AMENDED AND RESTATED
LOAN AGREEMENT
By and between
TUMBLEWEED, INC.
(Borrower)
and
NATIONAL CITY BANK OF KENTUCKY
(Lender)
dated as of April 21, 1999
AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT (the "Agreement"), made and
entered into as of April 21, 1999, by and between TUMBLEWEED, INC. (successor by
merger to Tumbleweed, LLC, a Kentucky limited liability company), a Delaware
corporation with its principal office and place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Borrower"), and NATIONAL CITY BANK OF
KENTUCKY, a national banking association with its principal office and place of
business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Lender").
W I T N E S S E T H:
Borrower and Lender recite and agree as follows, which recitations and
agreements constitute a part of this Agreement:
A. Borrower engages in the business of owning, operating, developing
and franchising full service restaurants and food court restaurants, same
currently being located in Kentucky, Indiana, Ohio, Illinois and Wisconsin.
B. Lender has previously made available to Borrower a $5,000,000
revolving line of credit to provide real estate financing for five (5) of
Borrower's full service restaurants and its commissary (the "Commissary") and to
provide funds to be used by Borrower for the acquisition and development of
additional restaurant facilities, in accordance with a loan agreement between
the parties dated as of August 8, 1996 (the "Prior Loan Agreement").
C. Borrower has requested that said revolving line of credit facility
be increased from $5,000,000 to $6,500,000 and Lender has consented to said
increase, as described in Lender's letter to Borrower dated February 16, 1999.
D. The parties are entering into this Agreement in order to amend and
restate the Prior Loan Agreement in its entirety and to describe with
particularity the terms and provisions upon which the revolving credit facility
in said increased principal amount will be made available by Lender to Borrower.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Borrower and Lender agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms shall
have the following meanings, unless the context otherwise requires.
"Advance" shall mean a disbursement by Lender of any sum to
Borrower hereunder pursuant to a Funding Application.
"Assignments" shall mean the first assignments of leases and
rents between Borrower and Lender relative to real estate and the improvements
thereon owned by Borrower located in Jefferson County, Kentucky, in ▇▇▇▇▇
County, Kentucky, in ▇▇▇▇▇▇ County, Kentucky and in ▇▇▇▇▇▇▇▇ County, Ohio.
"Borrower" shall have the meaning ascribed to such term in the
preamble of this Agreement.
"Business Day" shall mean a day on which Lender is open for
business.
"Cash Flow Available for Debt Service" shall mean earnings
before payment of interest and taxes plus depreciation and amortization.
"Collateral" shall mean the property and rights of the
Borrower more particularly described in Section 3.1 of this Agreement.
"Commitment Letter" shall mean the commitment letter dated
June 13, 1996 from Lender to Borrower outlining the basic terms of the Credit
Facility, as amended by Lender's letter to Borrower, dated February 16, 1999.
"Compliance Certificate" shall mean the form attached to this
Agreement as Exhibit A and incorporated herein by reference.
"Credit Facility" shall mean the aggregate principal amount
available from Lender to Borrower from time to time under this Agreement.
"Events of Default" shall mean any of the events specified in
Section 7.1 of this Agreement.
"Funding Application" shall mean Borrower's request for an
Advance.
"GAAP" shall mean generally accepted accounting principles
consistently applied as in effect at the time of application of the provisions
hereof so as to properly reflect the financial condition, and the results of
operations and changes in financial position, of Borrower; provided, that if in
this Agreement principles of accounting different from those required by
generally accepted accounting principles are specified, the principles of
accounting specified in this Agreement shall govern.
"Lender" shall have the meaning ascribed to such term in the
preamble of this Agreement.
"Loan" shall mean at any time the aggregate outstanding
principal amount of all Advances made hereunder evidenced by the Note and unpaid
interest accrued thereon.
"Loan Documents" shall mean this Agreement, the Note, the
Assignments, the Mortgages and any and all other instruments now or hereafter
executed and delivered by Borrower in connection with the Credit Facility, as
any of such may be amended or supplemented from time to time.
"Loan Year" shall mean the following: the first Loan Year
shall expire on December 31, 1999; the second Loan Year shall expire on December
31, 2000; the third Loan Year shall expire on December 31, 2001; and in the
event the Termination Date (hereinafter defined) is extended beyond December 31,
2001, each subsequent Loan Year shall expire on December 31 thereafter.
"Material Adverse Effect" shall mean any material adverse
influence on or change relative to (i) the validity or enforceability of this
Agreement, the Note or any other Loan Document (ii) the business, operations and
assets of Borrower, (iii) the Collateral, or (iv) the Borrower's ability to
fulfill its obligations under this Agreement, the Note or the other Loan
Documents.
"Mortgage" shall mean the first mortgages from Borrower to
Lender relative to real estate and the improvements thereon owned by Borrower
located in Jefferson County, Kentucky, in ▇▇▇▇▇ County, Kentucky, in ▇▇▇▇▇▇
County, Kentucky and in ▇▇▇▇▇▇▇▇ County, Ohio.
"Note" shall mean the substitution and renewal revolving line
of credit note of even date herewith delivered by Borrower to Lender pursuant to
this Agreement, and all renewals, modifications and extensions of same.
"Restaurants" shall include, collectively, when and as
applicable, full service restaurants, Borrower's Commissary and its food court
restaurants.
"Termination Date" shall mean December 31, 2001, as such date
may be extended from time to time by mutual agreement of Borrower and Lender.
