July 19, 2000
GRILL CONCEPTS, INC.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Gentlemen:
This letter is to confirm that ▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION
("Bank"), subject to all terms and conditions contained herein, has agreed to
make available the credit described below to GRILL CONCEPTS, INC. ("Borrower"):
1. A revolving line of credit under which Bank will make advances to
Borrower from time to time up to and including August 1, 2001, not to exceed at
any time the maximum principal amount of Three Hundred Thousand Dollars
($300,000.00) ("Line of Credit"), the proceeds of which shall be used first, to
refinance Borrower's credit accommodations with Bank of America, and second to
provide working capital for Borrower.
2. A term loan in the principal amount of One Million Two Hundred Thousand
Dollars ($1,200,000.00) ("Term Loan"), the proceeds of which shall be used to
refinance the existing credit accommodations with Bank of America. Bank's
commitment to grant the Term Loan shall terminate on August 19, 2000.
I. CREDIT TERMS:
1. LINE OF CREDIT:
(a) Line of Credit Note. ▇▇▇▇▇▇▇▇'s obligation to repay advances under the
Line of Credit shall be evidenced by a promissory note substantially in the form
of Exhibit A attached hereto ("Line of Credit Note"), all terms of which are
incorporated herein by this reference.
(b) Borrowing and Repayment. Borrower may from time to time during the term
of the Line of Credit borrow, partially or wholly repay its outstanding
borrowings, and reborrow, subject to all of the limitations, terms and
conditions contained herein or in the Line of Credit Note; provided however,
that the total outstanding borrowings under the Line of Credit shall not at any
time exceed the maximum principal amount available thereunder, as set forth
above. Notwithstanding the foregoing, Borrower shall maintain a zero balance on
advances under the Line of Credit for a period of at least 30 consecutive days
during the term of the Line of Credit.
2. TERM LOAN:
(a) Term Note. Borrower's obligation to repay the Term Loan shall be
evidenced by a promissory note substantially in the form of Exhibit B attached
hereto ("Term Note"), all terms of which are incorporated herein by this
reference.
(b) Repayment. The principal amount of the Term Loan shall be repaid in
accordance with the provisions of the Term Note.
(c) Prepayment. Borrower may prepay principal on the Term Loan solely in
accordance with the provisions of the Term Note.
3. GUARANTIES:
All indebtedness of Borrower to Bank shall be guaranteed by ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, as an individual and as Trustee of the ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Living
Trust u/t/a dated April 13, 1990 (each, a "▇▇▇▇▇▇▇▇▇ Guarantor" and
collectively, the "▇▇▇▇▇▇▇▇▇ Guarantors") in the principal amount of
$750,000.00, ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, Trustees of
the ▇▇▇▇▇ Revocable Trust of 1993 in the principal amount of $750,000.00, each
as evidenced by and subject to the terms of guaranties in form and substance
satisfactory to Bank. In the event any such guaranty were to be treated as a
partial guaranty for the purposes of California Civil Code Section 2822,
Borrower hereby waives any right Borrower may have thereunder, including without
limitation any right Borrower may have thereunder to designate the portion of
indebtedness of Borrower to Bank to which any payment or satisfaction is to be
applied.
II. INTEREST/FEES:
1. Interest. The outstanding principal balance of the Line of Credit and
the Term Loan shall bear interest at the rates of interest set forth in the Line
of Credit Note and the Term Note.
2. Computation and Payment. Interest shall be computed on the basis of a
360-day year, actual days elapsed. Interest shall be payable at the times and
place set forth in the Line of Credit Note and the Term Note .
3. Commitment Fee. Borrower shall pay to Bank a non-refundable commitment
fee for the Line of Credit equal to $1,000.00 and a non-refundable commitment
fee for the Term Loan equal to $2,000.00, which fees shall be due and payable in
full upon the execution of this letter.
III. REPRESENTATIONS AND WARRANTIES:
Borrower makes the following representations and warranties to Bank, which
representations and warranties shall survive the execution of this letter and
shall continue in full force and effect until the full and final payment, and
satisfaction and discharge, of all obligations of Borrower to Bank subject to
this letter.
