EXHIBIT 10.5
[LOGO] Western Financial Bank
BUSINESS LOAN AGREEMENT
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Principal Loan Date Maturity Loan No Call Collateral Account Officer Initials
$2,000,000.00 12-12-2000 12-11-2001 9001 4a0 3100 0001910 00905
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References in the shaded area are for Lender's use only and do not limit the applicability of
this document to any particular loan or item.
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Borrower: Fresh Enterprises, Inc.; ET. AL. Lender: Western Financial Bank
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ Commercial Banking Group
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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THIS BUSINESS LOAN AGREEMENT between Fresh Enterprises, Inc. and Baja Fresh
Westlake Village, Inc., dba Baja Fresh Mexican Grill (referred to in this
Agreement individually and collectively as "Borrower") and Western Financial
Bank (referred to in this Agreement as "Lender") is made and executed on the
following terms and conditions. Borrower has received prior commercial loans
from Lender or has applied to Lender for a commercial loan or loans and other
financial accommodations, including those which may be described on any exhibit
or schedule attached to this Agreement. All such loans and financial
accommodations, together with all future loans and financial accommodations from
Lender to Borrower, are referred to in this Agreement individually as the "Loan"
and collectively as the "Loans." Borrower understands and agrees that: (a) in
granting, renewing, or extending any Loan, Lender is relying upon Borrower's
representations, warranties, and agreements, as set forth in this Agreement; (b)
the granting, renewing, or extending of any Loan by Lender at all times shall be
subject to Lender's sole judgment and discretion; and (c) all such Loans shall
be and shall remain subject to the following terms and conditions of this
Agreement.
TERM. This Agreement shall be effective as of December 12, 2000, and shall
continue thereafter until all Indebtedness of Borrower to Lender has been
performed in full and the parties terminate this Agreement in writing.
DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. All references
to dollar amounts shall mean amounts in lawful money of the United States of
America.
Agreement. The word "Agreement" means this Business Loan Agreement, as this
Business Loan Agreement may be amended or modified from time to time,
together with all exhibits and schedules attached to this Business Loan
Agreement from time to time.
Borrower. The word "Borrower" means individually and collectively Fresh
Enterprises, Inc. and Baja Fresh Westlake Village, Inc., dba Baja Fresh
Mexican Grill
CERCLA. The word "CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.
Cash Flow. The words "Cash Flow" mean net income after taxes, and exclusive
of extraordinary gains and income, plus depreciation and amortization.
Collateral. The word "Collateral" means all property and assets granted as
collateral security for a Loan, whether real or personal property, whether
granted directly or indirectly, whether granted now or in the future, and
whether granted in the form of a security interest, mortgage, deed of
trust, assignment, pledge, chattel mortgage, chattel trust, factor's lien,
equipment trust, conditional sale, trust receipt, lien, charge, lien or
title retention contract, lease or consignment intended as a security
device, or any other security or lien interest whatsoever, whether created
by law, contract, or otherwise.
Debt. The word "Debt" means all of Borrower's liabilities excluding
Subordinated Debt.
ERISA. The word "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
Event of Default. The words "Event of Default" mean and include without
limitation any of the Events of Default set forth below in the section
titled "EVENTS OF DEFAULT."
Grantor. The word "Grantor" means each and all of the persons or
entities granting a Security Interest in any Collateral for the
Indebtedness, including without limitation all Borrowers granting such a
Security Interest.
Guarantor. The word "Guarantor" means each and all of the guarantors,
sureties, and accommodation parties in connection with any Indebtedness.
Indebtedness. The word "Indebtedness" means and includes without limitation
all Loans, together with all other obligations, debts and liabilities of
Borrower to Lender, or any one or more of them, as well as all claims by
Lender against Borrower, or any one or more of them; whether now or
hereafter existing, voluntary or involuntary, due or not due, absolute or
contingent, liquidated or unliquidated; whether Borrower may be liable
individually or jointly with others; whether Borrower may be obligated as a
guarantor, surety, or otherwise; whether recovery upon such Indebtedness
may be or hereafter may become barred by any statute of limitations; and
whether such Indebtedness may be or hereafter may become otherwise
unenforceable.
Lender. The word "Lender" means Western Financial Bank, its successors and
assigns.
Liquid Assets. The words "Liquid Assets" mean Borrower's cash on hand plus
Borrower's readily marketable securities.
Loan. The word "Loan" or "Loans" means any and all commercial loans and
financial accommodations from Lender to Borrower, whether now or hereafter
existing, and however evidenced, including without limitation those loans
and financial accommodations described herein or described on any exhibit
or schedule attached to this Agreement from time to time.
Note. The word "Note" means and includes without limitation Borrower's
promissory note or notes, if any, evidencing Borrower's Loan obligations in
favor of Lender, as well as any substitute, replacement or refinancing note
or notes therefor.
Permitted Liens. The words "Permitted Liens" mean: (a) liens and security
interests securing Indebtedness owed by Borrower to Lender; (b) liens for
taxes, assessments, or similar charges either not yet due or being
contested in good faith; (c) liens of materialmen, mechanics, warehousemen,
or carriers, or other like liens arising in the ordinary course of business
and securing obligations which are not(A); (d) purchase money liens or
purchase money security interests upon or in any property acquired or held
by Borrower in the ordinary course of business to secure indebtedness
outstanding on the date of this Agreement or permitted to be incurred under
the paragraph of this Agreement titled "Indebtedness and Liens"; (e) liens
and security interests which, as of the date of this Agreement, have been
disclosed to and approved by the Lender in writing; and (f) those liens and
security interests which in the aggregate constitute an immaterial and
insignificant monetary amount with respect to the net value of Borrower's
assets; (B).
Related Documents. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds
of trust, and all other instruments, agreements and documents, whether now
or hereafter existing, executed in connection with the Indebtedness.
Security Agreement. The words "Security Agreement" mean and include
without limitation any agreements, promises, covenants, arrangements
understandings or other agreements, whether created by law, contract, or
otherwise, evidencing, governing, representing, or creating a Security
Interest.
Security Interest. The words "Security Interest" mean and include without
limitation any type of collateral security, whether in the form of a lien,
charge, mortgage, deed of trust, assignment, pledge, chattel mortgage,
chattel trust, factor's lien, equipment trust, conditional sale, trust
receipt, lien or title retention contract, lease or consignment intended as
a security device, or any other security or lien interest whatsoever,
whether created by law, contract, or otherwise.
▇▇▇▇. The word "▇▇▇▇" means the Superfund Amendments and Reauthorization
Act of 1986 as now or hereafter amended.
Subordinated Debt. The words "Subordinated Debt" mean indebtedness and
liabilities of Borrower which have been subordinated by written agreement
to indebtedness owed by Borrower to Lender in form and substance acceptable
to Lender.
Tangible Net Worth. The words 'Tangible Net Worth" mean Borrower's total
assets excluding all intangible assets (i.e., goodwill, trademarks,
patents, copyrights, organizational expenses, and similar intangible items,
but including leaseholds and leasehold improvements) less total Debt.
Working Capital. The words "Working Capital" mean Borrower's current
assets, less Borrower's current liabilities.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial
Loan Advance and each subsequent Loan Advance under this Agreement shall be
subject to the fulfillment to Lender's satisfaction of all of the conditions set
forth in this Agreement and in the Related Documents.