1.2 Other Definitional Provisions. Defined terms used herein in the
singular shall import the plural and vice versa and the gender used shall
include the other genders where appropriate.
ARTICLE II
TERMS OF THE CREDIT
2.1 Commitment. Lender agrees to make Advances to Borrower on
a revolving credit basis from time to time on any Business Day from the date of
this Agreement through the Termination Date in an outstanding amount not to
exceed at any one time the Credit Facility. The Credit Facility shall be SIX
MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($6,500,000). Provided, that
upon the expiration of the first Loan Year the Credit Facility will be reduced
by $380,000, and the Credit Facility will be reduced by an additional
$540,000 upon the expiration of each Loan Year thereafter. Within the foregoing
limits, Borrower may borrow, repay and reborrow. And provided further, that
Lender shall not be obligated to make an Advance if an Event of Default shall
have occurred and is then existing hereunder or under any other Loan Document,
nor shall Lender be obligated to make an Advance which, when added to the
principal amount advanced and outstanding on the Note, would exceed the
principal amount available under the Credit Facility.
2.2 Purpose of the Credit Facility. Proceeds of the Credit Facility and
Advances made to Borrower by Lender under the Note shall be used by Borrower to
provide financing for seven (7) of Borrower's Restaurants and its Commissary and
to provide capital for acquisition and development of additional Restaurants.
2.3 Note. To evidence the Loan and the Credit Facility Borrower shall
execute and deliver the Note to Lender in the principal amount of the Credit
Facility and dated as of the date hereof. The Note shall be payable and bear
interest as set forth therein.
2.4 Legal Fees. Borrower agrees to pay all reasonable legal fees and
expenses of Lender incurred in connection with the closing of the Loan and any
modification, extension or renewal of same. Said fees and expenses shall be due
and payable upon Borrower's receipt of a statement from Lender's counsel.
2.5 Set-Off. Borrower hereby authorizes Lender to set off the
liability of Borrower on the Note and the Loan, without notice, against all
deposits and credits of Borrower with Lender (other than balances in trust
accounts, escrow accounts, and other accounts not beneficially owned by
Borrower).
ARTICLE III
COLLATERAL
3.1 Collateral. To secure payment of the Note and all obligations of
Borrower to Lender under this Agreement and the other Loan Documents, Borrower
shall execute and deliver the Mortgages and the Assignments to Lender relative
to Borrower's Commissary located at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ in Jefferson County,
Kentucky and Borrower's Restaurants located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇ Avenue, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇'▇ ▇▇▇▇ in Jefferson
County, Kentucky, relative to Borrower's Restaurant at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ in
▇▇▇▇▇ County, Kentucky, relative to Borrower's Restaurant at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ in ▇▇▇▇▇▇ County, Kentucky and relative to Borrower's Restaurant at ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ in ▇▇▇▇▇▇▇▇ County, Ohio.
3.2 Surveys. Borrower has provided and will provide Lender with
current engineers' surveys for the Collateral, certified to the Lender and
Lender's title insurer, showing all boundaries, easements, improvements and any
special details associated with the Collateral. The surveys should be sufficient
to eliminate any survey exceptions from the Lender's mortgagee title insurance
policy.
3.3 Title and Title Insurance. Fee simple title to the Collateral
shall be vested in the
Borrower. The Lender will be provided with mortgagee title insurance in the
principal amount of the Loan. The terms and conditions of the policy and the
title insurer must be acceptable to Lender and its counsel.
3.4 Appraisals. Lender must be provided with appraisals of the
Collateral by an appraiser acceptable to Lender. The amount, form and content of
the appraisals shall be acceptable to Lender, shall be addressed to Lender and
shall meet all of FIRREA's requirements.
3.5 Environmental Assessments. Lender must be provided with
environmental site assessments of the Collateral. The conclusions, content and
form of the site assessments, as well as the engineering firm or firms
performing the assessments, must be satisfactory to the Lender in its sole
discretion.
3.6 Insurance. Lender shall be provided with evidence that Borrower
has adequate insurance for all of the Restaurants, as required by subsection (f)
of Section 5.1 of this Agreement.
3.7 Other Compliance. Borrower shall provide such other information,
documents and data and perform all other acts reasonably deemed necessary by
Lender to close the Loan.
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Conditions Precedent to Additional Advance. Lender shall not be
obligated to make the additional Advance hereunder, unless Lender has received,
in addition to those items described in Article III, the following documents and
writings in form and substance acceptable to Lender and its counsel:
(a) Resolutions. Certified resolutions of Borrower's Board of
Directors evidencing authorization and approval of the execution and delivery of
this Agreement and the other Loan Documents.
(b) Organizational Documents. Certified copies of the articles of
incorporation and bylaws of Borrower, with all amendments thereto, and a
certificate of existence issued by the Delaware Secretary of State, and a
certificate of authority and certified copies of articles of merger provided by
the Kentucky Secretary of State
(c) Legal Opinion. An opinion from counsel for Borrower acceptable in
form and content to Lender and its counsel.
(d) Report of Tax Lien Searches. A report of federal and state tax
lien searches made in the appropriate public offices in the name of Borrower.
(e) Certifications as to Representation and Warranties. Borrower
certifies that the representations and warranties of Borrower contained herein
are true and correct as of the date of
this Agreement and the date of the initial Advance to be made hereunder.