1. Legal Status. Borrower is a corporation, duly organized and existing and
in good standing under the laws of the State of Delaware, and is qualified or
licensed to do business in all jurisdictions in which such qualification or
licensing is required or in which the failure to so qualify or to be so licensed
could have a material adverse effect on Borrower.
2. Authorization and Validity. This letter and each promissory note,
contract, instrument and other document deemed necessary by Bank to evidence any
extension of credit to Borrower pursuant to the terms and conditions hereof, or
now or at any time hereafter required by or delivered to Bank in connection with
this letter (collectively, the "Loan Documents") have been duly authorized, and
upon their execution and delivery in accordance with the provisions hereof will
constitute legal, valid and binding agreements and obligations of
Borrower or the party which executes the same, enforceable in accordance with
their respective terms.
3. No Violation. The execution, delivery and performance by Borrower of
each of the Loan Documents do not violate any provision of any law or
regulation, or contravene any provision of the Articles of Incorporation or
By-Laws of Borrower, or result in a breach of or constitute a default under any
contract, obligation, indenture or other instrument to which Borrower is a party
or by which Borrower may be bound.
4. Litigation. There are no pending, or to the best of ▇▇▇▇▇▇▇▇'s knowledge
threatened, actions, claims, investigations, suits or proceedings by or before
any governmental authority, arbitrator, court or administrative agency which
could have a material adverse effect on the financial condition or operation of
Borrower other than those disclosed by Borrower to Bank in writing prior to the
date hereof.
5. Correctness of Financial Statement. The financial statement of Borrower
dated March 26, 2000, a true copy of which has been delivered by Borrower to
Bank prior to the date hereof, (a) is complete and correct and presents fairly
the financial condition of Borrower, (b) discloses all liabilities of Borrower
that are required to be reflected or reserved against under generally accepted
accounting principles, whether liquidated or unliquidated, fixed or contingent,
and (c) has been prepared in accordance with generally accepted accounting
principles consistently applied. Since the date of such financial statement
there has been no material adverse change in the condition or operation of
Borrower, nor has Borrower mortgaged, pledged, granted a security interest in or
otherwise encumbered any of its assets or properties except in favor of Bank or
as otherwise permitted by Bank in writing.
6. Income Tax Returns. Borrower has no knowledge of any pending assessments
or adjustments of its income tax payable with respect to any year.
7. No Subordination. There is no agreement, indenture, contract or
instrument to which Borrower is a party or by which Borrower may be bound that
requires the subordination in right of payment of any of Borrower's obligations
subject to this letter to any other obligation of Borrower.
8. Permits, Franchises. Borrower possesses, and will hereafter possess, all
permits, consents, approvals, franchises and licenses required and all rights to
trademarks, trade names, patents and fictitious names, if any, necessary to
enable it to conduct the business in which it is now engaged in compliance with
applicable law.
9. ERISA. Borrower is in compliance in all material respects with all
applicable provisions of the Employee Retirement Income Security Act of 1974, as
amended or recodified from time to time ("ERISA"); Borrower has not violated any
provision of any defined employee pension benefit plan (as defined in ERISA)
maintained or contributed to by Borrower (each, a "Plan"); no Reportable Event,
as defined in ERISA, has occurred and is continuing with respect to any Plan
initiated by Borrower; Borrower has met its minimum funding requirements under
ERISA with respect to each Plan; and each Plan will be able to fulfill its
benefit obligations as they come due in accordance with the Plan documents and
under generally accepted accounting principles.
10. Other Obligations. Borrower is not in default on any obligation for
borrowed money, any purchase money obligation or any other material lease,
commitment, contract, instrument or obligation.
11. Environmental Matters. Except as disclosed by Borrower to Bank in
writing prior to the date hereof, Borrower is in compliance in all material
respects with all applicable federal or state environmental, hazardous waste,
health and safety statutes, and any rules or regulations adopted pursuant
thereto, which govern or affect any of Borrower's operations and/or properties,
including without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act of 1986, the Federal Resource Conservation and Recovery Act
of 1976, and the Federal Toxic Substances Control Act, as any of the same may be
amended, modified or supplemented from time to time. None of the operations of
Borrower is the subject of any federal or state investigation evaluating whether
any remedial action involving a material expenditure is needed to respond to a
release of any toxic or hazardous waste or substance into the environment.