Loan Documents. Borrower shall provide to Lender in form satisfactory to
Lender the following documents for the Loan: (a) the Note, (b) Security
Agreements granting to Lender security interests in the Collateral, (c)
Financing Statements perfect Lender's Security Interests; (d) evidence of
insurance as required below; and (e) any other documents required under
this Agreement or (C) by Lender or its counsel, including
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Loan No 9001 (Continued)
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without limitation any guaranties described below.
Borrower's Authorization. Borrower shall have provided in form and
substance satisfactory to Lender properly certified resolutions, duly
authorizing the execution and delivery of this Agreement, the Note and the
Related Documents, and such other authorizations and other documents and
instruments as Lender or its counsel, in their sole discretion, may
require.
Payment of Fees and Expenses. Borrower shall have paid to Lender all fees,
charges, and other expenses which are then due and payable as specified in
this Agreement or any Related Document.
Representations and Warranties. The representations and warranties set
forth in this Agreement, in the Related Documents, and in any document or
certificate delivered to Lender under this Agreement are true and correct.
No Event of Default. There shall not exist at the time of any advance a
condition which would constitute an Event of Default under this Agreement.
MULTIPLE BORROWERS. This Agreement has been exectuted by multiple obligors who
are referred to herein individually, collectively and interchangeably as
"Borrower." Unless specifically stated to the contrary, the word "Borrower" as
used in this Agreement, including without limitation all representations,
warranties and covenants, shall include all Borrowers. Borrower understands and
agrees that, with or without notice to Borrower, Lender may with respect to any
other Borrower (a) make one or more additional secured or unsecured loans or
otherwise extend additional credit; (b) alter, compromise, renew, extend,
accelerate, or otherwise change one or more times the time for payment or other
terms any indebtedness, including increases and decreases of the rate of
interest on the indebtedness; (c) exchange, enforce, waive, subordinate, fail or
decide not to perfect, and release any security, with or without the
substitution of new collateral; (d) release, substitute, agree not to ▇▇▇, or
deal with any one or more of Borrower's sureties, endorsers, or other guarantors
on any terms or in any manner Lender may choose; (e) determine how, when and
what application of payments and credits shall be made on any indebtedness; (f)
apply such security and direct the order or manner of sale thereof, including
without limitation, any nonjudicial sale permitted by the terms of the
controlling security agreement or deed of trust, as Lender in its discretion may
determine; (g) sell, transfer, assign, or grant participations in all or any
part of the indebtedness; (h) exercise or refrain from exercising any rights
against Borrower or others, or otherwise act or refrain from acting; (i) settle
or compromise any indebtedness; and (1) subordinate the payment of all or any
part of any indebtedness of Borrower to Lender to the payment of any liabilities
which may be due Lender or others.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of Loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any Indebtedness exists:
Organization. Borrower is a corporation which is duly organized, validly
existing, and in good standing under the laws of the State of California
and is in good standing in all states in which (D) Borrower has the full
power and authority to own its properties and to transact the businesses in
which it is presently engaged or presently proposes to engage. Borrower
also is duly qualified as a foreign corporation and is in good standing in
all states in which the failure to so qualify would have a material adverse
effect on its businesses or financial condition.
Authorization. The execution, delivery, and performance of this Agreement
and all Related Documents by Borrower, to the extent to be executed,
delivered or performed by Borrower, have been duly authorized by all
necessary action by Borrower; do not require the consent or approval of any
other person, regulatory authority or governmental body; and do not
conflict with, result in a violation of, or constitute a default under (a)
any provision of its articles of incorporation or organization, or bylaws,
or any agreement or other instrument binding upon Borrower or (b) any law,
governmental regulation, court decree, or order applicable to Borrower.
Financial Information. Each Financial statement of Borrower supplied to
Lender(E) disclosed Borrower's financial condition as of the date of the
statement (F) and there has been no material adverse change in Borrower's
financial condition subsequent to the date of the most recent financial
statement supplied to Lender. Borrower has no material contingent
obligations except as disclosed in such financial statements.
Legal Effect. This Agreement constitutes, and any instrument or agreement
required hereunder to be given by Borrower when delivered will constitute,
legal, valid and binding obligations of Borrower enforceable against
Borrower in accordance with their respective terms(G).
Properties. Except as contemplated by this Agreement or as previously
disclosed in Borrower's financial statements or in writing to Lender and as
accepted by Lender, and except for property tax liens for taxes not
presently due and payable, Borrower owns and has good title to all of
Borrower's properties free and clear of all Security Interests, and has not
executed any security documents or financing statements relating to such
properties. All of Borrower's properties are titled in Borrower's legal
name, and Borrower has not used, or filed a financing statement under, any
other name for at least the last five (5) years.
Hazardous Substances. The terms "hazardous waste," "hazardous substance,"
"disposal," "release," and "threatened release," as used in this Agreement,
shall have the same meanings as set forth in the "CERCLA," "▇▇▇▇," the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq.,
the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et
seq., Chapters 6.5 through 7.7 of Division 20 of the California Health and
Safety Code, Section 25100, et seq., or other applicable state or Federal
laws, rules, or regulations adopted pursuant to any of the foregoing.
Except as disclosed to and acknowledged by Lender in writing, Borrower
represents and warrants that: (a) During the period of Borrower's ownership
of the properties, there has been no use, generation, manufacture, storage,
treatment, disposal, release or threatened release of any hazardous waste
or substance by any person on, under, about or from any of the properties.
(b) Borrower has no knowledge of, or reason to believe that there has been
(i) any use, generation, manufacture, storage, treatment, disposal,
release, or threatened release of any hazardous waste or substance on,
under, about or from the properties by any prior owners or occupants of any
of the properties, or (ii) any actual or threatened litigation or claims of
any kind by any person relating to such matters. (c) Neither Borrower nor
any tenant, contractor, agent or other authorized user of any of the
properties shall use, generate, manufacture, store, treat, dispose of, or
release any hazardous waste or substance on, under, about or from any of
the properties; and any such activity shall be conducted in compliance with
all applicable federal, state, and local laws, regulations, and ordinances,
including without limitation those laws, regulations and ordinances
described above. The representations and warranties contained herein are
based on Borrower's due diligence in investigating the properties for
hazardous waste and hazardous substances. Borrower hereby (a) releases and
waives any future claims against Lender for indemnity or contribution in
the event Borrower becomes liable for cleanup or other costs under any such
laws, and (b) agrees to indemnity and hold harmless Lender against any and
all claims, losses, liabilities, damages, penalties, and expenses which
Lender may directly or indirectly sustain or suffer resulting from a breach
of this section of the Agreement or as a consequence of any use,
generation, manufacture, storage, disposal, release or threatened release
of a hazardous waste or substance on the properties. The provisions of this
section of the Agreement, including the obligation to indemnify, shall
survive the payment of the Indebtedness and the termination or expiration
of this Agreement and shall not be affected by Lender's acquisition of any
interest in any of the properties, whether by foreclosure or otherwise.
Litigation and Claims. No litigation, claim, investigation, administrative
proceeding or similar action (including those for unpaid taxes) against
Borrower is pending or (H) threatened, and no other event has occurred
which (I) materially adversely affect Borrower's financial condition or
properties, other than litigation, claims, or other events, if any, that
have been disclosed to and acknowledged by Lender in writing.
Taxes. To the best of Borrower's knowledge, all tax returns and reports of
Borrower that are or were required to be filed, have been filed, and all
taxes, assessments and other governmental charges have been paid in full,
except those presently being or to be contested by Borrower in good _______
at the ordinary course of business and business and for which adequate
reserves have been provided.
