THIRD AMENDED AND RESTATED CREDIT AGREEMENT
AGREEMENT dated as of the 28th day of May, 1998 by and between
ARK RESTAURANTS CORP., a New York corporation (the "Company") and BANK LEUMI USA
F/K/A BANK LEUMI TRUST COMPANY OF NEW YORK, a New York banking corporation (the
"Bank").
A. Pursuant to a Revolving Credit Loan Agreement between the
Bank and the Company dated as of March 3, 1989, as amended by Agreement dated
August 3, 1989, the Bank made available to the Company a revolving credit
facility, a standby letter of credit facility, and other financial
accommodations (collectively, the "Initial Facility").
B. On or about December 30, 1992, the Bank and the Company
entered into an Amended and Restated Credit Agreement, dated as of said date
(the "Restated Agreement"), wherein and whereby the Bank and the Company, among
other things, renewed and increased the Initial Facility. The Restated
Agreement, and the Initial Facility, were further amended by Agreement dated
August 10, 1994.
C. On or about March 5, 1996, the Bank and the Company entered
into a Second Amended and Restated Credit Agreement, dated as of said date (the
"Second Restated Agreement") wherein and whereby the Bank and the Company, among
other things (i) renewed, increased and made amendments to the Initial Facility,
(ii) the Bank provided the Company with a second loan facility and a second
letter of credit facility, to be used by the Company to finance the Las Vegas
Project (as herein defined), (iii) the credit facilities provided by the Bank to
the Company as referred to in (i) and (ii) hereof were further collateralized,
and (iv) certain other modifications to the existing arrangements were effected.
The Second Restated Agreement, was further amended by Agreements dated as of
March 31, 1996, and as of December 24, 1996.
D. The Bank and the Company have agreed (i) that the W.C.
Revolving Loans and LV Loans (each as defined in the Second Restated Agreement)
outstanding as of the date hereof pursuant to the Second Restated Agreement
shall be converted into one revolving loan facility, (ii) that the term of the
Initial Facility will be extended to the Maturity Date (as herein defined),
(iii) that the letter of credit facilities made available to the Company
provided in the Second Restated Agreement, shall be renewed, decreased and
amended, (iv) to the further collateralization of the credit facilities provided
by the Bank to the Company as referred to in (i) and (iii) hereof, and (v) to
certain other modifications of the existing arrangements. The Bank and the
Company have agreed to reflect these changes in this Third Amendment and
Restated Credit Agreement.
NOW, THEREFORE, IT IS AGREED:
1. DEFINITIONS
Unless the context otherwise requires, for all purposes of
this Agreement and of the other Loan Documents (as hereinafter defined), all
capitalized terms used in this Agreement and in the other Loan Documents without
definition shall have the respective meanings provided therefor or referred to
below:
1.1. The term "Affiliate" means with reference
to any Person, any director, officer or employee of such Person, any Person in
which such Person has a direct or indirect controlling interest or by which such
person is directly or indirectly controlled or which is under direct or indirect
common control with such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with") when used with respect to any specified Person shall mean
the power to direct or cause the direction of the actions, management or
policies of such Person, directly or indirectly, whether through the ownership
of voting
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securities, by contract or otherwise, and whether or not such power is actually
exercised.
1.2. The term "Agreement" means this Third
Amended and Restated Credit Agreement, including all of the Schedules and
Exhibits hereto, as the same may be amended or otherwise modified from time to
time, and the terms "herein", "hereof", "hereunder" and like terms shall be
taken as referring to this Agreement in its entirety and shall not be limited to
any particular section or provision hereof.
1.3. The term "Availability Date" means the
date of this Agreement.
1.4. The term "Bank Debt" means and includes
all (i) Consolidated Indebtedness for money borrowed, unless it meets the
definition of Purchase Money Indebtedness (ii) the amount of any letters of
credit outstanding for the account of the Company or any Subsidiary and (iii)
the aggregate amount of all equipment leases entered into by the Company or any
Subsidiary where the rental payments would be required to be capitalized under
generally accepted accounting principles, unless such lease meets the definition
of Purchase Money Indebtedness.
1.5. The term "Commitment" means the
Commitment (as defined in Section 2.1.1).
1.6. The term "Company's Collateral" means all
of the issued and outstanding shares of capital stock of each of the
Subsidiaries and the "security", as such term is defined in paragraph 3 of the
Company's Security Agreement.
1.7. The term "Consolidated Debt Service"
means interest expense and amortization cost for the applicable period on all of
the Company's Consolidated Indebtedness.
1.8. The term "Consolidated Indebtedness"
means the aggregate consolidated Indebtedness of the Company
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and its consolidated Subsidiaries. It is understood that in the calculation of
Consolidated Indebtedness, if one or more letters of credit, guarantees or
similar obligations relate to the same underlying liability, only the amount of
the underlying liability will be included in Consolidated Indebtedness.
1.9. The term "Consolidated Operating Cash
Flow" means consolidated after-tax earnings of the Company computed in
accordance with generally accepted accounting principles for the period of
calculation, plus depreciation and interest expense for such period on all
Consolidated Indebtedness.
1.10. The term "Consolidated Net Worth" shall
mean the excess of total assets over total liabilities of the Company and its
consolidated Subsidiaries, total assets and total liabilities each to be
determined as to both classification of items and amounts in accordance with
generally accepted accounting principles and consistent with the standards
applied in the financial statements referred to in Section 4.9; provided that
there shall be excluded from total assets (i) cash set apart and held in a
sinking or other analogous fund established for the purposes of redemption or
other retirement of capital stock, (ii) any revaluation or other write-up in
book value of assets subsequent to the date hereof, and (iii) amounts owed to
the Company or any Subsidiary from any of the officers, directors or employees
thereof or any of their Affiliates in excess of $300,000 at any one time
outstanding.
1.11. The term "Consolidated Trade
Indebtedness" means Current Liabilities of the Company and its consolidated
Subsidiaries for trade or other obligations, not outstanding more than sixty
(60) days, incurred in the ordinary course of their respective businesses and
not as a result of money borrowed.
1.12. The term "Current Assets", with respect
to any corporation, means as of the date of determination
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thereof, (i) cash and cash items on hand or in transit to or on deposit in any
bank or trust company which has not suspended business and which is located in
the United States of America; (ii) stocks, bonds and other securities or
obligations which are readily marketable in the United States of America, all
taken on the basis of cost or market value whichever is lower; (iii) good and
collectible accounts and notes receivable (including drafts, acceptances and
letters of credit), in good standing and payable in currency of the United
States of America and incurred or created less than one hundred twenty (120)
days prior to such date of determination; (iv) inventories of merchandise and
supplies located in the United States of America, all taken on the basis of cost
or market value, whichever is lower, and (v) subject to the limitations and
qualifications set forth in clauses (i) through (iv) of this paragraph, such
other assets located in the United States of America which in accordance with
generally accepted accounting principles would be included on a balance sheet as
current assets; all after write-offs and write-downs and after deducting
adequate reserves, in each case where a write-off, write-down or reserve is
proper in accordance with generally accepted accounting principles.
1.13. The term "Current Liabilities", with
respect to any corporation, includes, as of the date of determination thereof,
all Indebtedness maturing on demand or within one year from the date as of which
such determination is made, serial maturities, fixed sinking fund payments or
other prepayments required to be made with respect to any Indebtedness within
one year after such date, and all other items (including taxes accrued as
estimated) which in accordance with generally accepted accounting principles
would be included on a balance sheet as current liabilities.
1.14. The term "Disclosure Schedule" means the
Disclosure Schedule, dated as of even date herewith, executed by an officer of
the Company and delivered to the Bank setting forth certain information with
respect to the Company and the Subsidiaries.
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1.15. The term "ERISA" means the Employee
Retirement Income Security Act of 1974, as amended from time to time, and the
regulations and published interpretations thereof.
1.16. The term "ERISA Affiliate" means any
trade or business (whether or not incorporated) which together with the Company
would be treated as a single employer under Section 4001 (b)(1) of ERISA.
1.17. The term "Event(s) of Default" shall
have the meaning provided therefor in Section 8.1.
1.18. The term "Guarantor" means each and
"Guarantors" means all, collectively, of the entities listed on the Disclosure
Schedule annexed, and any other Subsidiary of the Company now existing or
hereafter formed which shall own or hold any assets or conduct any operations.
1.19. The term "Guarantor's Collateral" means
all assets of a Guarantor.
1.20. The term "Indebtedness", as applied to
a Person (an "obligor") at any time, shall mean the following amounts and
liabilities:
1.20.1. all amounts which, in accordance
with generally accepted accounting principles, are or should be treated as
liabilities or other obligations on the liabilities side of a balance sheet of
such obligor prepared in accordance with generally accepted accounting
principles; provided, however, that amounts accrued by such obligor in respect
of operating lease deferred credits shall not be deemed indebtedness; and
1.20.2. also, to the extent not so
treated,
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(i) letters of credit (whether revocable
or irrevocable) issued for the account of such obligor, but only to the extent
drawn upon and not repaid to the issuer;
(ii) liabilities of any other Person guar-
anteed directly or indirectly, in any manner by such obligor;
(iii) liabilities of or to any Person in
effect guaranteed, directly or indirectly, by such obligor through any
agreement, endorsement or understanding, contingent or otherwise (except
liabilities arising from endorsement of negotiable instruments for deposit or
collection in the ordinary course of business) of such obligor entered into for
the purpose, or which is used for the purpose, in whole or in part, of enabling
the debtor to pay, indemnify against or otherwise satisfy a liability or
obligation or to assure the obligee of the liability against loss, including
without limitation (x) agreements, commitments or understandings to repay
amounts drawn down by beneficiaries of letters of credit (whether revocable or
irrevocable) whether or not issued, directly or indirectly, for the account of
such obligor (y) statements or representations to the effect that such obligor
will not permit any other person to default in respect of any liability or will
maintain minimum net worth of another person, or (z) agreements, commitments or
understandings (A) to purchase securities or Indebtedness, or (B) to purchase or
sell services, products, raw materials or other property of any description,
outside of the ordinary course of its business, or (C) to supply funds to or in
any other manner make an investment in the debtor;
(iv) all liabilities secured (directly or
indirectly) by a lien or encumbrance upon any property or asset of such obligor
regardless of whether such obligor has assumed or become liable for the payment
of such liabilities; and
(v) amounts equal to any reserves or commitments
which are, or, under generally accepted accounting principles, should be,
reflected on the liabilities side of a
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balance sheet of such obligor in respect of contingent or disputed claims, debts
or other similar monetary obligations, either direct or guaranteed, to the
extent that the same are not included pursuant to (i), (ii) or (iii) above;
provided, however, that items includable as stockholders' equity (or parts
thereof), minority interests and reserves for deferred income taxes, each as
determined or set aside in accordance with generally accepted accounting
principles, shall not be deemed to be "Indebtedness". Obligations in respect of
leases shall be included as "Indebtedness" only to the extent that the same are
treated as liabilities or obligations by such obligor on its balance sheets
prepared in accordance with generally accepted accounting principles, except
that operating lease deferred credits shall not be included as "Indebtedness".
