<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ TO _______
Commission File No. 0-4678
Pancho's Mexican Buffet, Inc.
(Exact name of registrant as specified in its charter)
DELAWARE 75-1292166
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3500 Noble Avenue, Fort Worth, Texas 76111
(Address of principal executive offices) (Zip Code)
817-831-0081
(Registrant's telephone number,
including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Sections 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days.
YES X NO
Number of shares of Common Stock outstanding as of May 5, 1995:
4,397,559.
<PAGE>
PANCHO'S MEXICAN BUFFET, INC. AND SUBSIDIARIES
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements:
Introduction 1
Consolidated Condensed Balance Sheets,
March 31, 1995 and September 30, 1994 2
Consolidated Condensed Statements of
Operations for the Three-Months and
Six-Months Ended March 31, 1995 and 1994 3
Consolidated Condensed Statements of Cash
Flows for the Three-Months and Six-Months
Ended March 31, 1995 and 1994 4
Notes to Consolidated Condensed Financial
Statements 5
Independent Accountants' Report 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 7
Part II. Other Information
Item 1. Legal Proceedings (no response required)
Item 2. Changes in Securities (no response required)
Item 3. Defaults Upon Senior Securities (no
response required)
Item 4. Submission of Matters to a Vote of
Security Holders 11
Item 5. Other Information (no response required)
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
<PAGE>
PANCHO'S MEXICAN BUFFET, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
The consolidated condensed financial statements included herein
have been prepared by the Company without audit as of March 31, 1995
and for the three-month and six-month periods ended March 31, 1995
and 1994 pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures
normally included in annual financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although
the Company believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that these
condensed financial statements be read in conjunction with the
financial statements and the notes thereto included in the Company's
latest annual report on Form 10-K. In the opinion of the Company,
all adjustments, consisting only of normal recurring adjustments
except as discussed in the notes to consolidated condensed financial
statements, necessary to present fairly the financial position of the
Company as of March 31, 1995 and the results of operations and cash
flows for the indicated periods have been included. The results of
operations for such interim periods are not necessarily indicative of
the results to be expected for the fiscal year ending
September 30, 1995.
Deloitte & Touche LLP, independent public accountants, has made
a limited review of the consolidated condensed financial statements
as of March 31, 1995 and for the three-month and six-month periods
ended March 31, 1995 and 1994 included herein.
-1-
<PAGE>
PANCHO'S MEXICAN BUFFET, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, September 30,
1995 1994
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 782,000 $ 1,661,000
Accounts and notes receivable-current portion 389,000 656,000
Income taxes receivable 720,000 88,000
Inventories 1,304,000 1,635,000
Prepaid expenses 512,000 502,000
Deferred income taxes 206,000 224,000
Total current assets 3,913,000 4,766,000
PROPERTY, PLANT AND EQUIPMENT (AT COST):
Land 3,914,000 3,897,000
Buildings 10,169,000 11,146,000
Leasehold improvements 26,416,000 26,018,000
Equipment and furniture 31,963,000 31,511,000
Construction in progress 2,217,000 1,812,000
Total 74,679,000 74,384,000
Less accumulated depreciation and amortization (32,247,000) (32,547,000)
Property, plant and equipment-net 42,432,000 41,837,000
OTHER ASSETS:
Deferred income taxes 711,000 922,000
Other, including noncurrent portion of receivables 1,792,000 1,634,000
Total other assets 2,503,000 2,556,000
TOTAL $ 48,848,000 $ 49,159,000
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,233,000 $ 3,133,000
Accrued wages and bonuses 2,331,000 2,390,000
Other current liabilities 1,375,000 1,757,000
Total current liabilities 4,939,000 7,280,000
OTHER LIABILITIES:
Long-term debt 9,450,000 5,840,000
Accrued insurance costs 2,476,000 2,605,000
Other 152,000 141,000
Total other liabilities 12,078,000 8,586,000
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES 238,000 138,000