Lien Priority. Unless otherwise previously disclosed to Lender in writing,
Borrower has not entered into or granted any Security Agreements, or
permitted the filing or attachment of any Security Interests on or
affecting any of the Collateral directly or indirectly securing repayment
of Borrower's Loan and Note, that would be prior or that may in any way be
superior to Lender's Security Interests and rights in and to such
Collateral.
Binding Effect. This Agreement, the Note, all Security Agreements directly
or indirectly securing repayment of Borrower's Loan and Note and all of the
Related Documents are binding upon Borrower as well as upon Borrower's
successors, representatives and assigns, and are legally enforceable in
accordance with their respective terms(J).
Commercial Purposes. Borrower intends to use the Loan proceeds solely for
business or commercial related purposes.
Employee Benefit Plans. Each employee benefit plan as to which Borrower may
have any liability complies in all material respects with all applicable
requirements of law and regulations, and (i) no Reportable Event nor
Prohibited Transaction (as defined in ERISA) has occurred with respect to
any such plan, (ii) Borrower has not withdrawn from any such plan or
initiated steps to do so, (iii) no steps have been taken to terminate any
such plan, and (iv) there are no unfunded liabilities other than those
previously disclosed to Lender in writing.
Location of Borrower's Offices and Records. Borrower's place of business,
or Borrower's Chief executive office, if Borrower has more than one place
of business, is located at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇. Unless Borrower has designated otherwise in writing this
location is also the office or offices where Borrower keeps its records
concerning the Collateral.
Information. All information heretofore or contemporaneously herewith
furnished by Borrower to Lender for the purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all
information hereafter furnished by or on behalf of Borrower to Lender will
be, true and accurate in every material respect on the date as of which
such information is dated or certified; and none of such information is or
will be
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Loan No 9001 (Continued)
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incomplete by omitting to state any material fact necessary to make such
information not misleading.
Survival of Representations and Warranties. Borrower understands and agrees
that Lender, without independent investigation, is relying upon the above
representations and warranties in extending Loan Advances to Borrower.
Borrower further agrees that the foregoing representations and warranties
shall be continuing in nature and shall remain in full force and effect
until such time as Borrower's indebtedness shall be paid in full, or until
this Agreement shall be terminated in the manner provided above, whichever
is the last to occur.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower will:
Litigation. Promptly inform Lender in writing of (a) all material adverse
changes in Borrower's financial condition, and (b) all existing and all
threatened litigation, claims, investigations, administrative proceedings
or similar actions affecting Borrower or any Guarantor which /(J) affect
the financial condition of Borrower or the financial condition of any
Guarantor.
Financial Records. Maintain its books and records in accordance with
generally accepted accounting principles, applied on a consistent basis,
and permit Lender to examine and audit Borrower's books and records at all
reasonable times(K).
Additional Information. Furnish such additional information and statements,
lists of assets and liabilities, agings of receivables and payables,
inventory schedules, budgets, forecasts, tax returns, and other reports
with respect to Borrower's financial condition and business operations as
Lender may (L) request from time to time.
Financial Covenants and Ratios. Comply with the following covenants and
ratios:
Income. Maintain not less than the following income level: Earnings
before interest, taxes, depreciation and amortization (EBITDA) during
fiscal year 2000, must be greater than or equal to $2,600,000.00 and
greater than or equal to $6,000,000.00 during fiscal year 2001. For
the purpose of this calculation, EBITDA does not include store
pre-opening costs. The financial covenants and ratios set forth in
this paragraph shall be determined and calculated for all Borrowers on
a consolidated basis and reference in this paragraph to "Borrower"
shall mean all "Borrowers." Except as provided above, all computations
made to determine compliance with the requirements contained in this
paragraph shall be made in accordance with generally accepted
accounting principles, applied on a consistent basis, and certified by
Borrower as being true and correct.
Insurance. Maintain fire and other risk insurance, public liability
insurance, and such other insurance as Lender may require with respect
to Borrower's properties and operations, in form, amounts, coverages
and with insurance companies reasonably acceptable to Lender.
Borrower, upon request of Lender, will deliver to Lender from time to
time the policies or certificates of insurance in form satisfactory to
Lender, including stipulations that coverages will not be cancelled or
diminished without at least ten (10) days' prior written notice to
Lender. Each insurance policy also shall include an endorsement
providing that coverage in favor of Lender will not be impaired in any
way by any act, omission or default of Borrower or any other person.
In connection with all policies covering assets in which Lender holds
or is offered a security interest for the Loans, Borrower will provide
Lender with such loss payable or other endorsements as Lender
may require.
Insurance Reports. Furnish to Lender, upon request of Lender, reports on
each existing insurance policy showing such information as Lender may
reasonably request, including without limitation the following: (a) the
name of the insurer; (b) the risks insured; (c) the amount of the policy;
(d) the properties insured; (e) the then current property values on the
basis of which insurance has been obtained, and the manner of determining
those values; and (f) the expiration date of the policy. In addition, upon
request of Lender (however not more often than annually), (LL) Borrower
will have an independent appraiser satisfactory to Lender determine, as
applicable, the actual cash value or replacement cost of any Collateral.
The cost of such appraisal shall be paid by Borrower.
Guaranties. Prior to disbursement of any Loan proceeds, furnish executed
guaranties of the Loans in favor of Lender, executed by the guarantor named
below, on Lender's forms, and in the amount and under the conditions
spelled out in those guaranties.
Guarantor Amount
--------- --------------
Triune Corporation $12,000,000.00
Other Agreements. Comply (M) with all terms and conditions of all other
agreements, whether now or hereafter existing, between Borrower and any
other party and notify Lender immediately in writing of any default in
connection with any other such agreements(N).
Loan Proceeds. Use all Loan proceeds solely for Borrower's business
operations, unless specifically consented to the contrary by Lender in
writing.
Taxes, Charges and Liens. Pay and discharge when due all of its
indebtedness and obligations, including without limitation all assessments,
taxes, governmental charges, levies and liens, of every kind and nature,
imposed upon Borrower or its properties, income, or profits, and all lawful
claims that, if unpaid, might become a lien or charge upon any of
Borrower's properties, income, or profits. Provided however, Borrower will
not be required to pay and discharge any such assessment, tax, charge,
▇▇▇▇, ▇▇▇▇ or claim so long as (a) the legality of the same shall be
contested in good faith by appropriate proceedings, and (b) Borrower shall
have established on its books adequate reserves with respect to such
contested assessment, tax, charge, levy, lien, or claim in accordance with
generally accepted accounting practices. Borrower, upon demand of Lender,
will furnish to Lender evidence of payment of the assessments, taxes,
charges, levies, liens and claims and will authorize the appropriate
governmental official to deliver to Lender at any time a written statement
of any assessments, taxes, charges, levies, liens and claims against
Borrower's properties, income, or profits.
Performance. Perform and comply with all terms, conditions, and provisions
set forth in this Agreement and in the Related Documents in a timely
manner, and promptly notify Lender if Borrower learns of the occurrence of
any event which constitutes an Event of Default under this Agreement or
under any of the Related Documents.
Operations. Maintain executive personnel (P) with substantially the same
qualifications and experience as the present executive personnel (P)
provide written notice to Lender of any change in executive personnel(P);
conduct its business affairs in a reasonable and prudent manner and in (O)
compliance with all applicable federal, state and municipal laws,
ordinances, rules and regulations respecting its properties, charters,
businesses and operations, including without limitation, compliance with
the Americans With Disabilities Act and with all minimum funding standards
and other requirement of ERISA and other laws applicable to Borrower's
employee benefit plans.