1.21. The term "Initial Facility" means the
credit facility made available by the Bank to the Company described in Recital
A, as amended to date.
1.22. The term "Las Vegas Project" means the
several restaurants and other food service facilities constructed and operated
by the Company in the hotel and casino known as "New York New York" Las Vegas,
Nevada.
1.23. The term "Lien" means any charge, lien,
mortgage, pledge, security interest or other encumbrance of any nature
whatsoever upon, of or in property or other assets of a Person, whether absolute
or conditional, voluntary or involuntary, whether created pursuant to agreement,
arising by force of statute, by judicial proceedings or otherwise.
1.24. The terms "Loan and "Loans" shall have
the meanings provided therefor in Section 2.1.1 hereof.
1.25. The term "Loan Documents" shall have the
meaning provided therefor in Section 4.1.1 hereof.
1.26. The term "Maturity Date" shall have the
meaning provided therefor in Section 2.1.1 hereof.
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1.27. The term "Multiemployer Plan" means a
Plan described in Section 4001(a)(3) of ERISA which covers employees of the
Company or any ERISA Affiliate.
1.28. The terms "Note" shall have the meaning
provided therefor in Section 2.1.3 hereof.
1.29. The term "PBGC" means the Pension
Benefit Guaranty Corporation, or any successor thereto.
1.30. The term "Person" shall include an
individual, a partnership, a joint venture, a corporation (including, without
limitation, the Company or any Subsidiary), a limited liability company, a
trust, an estate, an unincorporated organization or association, a governmental
agency and any other business or legal entity.
1.31. The term "Plan" means any employee
benefit plan as defined in Section 3(2) of ERISA.
1.32. The term "Prohibited Transaction" means
any transaction set forth in Section 406 of ERISA or Section 4975 of the
Internal Revenue Code of 1986, as amended from time to time.
1.33. The term "Purchase Money Indebtedness"
means purchase money Indebtedness incurred by a Subsidiary at the time of the
acquisition of Restaurant-Related Business assets, which Indebtedness is secured
only by the assets of the business being acquired and not guaranteed by the
Company or any Subsidiary of the Company and for which the instrument or
instruments relating to the Indebtedness does not provide recourse against the
Company or any Subsidiary of the Company other than the Subsidiary issuing the
Indebtedness.
1.34. The term "Reference Rate" means the rate
designated by the Bank, and in effect from time to time, as its reference rate,
adjusted when such reference rate changes.
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1.35. The term "Reportable Event" means any of
the events set forth in Section 4043 of ERISA.
1.36. The term "Second Restated Agreement"
means the Second Amended and Restated Credit Agreement described in Recital C.
1.37. The term "Restaurant-Related Business"
means a restaurant, catering, hospitality, food preparation or food service
business.
1.38. The term "Shareholders' Equity" means
the excess of the total assets of the Company and its consolidated Subsidiaries
over their total liabilities, in each case as such items would be classified on
the consolidated balance sheet of the Company and its consolidated Subsidiaries
determined in accordance with generally accepted accounting principles.
1.39. The term "Subsidiary" and "Subsidiaries"
mean, respectively, each of the corporations listed on the Disclosure Schedule,
and any other corporation or Person, not less than a majority of the outstanding
shares of the class or classes of stock or other equity interest of which,
having by the terms thereof ordinary voting power to elect a majority of the
directors or manage such corporation or Person, are at the time owned by the
Company or by a Subsidiary of the Company, or by the Company and one or more
Subsidiaries of the Company.
1.40. The term "United States of America",
when used in a geographical sense, means all of the States of the United States
of America and the District of Columbia and, so long as they continue as
possessions or territories of the United States, Puerto Rico and the Virgin
Islands.
1.41. The term "Working Capital", with respect
to any corporation, means the excess, if any, of the Current Assets over the
Current Liabilities of such corporation.
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2. THE LOAN
2.1. Amount and Terms of Credit.
2.1.1. Commitment of the Bank. The Bank
shall, subject to and upon the terms and conditions herein set forth, make
available to the Company, from the Availability Date until April 30, 2000 (the
"Maturity Date") loans (each a "Loan" and collectively the "Loans"). On the
Availability Date the principal balance of the "LV Loans" and the "WC Revolving
Loans" (each as defined in the Second Restated Agreement) shall be converted
into a Loan. The Loans made available to the Company pursuant to the revolving
loan facility are to finance the development and construction of new restaurants
and to provide working capital for the Company's operations. The aggregate
principal amount of the Loans at any time shall not exceed $10,000,000 (the
"Commitment"). Subject to the foregoing, until the Maturity Date, the Company
may borrow, repay and reborrow the Loans to the limit of the Commitment.
2.1.2. Notice of Borrowing. If and
whenever the Company desires to borrow under the Commitment it shall give the
Bank at least three (3) full business days prior written or telegraphic notice,
specifying the date of the proposed borrowing, and the amount to be borrowed
(which shall be not less than $250,000). Subject to all the terms and conditions
of this Agreement, the Bank shall make available to the Company in immediately
available funds at the Bank's office specified in Section 9.6, not later than 11
a.m. current local time on the date specified in such notice, the amount to be
advanced hereunder against delivery to the Bank, at such office, of such
documents and papers as are provided for herein.
2.1.3. Note. The Loans shall be
evidenced by a promissory note evidencing the Loans substantially in the form of
Exhibit A annexed, with the blanks completed in conformity herewith (the "Note")
duly executed by the Company and payable to the order of the Bank and (i) be
dated as of the Availability Date; (ii) be in the
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principal amount of $10,000,000; (iii) bear interest at a fluctuating rate per
annum equal to one half of one (1/2%) percent above the Reference Rate, in
effect from time to time, until maturity (whether by acceleration or otherwise)
and thereafter at a fluctuating rate per annum equal to 3% above the Reference
Rate, in effect from time to time; and (iv) be payable as to interest at such
rate in arrears on the first day of each month commencing with the first day of
the month following the Availability Date and thereafter on the first day of
each month until maturity, (whether by acceleration or otherwise), and after
maturity upon demand, and both before and after judgment, until the principal
amount is paid in full.
2.1.4 Letters of Credit. Subject to and
upon the terms and conditions contained in this Agreement (including compliance
with the conditions precedent to the obligations of the Bank to make the initial
Loan to the Company on or after the Availability Date) and the Application (as
hereinafter defined) and provided the Company is not then in default of any of
its obligations under this Agreement, the Bank agrees to issue, from time to
time, one or more letters of credit and/or renewals of currently outstanding
letters of credit, at the request and for the account of the Company. The
letters of credit to be made available by the Bank to the Company shall be for
the Company's current operations (each such letter of credit a "CLC"). 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 CLC's issued for the account of the Company shall
not at any time exceed the sum of $1,000,000. If and whenever the Company
desires to obtain a letter of credit from the Bank for its account, it shall
apply to the Bank for such letter of credit in accordance with the Bank's normal
practices as in effect at that time, and shall execute and deliver to the Bank
such application and agreement as the Bank normally requires in connection with
such transactions (an "Application") and such other documents as may be required
thereunder. The Bank shall maintain a record of the letters of credit and all
transactions thereunder, which records shall be conclusive evidence of the
matters set forth therein, absent manifest
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error. In the event of any inconsistency between any provision of this Agreement
and any provision of the Application, this Agreement shall govern and prevail.
As consideration to the Bank for the issuance of the letters of credit, the
Company shall pay a commission to the Bank in an amount equal to 1 and 1/2% per
annum of the maximum amount which may be drawn under each letter of credit;
provided, however, that the commission payable to the Bank on the renewal of any
letter of credit outstanding on the date of this Agreement shall be at a rate
equal to the rate then payable with respect to such letter of credit. All
commissions shall be paid by the Company upon issuance of the letter of credit.
The obligation of the Bank to issue or extend any letter of credit for the
account of the Company hereunder shall exist at any time only if at that time
all conditions under Section 5.2 of this Agreement to the Bank's obligation to
make a Loan to the Company would have been satisfied in full if the Company had
requested a Loan in such amount. The obligation of the Bank to issue or extend
any CLC's hereunder for the account of the Company shall terminate on the
Maturity Date. Each letter of credit issued under this Section 2.1.5 shall have
an expiration date no later than one year from the date it is issued, and shall
be renewable only in the sole discretion of the Bank.
2.2. Prepayments.
2.2.1. Voluntary Prepayments. The
Company may prepay the Loans, or any of them, in part or in full at any time,
and from time to time, without premium or penalty, upon not less than three (3)
business days' prior written notice to the Bank, provided that each such
prepayment shall be in the amount of $100,000 or any integral multiple thereof.
In the absence of any such designation, the Bank may apply such prepayment at
its discretion.
2.2.2. Prepayments Generally. Any
prepayments, whether mandatory or voluntary, shall be accompanied by the payment
of any accrued interest on the principal amount so prepaid.
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2.2.3. Application of Life Insurance
Proceeds. The Bank will apply any proceeds received by the Bank upon the policy
or policies of insurance assigned to the Bank upon the life of Xxxxxxx
Xxxxxxxxx, in its discretion, to the payment or prepayment of the Loan, or other
obligations, as the case may be, of the Company or the Guarantors to the Bank.
