ASSUMPTION AGREEMENT, CONSENT AND
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FIRST AMENDMENT TO LOAN AGREEMENT
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THIS ASSUMPTION AGREEMENT, CONSENT AND FIRST AMENDMENT TO LOAN AGREEMENT
("Agreement"), dated as of the 14th day of January, 1999, is made and entered
into on the terms and conditions hereinafter set forth by and among SIRROM
CAPITAL CORPORATION, a Tennessee corporation ("SCC"), SIRROM FUNDING
CORPORATION, a Tennessee corporation and assignee of SCC ("SFC") (SCC and SFC
are hereinafter referred to collectively as "Lender") and HARTAN, INC., a Texas
corporation ("Hartan") and wholly owned subsidiary of Harvest Restaurant Group,
Inc. ("Harvest").
W I T N E S S E T H:
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WHEREAS, SCC has previously made a term loan to TRC Acquisition Corporation
("TRC") in the original principal amount of Two Million and No/100ths Dollars
($2,000,000.00) (the "Loan") on the terms and conditions set forth in that
certain Loan Agreement dated October 22, 1996, by and between SCC and TRC (as
now or hereafter amended, the "Loan Agreement");
WHEREAS, the Loan is evidenced by a Secured Promissory Note dated October
22, 1996 in the original principal amount of $1,000,000 made and executed by
TRC, payable to the order of SCC and a Secured Promissory Note dated February
25, 1997 in the original principal amount of $1,000,000 made and executed by
TRC, payable to the order of SCC (collectively the "Note");
WHEREAS, the Note has been amended and restated by that certain Amended and
Restated Secured Promissory Note of even date herewith in the original principal
amount of $2,000,000 made and executed by Hartan in favor of SCC (the "Amended
and Restated Note");
WHEREAS, the Loan is further evidenced and secured by certain agreements,
documents and instruments as more particularly described in the Loan Agreement
and defined therein as the "Loan Documents";
WHEREAS, the Loan has been assigned by SCC to SFC with SCC retaining
certain rights in the Loan and Loan Documents;
WHEREAS, on or before the date hereof, pursuant to the Amended and Restated
Agreement and Plan of Merger by and among Harvest, Hartan and TRC (the "Merger
Agreement") TRC will merge with and into Hartan (the "Merger");
WHEREAS, the Loan Agreement requires the consent of Lender for the Merger;
and
WHEREAS, TRC, Hartan and Harvest have requested that Lender consent to the
Merger.
NOW, THEREFORE, in consideration of the foregoing premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Consent. Lender hereby consents to the Merger on the terms and
conditions set forth in the Merger Agreement subject to the following conditions
precedent:
(i) Hartan's execution and delivery to Lender of an Amended and
Restated Note;
(ii) Hartan's delivery to Lender of an Amended and Restated Stock
Purchase Warrant (the "Amended and Restated Warrant") and Warrant
Valuation Letter executed by Harvest in form and substance
satisfactory to Lender;
(iii)Hartan's delivery to Lender of a Guaranty Agreement executed by
Harvest (the "Guaranty") in form and substance satisfactory to
Lender;
(iv) Hartan's delivery to Lender of an Amended and Restated Guaranty
executed by That Chicken Place, Inc., ▇▇▇▇▇▇'▇/Vinings, Inc.,
▇▇▇▇▇▇'▇ Oaks, Inc., ▇▇▇▇▇▇'▇ ▇▇▇▇▇▇▇▇, Inc., ▇▇▇▇▇▇'▇ Mill,
Inc., ▇▇▇▇▇▇'▇-▇▇▇▇▇▇, Inc., Northwest Store, Inc. (formerly
▇▇▇▇▇▇'▇-Rome, Inc.), ▇▇▇▇▇▇'▇ ▇▇▇▇▇▇▇, Inc., ▇▇▇▇▇▇'▇ Catering,
Inc. and Central Administration, Inc. (formerly ▇▇▇▇▇▇'▇
Management, Inc.);
(v) Hartan's delivery to Lender of a Pledge and Security Agreement,
together with related stock certificate, stock proxy, stock
pledge letter and stock power executed by Harvest in form and
substance satisfactory to Lender;
(vi) Hartan's delivery to Lender of new stock certificates, stock
proxies, stock pledge letters and stock powers executed by the
original shareholders of TRC;
(vii)Hartan's delivery to Lender of an opinion letter of Hartan's
counsel, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇, L.L.P., in form and
substance satisfactory to Lender;
(viii) Hartan's payment of the Closing Expenses (as hereinafter
defined);
(ix) Hartan's delivery to Lender of corporate resolutions of Hartan,
TRC and Harvest authorizing and approving the transactions
contemplated by and described in this Agreement;
(x) Hartan's delivery to Lender of good standing certificates for
Hartan and Harvest for Texas and Georgia;
(xi) Hartan's delivery to Lender of executed copies of all of the
documents executed in connection with the Merger; and
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(xii)Hartan's delivery to Lender of executed originals of all of the
UCC-1s and UCC-3s described on Exhibit A attached hereto.