Inspection. Permit employees or agents of Lender at any reasonable time (R)
to inspect any and all Collateral for the Loan or Loans and Borrower's
other properties and to examine or audit Borrower's books, accounts, and
records and to make copies and memoranda of Borrower's books, accounts, and
records. If Borrower now or at any time hereafter maintains any records
(including without limitation computer generated records and computer
software programs for the generation of such records) in the possession of
third party, Borrower, upon request of Lender, shall notify such party to
permit Lender free access to such records at all reasonable times (R) and
to provide Lender with copies of any records it may request, all at
Borrower's expense.
Compliance Certificate. Unless waived in writing by Lender, provide Lender
(S) a certificate executed by Borrower's chief financial officer, or other
officer or person acceptable to Lender, certifying that the representation
and warranties set forth in this Agreement are true and correct as of the
date of the certificate and further certifying that, as of the date of the
certificate, no Event of Default exists under this Agreement.
Environmental Compliance and Reports. Borrower shall comply in all respects
with all environmental protection federal, state and local laws, statutes,
regulations and ordinances, not cause or permit to exist, as a result of an
intentional or unintentional action or omission on its part or on the part
of any third party, on property owned and/or occupied by Borrower, any
environmental activity where damage may result to the environment, unless
such environmental activity is pursuant to and in compliance with the
conditions of a permit issued by the appropriate federal, state or local
governmental authorities; shall furnish to Lender promptly and in any event
within thirty (30) days after receipt thereof a copy of any notice,
summons, lien, citation, directive, letter or other communication from any
governmental agency or instrumentality concerning any intentional or
unintentional action or omission on Borrower's part in connection with any
environmental activity whether or not there is damage to the environment
and/or other natural resources.
Additional Assurances. Make, execute and deliver to Lender such promissory
notes, mortgages, deeds of trust, security agreements, financing
statements, instruments, documents and other agreements as Lender or its
attorneys may reasonably request to evidence and secure the Loans and to
perfect all Security Interests.
RECOVERY OF ADDITIONAL COSTS. If the imposition of or any change in any law,
rule, regulation or guideline, or the interpretation or application of any
thereof by any court or administrative or governmental authority (including any
request or policy not having the force of law) shall impose, modify or make
applicable any taxes (except U.S. federal, state or local income or franchise
taxes imposed on Lender), reserve requirements, capital adequacy requirements or
other obligations which would (a) increase the cost to Lender for extending or
maintaining the credit facilities to which this Agreement relates, (b) reduce
the amounts payable to Lender under this Agreement or the Related Documents, or
(c) reduce the rate of return on Lender's capital as a consequence of Lender's
obligations with respect to the credit facilities to which this Agreement
relates, then Borrower agrees to pay Lender such additional amounts as will
compensate Lender therefor, within five (5) days after Lender's written demand
for such payment, which demand shall be accompanied by an explanation of such
imposition or charge and a calculation in reasonable detail of the additional
amounts payable by Borrower, which explanation and calculations shall be
conclusive in the absence of manifest error.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior
12-12-2000 BUSINESS LOAN AGREEMENT Page 4
Loan No 9001 (Continued)
================================================================================
written consent of Lender:
Indebtedness and Liens. (a) Except for trade debt incurred in, the normal
course of business/(T) and Indebtedness to Lender contemplated by this
Agreement, create, incur or assume indebtedness for borrowed money, (b)
except/(D) allowed as a Permitted Lien, sell, transfer, mortgage, assign,
pledge, lease, grant a security interest in, or encumber any of Borrower's
assets, or (c) sell with recourse any of Borrower's accounts, except to
Lender.
Continuity of Operations. (a) Engage in any business activities
substantially different than those in which Borrower is presently engaged,
(b) cease operations, liquidate, merge, transfer, acquire or consolidate
with any other entity/(v), change ownership/(w) change its name, dissolve
or transfer or sell Collateral out of the ordinary course of business, (c)
pay any dividends on Borrower's stock (other than dividends payable in its
stock), provided, however that notwithstanding the foregoing, but only so
long as no Event of Default has occurred and is continuing or would result
from the payment of dividends, if Borrower is a "Subchapter S Corporation"
(as defined in the Internal Revenue Code of 1986, as amended). Borrower may
pay cash dividends on its stock to its shareholders from time to time in
amounts necessary to enable the shareholders to pay income taxes and make
estimated income tax payments to satisfy their liabilities under federal
and state law which arise solely from their status as Shareholders of a
Subchapter S Corporation because of their ownership of shares of stock of
Borrower, or (d) purchase or retire any of Borrower's outstanding shares or
alter or amend Borrower's capital structure
Loans, Acquisitions and Guaranties. /(X) Invest in or advance money or
assets, (b) purchase, create or acquire any interest in any other
enterprise or entity, or (c) Incur any obligation as surety or guarantor
other than in the ordinary course of business.
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds if:
(a) Borrower or any Guarantor is in default under the terms of this Agreement or
any of the Related Documents or any other agreement that Borrower or any other
Guarantor has with Lender; (b) Borrower or any Guarantor becomes insolvent,
files a petition in bankruptcy or similar proceedings, or is adjudged a
bankrupt; (c) there occurs a material adverse change in Borrower's financial
condition, in the financial condition of any Guarantor, or in the value of any
Collateral securing any Loan: or (d) any Guarantor seeks, claims or otherwise
attempts to limit, modify or revoke such Guarantor's guaranty of the Loan or any
other loan with Lender.
REPORTING COVENANTS.
1. Borrowers to provide to Lender annual certified public accountant audited
fiscal year end financial statements, along with a copy of the certified public
accountant management letter, within 120 days of fiscal year end.
2. Borrowers to provide to Lender copies of annual tax returns within 15 days of
filing.
3. Borrowers to provide to Lender monthly company prepared consolidated and
consolidating financial statements within 30 days after the end of each
four-week accounting period of Borrower: provided, however, that Borrower shall
have 45 days alter the end of each four-week accounting period to deliver such
financial statements with respect to all accounting periods ending on or prior
to March 26, 2001. Financial statements to include operating statements on each
restaurant.
4. Additional reporting, including store-by-store performance breakdown and
status of stores under development to be determined.
OTHER COVENANTS.
1. No advances on line of credit no. 0001910-9002 will be permitted until
January 2, 2001.
2. Borrowers agree to maintain their primary deposit relationships with Lender.
3. Through December 31, 2000, Borrowers to maintain minimum cash and marketable
securities of $1,500,000.00.
4. Borrower shall irrevocably grant a security interest in and pledge to Lender
as additional Collateral, all of Borrower's right, title and interest in the
Service ▇▇▇▇ name of Baja Fresh. Borrower agrees to execute and deliver to
Lender any and all instruments, documents and agreements that Lender shall
require in Lender's sole discretion to effectuate the grant, a security interest
in and pledge of the foregoing from Borrower to Lender as additional collateral.
If any or all of the covenants and agreements set forth in this paragraph do not
occur, it shall be deemed an Event of Default.
OTHER FINANCIAL COVENANTS AND RATIOS (CONTINUED FROM PAGE 3). Comply with the
following covenants and ratios:
Effective Tangible Net Worth. Maintain a minimum Effective Tangible Net Worth of
not less than $16,500,000.00. Effective Tangible Net Worth is defined as net
worth less intangibles plus debt subordinated to Lender.
Debt to Effective Tangible Net Worth. Maintain a ratio of maximum Debt to
Effective Tangible Net Worth of 1.25 to 1.00.