Borrower has no material contingent liability in connection with any release of
any toxic or hazardous waste or substance into the environment.
IV. CONDITIONS:
1. Conditions of Initial Extension of Credit. The obligation of Bank to
extend any credit contemplated by this letter is subject to fulfillment to
Bank's satisfaction of all of the following conditions:
(a) Documentation. Bank shall have received each of the Loan Documents,
duly executed and in form and substance satisfactory to Bank.
(b) Financial Condition. There shall have been no material adverse change,
as determined by Bank, in the financial condition or business of Borrower or any
guarantor hereunder, nor any material decline, as determined by Bank, in the
market value of any collateral required hereunder or a substantial or material
portion of the assets of Borrower or any such guarantor.
2. Conditions of Each Extension of Credit. The obligation of Bank to make
each extension of credit requested by ▇▇▇▇▇▇▇▇ hereunder shall be subject to the
fulfillment to Bank's satisfaction of each of the following conditions:
(a) Compliance. The representations and warranties contained herein and in
each of the other Loan Documents shall be true on and as of the date of the
signing of this letter and on the date of each extension of credit by Bank
pursuant hereto, with the same effect as though such representations and
warranties had been made on and as of each such date, and on each such date, no
default hereunder, and no condition, event or act which with the giving of
notice or the passage of time or both would constitute such a default, shall
have occurred and be continuing or shall exist.
(b) Documentation. Bank shall have received all additional documents which
may be required in connection with such extension of credit.
V. COVENANTS:
Borrower covenants that so long Bank remains committed to extend credit to
Borrower pursuant hereto, or any liabilities (whether direct or contingent,
liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents
remain outstanding, and until payment in full of all obligations of Borrower
subject hereto, Borrower shall, unless Bank otherwise consents in writing:
1. Punctual Payment. Punctually pay all principal, interest, fees or other
liabilities due under any of the Loan Documents at the times and place and in
the manner specified therein; provided, however, that notwithstanding anything
herein or in any of the Loan Documents to the contrary, an event of default
shall not exist under the Loan Documents as a result of ▇▇▇▇▇▇▇▇'s failure to
make a payment when due to Bank thereunder and Bank shall not be entitled to
accelerate Borrower's indebtedness to Bank hereunder as a result of ▇▇▇▇▇▇▇▇'s
failure to make a payment when due to Bank under the Loan Documents unless such
payment is more than five (5) days past due.
2. Accounting Records. Maintain adequate books and records in accordance
with generally accepted accounting principles consistently applied, and permit
any representative of Bank, at any reasonable time, to inspect, audit and
examine such books and records, to make copies of the same and inspect the
properties of Borrower.
3. Financial Statements. Provide to Bank all of the following, in form and
detail satisfactory to Bank:
(a) not later than 90 days after and as of the end of each fiscal year,
allowing for one 15 day SEC extension, an audited financial statement of
Borrower, prepared by a certified public accountant acceptable to Bank, to
include balance sheet, income statement and statement of cash flow, together
with all supporting schedules and footnotes;
(b) not later than 60 days after and as of the end of each fiscal quarter,
a financial statement of ▇▇▇▇▇▇▇▇, reviewed by a certified public accountant
acceptable to Bank, to include balance sheet and income statement;
(c) not later than each April 1 and as of each calendar year end, a
financial statement of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, prepared by such guarantor, to
include balance sheet and income statement, and within 45 days after filing, but
in no event later than each December 1, copies of such guarantor's filed federal
income tax returns for the previous year, with K-1's, notes and supporting
schedules;
(d) not later than each April 1 and as of each calendar year end, a
financial statement of ▇▇▇▇▇ ▇▇▇▇▇, prepared by such guarantor, to include
balance sheet and income statement;
(e) not later than 30 days after and as of the end of each calendar
quarter, a liquidity statement of the ▇▇▇▇▇▇▇▇▇ Guarantors hereunder, prepared
by such guarantor, to include supporting brokerage statements;
(f) not later than 30 days after and as of the end of each calendar
quarter, a balance sheet of ▇▇▇▇▇ ▇▇▇▇▇ in form previously approved and
certified to Bank.