Borrower agrees that a request by Borrower for each additional Advance shall
constitute reaffirmation by Borrower that (i) such representations and
warranties are true and correct as of the date each such Advance is to be made,
(ii) that no default exists relative to the Loan Documents or relative to any
other credit facility of Borrower, and (iii) that no material actions, suits,
legal, equitable, arbitration or administrative proceedings are pending or, to
the best of Borrowers knowledge after due inquiry, threatened against Borrower,
the adverse determination of which could have a Material Adverse Effect on the
Loan Documents, the business operation or financial condition of Borrower or the
ability of Borrower to fulfill its obligations under the Loan Documents.
(f) Loan Documents And Other Conditions. All Loan Documents shall be
duly executed and delivered to Lender; and such other documents as Lender and
its counsel may reasonably require shall be duly executed and delivered to
Lender; evidence shall be produced as is satisfactory to Lender and its counsel
as to the occurrence of any further conditions precedent to the closing of the
Loan.
(g) Release and Satisfaction of Existing Liens and Debts. All debts
secured by liens upon and security interests in the Collateral shall be paid and
provision made for the release of all such liens and security interests, all of
which shall be at Borrower's sole expense.
4.4 Conditions Precedent to Subsequent Advances. Lender shall not be
obligated to make any Advance hereunder if, at the time such Advance is
requested, an Event of Default shall have occurred or if such Advance would
exceed the amount of the Credit Facility than available.
ARTICLE V
COVENANTS
5.1 Affirmative Covenants. Until payment in full of the entire
principal balance of and all accrued interest on the Loan and the Note and all
other obligations relative thereto, Borrower agrees that Borrower will observe
and comply with all of the following covenants and agreements:
(a) Payments of Indebtedness. Borrower shall make full and timely
payment of the principal of and accrued interest on the Loan and the Note and on
all other indebtedness of Borrower to Lender in accordance with their respective
terms.
(b) Examination of Lender. Borrower shall, at all reasonable times,
permit Lender to examine any or all of the Borrower's books and financial
records. to make excerpts therefrom and transcripts thereof, to discuss the
affairs, finances and accounts of Borrower, with its officers and to conduct any
audit or similar examination (.including, without limitation, a collateral
audit) deemed reasonably necessary or appropriate by Lender at Borrower's cost
and expense.
(c) Financial Statements and Reports of Borrower. Borrower shall
furnish or shall cause the following to be furnished to Lender.
(i) Quarterly Financial Statements. Within forty-five (45 days
after the end of each
fiscal quarter, an internally generated income statement for Borrower
for the period from the beginning of Borrower's applicable fiscal
year to the end of such fiscal quarter and a balance sheet as of the
end of each such fiscal quarter, all prepared in accordance with GAAP
and certified by the chief financial officer of Borrower as being
true and accurate.
(ii) Annual Audited Financial Statements. Within one hundred twenty
(120) days after the end of each fiscal year of Borrower, an audited
income statement of Borrower for such fiscal year and an audited
balance sheet as of the end of such fiscal year, all in reasonable
detail and accompanied by a report and opinion of independent
certified public accountants reasonably satisfactory to Lender, which
report and opinion shall be prepared in accordance with GAAP relative
to reporting.
(d) Books and Records. Borrower shall at all times maintain its books
and records at its principal office at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
(e) Closing of Restaurants. Borrower shall notify Lender of the
closing of any Restaurants on which Lender holds a mortgage within ten (10) days
of same.
(f) Insurance. Borrower shall obtain and maintain in full force and
effect insurance and liability insurance for all its Restaurants, including
without limitation those Restaurants as comprise part of the Collateral, in such
amounts and with such companies as are reasonably satisfactory to Lender. Lender
shall be scheduled mortgagee and certificate holder as regards all fire and
extended coverage insurance relative to the Collateral, and shall be scheduled
as additional insured and certificate holder as to liability insurance relative
to the Collateral. If and only as applicable, Borrower shall maintain flood
insurance, as more particularly described in the Mortgages.
All such policies shall provide that Lender be given not less than
ten (10) days prior written notice before cancellation of any such insurance
becomes effective. Certified copies of all such policies or current certificates
of insurance shall be delivered to Lender when and as required by Lender.
(g) Compliance with Laws. Borrower shall comply with all applicable
governmental statutes, regulations and rules governing the conduct of Borrower's
business and ownership of property.
(h) Taxes and Assessments. Borrower shall pay all taxes, assessments
and governmental charges and levies imposed upon Borrower, Borrower's income or
any property before same become delinquent; provided, however, that no such tax,
assessment, charge or levy need be paid so long as the validity thereof shall be
contested in good faith by appropriate proceedings for which a bond or other
security reasonably satisfactory to Lender shall have been posted, and provided
that Borrower shall have set aside on Borrower's books adequate reserves
therefor.
(i) Existence. Borrower shall preserve and maintain Borrower's
existence as a Delaware
corporation and its qualification to do business in good standing in every
jurisdiction in which the nature of the business conducted by Borrower or the
properties owned by Borrower require such qualification.
(j) Events of Default and Notice. Borrower shall, promptly upon
obtaining knowledge of the occurrence or existence of any Event of Default, or
of the occurrence or existence of a condition or event which, with notice or the
lapse of time, or both, would constitute an Event of Default, deliver to Lender
a certificate specifying the nature thereof, the period of existence thereof,
and what action Borrower has taken or proposes to take with respect thereto.
(k) Payment of Indebtedness; Compliance with Agreements. Borrower
shall pay and discharge all of Borrower's debts and obligations in a timely
manner in accordance with their respective terms, and shall at all times comply
with each and every term and provision of the documents evidencing and securing
such debts and obligations, and with each and every lease, contract, agreement
or obligation Borrower may have or be a party to with any person or as to which
any of its properties may be subject.