Current Ratio. Maintain a ratio of Current Assets to Current Liabilities in
excess of 0.70 to 1.00. For purposes of calculating the Current Ratio covenant
only, Current Liabilities will not include the current portion of long term bank
debt and subordinated debt.
Debt Service Coverage. Maintain a ratio of minimum Debt Service Coverage of 2.00
to 1.00, defined as follows: The sum of net income before tax, plus depreciation
divided by current portion of long term debt. For purposes of calculating the
Debt Service Coverage Ratio, current portion of long term debt will not include
subordinated debt.
ADDITIONAL FINANCIAL COVENANTS.
1. Borrowers acknowledge and agree that no quarterly losses are permitted
excluding pre-opening costs.
2. Borrowers acknowledge and agree that quarterly losses for the Borrower's
fiscal quarter ending March 26, 2001 are not to exceed $300,000.00 alter
pre-opening costs and thereafter that quarterly losses are not to exceed
$200,000.00 after pre-opening costs.
RIDERS. All changes contained herein are included on the attached Exhibit "X".
RIGHT OF SETOFF. Borrower grants to Lender a contractual security interest in,
and hereby assigns, conveys, delivers, pledges, and transfers to Lender all
Borrower's right, title and interest in and to, Borrower's accounts with Lender
(whether checking, savings, or some other account), including without limitation
all accounts held jointly with someone else and all accounts Borrower may open
in the future, excluding however all ▇▇▇ and ▇▇▇▇▇ accounts, and all trust
accounts for which the grant of a security interest would be prohibited by law.
Borrower authorizes Lender, to the extent permitted by applicable law, to charge
or setoff all sums owing on the indebtedness against any and all such accounts.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:
Default on Indebtedness. Failure of Borrower to make any/(Z) payment when
due on the Loans(AA).
Other Defaults. Failure of Borrower or any Grantor to comply with or to
perform when due any other term, obligation, covenant or condition
contained in this Agreement or in any of the Related Documents, or failure
of Borrower to comply with or to perform any other term, obligation,
covenant or condition contained in any other agreement between Lender and
Borrower.
Default in Favor of Third Parties. Should Borrower or any Grantor default
under any loan extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person
that/(BB) property or Borrower's or any Grantor's ability to repay the
Loans or perform their respective Obligations under this Agreement or any
of the Related Documents.
False Statements. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Borrower or any Grantor under this
Agreement or the Related Documents is false or misleading in any material
at the time made or furnished, or becomes false or misleading at any time
thereafter.
Defective Collateralization. This Agreement or any of the Related Documents
ceases to be in full force and effect (including failure of any Security
Agreement to create a valid and perfected Security Interest) at any time
and for any reason.
Insolvency. The dissolution or termination of Borrower's/(BBB) existence as
a going business, the Insolvency of Borrower/(BBBB), the appointment of a
receiver for any part of Borrower's/(BBB) property, any assignment for the
benefit of creditors any type of creditor workout, or the commencement of
any proceeding under any bankruptcy or insolvency laws by or against
Borrower/(BBBB).
Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help
repossession or any other method, by any creditor of Borrower, any creditor
of any Grantor against any collateral securing the indebtedness/(CC) or by
any governmental agency. This includes a garnishment, attachment, or levy
on or of any of Borrower's/(BBB) deposit accounts with Lender/(CCC).
12-12-2000 BUSINESS LOAN AGREEMENT Page 5
Loan No 9001 (Continued)
================================================================================
Events Affecting Guarantor. Any of the preceding events occurs with respect
to any Guarantor of any of the indebtedness or any Guarantor dies or
becomes incompetent, or revokes or disputes the validity of, or liability
under, any Guaranty of the Indebtedness. Lender, at its option, may, but
shall not be required to, permit the Guarantor's estate to assume
unconditionally the obligations arising under the guaranty in a manner
satisfactory to Lender, and, in doing so, cure the Event of Default.
Events Affecting Co-Borrowers. Any of the preceding events occurs with
respect to any Co-borrower of any of the indebtedness or any co-borrower
dies or becomes incompetent, or revokes or disputes the validity of, or
liability under, any of the indebtedness. Lender, at its option, may, but
shall not be required to, permit the co-borrower's estate to assume
unconditionally the obligations on the Indebtedness in a manner
satisfactory to Lender, and, in doing so, cure the Event of Default.
Change in Ownership. Any change in ownership of/(DD) or more of the common
stock of Borrower.
Adverse Change. A material adverse change occurs in Borrower's financial
condition, or Lender/(EE) believes the prospect of payment or performance
of the Indebtedness is Impaired.
Right to Cure/(EEE) any default, other than a Default of Indebtedness, is
curable and if Borrower or Grantor, as the case may be, has not been given
a notice of a similar default within the preceding twelve (12) months, it
may be cured (and no Event of Default will have occurred) If Borrower or
Grantor, as the case may be, after receiving written notice from Lender
demanding cure of such default: (a) Cures the default within /(FF) or
(b) if the cure requires more than /(FF) immediately initiates steps which
Lender deems in Lender's sole discretion to be sufficient to cure the
default and thereafter continues and completes all reasonable and necessary
steps sufficient to produce compliance as soon as reasonably practical.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where
otherwise provided in this Agreement or the Related Documents, all commitments
and obligations of Lender under this Agreement or the Related Documents or any
other agreement Immediately will terminate (including any obligation to make
Loan Advances or disbursements), and, at Lender's option, all indebtedness
immediately will become due and payable, all without notice of any kind to
Borrower, except that in the case of an Event of Default of the type described
in the "Insolvency" subsection above, such acceleration shall be automatic and
not optional. In addition, Lender shall have all the rights and remedies,
provided in the Related Documents or available at law, in equity, or otherwise.
Except as may be prohibited by applicable law, all of Lender's rights and
remedies shall be cumulative and may be exercised singularly or concurrently.
Election by Lender to pursue any remedy shall not exclude pursuit of any other
remedy, and an election to make expenditures or to take action to perform an
obligation of Borrower or of any Grantor shall not affect Lender's right to
declare a default and to exercise its rights and remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
Amendments. This Agreement, together with any Related Documents,
constitutes the entire understanding and Agreement of the parties as to the
matters set forth in this Agreement. No alteration of or amendment to this
Agreement shall be effective unless given in writing and signed by the
party or parties sought to be charged or bound by the alteration or
amendment.
Applicable Law. This Agreement has been delivered to Lender and accepted by
Lender in the State of California. If there is a lawsuit, Borrower agrees
upon Lender's request to submit to the jurisdiction of the courts of Orange
County, the State of California. Lender and Borrower hereby waive the right
to any jury trial in any action, proceeding, or counterclaim brought by
either Lender or Borrower against the other. Subject to the provisions on
arbitration, this Agreement shall be governed by and construed in
accordance with the laws of the State of California.