2.3. General Provisions Concerning Loans.
Interest, including additional interest, shall be computed for the actual number
of days elapsed on the basis of a 360-day year. All mandatory and voluntary
payments or prepayments of principal and all payments of interest under the Note
shall be made by the Company directly to the Bank in immediately available
funds. To effect the payment of any amount due hereunder, the Bank may, but
shall not be obligated to, charge any deposit account maintained by the Company
with the Bank. If any payment of principal of or interest on the Note or the
Facility Fee becomes due and payable on a day on which the Bank is closed (as
required or permitted by law or otherwise), the due date thereof shall be
extended to the next succeeding full business day and, in the case of principal,
interest thereon shall be payable at the applicable rate during such extension.
All notations and entries made by the Bank or the holder of the Note on the grid
attached thereto shall be presumptive evidence of the correctness of such
notations and entries, absent manifest error. The failure of the Bank to make
any notation or entry on any such grid shall not, however, limit or otherwise
affect the obligations of the Company under this Agreement or under the Note.
2.4. Security For the Loans.
2.4.1 Concurrently with the execution and
delivery of the Restated Agreement, the Company granted a valid and perfected
first priority security interest to the Bank in the Company's Collateral,
pursuant to a security agreement, dated as of even date therewith, which
security agreement was amended and restated concurrently with the execution and
delivery of the Second Restated Agreement and is concurrently being amended and
restated in the form annexed as Exhibit C-1 (the "Company's Security
Agreement").
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2.4.2 Each of the Guarantors identified
on the Disclosure Schedule as a pre-existing Subsidiary heretofore granted a
valid and perfected security interest to the Bank in such of the Guarantor's
Collateral as was owned by it pursuant to a security agreement, which security
agreement, concurrently with the execution and delivery of this Agreement, is
being amended and confirmed, as provided in Exhibit C-2 annexed. Concurrently
with the execution and delivery of this Agreement, each of the Guarantors
identified on the Disclosure Schedule as a new Subsidiary shall grant a valid
and perfected security interest in such of the Guarantor's Collateral as is
owned by it pursuant to a security agreement, dated as of the date hereof, in
the form annexed as Exhibit C-3. Each existing security agreement, as
concurrently amended and confirmed, and each security agreement concurrently
executed and delivered is a "Guarantor's Security Agreement" and collectively
they are "Guarantors' Security Agreements". Each security interest granted by a
Guarantor's Security Agreement is a first priority security interest, subject
only to the security interests heretofore granted by each such Guarantor, as set
forth on Schedule 4.13.
2.5. Guarantees. The Guarantors identified on
the Disclosure Schedule as Subsidiaries heretofore guaranteed all of the
obligations of the Company to the Bank pursuant to an unlimited guarantee
executed by each such Guarantor. Concurrently with the execution and delivery of
this Agreement, each of such Guarantors is reaffirming its Guaranty, by its
execution of a Confirmation of Guarantee, annexed as Exhibit C-2. Concurrently
with the execution and delivery of this Agreement, each of the Guarantors
identified on the Disclosure Schedule as a new Subsidiary shall guarantee all of
the obligations of the Company to the Bank, pursuant to an unlimited guarantee
dated as of even date herewith, and in the form annexed as Exhibit D-1. Each
Guarantee, heretofore or concurrently executed and delivered, is individually a
"Guaranty" and collectively are the "Guarantees".
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3. USE OF PROCEEDS.
The Company represents, warrants and covenants that
the proceeds of the Loans will be used for the following purposes and no others:
to finance the development and construction of new restaurants and for working
capital.
4. REPRESENTATIONS AND WARRANTIES.
In order to induce the Bank to enter into this Agreement and
to make the Loans, the Company represents and warrants to the Bank that:
4.1. Corporate Existence and Power.
4.1.1. The Company and each Guarantor is
a corporation duly incorporated, validly existing and in good standing under the
law of its state of incorporation, and is duly qualified as a foreign
corporation in each jurisdiction wherein the character of the property owned or
the nature of the business being transacted by it makes such qualification
necessary; and the Company has the corporate power to execute and deliver this
Agreement, the Note and all other documents to be executed and delivered by the
Company in connection herewith, and each Subsidiary has the corporate power to
execute and deliver, as is applicable (i) the Confirmation of Guarantees and
Amendment and Confirmation of Security Agreements or (ii) a Guarantee and a
Guarantor's Security Agreement and all other documents executed and delivered by
such Subsidiary in connection herewith (collectively, the "Loan Documents") and
to incur and perform their respective obligations hereunder and thereunder.
4.1.2 Except as is otherwise set forth on
the Disclosure Schedule, all of the issued and outstanding shares of capital
stock of each of the Subsidiaries are owned of record and beneficially by the
Company. The Disclosure Schedule accurately sets forth the class and number of
shares issued by each Subsidiary, all of which shares have been duly issued,
fully paid and non-assessable. There are no
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outstanding warrants, options or other rights to acquire any shares in any of
the Guarantors.
4.2. Authorization. The Company and each of
the Guarantors has all requisite legal right, power and authority to execute,
deliver and perform the terms and provisions of this Agreement, the Loan
Documents executed by it, and all other instruments and documents delivered by
it pursuant hereto and thereto. The Company and each of the Guarantors has taken
or caused to be taken all necessary action to authorize the execution, delivery
and performance of this Agreement, the Loan Documents executed by it, the Note,
and any other related agreements, instruments or documents delivered or to be
delivered by the Company or the Guarantors pursuant hereto and thereto. This
Agreement, the Loan Documents and all related agreements, instruments and
documents delivered or to be delivered pursuant hereto or thereto constitute and
will constitute legal, valid and binding obligations of the Company (and, to the
extent executed by them, the Guarantors) enforceable in accordance with their
respective terms.
4.3. No Conflicts. Neither the execution and
delivery of this Agreement, the Loan Documents or any of the instruments and
documents delivered or to be delivered pursuant hereto or thereto, nor the
consummation of the transactions herein or therein contemplated, nor compliance
with the provisions hereof or thereof, will violate any law or regulation, or
any order, writ or decree of any court or governmental instrumentality, or will
conflict with, or result in the breach of, or constitute a default in any
respect under, any indenture, mortgage, deed of trust, agreement or other
instrument to which the Company or any of the Guarantors is a party, or by which
any of them or any of their respective properties may be bound or affected, or
will result in the creation or imposition of any lien, charge or encumbrance
upon any of the property of any of them (except as contemplated hereunder or
under the Loan Documents) or will violate any provision of the certificate or
articles of incorporation (as amended to date) or by-laws (as currently in
effect) of the Company or any of the Guarantors.
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4.4. Compliance and Other Agreements.
4.4.1 Neither the Company nor any of the
Guarantors is in default under any indenture, mortgage, deed of trust, agreement
or other instrument to which it is a party, or by which it or any of its
properties may be bound or affected, except for such defaults which,
individually or in the aggregate, will not have a material and adverse effect on
the business, operations, property or assets or in the condition, financial or
otherwise, of the Company or any of the Guarantors.
4.4.2 Neither the Company nor any of the
Guarantors is in default with respect to any order, writ, injunction or decree
of any court or of any federal, state, municipal or other governmental
department, commission, board, bureau, agency or authority, domestic or foreign,
or in violation of any law, statute or regulation, domestic or foreign, to which
it is, or any of its properties are subject, except for such defaults or
violations which, in the aggregate, will not have a material or adverse effect
on the business, operations, property or assets or on the condition, financial
or otherwise, of the Company or any of the Guarantors.
4.4.3 Neither the Company nor any of the
Guarantors is a party to or bound by, nor are any of their respective properties
bound or affected by, any agreement, deed, lease or other instrument, or subject
to any charter or other corporate restriction or any judgment, order, writ,
injunction, decree or award, or any law, statute, rule or regulation, any of
which materially and adversely affects or in the future may (so far as the
Company or any Guarantor should reasonably foresee) materially and adversely
affect the business, operations, prospects, properties or assets, or the
condition, financial or otherwise, of the Company or any of the Guarantors.
4.5. ERISA. Each of the Company and the
Guarantors is in compliance in all material respects with all applicable
provisions of ERISA. Neither a Reportable Event
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nor a Prohibited Transaction has occurred and is continuing with respect to any
Plan; no notice of intent to terminate a Plan has been filed nor has any Plan
been terminated; no circumstances exist which constitute grounds under Section
4042 of ERISA entitling the PBGC to institute proceedings to terminate, or
appoint a trustee to administrate, a Plan, nor has the PBGC instituted any such
proceedings; neither the Company, any Guarantor, nor any ERISA Affiliate has
completely or partially withdrawn under Sections 4201 or 4204 of ERISA from a
Multiemployer Plan; the Company, the Guarantors and each of their respective
ERISA Affiliates have met their minimum funding requirements under ERISA with
respect to all of their Plans and the present fair market value of all Plan
assets exceeds the present value of all vested benefits under each Plan, as
determined on the most recent valuation date of the Plan and in accordance with
the provisions of ERISA and the regulations thereunder for calculating the
potential liability of the Company, the Guarantors or any of their respective
ERISA Affiliates to PBGC or the Plan under Title IV of ERISA; and neither the
Company nor any of the Guarantors or their respective ERISA Affiliates has
incurred any liability to the PBGC under ERISA.
4.6. Investment Company. Neither the Company
nor any of the Guarantors is an "investment company" or a company "controlled"
by an "investment company" within the meaning of the Investment Company Act of
1940.
4.7. Approvals and Consents. All authoriza-
tions, consents, registrations, exemptions, approvals and licenses (governmental
or otherwise) or the taking of any other action (including, without limitation,
by the shareholders of the Company or any of the Guarantors) which are
required as a condition to the validity or enforceability of this Agreement, the
Loan Documents, or any of the instruments or documents delivered or to be
delivered pursuant hereto or thereto have been effected or obtained and are in
full force and effect (except that the Bank waives the requirement, if any, for
consent of any landlord of premises leased to the Company or Subsidiary, to the
pledge of the Company's Collateral or any Guarantor's Collateral hereunder).