(1) Management. Borrower shall notify Lender of any substantial
changes in the management of Borrower.
(m) ERISA. With respect to any Plan ("Plan" shall mean an employee
pension benefit plan or pension covered by ERISA, hereafter defined, which is
guaranteed by the Pension Benefit Guaranty Corporation or any successor thereto)
maintained or adopted by Borrower, Borrower shall (i) at all times make prompt
payments of contributions required to be made to meet the minimum funding
standards of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"); (ii) promptly, after the filing thereof, furnish to Lender copies of
all reports of prohibited transactions and accumulated funding deficiencies
required to be made pursuant to the provisions of ERISA; and (iii) notify the
Lender promptly of the occurrence of any reportable event within the meaning of
EISA.
(n) Other Acts. Borrower agrees, upon the request of Lender, to duly
execute and deliver, or cause to be duly executed and delivered, such further
instruments, and do or cause to be done such further acts, as may be necessary
or proper in the reasonable opinion of Lender to carry out more effectively the
provisions of this Agreement and the other Loan Documents.
(o) Additional Notification. Borrower will notify Lender of
significant events as to Borrower, its assets and its business, including
without limitation any event causing material loss or depreciation in value of
Borrower's properties or assets by reason of casualty or any other cause.
Further, Borrower will notify Lender of any change in its structure, the name
under which Borrower conducts its business or any material portion thereof, or
any change in the ownership of any material portion of Borrower's business,
properties or assets.
5.2 Financial Covenants. Until payment in full of the entire
principal balance of and all accrued interest on the Loan and the Note and all
other obligations relative thereto, Borrower agrees that Borrower will observe
and comply with all of the following financial covenants and agreements.
(a) Tangible Net Worth. Borrower agrees to maintain a minimum
tangible net worth (defined in accordance with GAAP) of $10,500,000 during the
first Loan Year and thereafter.
(b) Debt Coverage Ratio. Borrower has maintained and will maintain a
ratio of (i) Cash Flow Available for Debt Service to (ii) the current portion of
long-term debt and interest of at least 2.00 to 1.00 for the first Loan Year and
for each Loan Year thereafter. Same shall be evaluated by Lender as of June 30,
September 30, December 31 and March 31, in respect of the four (4) immediately
preceding fiscal quarters ending as of the last day of the most recently ended
fiscal quarter.
(c) Leverage. Borrower agrees to maintain a ratio of its total
liabilities to tangible net worth of not more than 1.50 to 1.00.
(d) Compliance Certificate. Borrower will complete and deliver to
Lender, not later than forty-five (45) days after each fiscal quarter, a
Compliance Certificate in the form of that attached hereto as Exhibit A or in
-such other form as Lender may prescribe from time to time.
5.3 Negative Covenants Borrower .shall at all times comply with the
covenants contained in this Section 5.3, from the date here of and for so long
as the Credit Facility shall remain available to Borrower.
(a) No Merger. Without Lender's prior written consent, which will not
be unreasonably withheld, Borrower shall not merge or consolidate with or into
any partnership, corporation, or other entity.
(b) Fiscal Year, Method of Accounting. Borrower shall not change its
fiscal year or method of accounting without thirty (30) days prior written
notice to Lender.
(c) Liquidations and Dispositions of Substantial Assets. Without
Lender's prior written consent, which, will not be reasonably withheld, Borrower
shall not dissolve or liquidate or sell, transfer, lease or otherwise dispose of
any material portion of its property or assets or business.
(d) Contracts. Borrower will not enter into any contract or agreement
which would materially and adversely affect its business, property, ability to
perform its obligations under the Note and this Agreement, or the Collateral.
(e) Transactions with Respect to Collateral. Borrower will not enter
into any transaction which materially and adversely affects the Collateral or
Borrower's ability to repay the Loan.
(f) Dividends. Borrower will not declare or pay dividends or bonuses
or make any distributions of Borrower's property or assets to any of its
shareholders.
(g) Change in Ownership. Borrower will not make a material change in
the ownership of Borrower or the management of Borrower's business.
ARTICLE VI
REPRESENTATION AND WARRANTIES
6.1 Existence. Borrower is a corporation duly organized and validly
existing under the laws of Delaware, and is qualified to transact business as a
nonresident in every jurisdiction in which such qualification is required.
6.2 No Restrictions on Performance. Neither the execution or delivery
of this Agreement or any other Loan Document, the consummation of the
transactions contemplated hereby, nor the compliance with the terms and
conditions of this Agreement and the other Loan Documents:
(a) requires the consent or approval of, or registration with, any
federal, state, municipal or other governmental commission, board, agency,
bureau, authority, official or regulatory body;
(b) violates any provision of law, any order of any court or any
order, rule or regulation of any agency of government;
(c) conflicts with or results in a breach of any of the terms,
conditions or provisions of any restrictions or of any agreement or instrument
to which the Borrower is a party or by which Borrower or any of Borrower's
properties may be bound or affected; or
(d) results in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any of the Collateral.1 except liens
and security interests in favor of Lender.
6.3 Proper Execution. The officer executing and delivering this
Agreement and the other Loan Documents on behalf of Borrower has been duly
authorized to do so, and this Agreement and the other Loan Documents are legally
binding upon Borrower in every respect in accordance with their respective
terms.