Arbitration. Lender and Borrower agree that all disputes, claims and
controversies between them, whether individual, joint, or class in nature,
arising from this Agreement or otherwise, including without limitation
contract and tort disputes, shall be arbitrated pursuant to the Rules of
the American Arbitration Association, upon request of either party. No act
to take or dispose of any Collateral shall constitute a waiver of this
arbitration agreement or be prohibited by this arbitration agreement. This
includes, without limitation, obtaining injunctive relief or a temporary
restraining order: invoking a power of sale under any deed of trust or
mortgage; obtaining a writ of attachment or imposition of a receiver: or
exercising any rights relating to personal properly, including taking or
disposing of such property with or without judicial process, pursuant to
Article 9 of the Uniform Commercial Code. Any disputes, claims, or
controversies concerning the lawfulness or reasonableness of any act, or
exercise of any right, concerning any Collateral, including any claim to
rescind, reform, or otherwise modify any agreement relating to the
Collateral, shall also be arbitrated, provided however that no arbitrator
shall have the right or the power to enjoin or restrain any act of any
party. Lender and Borrower agree that in the event of an action for
judicial foreclosure pursuant to California Code of Civil Procedure Section
728, or any similar provision in any other state, the commencement of such
an action will not constitute a waiver of the right to arbitrate and the
court shall refer to arbitration as much of such action, including
counterclaims, as lawfully may be referred to arbitration. Judgment upon
any award rendered by any arbitrator may be entered in any court having
jurisdiction. Nothing in this Agreement shall preclude any party from
seeking equitable relief from a court of competent jurisdiction. The
statute of limitations, estoppel, waiver, laches, and similar doctrines
which would otherwise be applicable in an action brought by a party shall
be applicable in any arbitration proceeding, and the commencement of an
arbitration proceeding shall be deemed the commencement of an action for
these purposes. The Federal Arbitration Act shall apply to the
construction, interpretation, and enforcement of this arbitration
provision.
Caption Headings. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions
of this Agreement.
Multiple Parties: Corporate Authority. All obligations of Borrower under
this Agreement shall be joint and several, and all references to Borrower
shall mean each and every Borrower, This means that each/(GG) signing below
is responsible for all obligations in this Agreement.
Consent to Loan Participation. Borrower agrees and consents to Lender's
sale or transfer, whether now or later, of one or more participation
interests in the Loans to one or more purchasers, whether related or
unrelated to Lender. Lender may provide, without any limitation whatsoever,
to any one or more purchasers, a potential purchasers, any information or
knowledge Lender may have about Borrower or about any other matter relating
to the Loan, and Borrower hereby waives any rights to privacy it may have
with respect to such matters. Borrower additionally waives any and all
notices of sale of participation interests, as well as all notices of any
repurchase of such participation interests. Borrower further waives all
rights of offset or counterclaim that it may have now or later against
Lender or against any purchaser of such a participation interest and
unconditionally agrees that either Lender or such purchaser may enforce
Borrower's obligation under the Loans irrespective of the failure or
insolvency of any holder of any interest in the Loans. Borrower further
agrees that the purchaser of any such participation interest may enforce
its interests irrespective of any personal claims or defenses that Borrower
may have against Lender.(GGG)
Costs and Expenses. Borrower agrees to pay upon demand all of Lender's
expenses, including without limitation /(HH) attorneys' fees, incurred in
connection with the preparation, execution, enforcement, modification and
collection of this Agreement or in connection with the Loans made pursuant
to this Agreement. Lender may pay someone else to help collect the Loans
and to enforce this Agreement, and Borrower will pay that amount. This
includes, subject to any limits under applicable law, Lender's attorneys'
fees and Lender's legal expenses, whether or not there is a lawsuit,
including attorneys' fees for bankruptcy proceedings (including efforts to
modify or vacate any automatic stay or injunction), appeals, and any
anticipated post-judgment collection services. Borrower also will pay any
court costs, in addition to all other sums provided by law.
Notices. All notices required to be given under this Agreement shall be
given in writing, may be sent by telefacsimile (unless otherwise required
by law), and shall be effective when actually delivered or/(II) deposited
with a nationally recognized overnight courier or/(II) deposited in the
United States mail, first class, postage prepaid, addressed to the party to
whom the notice is to be given at the address shown above. Any party may
change its address for notices under this Agreement by giving formal
written notice to the other parties, specifying that the purpose of the
notice is to change the party's address. To the extent permitted by
applicable law, if there is more than one Borrower, notice to any Borrower
will constitute notice to all Borrowers. For notice purposes, Borrower will
keep Lender informed at all times of Borrower's current address(es).
Severability. If a court of competent jurisdiction finds any provision of
this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to be within the
limits of enforceability or validity; however, if the offending provision
cannot be so modified, it shall be stricken and all other provisions of
this Agreement in all other respects shall remain valid and enforceable.
Successors and Assigns. All covenants and agreements contained by or on
behalf of Borrower shall bind its successors and assigns and shall inure to
the benefit of Lender, its successors and assigns. Borrower shall not,
however, have the right to assign its rights under this Agreement or any
interest therein, without the prior written consent of Lender.
Survival. All warranties, representations, and covenants made by Borrower
in this Agreement or in any certificate or other instrument delivered by
Borrower to Lender under this Agreement shall be considered to have been
relied upon by Lender and will survive the making of the Loan and delivery
to Lender of the Related Documents, regardless of any investigation made by
Lender or on Lender's behalf.
Time is of the Essence. Time is of the essence in the performance of this
Agreement.
Waiver. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by
12-12-2000 BUSINESS LOAN AGREEMENT Page 6
Loan No 9001 (Continued)
================================================================================
Lender of a provision of this Agreement shall not prejudice or constitute a
waiver of Lender's right otherwise to demand strict compliance with that
provision or any other provision of this Agreement. No prior waiver by
Lender, nor any course of dealing between Lender and Borrower, or between
Lender and any Grantor, shall constitute a waiver of any of Lender's rights
or of any obligations of Borrower or of any Grantor as to any future
transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance shall not
constitute continuing consent in subsequent instances where such consent is
required, and in all cases such consent may be granted or withheld in the
sole discretion of Lender.
EACH BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT, AND EACH BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF
DECEMBER 12, 2000.