2. Assumption of Obligations under Amended and Restated Note. Without
limiting, releasing or otherwise affecting the liability of TRC or any other
person, firm or entity which may now or hereafter be liable for payment of the
indebtedness evidenced by the Note or the Amended and Restated Note, Hartan
hereby agrees to be directly and personally liable to Lender for payment of (a)
the principal sum of $2,000,000, evidenced by the Amended and Restated Note,
together with (b) interest on the outstanding principal balance at the rate of
thirteen and one-half percent (13.5%) per annum (computed on the basis of a
360-day year) (the "Assumed Indebtedness"); such principal and interest being
payable as set forth in the Amended and Restated Note. Hartan agrees that its
obligation with respect to the Assumed Indebtedness shall be governed by the
terms and conditions of the Amended and Restated Note.
3. Assumption of Other Obligations; Grant of Security Interest. Hartan
agrees that all obligations of TRC under the Loan Documents shall be the
obligations of Hartan. Accordingly, Hartan hereby grants to Lender a security
interest in all of its Collateral (as defined in the Security Agreement by and
between TRC and Lender dated October 22, 1996) and Hartan pledges, hypothecates,
assigns, sets over and delivers unto Lender and hereby grants to Lender a
security interest in the collateral described on Schedule A to the Pledge and
Security Agreement by and between TRC and Lender dated October 22, 1996 together
with all proceeds thereof and all cash, additional securities or other property
at any time and from time to time receivable or otherwise distributable in
respect of, in exchange for, or in substitution for any and all such pledged
securities.
4. Amendment to Loan Agreement. Section 3.12 of the Loan Agreement is
amended to provide that Hartan may pay dividends to Harvest in amounts necessary
for Harvest to pay cash dividends on its Series A Preferred Stock as set forth
in Harvest's current Articles of Incorporation so long as (i) the Fixed Charge
Coverage Ratio (as defined in the Guaranty) is 1.1 to 1 or above, (ii) Hartan
makes a principal payment on the Amended and Restated Note in the same amount of
the dividends on the Series A Preferred Stock simultaneously with paying such
dividends, and (iii) no Event of Default (as defined in the Loan Agreement) has
occurred and is continuing and to pay cash dividends on its Series D Preferred
Stock as set forth in Harvest's current Articles of Incorporation so long as (i)
Hartan makes a principal prepayment on the Amended and Restated Note in the same
amount of the dividends on the Series D Preferred Stock simultaneously with
paying such dividends and (ii) no Event of Default (as defined in the Loan
Agreement) has occurred and is continuing.
5. Miscellaneous. It is further agreed as follows:
(a) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Tennessee.
(b) Amendment. This Agreement cannot be amended, rescinded,
supplemented or modified except in writing signed by the parties hereto.
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(c) Binding Effect. This Agreement will inure to the benefit of, and
bind the respective heirs, personal representatives, successors and assigns of
the parties hereto.
(d) Headings. Paragraph or other headings contained in this Agreement
are for reference purposes only and are not intended to affect in any way the
meaning or interpretation of this Agreement.
(e) Counterpart Execution. This Agreement may be executed in
counterparts, each of which will be deemed an original document, but all of
which shall constitute a single agreement. This document will not be binding on
or constitute evidence of a contract between the parties until such time as a
counterpart of this document has been executed by each party and a copy thereof
delivered to each party to this Agreement.