(g) from time to time such other information as Bank may reasonably
request.
4. Compliance. Preserve and maintain all licenses, permits, governmental
approvals, rights, privileges and franchises necessary for the conduct of its
business; and comply with the provisions of all documents pursuant to which
Borrower is organized and/or which govern Borrower's continued existence and
with the requirements of all laws, rules, regulations and orders of a
governmental agency applicable to Borrower and/or its business.
5. Insurance. Maintain and keep in force insurance of the types and in
amounts customarily carried in lines of business similar to that of Borrower,
including but not limited to fire, extended coverage, public liability, flood,
property damage and workers' compensation, with all such insurance carried with
companies and in amounts satisfactory to Bank, and deliver to Bank from time to
time at Bank's request schedules setting forth all insurance then in effect.
6. Facilities. Keep all properties useful or necessary to Borrower's
business in good repair and condition, and from time to time make necessary
repairs, renewals and replacements thereto so that such properties shall be
fully and efficiently preserved and maintained.
7. Taxes and Other Liabilities. Pay and discharge when due any and all
indebtedness, obligations, assessments and taxes, both real or personal,
including without limitation federal and state income taxes and state and local
property taxes and assessments, except (a) such as Borrower may in good faith
contest or as to which a bona fide dispute may arise, and (b) for which Borrower
has made provision, to Bank's satisfaction, for eventual payment thereof in the
event Borrower is obligated to make such payment.
8. Litigation. Promptly give notice in writing to Bank of any material
litigation pending or threatened against Borrower.
9. Financial Condition. Maintain Borrower's financial condition on a
consolidated basis as follows using generally accepted accounting principles
consistently applied and used consistently with prior practices (except to the
extent modified by the definitions herein):
(a) Total Liabilities divided by Tangible Net Worth not greater than 3.0 to
1.0 determined on a quarterly basis, commencing with the fiscal quarter ending
December 31, 2000, with "Total Liabilities" defined as the aggregate of current
liabilities and non-current liabilities less subordinated debt, and with
"Tangible Net Worth" defined as the aggregate of total stockholders' equity plus
subordinated debt less any intangible assets.
(b) Debt Service Coverage Ratio not less than 1.25 to 1.0 determined on a
four rolling quarter basis, commencing with the fiscal quarter ending December
31, 2000, with "Debt Service Coverage Ratio" defined as the sum of net income
after taxes plus depreciation expense, amortization expense, pre-opening
expense, and interest expense minus cash dividends divided by the sum of the
current portion of long-term liabilities plus interest expense.
10. Financial Condition. Cause each guarantor to maintain its financial
condition as follows using generally accepted accounting principles consistently
applied and used consistently with prior practices (except to the extent
modified by the definitions herein):
Unencumbered personal liquid assets (defined as cash, cash equivalents
and/or publicly traded/quoted marketable securities acceptable to Bank and
excluding Grill Concepts, Inc.) with an aggregate fair market value not less
than One Million Five Hundred Thousand Dollars ($1,500,000.00), determined on a
quarterly basis. Pension and retirement assets qualify for this calculation, but
at fifty percent (50%) of their valuation.
11. Other Indebtedness. Cause the ▇▇▇▇▇▇▇▇▇ Guarantors, not to create,
incur, assume or permit to exist any indebtedness or liabilities from
borrowings, loans or advances, whether secured or unsecured, matured or
unmatured, liquidated or unliquidated, joint or several, except for (a)
liabilities of the ▇▇▇▇▇▇▇▇▇ Guarantors existing as of, and disclosed to Bank
prior to the date hereof and replacements thereof, (b) liabilities of the
▇▇▇▇▇▇▇▇▇ Guarantors to Bank, (c) non-recourse borrowings hereafter by
partnerships or limited liability companies in which the ▇▇▇▇▇▇▇▇▇ Guarantors
are partners or members, (d) purchase money indebtedness incurred hereafter to
finance the acquisition of real property, secured by such real property, (e)
purchase money indebtedness incurred hereafter to finance the acquisition of
motor vehicles, secured by such vehicles, and (f) other borrowings hereafter
which do not exceed $250,000.00 in the aggregate for the ▇▇▇▇▇▇▇▇▇ Guarantors
combined.