BORROWER:
Fresh Enterprises Inc.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, President & CEO
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇, Senior Vice President & CFO
Baja Fresh Westlake Village, Inc., dba Baja Fresh Mexican Grill, Co-Borrower
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, President & CEO
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇, Senior Vice President & CFO
LENDER:
Western Financial Bank
By:/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
Authorized Officer
================================================================================
EXHIBIT "X"
Riders to Business Loan Agreement by and between Fresh Enterprises, Inc. and
Baja Fresh Westlake Village, Inc., dba Baja Fresh Mexican Grill (individually
and collectively "Borrower"), and Western Financial Bank ("Lender")
Rider (A):
---------
overdue for a period of more than 30 days or which are being contested in good
faith;
Rider (B):
---------
; and (g) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation
Rider (C):
---------
reasonably requested
Rider (D):
---------
its ownership or lease of properties or the conduct of its business requires
such qualification
Rider (E):
---------
truly and fairly discloses
Rider (F):
---------
and its results of operations for the period covered thereby in accordance with
GAAP, consistently applied, except as expressly noted therein and except for
year-end audit adjustments
Rider (G):
---------
, subject to the effects of applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights generally and of
equitable principles
Rider (H):
---------
, to Borrower's knowledge,
Rider (I):
---------
, to Borrower's knowledge, is reasonably likely to
Rider (J):
---------
against Borrower, subject to the effects of applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights
generally and of equitable principles
1
EXHIBIT "X"
Riders to Business Loan Agreement by and between Fresh Enterprises, Inc. and
Baja Fresh Westlake Village, Inc., dba Baja Fresh Mexican Grill (individually
and collectively "Borrower"), and Western Financial Bank ("Lender")
Rider (JJ):
----------
is reasonably likely to materially adversely
Rider (K):
---------
upon reasonable notice
Rider (L):
--------
reasonably
Rider (LL):
----------
upon the occurrence and during the continuance of an Event of Default,
Rider (M):
---------
in all material respects
Rider (N):
---------
which could reasonably be expected to have a material adverse effect on the
business or financial condition of Borrower
Rider (O):
---------
[intentionally omitted]
Rider (P):
---------
and corporate officers
Rider (Q):
---------
material
Rider (R):
---------
upon reasonable notice
Rider (S):
---------
, along with each financial statement,
2
EXHIBIT "X"
Riders to Business Loan Agreement by and between Fresh Enterprises, Inc. and
Baja Fresh Westlake Village, Inc., dba Baja Fresh Mexican Grill (individually
and collectively "Borrower"), and Western Financial Bank ("Lender")
Rider (T):
---------
, purchase money indebtedness incurred after the date of this Agreement in an
amount not to exceed $100,000 at any time outstanding
Rider (U):
---------
(i) purchase money liens or purchase money security interests securing purchase
money indebtedness incurred after the date of this Agreement in an amount not to
exceed $100,000 at any time outstanding, (ii) sales and assignments of inventory
and obsolete equipment in the ordinary course of Borrower's business, (iii)
security interests of Imperial Bank pursuant to that certain Credit Agreement
dated as of November 24, 1998 which will be terminated concurrently with the
making of the first Loan hereunder, and (iv) as otherwise
Rider (V):
---------
in any transaction which, together with the transactions permitted under the
following paragraph of this Agreement entitled "Loans, Acquisitions and
Guaranties," involves an aggregate payment of more than $3,000,000.00 by
Borrower
Rider (W):
---------
of forty percent (40%) or more of the common stock of Borrower
Rider (X):
---------
In an aggregate amount which exceeds $3,000,000.00, (a) loan
Rider (Y):
---------
[intentionally omitted and added to "Reporting Covenants" #3 text within
referenced document]
Rider (YY):
----------
[intentionally omitted and added to "Additional Financial Covenants" #2 text
within referenced document]
Rider (Z):
---------
principal
3
EXHIBIT "X"
Riders to Business Loan Agreement by and between Fresh Enterprises, Inc. and
Baja Fresh Westlake Village, Inc., dba Baja Fresh Mexican Grill (individually
and collectively "Borrower"), and Western Financial Bank ("Lender")
Rider (AA):
----------
or to pay any interest or other fees payable in respect of the Loans within five
(5) days after the due date thereof
Rider (BB):
----------
is reasonably likely to materially adversely affect Borrower's business or
financial condition
Rider (BBB):
-----------
or Grantor's
Rider (BBBB):
-----------
or Grantor
Rider (CC):
----------
which individually or in the aggregate has a value of $50,000 or more
Rider (CCC):
-----------
However, this Event of Default shall not apply if there is a good faith dispute
by Grantor or Borrower as to the validity or reasonableness of the claim which
is the basis of the creditor or forfeiture proceeding and if Grantor or Borrower
gives Lender written notice of the creditor or forfeiture proceeding and
deposits with Lender monies or a surety bond for the creditor or forfeiture
proceeding, in an amount determined by Lender, in its sole discretion, as being
an adequate reserve or bond for the dispute.
Rider (DD):
----------
forty percent (40%)
Rider (EE):
----------
reasonably
Rider (EEE):
-----------
Notwithstanding anything to the contrary set forth above, if
Rider (FF):
----------
fifteen (15) business days
4
EXHIBIT "X"
Riders to Business Loan Agreement by and between Fresh Enterprises, Inc. and
Baja Fresh Westlake Village, Inc., dba Baja Fresh Mexican Grill (individually
and collectively "Borrower"), and Western Financial Bank ("Lender")
Rider (GG):
----------
Borrower
Rider (GGG):
-----------
Notwithstanding the foregoing, Lender's sale or transfer of participation
interests hereunder shall be at Lender's sole cost and expense and such sale or
transfer shall not require Borrower to deal with more than one party as lender
hereunder and shall not increase any of the costs or expenses payable by
Borrower hereunder, including without limitation those payable pursuant to the
next succeeding paragraph entitled "Costs and Expenses." Borrower shall be
required to pay only the expenses of Lender or, if applicable, a different
designated lead participant and the reasonable fees of one firm of attorneys
which will act on behalf of Lender and/or such lead participant and all other
purchasers of participation interests. Subject to the foregoing, Borrower agrees
that they shall not contest the treatment of any purchasers of participation
interests as the absolute owners of such interests in the Loans.
Rider (HH):
----------
reasonable
Rider (II):
----------
one (1) day after being
Rider (JJJ):
-----------
five (5) days after being
BORROWER:
Fresh Enterprises, Inc.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, President & CEO
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇, Senior Vice President & CFO
5
EXHIBIT "X"
Riders to Business Loan Agreement by and between Fresh Enterprises, Inc. and
Baja Fresh Westlake Village, Inc., dba Baja Fresh Mexican Grill (individually
and collectively "Borrower"), and Western Financial Bank ("Lender")
Baja Fresh Westlake Village, Inc., dba Baja Fresh Mexican Grill
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, President & CEO
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇, Senior Vice President & CFO
LENDER:
Western Financial Bank
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------------
Authorized Officer
6
[LOGO] Western Financial Bank
CHANGE IN TERMS AGREEMENT
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Principal Loan Date Maturity Loan No Call/Coll Account Officer Initials
$12,000,000.00 07-10-2001 12-11-2001 4AO/3100 0001910 00905 /s/ Illegible
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References in the shaded area are for Lender's use only and do not limit the applicability of
this document to any particular loan or item. Any item above containing "***" has been omitted
due to text length limitations.
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Borrower: Fresh Enterprises, Inc. Lender: Western Financial Bank
Baja Fresh Westlake Village, Commercial Banking Group
Inc. dba Baja Fresh ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
Mexican Grill ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
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Date of Agreement: July 10, 2001
DESCRIPTION OF EXISTING INDEBTEDNESS. Business Loan Agreement dated December 12,
2000, along with all renewals, extensions and/or modifications.
DESCRIPTION OF CHANGE IN TERMS.
Replace the Current Ratio covenant with the following:
Maintain a ratio of Current Assets to Current Liabilities in excess of 0.50 to
1.00.
For purposes of calculating the Current Ratio covenant only, Current Liabilities
will not include the current portion of long term bank debt and subordinated
debt.
CONTINUING VALIDITY. Except as expressly changed by this Agreement, the terms of
the original obligation or obligations, including all agreements evidenced or
securing the obligation(s), remain unchanged and in full force and effect.
Consent by Lender to this Agreement does not waive Lender's right to strict
performance of the obligalion(s) as changed, nor obligate Lender to make any
future change in terms. Nothing in this Agreement will constitute a satisfaction
of the obligation(s). It is the intention of Lender to retain as liable parties
all makers and endorsers of the original obligation(s), including accommodation
parties, unless a party is expressly released by Lender in writing. Any maker or
endorser, including accommodation makers, will not be released by virtue of this
Agreement. If any person who signed the original obligation does not sign this
Agreement below, then all persons signing below acknowledge that this Agreement
is given conditionally, based on the representation to Lender that the
non-signing party consents to the changes and provisions of this Agreement or
otherwise will not be released by it. This waiver applies not only to any
initial extension, modification or release, but also to all such subsequent
actions.
BORROWER:
FRESH ENTERPRISES, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------- -------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, President & CEO ▇▇▇▇▇▇ ▇▇▇▇▇, Senior Vice Pres. & CFO
of Fresh Enterprises, Inc. of Fresh Enterprises, Inc.