STOCKHOLDERS' EQUITY:
Preferred stock
Common stock 555,000 555,000
Additional paid-in capital 26,217,000 26,217,000
Retained earnings 13,729,000 14,718,000
Cumulative foreign currency translation adjustment (603,000) (30,000)
Treasury stock (7,699,000) (7,699,000)
Stock notes receivable from officers (606,000) (606,000)
Stockholders' equity 31,593,000 33,155,000
TOTAL $ 48,848,000 $ 49,159,000
See notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
PANCHO'S MEXICAN BUFFET, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
SALES $ 19,868,000 $ 21,868,000 $ 40,778,000 $ 41,903,000
COSTS AND EXPENSES:
Food costs 5,801,000 5,954,000 11,744,000 11,616,000
Restaurant labor and related expenses 7,540,000 7,730,000 15,670,000 15,239,000
Restaurant operating expenses 4,586,000 4,606,000 9,197,000 8,595,000
Depreciation and amortization 1,179,000 1,111,000 2,346,000 2,154,000
General and administrative expenses 1,352,000 1,381,000 2,771,000 2,627,000
Total 20,458,000 20,782,000 41,728,000 40,231,000
OPERATING INCOME (LOSS) (590,000) 1,086,000 (950,000) 1,672,000
INTEREST EXPENSE (131,000) (6,000) (232,000) (7,000)
OTHER, INCLUDING INTEREST INCOME 35,000 (1,000) 67,000 19,000
EARNINGS (LOSS) BEFORE INCOME TAXES (686,000) 1,079,000 (1,115,000) 1,684,000
PROVISION (BENEFIT) FOR INCOME TAXES (240,000) 388,000 (390,000) 606,000
NET EARNINGS (LOSS) $ (446,000) $ 691,000 $ (725,000) $ 1,078,000
NET EARNINGS (LOSS) PER SHARE $ (.10) $ .16 $ (.16) $ .24
See notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
PANCHO'S MEXICAN BUFFET, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ (446,000) $ 691,000 $ (725,000) $ 1,078,000
Adjustments to reconcile net earnings (loss) to net
cash provided by operating activities:
Depreciation and amortization 1,179,000 1,111,000 2,346,000 2,154,000
Provision for deferred income taxes (56,000) 5,000 229,000 381,000
Amortization of restaurant start-up costs 27,000 26,000 63,000 37,000
Payment of restaurant start-up costs (19,000) (23,000) (79,000)
(Gain) loss on sale of assets (13,000) 22,000 (7,000) 22,000
Income tax benefit from exercise of stock options 9,000 20,000
Changes in operating assets and liabilities:
Accounts and notes receivable (87,000) 10,000 234,000 (49,000)
Income taxes receivable (167,000) 256,000 (632,000)
Inventories, prepaid expenses and other assets 35,000 432,000 293,000 795,000
Accounts payable and accrued expenses (305,000) (718,000) (1,340,000) (1,353,000)
Total adjustments 613,000 1,134,000 1,163,000 1,928,000
Net cash provided by operating activities 167,000 1,825,000 438,000 3,006,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions (1,739,000) (2,504,000) (4,592,000) (5,598,000)
Proceeds from sale of assets 38,000 43,000 157,000 377,000
Other (80,000) (80,000)
Net cash (used in) investing activities (1,701,000) (2,541,000) (4,435,000) (5,301,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term borrowings-net (990,000)
Long-term borrowings 9,625,000 3,830,000 28,565,000 3,830,000
Repayments of long-term borrowings (8,065,000) (1,830,000) (24,955,000) (1,830,000)
Proceeds from increase in minority interest 100,000
Proceeds from exercise of stock options 45,000 283,000
Treasury stock purchases (3,000)
Dividends paid (264,000) (264,000) (528,000) (527,000)
Net cash provided by financing activities 1,296,000 791,000 3,182,000 1,753,000
EFFECT OF FOREIGN EXCHANGE RATE
CHANGE ON CASH (31,000) (64,000)
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (269,000) 75,000 (879,000) (542,000)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 1,051,000 952,000 1,661,000 1,569,000
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 782,000 $ 1,027,000 $ 782,000 $ 1,027,000
SUPPLEMENTAL INFORMATION:
Income taxes paid $ 25,000 $ 30,000 $ 175,000
Assets sold for notes receivable 125,000 160,000
Interest paid, net of capitalized amounts $ 102,000 18,000 199,000 19,000
See notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
PANCHO'S MEXICAN BUFFET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. NET EARNINGS (LOSS) PER SHARE
Net earnings (loss) per share is based on the weighted average
number of shares and equivalent shares (including stock options,
when dilutive) outstanding during each period. The weighted
average of such shares was 4,398,000 for both the three-months
and six-months ended March 31, 1995, compared to 4,453,000 and
4,441,000 for the same periods last year.