6.4 Legal Proceedings; Taxes. There are no actions, proceedings or
investigations pending, or to the knowledge of Borrower, threatened, before any
federal, state, municipal or other governmental department, commission, board,
agency, bureau, authority or official involving the likelihood of any material
judgment or liability against Borrower, or questioning or threatening Borrower's
right to carry on the business which Borrower presently conducts or proposes to
conduct, or which, if adversely determined, would cause a Material Adverse
Effect. All tax returns and reports of Borrower required by law to be filed have
been duly filed or will be filed in a timely manner, and all taxes, assessments,
withholdings, fees and other governmental charges upon Borrower, Borrower's
employees or upon any of Borrower's assets, income or franchises, which are due
and payable, have been paid or will be paid in a timely manner.
6.5 EISA. To the best of Borrower's knowledge, no fact or
circumstance, including but not limited to any reportable event within the
meaning of EISA, exists in connection with any Plan of the Borrower which might
constitute grounds for the termination of any such Plan by the
Pension Benefit Guaranty Corporation or for the appointment of a trustee to
administer any such Plan.
6.6 No Misrepresentations. This Agreement, the other Loan Documents,
the financial covenants referred to herein and the financial information
relative to Borrower heretofore submitted to Lender prior to the issuance of the
Commitment Letter do not contain any untrue statement of a material fact nor
omit to state a material fact necessary in order to make any statement made not
misleading.
6.7 Inducement to Lender. The foregoing representations and
warranties are an inducement to Lender's entering into this Agreement, and each
and every request for an Advance by Borrower shall constitute a reaffirmation
and reiteration of each and every representation and warranty of Borrower
contained in this Article VI.
ARTICLE VII
DEFAULTS AND REMEDIES
7.1 Events of Default. Each of the following shall constitute an
Event of Default hereunder:
(a) Payments. If Borrower fails to make any payment of principal
and/or interest on the Note, or payment of any fee, expense or other amount due
hereunder, under the Note or under any other Loan Document, and shall any such
payment of principal, interest, fee, expense or other sum remain unpaid for a
period of ten (10) days after any such payment is due.
(b) Covenants and Agreements. If Borrower shall fail or omit to
perform or observe any covenant, agreement, condition or other provision
contained or referred to in this Agreement or in any other Loan Document (other
than monetary default), and such failure or omission shall not have been fully
corrected to the reasonable satisfaction of Lender within thirty (30) days after
occurrence thereof.
(c) Accuracy of Statements. If any representation or warranty or
other statement of fact contained in this Agreement, in any other Loan Document
or in any writing, certification, report or statement at any time furnished to
Lender pursuant to or in connection with this Agreement or in connection with
obtaining the Credit Facility or otherwise, shall have been false or misleading
in any material respect or omitted to state a material fact as of the date such
representation, warranty or statement of fact was made.
(d) Judgments. If a final judgment for the payment of money in excess
of the sum of $500,000 in the aggregate shall be entered against Borrower, and
such judgment shall remain unsatisfied and in effect for a period of thirty (30)
consecutive days after the entry thereof, and shall not have been discharged or
execution thereof stayed pending appeal, or if so stayed within ten (I 0) days
after the expiration of any such stay if such judgment shall not have been
discharged.
(e) Borrower's Solvency. If Borrower shall: (i) make a general
assignment for the
benefit of creditors; (ii) apply for or consent to the appointment of, or if for
any other reason, a receiver, trustee or liquidator of all or a substantial part
of the assets of Borrower is appointed; (iii) be adjudicated a bankrupt or
insolvent; (iv) file a voluntary petition in bankruptcy or file a petition or
any answer seeking reorganization or an arrangement with creditors or seeking to
take advantage of any other law relating to relief of debtors, or admit (by
answer, default or otherwise) the material allegations of a petition filed
against Borrower in any bankruptcy, reorganization, insolvency or other
proceedings relating to relief for debtors; ( v) suffer or permit to continue
unstayed and in effect for thirty (30) consecutive days any judgment, decree or
order entered by a court or governmental agency of competent jurisdiction, which
assumes control of Borrower, approves a petition seeking reorganization of
Borrower or any other judicial modification of the rights of Borrower's
creditors, or appoints a receiver, trustee, custodian or liquidator for Borrower
of all or a substantial part of Borrower's assets; or (vi) fail to pay
Borrower's debts as and when the same mature.
(f) Termination or Suspension of Business. If Borrower shall
terminate or suspend the transaction of business.
(g) Material Adverse Change. If any material adverse change shall occur
in the condition of Borrower, financial or otherwise.
(h) Change in Ownership or Management. If any change in the control or
management of Borrower shall occur, the result of which could, in the reasonable
judgment of Lender, have a Material Adverse Effect.
(i) Loan Documents. If any provision of this Agreement, the Note or any
other Loan Document shall for any reason cease to be in full force and effect;
or be declared null and void or unenforceable in whole or in part; or the
validity or enforceability of any such document shall be challenged or denied.
(j) Default on Other Indebtedness. If Borrower shall default beyond any
applicable grace or curative period on any other credit facility available to
Borrower which exceeds $1 00,000, then same shall constitute a default by
Borrower under this Agreement.
7.2 Remedies Upon Default. Upon the occurrence of an Event of Default,
Lender may exercise any one or more of the following remedies:
(a) Acceleration. Demand payment in full of all principal of and
accrued interest on the Note and/or any and all of Borrower's other indebtedness
to Lender, whereupon all indebtedness of Borrower to Lender shall become
immediately due and payable in full without any presentment, demand or notice of
any kind, all of which are hereby expressly waived by the Borrower.