VI. DEFAULT, REMEDIES:
1. Default, Remedies. Upon the violation of any term or condition of any of
the Loan Documents, or upon the occurrence of any default or defined event of
default under any of the Loan Documents: (a) all indebtedness of Borrower under
each of the Loan Documents, any term thereof to the contrary notwithstanding,
shall at Bank's option and without notice become immediately due and payable
without presentment, demand, protest or notice of dishonor, all of which are
expressly waived by Borrower; (b) the obligation, if any, of Bank to extend any
further credit under any of the Loan Documents shall immediately cease and
terminate; and (c) Bank shall have all rights, powers and remedies available
under each of the Loan Documents, or accorded by law, including without
limitation the right to resort to any or all security for any credit subject
hereto and to exercise any or all of the rights of a beneficiary or secured
party pursuant to applicable law. All rights, powers and remedies of Bank may be
exercised at any time by Bank and from time to time after the occurrence of any
such breach or default, are cumulative and not exclusive, and shall be in
addition to any other rights, powers or remedies provided by law or equity.
2. No Waiver. No delay, failure or discontinuance of Bank in exercising any
right, power or remedy under any of the Loan Documents shall affect or operate
as a waiver of such right, power or remedy; nor shall any single or partial
exercise of any such right, power or remedy preclude, waive or otherwise affect
any other or further exercise thereof or the exercise of any other right, power
or remedy. Any waiver, permit, consent or approval of any kind by Bank of any
breach of or default under any of the Loan Documents must be in writing and
shall be effective only to the extent set forth in such writing.
3. Cure Periods. Notwithstanding anything herein or in any of the other
Loan Documents to the contrary:
(a) An event of default shall not exist under the Loan Documents as a
result of ▇▇▇▇▇▇▇▇'s failure to make a payment when due to Bank thereunder and
Bank shall not be entitled to accelerate ▇▇▇▇▇▇▇▇'s indebtedness to Bank
hereunder as a result of ▇▇▇▇▇▇▇▇'s failure to make a payment when due to Bank
under the Loan Documents unless such payment is more than five (5) days past
due.
(b) An event of default shall not exist under the Loan Documents as a
result of Borrower's default in compliance with any covenant therein (other than
a payment default referred to in paragraph (a) above) and Bank shall not be
entitled to accelerate Borrower's indebtedness to Bank hereunder as a result of
any such default unless, with respect to any such default which by its nature
can be cured, such default shall continue for a period of twenty (20) days from
its occurrence; provided, however, that in the case of a default under the
following covenants, Borrower shall have twenty (20) days from the date Borrower
receives notice thereof from Bank to cure such default: paragraph V,1 as it
relates to the maintenance of adequate books and records; paragraph V, 3 as it
relates to financial statements being in form and detail satisfactory to Bank;
paragraph V,4; paragraph V,5; paragraph V,6; and paragraph V,7 as it relates to
making provisions satisfactory to Bank.
VII. MISCELLANEOUS:
1. Notices. All notices, requests and demands which any party is required
or may desire to give to any other party under any provision of this letter must
be in writing delivered to each party at its address first set forth above, or
to such other address as any party may designate by written notice to all other
parties. Each such notice, request and demand shall be deemed given or made as
follows: (a) if sent by hand delivery, upon delivery; (b) if sent by mail, upon
the earlier of the date of receipt or three (3) days after deposit in the U.S.
mail, first class and postage prepaid; and (c) if sent by telecopy, upon
receipt.