(f) Cooperation. Prior to and at all times following the closing date,
all the parties hereto agree to execute and deliver, or to cause to be executed
and delivered, such documents and to do, or cause to be done, such other acts
and things as may reasonably be requested by any of the parties hereto to assure
that the benefits of this Agreement are realized by Lender and Hartan.
(g) Closing Expenses. Except as expressly set forth to the contrary
herein, TRC or Hartan shall pay or cause to be paid in full all out-of-pocket
expenses of the Lender incurred in connection with the execution and delivery of
this Agreement and related documents and the consummation of the transactions
contemplated by such documents and any and all outstanding invoices of Lender's
attorney (collectively the "Closing Expenses"); and TRC and Hartan shall pay or
cause to be paid in full all of the out-of-pocket expenses incurred by Lender in
connection with the execution and delivery of this Agreement and related
documents and the consummation of the transactions contemplated by such
documents.
(h) Assignment. The Loan has been assigned by SCC to SFC with SCC
retaining certain rights in the Loan and Loan Documents, and the Amended and
Restated Note and the Amended and Restated Warrant will be assigned by SCC to
SFC upon their delivery to SCC.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement, or
have caused this Agreement to be executed by their duly authorized
representatives, as of the date first above written.
HARTAN:
HARTAN, INC., a Texas corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇, III
Title: Chief Executive Officer
LENDER:
SIRROM CAPITAL CORPORATION, a
Tennessee corporation
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
SIRROM FUNDING CORPORATION, a
Tennessee corporation
By: /s/ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
Title: Treasurer
The undersigned acknowledged and agree that pursuant to the terms of their
Pledge and Security Agreements dated October 22, 1996 between SCC and the
undersigned, respectively, the stock of the undersigned in Harvest Restaurant
Group, Inc. secures the Loan, and the undersigned agree to execute and deliver
to Lender new stock powers and stock proxies and to deliver to Lender the stock
certificates representing the ownership of the undersigned in Harvest Restaurant
Group, Inc.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
BROOKHAVEN CAPITAL CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: /s/ Chairman
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇, III
▇▇▇▇▇ ▇. ▇▇▇▇, III
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EXHIBIT A
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1. UCC-3s (reflecting merger of TRC Acquisition Corporation with and into
Hartan, Inc.)
* TRC Acquisition Corporation (▇▇▇▇▇▇ County)
* ▇▇▇▇▇▇'▇ Inc., a tradename of TRC Acquisition Corporation (▇▇▇▇▇▇
County)
* ▇▇▇▇▇▇'▇ Rotisserie Chicken, a tradename of TRC Acquisition
Corporation (▇▇▇▇▇▇ County)
* ▇▇▇▇▇▇'▇ Restaurants, a tradename of TRC Acquisition Corporation
(▇▇▇▇▇▇ County)
2. UCC-1s (reflecting name of new borrower after merger)
* Hartan, Inc.
* TRC Acquisition Corporation, a tradename of Hartan, Inc.
* ▇▇▇▇▇▇'▇ Inc., a tradename of Hartan, Inc.
* ▇▇▇▇▇▇'▇ Rotisserie Chicken, a tradename of Hartan, Inc.
* ▇▇▇▇▇▇'▇ Restaurant, a tradename of Hartan, Inc.
3. UCC-3s (changing name from ▇▇▇▇▇▇'▇ Management, Inc. to Central
Administration, Inc.)
* ▇▇▇▇▇▇'▇ Management, Inc. (▇▇▇▇▇▇ County)
* ▇▇▇▇▇▇'▇ Rotisserie Chicken (▇▇▇▇▇▇ County)
4. UCC-1 (reflecting name change)
* Central Administration, Inc. (▇▇▇▇▇▇ County) (2)
5. UCC-3s (changing name from ▇▇▇▇▇▇'▇-Rome, Inc. to Northwest Store, Inc.)
* ▇▇▇▇▇▇'▇-Rome, Inc. (▇▇▇▇▇▇ County)
* ▇▇▇▇▇▇'▇ Rotisserie Chicken (▇▇▇▇▇▇ County)
6. UCC-1 (reflecting name change)
* Northwest Store, Inc. (▇▇▇▇▇▇ County) (2)
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