2. RESTRUCTURING COSTS
During the quarter ended December 31, 1993, the Company sold a
restaurant site purchased for expansion in 1989 in Jacksonville,
Florida and subleased a closed restaurant location in Littleton,
Colorado. In light of these dispositions, previously established
restructuring reserves were reevaluated and a pre-tax operating
expense benefit of $264,000 was recorded during the quarter ended
December 31, 1993.
3. LONG-TERM DEBT
The Company's revolving credit and term loan agreement ("Loan
Agreement") with a bank includes a covenant that the Company will
not permit its consolidated net income to be less than $1 during
any fiscal quarter. The net losses incurred by the Company in
the first and second quarters of fiscal 1995 resulted in
violations of this covenant. The bank subsequently granted
permanent waivers of the covenant for both periods.
In February 1995, the Loan Agreement was amended to increase the
revolving credit line to $12 million through December 31, 1995
and extend its termination date to March 1, 1997. The credit
line reverts to $10 million effective January 1, 1996. At March
31, 1995, the Company had $2,550,000 available under the bank
credit line.
4. CASH DIVIDEND
On May 5, 1995, the Company's board of directors declared a $.03
per common share quarterly cash dividend. The dividend will be
paid on June 13, 1995 to holders of record on May 30, 1995.
5. STATEMENT OF OPERATIONS RECLASSIFICATION
The statement of operations has been reformatted to provide more
detailed information on costs and expenses. Prior period amounts
have been reclassified to conform to the current period
presentation.
-5-
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
Pancho's Mexican Buffet, Inc.:
We have made a review of the consolidated condensed balance sheet of
Pancho's Mexican Buffet, Inc. and subsidiaries as of March 31, 1995,
and the related consolidated condensed statements of operations and
cash flows for the three-month and six-month periods ended
March 31, 1995 and 1994. These consolidated condensed financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants. A review of
interim financial information consists principally of obtaining an
understanding of the system for the preparation of interim financial
information, applying analytical review procedures to financial data
and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit
in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the
financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the consolidated condensed financial
statements referred to above for them to be in conformity with
generally accepted accounting principles.
We previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of September 30, 1994,
and related consolidated statements of earnings, stockholders' equity
and cash flows for the year then ended (not presented herein), and in
our report dated November 4, 1994, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying consolidated condensed
balance sheet as of September 30, 1994, is fairly stated in all
material respects in relation to the consolidated balance sheet from
which it has been derived.
DELOITTE & TOUCHE LLP
Fort Worth, Texas
May 5, 1995
-6-
<PAGE>
PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Financial Condition
As of March 31, 1995, the Company's current ratio was 0.8 to 1
compared to 0.7 to 1 at September 30, 1994. Cash and cash
equivalents decreased $879,000 during the six-month period to a
balance of $782,000 at March 31, 1995, as cash provided by operating
and financing activities was exceeded by capital expenditures.
Operating activities provided net cash of $438,000 for the six-month
period ended March 31, 1995, compared to $3,006,000 for the same
period last year. The Company incurred a net loss of $725,000 during
the 1995 period, versus a net profit of $1,078,000 in 1994.
Operating cash flow decreased due largely to this decline in
profitability and a related increase in income taxes receivable.
Financing activities, which provided cash of $3,182,000 during the
six-month period, consisted of net long term borrowings of
$3,610,000, the payment of quarterly cash dividends and minority
interest capital contributions to the Company's Mexican joint venture.
Investing activities used $4,435,000 of cash during the six-month
period. Cash was used during the period for the construction of new
restaurants, remodeling of existing restaurants, restaurant computer
system installations and payment of accrued construction costs from
the prior year. One new restaurant was opened during the six-month
period and a former Emiliano's Buffet Mexicano restaurant was
reopened as a Pancho's Mexican Buffet.