2. Costs, Expenses and Attorneys' Fees. Borrower shall pay to Bank
immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys' fees (to include outside
counsel fees and all allocated costs of Bank's in-house counsel), expended or
incurred by Bank in connection with (a) the negotiation and preparation of this
letter and the other Loan Documents, Bank's continued administration hereof and
thereof, and the preparation of amendments and waivers hereto and thereto,
(b) the enforcement of Bank's rights and/or the collection of any amounts which
become due to Bank under any of the Loan Documents, and (c) the prosecution or
defense of any action in any way related to any of the Loan Documents, including
without limitation, any action for declaratory relief, whether incurred at the
trial or appellate level, in an arbitration proceeding or otherwise, and
including any of the foregoing incurred in connection with any bankruptcy
proceeding (including without limitation, any adversary proceeding, contested
matter or motion brought by Bank or any other person) relating to any Borrower
or any other person or entity.
3. Successors, Assignment. This letter shall be binding upon and inure to
the benefit of the heirs, executors, administrators, legal representatives,
successors and assigns of the parties; provided however, that Borrower may not
assign or transfer its interest hereunder without Bank's prior written consent.
Bank reserves the right to sell, assign, transfer, negotiate or grant
participations in all or any part of, or any interest in, Bank's rights and
benefits under each of the Loan Documents. In connection therewith Bank may
disclose all documents and information which Bank now has or hereafter may
acquire relating to any credit subject hereto, Borrower or its business, any
guarantor hereunder or the business of such guarantor, or any collateral
required hereunder.
4. Entire Agreement; Amendment. This letter and the other Loan Documents
constitute the entire agreement between Borrower and Bank with respect to each
credit subject hereto and supersede all prior negotiations, communications,
discussions and correspondence concerning the subject matter hereof. This letter
may be amended or modified only in writing signed by each party hereto.
5. No Third Party Beneficiaries. This letter is made and entered into for
the sole protection and benefit of the parties hereto and their respective
permitted successors and assigns, and no other person or entity shall be a third
party beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this letter or any other of the Loan Documents to which it is
not a party.
6. Severability of Provisions. If any provision of this letter shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or any remaining provisions of this
letter.
7. Governing Law. This letter shall be governed by and construed in
accordance with the laws of the State of California.
8. Arbitration.
(a) Arbitration. Upon the demand of any party, any Dispute shall be
resolved by binding arbitration in accordance with the terms of this letter. A
"Dispute" shall mean any action, dispute, claim or controversy of any kind,
whether in contract or tort, statutory or common law, legal or equitable, now
existing or hereafter arising under or in connection with, or in any way
pertaining to, any of the Loan Documents, or any past, present or future
extensions of credit and other activities, transactions or obligations of any
kind related directly or indirectly to any of the Loan Documents, including
without limitation, any of the foregoing arising in connection with the exercise
of any self-help, ancillary or other remedies pursuant to any of the Loan
Documents. Any party may by summary proceedings bring an action in court to
compel arbitration of a Dispute. Any party who fails or refuses to submit to
arbitration following a lawful demand by any other party shall bear all costs
and expenses incurred by such other party in compelling arbitration of any
Dispute.
(b) Governing Rules. Arbitration proceedings shall be administered by the
American Arbitration Association ("AAA") or such other administrator as the
parties shall mutually agree upon in accordance with the AAA Commercial
Arbitration Rules. All Disputes submitted to arbitration shall be resolved in
accordance with the Federal Arbitration Act (Title 9 of the United States Code),
notwithstanding any conflicting choice of law provision in any of the Loan
Documents. The arbitration shall be conducted at a location in California
selected by the AAA or other administrator. If there is any inconsistency
between the terms hereof and any such rules, the terms and procedures set forth
herein shall control. All statutes of limitation applicable to any Dispute shall
apply to any arbitration proceeding. All discovery activities shall be expressly
limited to matters directly relevant to the Dispute being arbitrated. Judgment
upon any award rendered in an arbitration may be entered in any court having
jurisdiction; provided however, that nothing contained herein shall be deemed to
be a waiver by any party that is a bank of the protections afforded to it under
12 U.S.C. 91 or any similar applicable state law.
(c) No Waiver; Provisional Remedies, Self-Help and Foreclosure. No
provision hereof shall limit the right of any party to exercise self-help
remedies such as setoff, foreclosure against or sale of any real or personal
property collateral or security, or to obtain provisional or ancillary remedies,
including without limitation injunctive relief, sequestration, attachment,
garnishment or the appointment of a receiver, from a court of competent
jurisdiction before, after or during the pendency of any arbitration or other
proceeding. The exercise of any such remedy shall not waive the right of any
party to compel arbitration or reference hereunder.