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4.8. Regulation U, etc. Neither the Company
nor any of the Guarantors is engaged in the business of extending credit for the
purpose of purchasing or carrying any margin stock (within the meaning of
Regulation U or G of the Board of Governors of the Federal Reserve System). None
of the proceeds of the Loans will be used, directly or indirectly, in violation
of Regulation U for the purpose of purchasing or carrying any margin stock or
for any other purpose which might constitute the loan contemplated hereby a
"purpose credit" within the meaning of such Regulation U which would be in
violation of Regulation U.
4.9. Financial Condition.
4.9.1. The audited consolidated balance
sheets of the Company and its Subsidiaries as at September 30, 1997 and the
audited consolidated statements of operations, shareholders' equity and cash
flows of the Company and its Subsidiaries for the fiscal year then ended, and
the unaudited consolidated balance sheets and statements of operations,
shareholders' equity and cash flows of the Company and its Subsidiaries as at
and for the 13 weeks ended December 30, 1997, copies of which have been
furnished to the Bank, are complete and correct and fairly present (subject, in
the case of such unaudited statements, to year-end audit adjustments) the
consolidated financial condition and results of operations of the Company and
its Subsidiaries as at the dates and for the periods indicated. All of such
financial statements have been prepared in conformity with generally accepted
accounting principles and practices applied on a basis consistently maintained
throughout the periods involved.
4.9.2. There are no material liabilities,
direct or indirect, fixed or contingent, of the Company or the Subsidiaries as
of the dates of such financial statements which were not reflected therein or in
the notes thereto. Since the date of the most recent financial statements, there
has been no material adverse change in the condition, financial or otherwise, or
the business, operations, prospects, properties or assets of the Company and its
Subsidiaries on a consolidated basis or of the Company individually.
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4.10. Taxes. The Company and each Subsidiary
has filed or caused to be filed, all tax returns required to be filed, and has
paid all taxes (including interest and penalties) shown to be due and payable on
said returns or any assessments made against it, and no tax liens have been
filed and no claims are being asserted with respect to such taxes which are not
reflected in the financial statements referred to in Section 4.9.1 hereof. The
Company has no knowledge of any proposed material tax assessment against or
affecting it or any of the Subsidiaries and is not otherwise obligated by any
agreement, instrument or otherwise to contribute to the payment of taxes owed by
any other Person. All material tax liabilities are adequately provided for or
reserved against on the books of the Company and/or the Subsidiaries, as is
applicable, in accordance with generally accepted accounting principles.
4.11. Litigation. Except as set forth on
Schedule 4.11 annexed, there are no actions, suits or proceedings pending or, to
the knowledge of the Company, threatened against or affecting the Company or any
Subsidiary or the property of any of them before any court, arbitrator or
governmental department, commission, board, bureau, agency or instrumentality
which, (i) if not covered by insurance seeks recovery of more than $200,000 or
if covered by insurance seeks recovery of an amount in excess of the applicable
insurance limits, (ii) either in any case or in the aggregate, if adversely
determined, would have a material adverse effect on the financial condition,
business or operations of the Company or any Subsidiary, or (iii) question the
validity or enforceability of this Agreement, the Second Restated Agreement, the
Loan Documents, or any action to be taken in connection with the transactions
contemplated hereby or thereby.
4.12. Chief Executive Office; Collateral
Locations. The address of the chief executive office of the Company is set forth
in the Company's Security Agreement. The only locations of any of the Company's
Collateral, other than such of the Company's Collateral as the Bank shall take
possession of to perfect its lien and security interest therein and the chief
executive office of the Company, are
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those listed in the Company's Security Agreement. The Chief Executive Office and
principal place of business of each of the Guarantors is set forth on the
Disclosure Schedule and in such Guarantor's Security Agreement. The only other
locations of any of the Guarantors' Collateral, other than their Chief Executive
Office or principal places of business, are listed in the Guarantors' Security
Agreements.
4.13. Title to Properties/Priority of Liens.
4.13.1. The Company and its Subsidiaries
have good and marketable title to, or valid leasehold interests in, all of the
properties and assets reflected on the most recent of the financial statements
delivered to the Bank pursuant to Section 4.9.1 or acquired by it after the date
of such financial statements and prior to the date hereof, except for those
properties and assets which have been disposed of since such date in the
ordinary course of business. All such properties and assets are owned or leased
by the Company or a Subsidiary free and clear of all mortgages, pledges, liens,
security interests, encumbrances or charges of any kind, except (i) such as are
disclosed on Schedule 4.13 hereto, (ii) such as are in favor of the Bank, and
(iii) such as are permitted under the provisions of Section 7.5 hereof.
4.13.2 Upon the Bank taking possession of
the certificates evidencing all of the issued and outstanding shares of capital
stock owned by the Company in each of the Subsidiaries identified on the
Disclosure Schedule, the liens and security interest granted by the Company to
the Bank under the Company's Security Agreement will constitute valid and
perfected first priority liens and security interest in the Company's
Collateral. Except as disclosed on Schedule 4.13 hereto, upon the filing of the
Uniform Commercial Code financing statements with the appropriate authorities
with respect to the Guarantor's identified on the Disclosure Schedule, the liens
and security interests granted by each of the Guarantors to the Bank under the
Guarantors' Security Agreements will constitute valid and perfected first
priority liens and security interests in the Guarantor's Collateral.
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4.14. Insurance. All physical properties and
assets of the Company and each of the Guarantors are insured in accordance with
the requirements of Section 6.5 hereof.
4.15. Subsidiaries. Except for shares of
stock in the Subsidiaries, neither the Company nor any Guarantor owns shares of
stock in, or has any option, warrant or other right to purchase or subscribe to
shares of stock in or otherwise acquire an equity interest in any Person which
upon effecting such purchase would be a Subsidiary.
4.16. Year 2000. The Company has (i) undertaken a
sufficient inventory, review and assessment of all of the Company's areas
within its business and operations that could be adversely affected by the
failure of the Company to be Year 2000 Compliant on a timely basis, (ii)
developed a plan and timeline for becoming Year 2000 Compliant on a timely
basis, (iii) to date, implemented that plan in accordance with that timeline in
all material respects and, (iv) made inquiry of its key suppliers, vendors and
customers as to whether such person(s) will, on a timely basis, be Year 2000
Compliant in all material respects and on the basis of such inquiry reasonably
believes that all such person(s) will be Year 2000 Compliant. "Year 2000
Compliant" shall mean that, in all material respects, all computer and software
related applications shall be able to recognize and perform properly, date
sensitive functions involving dates prior to and after December 31, 1999. No
later than December 31, 1998, the Company shall have completed testing to verify
whether all of its computer and software related applications are Year 2000
Compliant. The Company shall take all action necessary to ensure that the
Company shall be Year 2000 Compliant and that no material adverse change will
arise in the Company's financial condition as a result of its efforts or failure
to be year 2000 Compliant.
4.17. Disclosure. No certificate, statement,
report or other document furnished to the Bank by or on behalf of the Company or
any of the Guarantors in connection herewith or in connection with any
transaction contemplated hereby, or this Agreement, the Second Restated
Agreement or any Loan Document, contains any untrue statement of a material
-23-
fact or omits to state any material fact necessary in order to make the
statements contained therein not misleading.
4.18. No Event of Default. After giving
effect to the transactions contemplated by this Agreement, the Loan Documents
and the other instruments or documents delivered in connection herewith and
therewith, there does not exist at the date hereof any condition, event or act
which constitutes an Event of Default hereunder or which, after notice or lapse
of time, or both, would constitute an Event of Default hereunder.
5. CONDITIONS TO LOANS.
5.1. Initial Loan. The obligation of the Bank
to make the initial Loan to the Company hereunder on or after the date hereof is
subject to the satisfaction, on or before the date of the making of such Loan,
of each of the following conditions precedent:
5.1.1 Loan Documents. The Company and
each of the Guarantors shall have executed and delivered to the Bank the Loan
Documents to be executed by each of them, and all other agreements, instruments
and documents required or contemplated by this Agreement and the Loan Documents.
The liens and security interests created by the Company's Security Agreement
shall have been perfected and be first and prior to any other lien with respect
to the Company's Collateral, and the liens and security interests created by
each of the Guarantors' Security Agreements shall have been perfected and be
first and be prior to any other lien with respect to such of the Guarantor's
Collateral as is owned by the Guarantor executing and delivering such
Guarantor's Security Agreement, except as set forth on Schedule 4.13 hereof.
5.1.2 Opinion of the Company's Counsel.
The Bank shall have received a written opinion of Shack & Xxxxxx, P.C., counsel
to the Company and each of the Guarantors, dated as of even date herewith, to
the effect set forth in Exhibit E annexed, and covering such other matters
incident to the transactions herein contemplated as the Bank may reasonably
request.
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5.1.3 Supporting Documents - Initial
Loan. The Bank shall have received the following: (a) a certificate of the
Secretary or an Assistant Secretary of the Company and of each Guarantor, dated
as of even date herewith, certifying as to (i) the By-laws of the Company and
each such Guarantor as then in effect; (ii) resolutions of the Board of
Directors of the Company and each such Guarantor authorizing the execution,
delivery and performance of this Agreement, the Note, the amendment to and
confirmation of the Company's Security Agreement, the Guarantors' Security
Agreements, on any applicable amendments thereto and confirmation thereof, the
Guarantees, or as applicable confirmations thereof, and the other Loan Documents
and the borrowing(s) hereunder, to the extent being executed by each such
corporation; (iii) the full force and effect of such resolutions on the date
hereof; and (iv) the incumbency and signature of each of the officers of the
Company and each Guarantor signing such Loan Documents and all other closing
papers hereunder; (b) certified copies of the Certificate or Articles of
Incorporation of the Company and each Guarantor, as amended through the date
hereof; (c) a long-form certificate of subsistence from the Secretary of State
of the State of New York in respect of the Company and certificates of
subsistence or good standing from the appropriate official in the jurisdiction
of incorporation of each Guarantor; (d) tax status reports in respect of the
Company and each Guarantor from state tax authorities; and (e) such additional
supporting documents as the Bank may reasonably request.
5.1.4 Insurance. The Bank shall have
received one or more certificates, in form and substance satisfactory to the
Bank, evidencing the existence of the insurance required by the provisions of
Section 6.5 hereof.