BAJA FRESH WESTLAKE VILLAGE, INC. DBA BAJA FRESH MEXICAN GRILL
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------- -----------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, President & CEO ▇▇▇▇▇▇ ▇▇▇▇▇, Senior Vice Pres.& CFO
of Westlake Village, Inc. dba of Fresh Westlake Village, Inc.dba
Baja Fresh Mexican Grill Baja Fresh Mexican Grill
LENDER:
WESTERN FINANCIAL BANK
X /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Authorized Signer
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[LOGO] Western Financial Bank
CHANGE IN TERMS AGREEMENT
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Principal Loan Date Maturity Loan No Call/Coll Account Officer Initials
$16,000,000.00 09-27-2001 09-30-2002 0099(CM) 4AO/3100 0001910 00905
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References in the shaded area are for Lender's use only and do not limit the applicability of
this document to any particular loan or item. Any item above containing "***" has been omitted
due to text length limitations.
-------------------------------------------------------------------------------------------------
Borrower: Fresh Enterprises, Inc. Lender: Western Financial Bank
Baja Fresh Westlake Village, Commercial Banking Group
Inc. dba Baja Fresh ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
Mexican Grill ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
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Principal Amount: $16,000,000.00 Initial Rate: 6.250% Date of Agreement: September 27, 2001
DESCRIPTION OF EXISTING INDEBTEDNESS. Business Loan Agreement dated
December 12, 2000, along with all renewals, extensions and/or
modifications.
DESCRIPTION OF CHANGE IN TERMS. Upon verification by Lender of a
$12,000,000.00 Preferred Stock Series C equity contribution by Borrower's
stockholders, the following changes to the Business Loan Agreement shall
become effective:
The Income paragraph, as referenced in the FINANCIAL COVENANTS AND
RATIOS section of the Business Loan Agreement, is hereby amended to
include (add) the following:
Maintain not less than $4,000,000.00 EBITDA for the six-month
fiscal period ending June 30, 2002 and not less than
$11,000,000.00 for fiscal year ending December 31, 2002. EBITDA
financial covenant calculations are before store pre-opening
costs and non-cash stock compensation expense.
The covenants and ratios, as referenced in the OTHER FINANCIAL
COVENANTS AND RATIOS section of the Business Loan Agreement, are
hereby replaced with the following, as applicable:
Effective Tangible Net Worth. Maintain a minimum Effective
Tangible Net Worth ratio of not less than $29,000,000.00.
Effective Tangible Net Worth is defined as net worth less
intangibles plus debt subordinated to Lender.
Debt to Effective Tangible Net Worth. Maintain a maximum Debt to
Effective Tangible Net Worth ratio of 0.50 to 1.00.
Beginning March 31, 2002, maintain a maximum Debt to
Effective Tangible Net Worth ratio of 0.75 to 1.00.
Beginning June 30, 2002, maintain a maximum Debt to
Effective Tangible Net Worth ratio of 1.00 to 1.00.
Beginning September 30, 2002, maintain a maximum Debt to
Effective Tangible Net Worth ratio of 1.25 to 1.00.
Debt Service Coverage. Maintain a minimum Debt Service Coverage
ratio of 2.00 to 1.00. Debt Service Coverage is defined as net
income before tax, plus pre-opening costs, plus depreciation,
plus non-cash stock compensation expense, divided by current
portion of long term debt. For purposes of calculating the Debt
Service Coverage ratio, current portion of long term debt shall
not include subordinated debt.
The existing ADDITIONAL FINANCIAL COVENANTS are hereby removed and
replaced with the following:
Quarterly Losses. Borrower shall incur no quarterly losses.
The existing REPORTING COVENANTS are hereby removed and replaced with
the following:
Annual Statements. Fresh Enterprises, Inc. shall provide to
Lender annual unqualified fiscal year end financial statements,
consolidated to include all subsidiaries of Fresh Enterprises,
Inc., audited by a certified public accountant (CPA) and
accompanied by a copy of the CPA management letter. The annual
financial statement, to be accompanied by a consolidation
schedule, is due to Lender within ninety (90) days of Borrower's
fiscal year end.
Tax Returns. Fresh Enterprises, Inc. shall provide to Lender a
copy of annual tax returns, combined to include all subsidiaries
of Fresh Enterprises, Inc. Copies of tax returns are due to
Lender within fifteen (15) days of filing.
Monthly Statements. Fresh Enterprises, Inc. shall provide to
Lender monthly consolidated financial statements, combined to
include all subsidiaries of Fresh Enterprises, Inc., prepared by
Borrower. The monthly financial statement is due to Lender within
thirty (30) days of each four-week accounting period of Borrower.
Only upon request of Lender, Borrower to provide to financial
statements to include operating results on each restaurant
(store-by-store breakdown).
Store-by-Store Summary and Status Reports. Borrower shall provide
to Lender a monthly summary report reflecting store-by-store
performance and a status report of stores under development. The
summary and status reports are due to Lender within thirty (30)
days of each month end.
The following section is hereby added to the Business Loan Agreement:
SUBORDINATION. Prior to disbursement of any loan proceeds,
Borrower shall deliver to Lender a subordination agreement on
Lender's form, executed by Borrower's creditor named below,
subordinating all of Borrower's indebtedness to such creditor, or
such lesser amounts as may be agreed to by Lender in writing, and
any security interests in collateral securing that indebtedness
to the Loans and security interests of Lender.
Creditor: ▇▇▇▇▇ ▇▇▇▇▇▇▇ $2,000,000.00
The Commercial Guaranty dated December 12, 2000, in the amount of
$12,000,000.00 in favor of Lender, executed by Triune Corporation, is
superseded in it's entirety and replaced by that certain Commercial
Guaranty dated September 27, 2001, in the amount of $18,000,000.00 in
favor of Lender, executed by Triune Corporation.
HANGE IN TERMS AGREEMENT
Loan No: 0099 (CM) (Continued) Page 2
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CONTINUING VALIDITY. Except as expressly changed by this Agreement, the terms of
the original obligation or obligations, including all agreements evidenced or
securing the obligation(s), remain unchanged and in full force and effect.
Consent by Lender to this Agreement does not waive Lender's right to strict
performance of the obligation(s) as changed, nor obligate Lender to make any
future change in terms. Nothing in this Agreement will constitute a satisfaction
of the obligation(s). It is the intention of Lender to retain as liable parties
all makers and endorsers of the original obligation(s), including accommodation
parties, unless a party is expressly released by Lender in writing. Any maker or
endorser, including accommodation makers, will not be released by virtue of this
Agreement. If any person who signed the original obligation does not sign this
Agreement below, then all persons signing below acknowledge that this Agreement
is given conditionally, based on the representation to Lender that the
non-signing party consents to the changes and provisions of this Agreement or
otherwise will not be released by it. This waiver applies not only to any
initial extension, modification or release, but also to all such subsequent
actions.
BORROWER:
FRESH ENTERPRISES, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------- --------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, President & CEO ▇▇▇▇▇▇ ▇▇▇▇▇, Senior Vice Pres. & CFO
of Fresh Enterprises, Inc. of Fresh Enterprises, Inc.
BAJA FRESH WESTLAKE VILLAGE, INC. DBA BAJA FRESH MEXICAN GRILL
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------- --------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, President &.CEO ▇▇▇▇▇▇ ▇▇▇▇▇, Senior Vice Pres. & CFO
of Baja Fresh Westlake Village, of Baja Fresh Westlake Village, Inc.
Inc.dba Baja Fresh Mexican Grill dba Baja Fresh Mexican Grill
LENDER:
WESTERN FINANCIAL BANK
X /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Authorized Signer
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