(b) Advances; Termination of Agreement. Refuse to make any further
Advances, and at Lender's sole discretion terminate this Agreement.
(c) Judgment. Reduce any claim to judgment.
(d) Offsets. If any state of facts or with the lapse of time or the
giving of notice, or both, would constitute an Event of Default, shall occur or
begin to exist, Lender shall have the right then, or at any time thereafter,
unless remedied to the reasonable satisfaction of Lender, to set off against,
and to appropriate and apply toward the payment of, first the Note and then any
other indebtedness then owed by Borrower to Lender, whether or not such
indebtedness shall have been matured or be due and payable and whether or not
Lender has declared the note evidencing such other indebtedness in default, any
and all deposit balances and other sums and indebtedness then held or owed by
Lender to or for the credit or account, of Borrower (other than balances in
trust accounts, escrow accounts, and other accounts not beneficially owned by
Borrower), all without notice to or demand upon Borrower or any other person,
all. such notices and demands being hereby expressly waived.
(e) Rights Under Note and This Agreement. Exercise all rights and
remedies granted Lender under any and all of the instruments now or hereafter
evidencing and securing the Credit Facility, including but not limited to the
Note and this Agreement.
(f) Foreclosure. Exercise all those rights and remedies allowed to
secured parties by all applicable laws, including without limitation foreclosure
of the liens of the Mortgages.
(g) Possession. Enter upon the premises of Borrower and take immediate
possession of the Collateral, with or without legal process either personally or
by means of a receiver appointed by a court of competent jurisdiction.
(h) Collection of Accounts. Collect and receive all accounts, rents,
income, revenue, earnings, issues and profits from the Collateral.
(i) Exercise of Rights. Exercise, as Lender shall deem appropriate, any
and all other rights afforded by any applicable laws or by this Agreement and
the other Loan Documents, at law, in equity, or otherwise, including, but not
limited to, the rights to bring suits or other proceedings before any tribunal
or competent jurisdiction, either for specific performance of any covenant or
condition contained in the Loan Documents or in aid of the exercise of any right
granted to Lender under this Agreement.
(j) Performance by Lender. Should Borrower fail to observe or perform
any covenant, duty or promise by it to be observed or performed under the terms
of this Agreement or the other Loan Documents, Lender may, but shall not be
obligated to, perform or attempt to perform, such covenant, duty or promise on
behalf of Borrower, and, in the event Lender shall do so, Borrower shall
immediately upon demand reimburse Lender for all expenses, disbursements, fees
and costs reasonably incurred by Lender in connection therewith, with interest
thereon at the rate specified in the Note. Lender does not assume and shall
never have, except by its express written consent, any liability or
responsibility for the performance of any covenant, duty or promise of Borrower
under this Agreement, the Mortgages or the Assignments.
7.3 Rights Cumulative. The rights and remedies of Lender hereunder, in
the Note, and in the other Loan Documents are cumulative, may be exercised in
such sequence or combination as Lender may elect, and are not exclusive of any
rights or remedies otherwise provided by law.
ARTICLE VIII
MISCELLANEOUS
8.1 Interpretation. No course of dealing in respect of, nor any
omission or delay in the exercise of, any right, power, or privilege by Lender
shall operate as a waiver thereof. Each right, power or privilege may be
exercised by Lender as often and in such order as Lender may deem expedient. No
waiver or consent granted by Lender in respect to this Agreement or any related
writing shall be binding upon Lender unless specifically granted in writing,
which right shall be strictly construed. Time shall be of the essence in the
performance of all Borrower's obligations under this Agreement and the other
Loan Documents. Borrower may not assign any of Borrower's rights under this
Agreement, and any such attempted assignment shall be wholly null and void.
8.2 Notices. All notices and other communications hereunder or under
the other Loan Documents shall be in writing and shall be mailed by first class
mail or express mail, postage prepaid, or sent by telex, telegram or other
similar form of rapid transmission confirmed by mailing (by first class or
express mail, postage prepaid) written confirmation at substantially the same
time as such rapid transmission, or personally delivered to an officer of the
receiving party. All such communications shall be mailed. sent or delivered to
the parties hereto at their respective addresses as follows:
If to Borrower:
TUMBLEWEED, INC.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
With a copy to:
Legal Department
Tumbleweed, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
If to Lender:
NATIONAL CITY BANK OF KENTUCKY
8th Floor, National City Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attention: ▇▇▇ ▇▇▇▇
Any communication so addressed and mailed shall be deemed to be given
when so mailed, except that notices and requests related to Advances shall not
be effective until actually
received by Lender or Borrower, as the case may be; and any notice so sent by
rapid transmission shall be deemed to be given when receipt of such transmission
is acknowledged, and any communication so delivered in person shall be deemed to
be given when receipted for by, or actually received by, an authorized officer
of Borrower or Lender, as the case may be.
8.3 Governing Law. The laws of the Commonwealth of Kentucky shall
govern the construction of this Agreement and the rights, remedies and duties of
the parties hereto.
8.4 Section Titles. The section titles of this Agreement are inserted
for convenience only and do not constitute a part of this Agreement.
8.5 Severability. The invalidity or unenforceability of any one (1) or
more phrases, sentences, clauses or paragraphs of this Agreement shall -not
affect the validity or enforceability of the remaining portions of this
Agreement or of any part hereof.
8.6 Integration. The Loan Documents contain the entire agreement
between the parties relating to the Credit Facility. The Loan Documents
supersede any and all prior agreements and any and all contemporaneous oral
agreements between Lender and Borrower relative to the Credit Facility.