5.1.5 Assignment of Life Insurance
Policy. The Bank shall have received confirmation satisfactory to it that the
assignment of life insurance in the aggregate amount of $3,000,000 on the life
of Xxxxxxx Xxxxxxxxx, made as condition to the effectiveness of the Second
Restated Agreement, remains in full force and effect.
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5.1.6 Commitment Fee. The Borrower shall
have paid to the Bank a Commitment Fee in the sum of $20,000.
5.2. All Loans. In addition to the conditions
set forth above with respect to the initial Loan, each of the following
conditions precedent shall be applicable thereto and to any subsequent Loans
hereunder.
5.2.1 Note. The Note shall have been
duly completed, executed and delivered to the Bank.
5.2.2 No Default. After giving effect to
each Loan there shall exist no Event of Default and no condition, event or act
which, with notice or lapse of time, or both, would constitute such an Event of
Default.
5.2.3 Representations. All representa-
tions and warranties contained herein, or otherwise made in writing in
connection herewith by the Company or any Guarantor, shall be true and correct,
with the same force and effect as if made on and as of the date of such Loan,
and the representations and warranties set forth in Section 4.9.1 shall also be
true and correct (and shall be deemed repeated as of the date of such Loan) in
respect of all of the Company's financial statements and all other information
furnished to the Bank as at any such date, or with respect to any period,
subsequent to September 30, 1997.
5.2.4 Officers' Certificate. At the time
of the making of the initial Loan and at the time of the making of such
subsequent Loan, the Company shall deliver to the Bank a certificate signed by
the chief executive and the chief financial officers of the Company, dated such
date, certifying and confirming that (i) no default exists as set forth in
Section 5.2.2, (ii) the representations and warranties referred to in Section
5.2.3 are true and correct and (iii) all conditions to the Bank's obligation to
make the Loan have been fully satisfied.
5.2.5 Form U-1. If required by the Bank
at any time, the Company shall have furnished to the Bank its
-26-
duly executed Federal Reserve Form U-1, in form and substance reasonably
satisfactory to the Bank.
5.2.6 Proceedings. All corporate and
legal proceedings and all instruments and agreements in connection with the
transactions contemplated by this Agreement shall be satisfactory in form, scope
and substance to the Bank and its counsel, and the Bank and such counsel shall
have received all information and copies of all documents, including reports of
corporate proceedings, which the Bank or its counsel may reasonably have
requested in connection therewith, such documents where appropriate to be
certified by proper corporate and governmental authorities.
5.2.7 No Adverse Change. There shall
have been no material adverse change in the operations, business, property or
assets or in the condition (financial or otherwise) of the Company or the
Guarantors.
Each borrowing hereunder shall constitute a representation and
warranty by the Company to the Bank that all of the conditions specified in this
Section 5 have been satisfied as of that time.
6. AFFIRMATIVE COVENANTS.
The Company covenants and agrees that from and
after the date hereof and so long as any Loan (including interest or any other
obligation incurred hereunder) is outstanding or any Commitment is in effect,
unless the Bank shall otherwise consent in a writing delivered to the Company,
the Company and each Guarantor will:
6.1. Financial Statements. Furnish to the
Bank:
6.1.1. as soon as practicable, but in any
event not later than forty-five (45) days after the end of each of the first
three (3) fiscal quarters in each fiscal year of the Company, consolidated and
consolidating balance sheets of the Company and its Subsidiaries as at such date
and consolidated and consolidating statements of operations,
-27-
shareholders' equity and cash flows of the Company and its Subsidiaries for the
period commencing at the beginning of such fiscal year and ending on the last
day of such quarter, together with the comparative financial statements for the
corresponding period of the preceding fiscal year, in each case duly certified
by an authorized officer of the Company as being complete and correct and as
having been prepared in accordance with generally accepted accounting principles
consistently applied;
6.1.2. as soon as practicable, but in any
event not later than ninety (90) days after the end of each fiscal year,
consolidated balance sheets of the Company and its Subsidiaries as at such date
and consolidated statements of operations, shareholders' equity and cash flows
of the Company and its Subsidiaries for such fiscal year, together with the
comparative financial statements for the preceding fiscal year, in each case
certified by independent certified public accountants of recognized standing
acceptable to the Bank;
6.1.3. together with the financial
statements referred to in Sections 6.1.1 and 6.1.2, a certificate of an
authorized officer of the Company (a) stating that no event has occurred and is
continuing which constitutes an Event of Default or which with notice and/or
lapse of time would constitute an Event of Default, or if an Event of Default or
such event has occurred and is continuing, stating the nature thereof and the
action which the Company proposes to take in connection therewith; and (b)
setting forth the information (including detailed calculations) required in
order to establish whether the Company was in compliance with the covenants set
forth in Section 7 hereof during and as of the end of the period covered by the
financial statements then being furnished;
6.1.4. together with the financial
statements referred to in Section 6.1.2, the related consolidating financial
statements of the Company and its subsidiaries, which need not be certified;
and
6.1.5. as soon as practicable, but in any
event not later than forty-five (45) days prior to the end of each fiscal year,
a projection for the next following fiscal year, in form and substance
acceptable to the Bank.
-28-
6.2. SEC Filings. So long as the Company is
registered with the Securities and Exchange Commission ("SEC") pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended, the Company will
furnish to the Bank, promptly following the filing thereof with the SEC or any
securities exchange, copies of all regular and periodic reports, notices,
registration statements, proxy statements and other documents filed by the
Company with the SEC or any securities exchange.
6.3. Notice of Default; Litigation. Furnish
to the Bank (i) as soon as practicable and in any event within five days after
the occurrence of each Event of Default or each event which, with notice and/or
lapse of time, would constitute an Event of Default, the statement of an
authorized officer of the Company setting forth details of such Event of Default
or event and the action which the Company proposes to take in connection
therewith; and (ii) promptly after the occurrence thereof, notice of the
commencement of any action or proceeding of the type described in Section 4.11
hereof and notice of any material development in any such action or proceeding.
6.4. Payment of Taxes. Pay and discharge all taxes,
assessments and governmental charges or levies imposed upon it or its income or
profits, or upon any of its
-29-
properties, prior to the date on which penalties attach thereto, except those
which are being contested in good faith and by proper proceedings if the Company
or a Subsidiary, as the case may be, shall have established appropriate and
proper reserves which are reflected on its books, to the extent required by
generally accepted accounting principles.
6.5. Maintenance of Insurance. Maintain
insurance with responsible and reputable insurers reasonably acceptable to the
Bank in such amounts and covering such risks as is usually carried by companies
engaged in similar businesses and owning similar properties in the same general
locations in which the Company or such Subsidiary operates. All such insurance
on the Company's Collateral and the Guarantors' Collateral (unless prohibited by
the terms of any lease to which the Company or such Guarantor is a party) shall
name the Bank as loss payee in an amount not less than the maximum obligation of
the Company to the Bank hereunder, and shall contain such other provisions as
the Bank may reasonably require to fully protect its interest in the Company's
Collateral and the Guarantors' Collateral, provided, however, that the Company
or a Guarantor may be named as initial loss payee of such insurance in an
aggregate amount not exceeding $50,000 for each occurrence; provided, however,
the aggregate amount for which the Company and all Guarantors shall be named as
the initial loss payee(s) shall not exceed $100,000 in any fiscal year of the
Company. In the event that the Bank shall receive any such insurance proceeds,
it shall remit such proceeds to the Company or the Guarantor which suffered the
insured loss, which proceeds shall be used either (i) to restore or replace the
fixtures, furniture, furnishings or equipment as were the subject of the insured
loss or (ii) for working capital purposes. Notwithstanding the foregoing, the
Bank shall have the right to apply any such amount received by it to the payment
of the Note, or other obligation of the Company or the Guarantors to the Bank
should an Event of Default occur, and to retain such amount on deposit if an
event, condition or act which with notice or the lapse of time, or both, would
constitute an Event of Default, has occurred and is continuing.
6.6. Access to Premises, Books and Records. At
any reasonable time during normal business hours and from time to time, upon
reasonable prior notice, permit the Bank or any of its agents or representatives
to examine and make copies of
-30-
and abstracts from its records and books of account, visit its properties and
discuss its affairs, finances and accounts with any of its officers, directors
or independent accountants.
6.7. Books of Account. Keep proper records
and books of account, in which complete entries will be made in accordance with
generally accepted accounting principles consistently applied, reflecting all of
its financial transactions.
6.8. Preservation of Corporate Existence.
Preserve and maintain its corporate existence, rights, franchises and
privileges, and those of each of the Guarantors, in the jurisdiction of its
incorporation and qualify and remain qualified as a foreign corporation in each
jurisdiction in which such qualification is necessary or desirable in view of
its business and operations or the ownership of its properties; provided,
however, that the Company shall not be required to maintain the existence,
rights, franchises and privileges of any Guarantor which shall no longer conduct
any operations or own any property; and provided, further, that any Guarantor
may be merged with and into the Company or another Guarantor.
6.9. Maintenance of Properties. Maintain,
preserve and keep all of its properties and assets in reasonably good working
order and condition, ordinary wear and tear excepted, and make all necessary and
proper renewals, replacements, additions and improvements thereto.
6.10. ERISA. Maintain compliance in all
material respects with the applicable provisions of ERISA. The Company will
deliver to the Bank, promptly after the filing or receiving thereof, copies of
all reports, including annual reports and notices, which the Company or any
Guarantor files with or receives from the PBGC or the U.S. Department of Labor
under ERISA; and as soon as possible and in any event within thirty (30) days
after the Company knows or has reason to know that any Reportable Event or
Prohibited Transaction has occurred with respect to any Plan or that the PBGC,
the Company or any Guarantor has instituted or will institute proceedings under
Title IV of ERISA to terminate any Plan, the Company will deliver to the Bank a
certificate of the chief executive officer or chief financial officer of the
Company setting forth the details as to such Reportable Event or
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Prohibited Transaction or Plan termination and the action the Borrower and/or
each affected Guarantor proposes to take with respect thereto.
6.11. Change in Business. The Company and
each Guarantor will not make any material change in the character of its
business as carried on at the date hereof.