(d) Arbitrator Qualifications and Powers; Awards. Arbitrators must be
active members of the California State Bar or retired judges of the state or
federal judiciary of California, with expertise in the substantive law
applicable to the subject matter of the Dispute. Arbitrators are empowered to
resolve Disputes by summary rulings in response to motions filed prior to the
final arbitration hearing. Arbitrators (i) shall resolve all Disputes in
accordance with the substantive law of the State of California, (ii) may grant
any remedy or relief that a court of the State of California could order or
grant within the scope hereof and such ancillary relief as is necessary to make
effective any award, and (iii) shall have the power to award recovery of all
costs and fees, to impose sanctions and to take such other actions as they deem
necessary to the same extent a judge could pursuant to the Federal Rules of
Civil Procedure, the California Rules of Civil Procedure or other applicable
law. Any Dispute in which the amount in controversy is $5,000,000 or less shall
be decided by a single arbitrator who shall not render an award of greater than
$5,000,000 (including damages, costs, fees and expenses). By submission to a
single arbitrator, each party expressly waives any right or claim to recover
more than $5,000,000. Any Dispute in which the amount in controversy exceeds
$5,000,000 shall be decided by majority vote of a panel of three arbitrators;
provided however, that all three arbitrators must actively participate in all
hearings and deliberations.
(e) Real Property Collateral; Judicial Reference. Notwithstanding anything
herein to the contrary, no Dispute shall be submitted to arbitration if the
Dispute concerns indebtedness secured directly or indirectly, in whole or in
part, by any real property unless (i) the holder of the mortgage, lien or
security interest specifically elects in writing to proceed with the
arbitration, or (ii) all parties to the arbitration waive any rights or benefits
that might accrue to them by virtue of the single action rule statute of
California, thereby agreeing that all indebtedness and obligations of the
parties, and all mortgages, liens and security interests securing such
indebtedness and obligations, shall remain fully valid and enforceable. If any
such Dispute is not submitted to arbitration, the Dispute shall be referred to a
referee in accordance with California Code of Civil Procedure Section 638 et
seq., and this general reference agreement is intended to be specifically
enforceable in accordance with said Section 638. A referee with the
qualifications required herein for arbitrators shall be selected pursuant to the
AAA's selection procedures. Judgment upon the decision rendered by a referee
shall be entered in the court in which such proceeding was commenced in
accordance with California Code of Civil Procedure Sections 644 and 645.
(f) Miscellaneous. To the maximum extent practicable, the AAA, the
arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the filing of the Dispute with the
AAA. No arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business, by applicable law or
regulation, or to the extent necessary to exercise any judicial review rights
set forth herein. If more than one agreement for arbitration by or between the
parties potentially applies to a Dispute, the arbitration provision most
directly related to the Loan Documents or the subject matter of the Dispute
shall control. This arbitration provision shall survive termination, amendment
or expiration of any of the Loan Documents or any relationship between the
parties.
Your acknowledgment of this letter shall constitute acceptance of the
foregoing terms and conditions. Bank's commitment to extend any credit to
Borrower pursuant to the terms of this letter shall terminate on August 19,
2000, unless this letter is acknowledged by ▇▇▇▇▇▇▇▇ and returned to Bank on or
before that date.
Sincerely,
▇▇▇▇▇ FARGO BANK,
NATIONAL ASSOCIATION
By: __________________________
▇▇▇▇ ▇▇▇▇▇▇
Vice President
Acknowledged and accepted as of _________:
GRILL CONCEPTS, INC.
By: __________________________
Title: _________________________