8.7 Successors and Assigns. This Agreement shall bind each of Borrower
and Lender and their respective successors and assigns, and sha11 inure to the
benefit of Lender and Borrower and their respective successors and assigns.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day, month and year first above written.
BORROWER:
TUMBLEWEED, INC.
(a Delaware corporation)
By:_____________________________________
Its Executive Vice President
LENDER:
NATIONAL CITY BANK OF KENTUCKY
(a national banking association)
By:______________________________________
Its Senior Vice President
EXHIBIT A
COMPLIANCE CERTIFICATE
This Compliance Certificate is delivered to National City Bank of
Kentucky (the "Lender") pursuant to Section 5.2(d) of the amended and restated
loan agreement dated as of April 21, 1999 between Tumbleweed Restaurants, Inc.
(the "Borrower") and the Lender (the "Loan Agreement"). All capitalized terms
used herein not defined herein shall have the meanings ascribed thereto in the
Loan Agreement.
The Borrower hereby represents, warrants and certifies to the Lender
the following, as of the last day of the most recently ended fiscal quarter for
the Borrower:
A. Borrower's minimum tangible net worth as of the last day of the
most recently ended fiscal quarter was $
B. The ratio of Borrower's Cash Flow Available for Debt Service to the
current portion of long-term debt and interest in respect of the four (4)
immediately preceding fiscal quarters ending as of the last day of the most
recently ended fiscal quarter was
C. The ratio of Borrower's total liabilities to its tangible net worth
as of the last day of the most recently ended fiscal quarter was Borrower's
officer executing and delivering this Compliance Certificate on behalf of
Borrower further certifies to the Lender that the officer has reviewed the Loan
Agreement and the Note and has no knowledge of any event or condition which
constitutes an Event of Default under the Loan Agreement other than --- (if any
Event of Default has occurred, describe same, the period of existence of such
default and what action the Borrower has taken or proposes to take with respect
thereto).
IN WITNESS WHEREOF, the Borrower has executed this Compliance
Certificate this _____ day of_______________, _______.
TUMBLEWEED, INC.
By:________________________________
Its Executive Vice President
SUBSTITUTION AND RENEWAL
REVOLVING LINE OF
CREDIT NOTE
$6,500,000 Louisville, Kentucky
April 21, 1999
FOR VALUE RECEIVED, the undersigned, TUMBLEWEED, INC. a Delaware
corporation (the "Borrower"), hereby promises to pay, on December 3 1, 200 1,
upon the terms and provisions hereafter provided, to the order of NATIONAL CITY
BANK OF KENTUCKY, a national banking association with offices at 1 0 ▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, its successors and assigns (the
"Bank"), the principal sum of SIX MILLION FIVE HUNDRED THOUSAND AND NO/100
DOLLARS ($6,500,000) (the "Loan"), or the aggregate principal amount of all
advances made on this note (the "Note"), which shall be outstanding at the date
of payment, whichever shall be less, together with interest on the principal
sums disbursed and outstanding hereon from time to time in the manner and at the
rates hereafter set forth.
THIS NOTE has in part been executed and delivered by the Borrower to
the Bank in substitution for and in renewal of the Borrower's revolving line of
credit note payable to the order of Bank dated August 8, 1996 in a principal sum
not to exceed $5,000,000 outstanding at any time (the "Prior Note"). This Note
evidences the Borrower's obligation to pay principal sums heretofore advanced by
Bank and not repaid by the Borrower on the Prior Note and to be advanced
hereafter, which principal and interest thereon shall be paid to Bank in
accordance with the terms and provisions of this Note. Bank and Borrower
understand and mutually acknowledge that the Loan evidenced by this Note is, to
the extent of the amount presently advanced and outstanding on the Prior Note,
the same Loan evidenced by the Prior Note and mutually acknowledge and agree
that payment of this Note is secured in part by the same collateral documents
that secured payment of the Prior Note (which collateral documents are
hereinafter described). This Note additionally evidences the Borrower's promise
and obligation to repay the additional loan made this date by Bank to the
Borrower in a principal amount not to exceed $1,500,000 outstanding at any time,
together with interest thereon at the rates hereinafter described.
IT IS UNDERSTOOD that the Borrower will request principal advances on
this Note from time to time. Bank will honor such requests for advance in its
discretion, provided that: no default exists hereon or otherwise with regard to
the Loan; there is no default on any other loan now or hereafter owing bank by
the Borrower; and, the amount of the request will not cause the aggregate
principal amount owed on this Note to exceed the maximum principal amount then
available hereunder. The Borrower's indebtedness to the Bank on this Note at any
time shall be the total of all such advances plus accrued interest, less
payments received by Bank. The Bank may act on all matters, including without
limitation the making of advances, on the telephonic instructions of any
authorized officer designated by the Borrower, and may rely thereon in doing and
performing all actions which such officer shall direct the Bank to perform. All
telephonic instructions shall be confirmed immediately in writing, should the
Bank so require, but the failure of the Bank to so require shall not affect the
Borrower's liability to Bank hereon or
otherwise nor the right of Bank to rely on any such telephonic instruction. The
Bank may prescribe and may revise from time to time the form that requests for
advance hereon shall take.