6.12. Compliance. The Company and each
Guarantor will comply with the requirements of all applicable laws, rules,
regulations, orders of any governmental authority, and all agreements to which
it is a party, a noncompliance with which laws, rules, regulations, orders and
agreements would materially adversely affect the business, operations, prospects
or assets, or the condition, financial or otherwise, of the Company.
6.13. Additional Notification to Bank. The
Borrower shall promptly notify the Bank of (i) each and every default by the
Company or any Guarantor under any obligation for borrowed money which would
permit the holder of such obligation to accelerate its maturity, including the
names and addresses of the holders of such obligation and the amount thereof, in
each case describing the nature thereof and the action the Company, or the
applicable Guarantor, as the case may be, proposes to take with respect thereto,
and (ii) any change in the chief executive office of the Company or location of
any of the Company's Collateral or the Guarantors' Collateral from that listed
in the Company's Security Agreement or any of the Guarantors' Security
Agreements.
6.14. Additional Guarantors. In the event
that (i) the Company shall cause a new Subsidiary to be formed, or acquire such
shares of any corporation, or such equity interest in any other Person, that it
shall become a Subsidiary or (ii) any Subsidiary which is not a Guarantor
becomes party to a lease or a management agreement or otherwise actively
participates in the management or operation of a Restaurant-Related Business or
other facility, such Subsidiary shall thereupon be deemed a Guarantor. The
Company shall give the Bank not less than fifteen (15) days notice following the
formation or acquisition of a new Subsidiary or of a Subsidiary becoming a
Guarantor, which notice shall (i) specify the name and state of incorporation or
formation of such new Guarantor, identify each of the shareholders, or
-32-
other equity owners therein, and state the number of shares or other equity
interest owned by each of them, (ii) state whether it is to be a party to a
lease or management agreement and identify the other party thereto, (iii) give
the address of any Restaurant-Related Business or other facility to be operated
or managed by such Guarantor, and (iv) state the amount to be invested by the
Company in such Guarantor or to be paid by it to acquire same. Concurrently with
the Company's creating or acquiring a new Guarantor, or any Subsidiary becoming
a Guarantor, such Guarantor shall execute and deliver a Guaranty to the Bank,
and a Guarantor's Security Agreement pursuant to which such Guarantor, as
debtor, shall grant to the Bank a first priority perfected security interest in
its Guarantor's Collateral subject only to the lien of Purchase Money
Indebtedness in respect thereof. All of the shares in any such Guarantor which
have been issued to the Company, together with stock powers executed in blank by
the Company or if applicable a collateral assignment of any other form of equity
interest in a Subsidiary, sufficient to transfer such shares or other interest
upon delivery, shall be delivered by the Company to the Bank promptly after the
Company's receipt thereof, which shares and stock powers or collateral
assignment will thereupon become part of the Company's Collateral.
6.15. Notification of Write-offs of Investments and Sales
of Assets. Within ten (10) days of (a) the write-off or write-down of the
Company's or any Subsidiary's investments in or advances to any Restaurant-
Related Businesses in excess of an aggregate of $1,000,000 in any fiscal year,
or (b) the sale of any assets of the Company or any Subsidiary in excess of
$250,000 other than in the ordinary course of business, the Company shall
deliver a written notice to the Bank describing such event in reasonable detail.
6.16. Description of New Restaurant Arrangements. Upon
entering into a letter of intent or similar document setting forth the terms of
the arrangements for the development or acquisition of a new Restaurant-Related
Business, the Company will deliver to the Bank a copy thereof, will advise the
Bank of the material terms (including, without limitation, the amount of the
proposed investment, any indebtedness proposed to be incurred, and whether such
indebtedness is to be non-recourse or with recourse) and will
-33-
thereafter keep the Bank informed of any material developments in respect
thereof. Within ten (10) days after execution thereof, the Company will deliver
to the Bank a copy of any acquisition agreement or lease relating thereto.
6.17. Further Assurances. The Company and
each Guarantor will duly execute and deliver, or will cause to be duly executed
and delivered, such further instruments and documents, including, without
limitation, additional security agreements, Uniform Commercial Code financing
statements or amendments or continuations thereof, and will do or use its best
efforts to cause to be done such further acts as may be necessary or proper in
the Bank's reasonable opinion to effectuate the provisions or purposes of this
Agreement or the Loan Documents.
7. NEGATIVE COVENANTS.
The Company covenants and agrees that from and after the date
hereof and so long as any Loan (including interest or any other obligations
incurred hereunder) is outstanding or any Commitment is in effect, unless the
Bank shall otherwise consent in writing delivered to the Company, the Company
will not, and will not permit or suffer any Subsidiary to:
7.1. Indebtedness. Create, incur, assume or
suffer to exist, any Indebtedness except:
7.1.1. Indebtedness listed in the
financial statements described in Section 4.9.1, but no renewals, extensions
or refinancings thereof;
7.1.2. Purchase Money Indebtedness;
7.1.3. Indebtedness of any Subsidiary of
the Company (other than Purchase Money Indebtedness) for assets purchased for
use in the Restaurant-Related Business of such Subsidiary, which shall be deemed
a capital expenditure and shall be subject to the limitation of Section 7.8;
7.1.4. Indebtedness of the Company for
assets purchased for use in the Restaurant-Related Business conducted by the
Company or any Subsidiary, which, if such Indebtedness provides for non-recourse
liability limited to the asset purchased, shall constitute, for the purposes of
the
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second sentence of Section 7.1.9, Purchase Money Indebtedness, or which, if such
Indebtedness does not so provide, shall be deemed a capital expenditure and
shall be subject to the limitation of Section 7.8, and which Indebtedness may be
secured by the asset purchased;
7.1.5. Indebtedness of any Subsidiary to
the Company, which Indebtedness is created for working capital purposes and not
in connection with the development or acquisition of a Restaurant-Related
Business in an amount not exceeding $250,000, and any such Indebtedness of such
Subsidiary exceeding such amount, which excess shall be deemed a capital
expenditure subject to the limitation set forth in Section 7.8. Indebtedness of
the Company to a Subsidiary, or of a Subsidiary to a Subsidiary, is permitted
without limitation.
7.1.6. Indebtedness to the Company of any
newly-organized Subsidiary (or any such Indebtedness guaranteed by the Company)
in connection with the development or acquisition of a Restaurant-Related
Business, which shall be deemed a capital expenditure subject to the limitation
set forth in Section 7.8.
7.1.7. Consolidated Trade Indebtedness;
7.1.8. Indebtedness of the Company and
the Subsidiaries in respect of endorsements made in connection with the deposit
of items for credit or collection in the normal and ordinary course of business;
and
7.1.9. Indebtedness of the Company and
the Subsidiaries ("Consolidated Indebtedness"), which in the aggregate does not
exceed $14,000,000 exclusive of (i) Consolidated Trade Indebtedness, (ii)
Purchase Money Indebtedness and (iii) outstanding letters of credit against
which there has not been a draw. This Section 7.1.9 is a maintenance test as
well as an incurrence test and that calculations will be made on a quarterly
basis to determine compliance. Nothing in this Section 7.1.9, or elsewhere in
this Agreement, shall permit the Company or any Subsidiary to incur, assume or
suffer to exist any Indebtedness except for Indebtedness which is required in
the normal course of the business of operating and acquiring Restaurant-Related
Businesses.
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7.2. Cash Flow. Maintain Consolidated Operating Cash
Flow, calculated as of each September 30 on the basis of the twelve (12) full
calendar months preceding such calculation, of less than the product of (a) 2.0
and (b) the Consolidated Debt Service for such twelve (12) month period;
provided, however, that if Consolidated Operating Cash Flow for any such twelve
(12) month period shall be less than the product determined pursuant to the
first clause of this sentence, then Working Capital must equal or exceed the
total amounts paid or payable for Consolidated Debt Service for such
twelve-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-month period.
7.3. Net Worth. Maintain Consolidated Net
Worth (i) which is less than $24,000,000 at any time, (ii) at September 30, 1998
of not less than $27,000,000, and (iii) at each subsequent September 30th, in an
amount which is not less than $3,000,000 more than the Minimum Consolidated Net
Worth permitted for the prior period; provided, however, that the dollar
thresholds set forth in this Section 7.3 shall be reduced on a dollar-for-dollar
basis to the extent of cash dividends paid and expenditures made by the Company
to redeem its capital stock, to the extent permitted by Section 7.11 of this
Agreement.
7.4. Ratio of Consolidated Indebtedness to
Shareholders' Equity. Maintain a ratio of total Consolidated Indebtedness to
Shareholders' Equity of more than 1.0 to 1.0 at any time.
7.5. Liens. Directly or indirectly, create,
incur, assume or permit or suffer to exist any mortgage, lien, security
interest, charge or encumbrance on, or pledge or deposit of or conditional sale,
lease or other title retention agreement with respect to, any of its properties
or assets, whether now owned or hereafter acquired or created, or be bound by or
subject to any agreement or option to do so, provided that the foregoing
restrictions shall not apply to:
7.5.1. liens for taxes, assessments or
governmental charges or levies the payment of which is not yet due or is being
contested in good faith by appropriate proceedings;
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7.5.2. liens incurred by the Company or
the Subsidiaries or deposits made by the Company or the Subsidiaries in the
ordinary course of business in connection with worker's compensation or
unemployment insurance or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, performance and return-of-money bonds and
other similar obligations (exclusive of obligations for the payment of borrowed
money);
7.5.3. good faith deposits (in amounts
not greater than the amounts normally required under leases of that type) under
leases of real property to which the Company or any of the Subsidiaries is a
party;
7.5.4. zoning restrictions, easements,
rights-of-way, restrictions, exceptions, reservations, covenants and other
similar title exceptions or encumbrances affecting real property, provided the
same are not incurred in connection with the borrowing of money and do not in
the aggregate materially detract from the value of said properties or materially
interfere with their use in the ordinary course of business;
7.5.5. statutory or common law possessory
liens for charges incurred by the Company or the Subsidiaries in the ordinary
course of business, the payment of which is not yet due or is being contested in
good faith by appropriate steps promptly initiated and diligently conducted, if
adequate reserves or other appropriate provision, if any, as shall be required
by generally accepted accounting principles shall have been made therefor;
7.5.6. the mortgages, liens and encum-
brances disclosed on Schedule 4.13 hereto;
7.5.7. purchase money liens securing
Indebtedness permitted to be incurred under Section 7.1 hereof, including
conditional sale or related lease arrangements, created or executed concurrently
with or immediately following the time of acquisition of such property;
7.5.8. purchase money liens created by
any Subsidiary securing Purchase Money Indebtedness or the assumption by any
Subsidiary of existing purchase money liens
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in connection with the acquisition by such Subsidiary of any additional
Restaurant-Related Business acquired by any Subsidiary, provided, however, that
such liens extend only to the assets of the Restaurant-Related Business
acquired;
7.5.9. a lien arising from a judgment
which does not at the time constitute the basis for a default under the
provisions of Section 8.1.8 hereof; and
7.5.10. liens created in connection with
the issuance of (or to further secure) Bank Debt.
7.6. Loans, Advances, Investments. Except (i)
loans made to fund the purchase of the Company's shares pursuant to its stock
option plans, (ii) loans to the Company's employees other than as provided for
in (i), which loans shall not exceed $600,000 in the aggregate, and (iii) other
loans with the prior written consent of the Bank, which consent shall not be
unreasonably withheld or delayed:
7.6.1 make any loan, advance or capital
contribution or extend any credit to any Person (except to employees or to a
Subsidiary in the ordinary course of business, to the extent permitted in this
Agreement), or make any commitment to purchase or otherwise acquire any stock,
bond, debenture, note or other security or obligation of any Person if such
loan, advance, capital contribution, extension of credit or purchase or
acquisition (an "Investment") is to or in a Person engaged in other than a
Restaurant-Related Business and such Investment, together with all other
outstanding Investments and the cost of any mergers, consolidations or
acquisitions of corporations engaged in other than Restaurant-Related Businesses
pursuant to Section 7.9 hereof, exceeds the sum of $500,000; and
7.6.2 make any Investment in any
Restaurant-Related Businesses managed (but not owned by) the Company or a
Subsidiary if such Investment, together with all other such Investments made in
any twelve (12) month period, exceeds the sum of $1,000,000. For the purposes of
this subsection 7.6.2, a Restaurant-Related Business which is "owned" by the
Company shall include a Restaurant-Related Business in which an Investment is
permitted pursuant to Section 7.6.3.
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7.6.3 without the prior written consent
of the Bank, make any Investment in any Restaurant-Related Business, unless the
Company, directly or indirectly, shall own not less than 51% of both the equity
and voting interests in the Person owning and operating such Restaurant-Related
Business. The Bank hereby consents to the Company's owning a 50% membership
interest in Southfield Restaurant Company, L.L.C.; provided, however, that the
Investment of the Company in Southfield Restaurant Company, L.L.C., in the
aggregate, shall not exceed $8,000,000.
7.7. Guarantees. Assume, guarantee, endorse
or otherwise be or become directly or contingently responsible or liable for the
obligations of any Person (including, but not limited to, an agreement to
purchase any obligation, stock, assets, goods or services or to supply or
advance any funds, assets, goods, or services other than in the ordinary course
of business, or otherwise to assure the creditors of any Person against loss)
other than (i) guarantees by endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business, (ii)
guarantees by the Company of the obligations of any Subsidiary, or by any
Subsidiary of the obligations of the Company or any other Subsidiary, (iii)
guarantees in favor of the Bank, or (iv) other guarantees by the Company or a
Subsidiary not otherwise permitted hereunder, provided that the amount thereof
shall be deemed a capital expenditure, subject to the limitation set forth in
Section 7.8.
7.8. Capital Expenditures. Make, in the
aggregate (by the Company and any Subsidiary) in any fiscal year, any
expenditures for fixed or capital assets whether by purchase or capitalized
lease (including such loans, advances, investments, recourse purchase money
indebtedness and guarantees as are deemed capital expenditures under Sections
7.1.3, 7.1.4, 7.1.5 and 7.1.6 of this Agreement), in excess of an aggregate of
30% of Consolidated Net Worth at the end of the Company's last fiscal year.
7.9. Mergers, Consolidations, Acquisitions.
Except with the prior written consent of the Bank, which consent shall not be
unreasonably withheld or delayed, merge into or consolidate with or into any
corporation (and, for purposes of this Section 7.9, the acquisition by the
Company or any Subsidiary, by lease, purchase or otherwise, of all or
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substantially all of the assets of any corporation shall be deemed a merger of
such corporation with the Company or such Subsidiary), if such corporation is
not engaged in Restaurant- Related Businesses, except that the Company or any
Subsidiary may merge into, consolidate with or into or acquire any corporation
or corporations engaged in other than Restaurant- Related Businesses without the
prior consent of the Bank if the aggregate cost thereof or purchase price
therefor, together with the amount of any Investments in other than
Restaurant-Related Businesses, does not exceed $500,000.
7.10. Sales of Assets. Sell, lease, assign,
transfer or otherwise dispose of all or substantially all of its assets; except
any Subsidiary may sell, lease, assign or otherwise dispose of substantially all
of its assets.
7.11. Dividends, Redemptions. Declare or pay
any dividend, purchase, redeem or otherwise acquire for value any of its capital
stock now or hereafter outstanding or return any capital or make any
distribution of assets to stockholders, except that Subsidiaries may declare and
pay dividends, return capital and make distributions of assets to the Company
and the Company may (i) declare and pay cash dividends in any fiscal year, and
redeem shares of its capital stock in an aggregate amount not exceeding 20% of
Consolidated Operating Cash Flow for such fiscal year, and (ii) declare and pay
stock dividends.
7.12. Transactions with Affiliates. Enter
into any transaction, including, without limitation, the lease, purchase, sale
or exchange of property or the making of any loans or the entering into
agreements for any payments with respect to, or the making of any payment of,
any fees, charges or other expenses resulting from any allocation of general
overhead, management fees or other similar services, with any Affiliate of the
Company or any of the Subsidiaries except in the ordinary course of and pursuant
to the reasonable requirements of the business of the Company or such Subsidiary
and upon fair and reasonable terms no less favorable to the Company or such
Subsidiary than would obtain in a comparable arm's-length transaction with a
Person other than an Affiliate.
7.13. Sale of Subsidiary's Shares or Assets.
Sell any of the capital stock of any Subsidiary, or all, or
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substantially all, of the assets of any Subsidiary, unless the net proceeds of
any such sale are used for working capital purposes of the Company or a
Subsidiary.
8. DEFAULTS AND REMEDIES.
8.1. Events of Default. In the case of the
occurrence of any of the following events for any reason whatsoever, and whether
such occurrence shall be voluntary or involuntary or come about or be effected
by operation of law or pursuant to or in compliance with any judgment, decree or
order of any court or any order, rule or regulation of any governmental body or
otherwise (each herein sometimes called an "Event of Default"):
8.1.1. the Company shall fail to make any
payment of principal of or interest on the Note, or any commitment fee, Facility
Fee or Deficiency Fee within three (3) days after notice of a default in such
payment;
8.1.2. the Company or any Guarantor shall
default in the performance or observance of any covenant or
agreement contained in Section 7 hereof;
8.1.3. the Company or any Guarantor shall
default in the performance of any other covenant or agreement contained in this
Agreement which shall remain unremedied for a period of ten (10) days after
notice of the occurrence thereof;
8.1.4. an event of default or default
shall occur and be continuing under any other Loan Document;
8.1.5. any representation or warranty
made by or on behalf of the Company or any Guarantor in this Agreement, the
Note, in any other Loan Document or in any other certificate, agreement,
instrument or statement delivered to the Bank by or on behalf of the Company
shall at any time prove to have been incorrect when made in any material
respect;
8.1.6. the Company or any Guarantor shall
default in the payment of principal of or interest on any Indebtedness for
borrowed money or the deferred purchase price of property (including any such
Indebtedness in the nature of
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a lease) or shall default in the performance or observance of the terms of any
instrument pursuant to which such Indebtedness was created or is secured, the
effect of which default is to cause or permit any holder of any such
Indebtedness to cause the same to become due prior to its stated maturity (and
whether or not such default is waived by the holder thereof);
8.1.7. Xxxxxxx Xxxxxxxxx shall not at all
times be active in the management of the Company, other than
by reason of his death or disability;
8.1.8. any judgment against the Company
or any Guarantor or any attachment, levy or execution against any of its
properties for an amount in excess of $100,000 shall remain unpaid, or shall not
be released, discharged, dismissed, stayed or fully bonded for a period of
thirty (30) days or more after its entry, issue or levy, as the case may be;
8.1.9. the Company or any Guarantor shall
become insolvent (however evidenced) or be unable, or admit in writing its
inability, to pay its debts as they mature; or
8.1.10. the Company or any Guarantor
shall make an assignment for the benefit of creditors, or a trustee, receiver or
liquidator shall be appointed for the Company or any Guarantor, or for any of
its property, or any proceedings by or against the Company or any Guarantor
under any bankruptcy, reorganization, arrangement of debt, insolvency,
readjustment of debt, receivership, liquidation or dissolution law or statute
shall be commenced and which, if not consented to by the Company or such
Guarantor, shall continue undischarged for a period of thirty (30) days;
8.1.11 If the Company shall suspend or
have suspended (voluntarily or involuntarily and for whatever reason) the
operation of a material portion of the business conducted by the Company and the
Guarantors; or
8.1.12 If (i) a reportable event (within
the meaning of Section 4043(b) of ERISA) (whether or not waived) shall have
occurred with respect to a Plan which could, in the opinion of the Bank, have a
material adverse effect on the financial condition of the Company or of any
Guarantor, (ii) the filing by the Company, any Guarantor or an
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administrator of any Plan of a notice of intent to terminate such Plan in a
"distress termination" under the provisions of Section 4041 of ERISA, (iii) the
receipt of notice by the Company, any Guarantor or an administrator of a Plan
that the PBGC has instituted proceedings to terminate (or appoint a trustee to
administer) such a Plan, (iv) any other event or condition exists which might,
in the opinion of the Bank, constitute grounds under the provisions of Section
4042 of ERISA for the termination of (or the appointment of a trustee to
administer) any Plan by the PBGC, (v) a Plan shall fail to maintain the
minimum funding standard required by Section 412 of the Internal Revenue Code
for any plan year or a waiver of such standard is sought or granted under the
provisions of Section 412(d) of the Internal Revenue Code which could, in the
opinion of the Bank, have material adverse effect on the financial condition of
the Company or of any Guarantor, (vi) the Company or any Guarantor has incurred,
or is likely to incur, a liability under the provisions of Sections 4062, 4063,
4064 or 4201 of ERISA which could, in the opinion of the Bank, have a material
adverse effect on the financial condition of the Company or any Guarantor; and
in each case in clauses (i) through (vi) of this Section 8.1.12, such event or
condition, together with all other such events or conditions, if any, could
subject the Company or any Guarantor to any tax, penalty or other liabilities
in the aggregate material in relation to the business, operations, property or
financial or other condition of the Company or any Guarantor.