PAYMENT OF THIS NOTE is secured by first mortgages and by assignments
of leases and rents encumbering real estate owned by the Borrower located in
Jefferson County, Kentucky, in ▇▇▇▇▇ County, Kentucky, in ▇▇▇▇▇▇ County,
Kentucky and in ▇▇▇▇▇▇▇▇ County, Ohio, more particularly described in an amended
and restated loan agreement of even date between Borrower and Bank (the "Loan
Agreement"). This Loan is made by Bank and is accepted by Borrower pursuant to
the terms and provisions of the Loan Agreement.
INTEREST shall be payable by Borrower on the principal sums actually
disbursed and outstanding hereon from time to time at an annual rate equal to
one-fourth of one per cent (1/40/0) above the Bank's prime rate of interest,
calculated on the basis of a 360 day year and the actual number of days or
portion thereof elapsed. Any change in said prime rate subsequent to the date
hereof shall become effective as to this Note immediately following a change in
the prime rate as quoted by Bank. "Prime rate" shall mean the rate of interest
generally charged by Bank from time to time to its most substantial and
creditworthy commercial borrowers for 90- day unsecured loans, it being
understood and agreed, however, that such prime rate is the rate designated by
Bank as its "prime rate" and does not necessarily mean or imply that such prime
rate is the lowest rate then available from Bank on floating rate loans to
specific borrowers of the class described above. The first such payment of
interest only shall be due on or before May 1, 1999 and on or before the first
day of each month thereafter during the term hereof Simultaneously with each
such monthly interest payment, the Borrower will make a payment on principal to
Bank in the amount of $45,000 per payment.
BORROWER AND BANK mutually consent, acknowledge and agree that on or
before December 31, 1999, the maximum principal amount available to Borrower
under this revolving credit facility will be reduced by $380,000, and further
agree that such maximum principal amount available will be further reduced by
$540,000 on or before each December 31 thereafter during the term of the Loan.
Borrower will make, on or before each of said dates, payments on principal in
addition to regular monthly principal payments as may be necessary to reduce the
principal amount outstanding under this Note as aforesaid on or before each of
said dates.
BORROWER shall repay Bank for advances made by Bank on this Note at the
times and in the amounts herein above set forth. Borrower may borrow, repay in
whole or in part at any time without premium or penalty, and reborrow hereunder,
subject to the terms hereof and subject to the terms of the Loan Agreement.
THE COLLATERAL granted Bank to secure this Note and advances hereon
shall also secure payment of all renewals, extensions or modifications hereof.
Each request for advance hereon shall be a reaffirmation of all collateral
interests previously granted to the Bank and a reaffirmation of all
representations and warranties heretofore made to the Bank in the Loan Agreement
and made in all other documents securing or otherwise pertaining to the Loan.
BORROWER shall pay to the holder hereof a late charge of five per cent
(5%) of any monthly installment of principal and/or interest not paid within ten
(10) days of the date same is
due and payable.
NOTWITHSTANDING anything to the contrary contained herein all default
interest and late charges shall be due and payable by Borrower to Bank on demand
and the same shall be paid separately from and in addition to the scheduled
payments of principal and interest provided for herein.
IF DEFAULT is made in the payment of principal or interest hereof as
and when the same is or becomes due, or in the performance of any term, covenant
or condition required to be kept, observed or performed under this Note or any
other instrument executed in connection with this Loan (including, without
limitation, the Loan Agreement, and (absent a specific contrary grace or
curative period) if same shall not be cured to the complete satisfaction of the
holder hereof within ten (10) days after any monetary default or within thirty
(30) days after the occurrence of any nonmonetary default on the Loan; or should
Borrower default on any other indebtedness now or hereafter owing Bank during
the term hereof beyond any applicable grace or curative period contained in any
documents relative to such other indebtedness; then the owner and holder of this
Note may, without notice or demand, declare all sums owing hereunder and under
any of said other instruments at once due and payable. If default is made in the
payment of this Note at maturity (regardless of how same may be brought about)
Borrower agrees, upon expiration of the aforesaid curative periods, to pay to
the owner and holder hereof interest at a default rate equal to the annual rate
for the principal hereof plus three percent (3%) until paid, together with all
reasonable attorneys' fees and other costs of collection occasioned by any of
the foregoing.
BORROWER expressly waives demand and presentment for payment, notice of
nonpayment, protest, notice of protest, bringing of suit, and diligence in
taking any action to collect amounts called for hereunder and in the handling of
security at any time existing in connection therewith; and is and shall be
directly and primarily liable for the payment of all sums owing and to be owing,
regardless of and without any notice, diligence, act or omission or with respect
to the collection of any amount called for hereunder or in connection with any
right, lien, interest, or property at any and all times had or existing as
security for any amount called for hereunder or under any other instrument
executed in connection with the Loan.
BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY
RIGHT BORROWER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS LOAN OR ANY AGREEMENT
CONTEMPLATED TO BE MADE OR EXECUTED IN CONNECTION THEREWITH, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR BANKS MAKING THE LOAN
EVIDENCED HEREBY.
IN THE EVENT of any inconsistency in the terms and provisions of this
Note or any other document relative to the Loan as to the rights and remedies of
the holder hereof, or in the event of any such inconsistency as between or among
any two (2) or more documents, then in any such event the holder shall have the
right at its sole option to elect which of such provisions
shall govern.
THIS NOTE and the respective rights and liabilities of Borrower and the
holder of this Note shall be governed by and shall be construed in accordance
with the laws of the Commonwealth of Kentucky. The invalidity or
unenforceability of any portion of this Note shall not affect the validity or
enforceability of the remaining portions of this Note.
BORROWER:
TUMBLEWEED, INC.
(a Delaware corporation)
By: ________________________________
Its Executive Vice President