then, if any event described in Section 8.1.10 above shall have occurred the
Note shall immediately become due and payable, and if any event described in any
other subsection of this Section 8.1 shall have occurred, and at any time
thereafter, if any such event shall then be continuing, the Bank may take either
or both of the following actions by notice to the Company: (i) declare the
principal of and accrued interest on the Note and any other notes or evidences
of Indebtedness of the Company or any Guarantor then held by the Bank, to be due
and payable, both as to principal and interest, without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived,
anything contained herein or in the Note or in such other note or evidence of
Indebtedness to the contrary notwithstanding; and (ii) declare the Commitment
terminated immediately. Upon termination of the Commitment under this Section
8.1, any
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accrued Facility Fees shall be and become forthwith due and payable to the Bank
without further notice.
8.2. Suits for Enforcement. In case any one
or more of such Events of Default shall occur and be continuing, the Bank, or
any other holder of the Note may proceed, to the extent permitted by law, to
protect and enforce such holder's rights either by suit in equity or by action
at law, or both, whether for the specific performance of any covenant, condition
or agreement contained in this Agreement or the Note or in aid of the exercise
of any power granted in this Agreement or the Note or proceed to enforce the
payment of the Note or to enforce any other legal or equitable right of the
holder of the Note.
8.3. Remedies Cumulative. No right or remedy
herein or in any other agreement or instrument conferred upon the Bank or the
holder of the Note is intended to be exclusive of any other right or remedy, and
each and every such right or remedy shall be cumulative and shall be in addition
to every other right and remedy given hereunder or now or hereafter existing at
law or in equity or by statute or otherwise. Without limiting the generality of
the foregoing, if the Note or any of the other obligations of the Company to the
Bank shall not be paid when due, whether at the stated maturity thereof, by
acceleration or otherwise, the Bank shall not be required to resort to any
particular security, right or remedy or to proceed in any particular order of
priority and the Bank shall have the right at any time and from time to time, in
any manner and in any order, to enforce its security interests, liens, rights
and remedies, or any of them, as it deems appropriate in the circumstances
including, without limitation, all of the rights and remedies of a secured party
under the Uniform Commercial Code of the State of New York and under the Uniform
Commercial Code of any other jurisdiction in which any of the Company's
Collateral or the Guarantors' Collateral may be situated and apply the proceeds
of its collateral to such obligations of the Company and the Guarantors as it
determines in its sole discretion.
9. MISCELLANEOUS.
9.1. No Waiver. No failure on the part of the
Bank to exercise, and no delay in exercising, any right hereunder or under any
of the Loan Documents shall operate as a
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waiver thereof; nor shall any single or partial exercise by the Bank of any
right hereunder or thereunder preclude any other or further exercise thereof or
the exercise of any other right. The rights and remedies of the Bank hereunder
and under the Loan Documents and under any other present and future agreements
between the Bank and the Company or any Guarantor are cumulative and not
exclusive of any rights or remedies provided by law, or under any of said Loan
Documents or agreements, and all such rights and remedies may be exercised
successively or concurrently.
9.2. Costs and Expenses. The Company shall
reimburse the Bank for all costs and expenses incurred by it, and shall pay the
reasonable fees and disbursements of counsel to the Bank, in connection with the
preparation of this Agreement, the Note and all other Loan Documents. The
Company shall also pay the costs and expenses incurred by the Bank, including
reasonable attorneys' fees, in connection with the enforcement of the Bank's
rights hereunder and under the Note and the other Loan Documents. The Company
shall also pay any and all taxes (other than taxes on or measured by net income
of the holder of the Note) incurred or payable in connection with the execution
and delivery of the Note.
9.3. Amendments. No amendment, modification
or waiver of any provision of this Agreement, the Note nor consent to any
departure by the Company therefrom shall be effective unless the same shall be
in writing and signed by the Bank and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
9.4. Survival of Representations. All repre-
sentations and warranties made herein or in any other writing furnished to the
Bank shall survive the delivery of the Note.
9.5. Construction. This Agreement and the
Note shall be deemed to be contracts made under the laws of the State of New
York and shall be construed in accordance with the laws of said State applicable
to contracts made and to be performed entirely within such State.
9.6. Notices. All notices, approvals, consents, requests,
demands or other communications (collectively, "Communications") to or upon the
respective
-45-
parties hereto shall be made in writing in one of the following ways and shall
be deemed to have been given, received and dated: If by hand, immediately upon
delivery; if by facsimile transmission, telex or telegram, immediately upon
receipt of answerback or confirmation; if by express mail or any other overnight
delivery service, one (1) day after dispatch; and if by certified mail, return
receipt requested, four (4) days after mailing. All Communications are to be
given to the following addresses (or to such other address as any party may
designate by Communication in accordance with this Section):
If to the Bank: Bank Leumi Trust Company of
New York
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xx. Xxxxxxx Xxxxxxxxxx
Vice President
with a copy to: Xxxxxxx Xxxxxxxx Xxxxx
Xxxxxxxxxxx & Kuh LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxx, Esq.
If to the Company
or a Guarantor: Ark Restaurants, Inc.
000 Xxxx 00 Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxxxxxx, President
with a copy to: Shack & Xxxxxx, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxxx, Esq.
9.7. Successors and Assigns. This Agreement
shall be binding upon the Company and its successors and assigns and the terms
hereof shall inure to the benefit of the Bank and its successor and assigns,
including a subsequent holder of the Note.
9.8. Further Assurances. The Company agrees
to execute and deliver such further documents and to do such
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other acts and things as the Bank may reasonably request in order further to
effect the purposes of this Agreement and the due performance by the Company of
its obligations hereunder.
9.9. Severability. The provisions of this
Agreement are severable, and if any provision shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall not in any manner affect such provision in any other
jurisdiction or any other provision of this Agreement in any jurisdiction.
9.10. JURISDICTION; WAIVER OF JURY TRIAL. THE
COMPANY HEREBY IRREVOCABLY CONSENTS TO THE JURISDICTION OF ANY NEW YORK STATE OR
FEDERAL COURT LOCATED IN NEW YORK CITY OVER ANY ACTION OR PROCEEDING ARISING OUT
OF ANY DISPUTE BETWEEN THE COMPANY AND THE BANK WITH RESPECT TO THE SUBJECT
MATTER HEREOF AND THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF A COPY OF SUCH
PROCESS TO THE COMPANY AT THE ADDRESS SET FORTH ABOVE. IN THE EVENT OF
LITIGATION BETWEEN THE COMPANY AND THE BANK OVER ANY MATTER CONNECTED WITH THIS
AGREEMENT OR RESULTING FROM TRANSACTIONS HEREUNDER, THE RIGHT TO A TRIAL BY JURY
IS HEREBY WAIVED BY THE COMPANY AND THE BANK.
9.11. Bank's Right of Set-Off. Upon the
occurrence of an Event of Default or of any condition, event or act which, with
notice or lapse of time, or both, would constitute such an Event of Default, the
Bank is hereby authorized at any time or from time to time, without notice to
the Company, any Guarantor or any other Person, any such notice being hereby
expressly waived, to set off and to appropriate and apply any and all deposits
(generally or special) and any other Indebtedness or property at any time held
or owing by the Bank to or for the credit or the account of the Company or any
Guarantor, whether or not related to this Agreement or any transaction or
occurrence hereunder, against and on account of any and all obligations and
liabilities of the Company or any Guarantor to the Bank, including (without
limitation) all claims of any nature or description arising out of or connected
with this Agreement and/or the Note held by the Bank, irrespective of whether or
not the Bank shall have made any demand hereunder and although such obligations,
liabilities or claims, or any of them, shall
-47-
be contingent or unmatured. In addition, as security for any and all
Indebtedness and other liabilities of the Company or any Guarantor to the Bank,
whether direct or contingent, now existing or hereafter arising, the Bank is
hereby granted a lien and security interest in all property of the Company or
any Guarantor held by the Bank, including, without limitation, all property of
every description, now or hereafter in the possession or custody of or in
transit to the Bank for any purpose, including safekeeping, collection or
pledge, for the account of the Company or any Guarantor, or as to which the
Company or any Guarantor may have any right or power. The rights and/or remedies
granted to the Bank under this Section 9.11 shall be in addition to, and not in
substitution for, any rights of set-off and banker's lien, to which the Bank may
otherwise be entitled.
9.12. Use of Accounting Terms. Except as
otherwise provided herein, accounting terms used herein shall be construed,
calculations hereunder shall be made and financial data required hereunder shall
be prepared, both as to classification of items and as to amounts, in accordance
with generally accepted accounting principles.
9.13. Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall constitute an
original, and all of which taken together shall constitute one and the same
agreement.
9.14. Headings. Section headings are for
convenience only and shall not affect the interpretation or
construction of this Agreement or the Note.
IN WITNESS WHEREOF, the Company and the Bank have duly
executed this Agreement as of the date first above written.
ARK RESTAURANTS CORP.
By:__________________________
Xxxxxx Xxxxx,
Vice President
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BANK LEUMI USA
By:___________________________
Xxxx Xxxxxxxxx,
Vice President
By:___________________________
Xxxxxxx X. Xxxxxxxxxx,
Vice President
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