Restaurants in Galveston and Baytown, Texas are under construction
and are scheduled to open in the Company's fiscal third quarter. The
Company has also entered into a joint venture to build a restaurant
in Guadalajara, Mexico, see "Other Uncertainties and Trends." No
additional new restaurants are planned at this time, as management
intends to focus on improving sales and profitability and reducing
debt. Capital expenditures to remodel existing restaurants and
install restaurant computer systems will continue within the
constraint of available operating cash flow.
The Company's revolving credit and term loan agreement ("Loan
Agreement") with a bank includes a covenant that the Company will not
permit its consolidated net income to be less than $1 during any
fiscal quarter. The net losses incurred by the Company in the first
and second quarters of fiscal 1995 resulted in violations of this
covenant. The bank subsequently granted permanent waivers of the
covenant for both periods.
-7-
<PAGE>
Management is taking steps to ensure that the Company will be able to
comply with all of its covenants under the Loan Agreement in the
future. However, should the bank decline to waive a future covenant
violation, the bank would be required under the Loan Agreement to
give the Company 30 days written notice of the violation, after which
time the Company would be in default. At the bank's option, it could
then declare the loan principal and all accrued interest current and
payable and/or refuse to make additional advances on the credit line.
The Company could then be forced to seek alternative sources of
financing.
In February 1995, the Loan Agreement was amended to increase the
revolving credit line to $12 million through December 31, 1995 and
extend its termination date to March 1, 1997. The credit line
reverts to $10 million effective January 1, 1996. At March 31, 1995,
the Company had $2,550,000 available under the line.
On May 5, 1995, the Company's board of directors declared a $.03 per
common share quarterly cash dividend. The dividend will be paid on
June 13, 1995 to holders of record on May 30, 1995. The dividend was
reduced from a quarterly rate of $.06 per share to $.03 per share due
to the Company's recent financial performance. Future cash dividends
will depend on earnings, financial position, capital requirements and
other relevant factors.
Results of Operations
Sales decreased $2,000,000 (9.2%) and $1,125,000 (2.7%) for the
three-months and six-months ended March 31, 1995 compared to the same
periods last year. New restaurants provided $2.3 million and $5.8
million, respectively, in additional revenue for the quarter and
six-months, and a price increase in December 1993 added approximately
$839,000 to sales for the six-months. Lower comparable store sales,
however, along with reduced revenue due to restaurant closings and
the outsourcing of the Company's grocery distribution operation in
September 1994, more than offset these increases.
Average sales for restaurants open throughout the current three-month
and six-month periods were $276,000 and $565,000 compared to $311,000
and $598,000 for the same periods a year ago. Comparable-store sales
(sales for restaurants open throughout the period in both fiscal 1995
and 1994) were down 15.5% for the second quarter of 1995 compared to
being up 15.1% last year. Year-to-date, comparable store sales were
down 11.3% compared to an increase of 15.0% in 1994.
Comparable-store sales for the first two quarters of fiscal 1994
reflect record increases, primarily due to the completion of an
aggressive soup/salad and dessert bar conversion program, effective
television advertising and a December 1993 price increase.
The Company has conducted significant marketing research in fiscal
1995 to better understand its customers. As a result of that
research, improvements have been made in food quality and in
operational areas. A television advertising campaign developed from
this research debuted in late February. However, results of the
television campaign have been disappointing. Therefore, a family
vacation package promotion has been incorporated into the television
advertising to stimulate customer traffic in May and June. Newspaper
and direct mail programs are also being implemented to promote
specific restaurant locations and value-oriented menu offerings.
-8-
<PAGE>
Food costs as a percentage of sales increased 2.0% and 1.1% for the
three-months and six-months ended March 31, 1995 compared to the same
periods a year ago. Recipe and food offering changes, combined with
higher produce and shortening prices, resulted in the increases.
Food offerings, preparation methods and recipes are currently being
modified to improve quality and preserve variety while lowering
product cost. The benefit of these changes, as well as seasonally
lower produce prices, should be realized in the latter half of the
fiscal third quarter.
Restaurant labor and related expenses as a percentage of sales
increased 2.7% and 2.0% for the current three-month and six-month
periods compared to the same periods in 1994. Sharply lower
comparable-store sales raised labor costs as a percentage of sales in
established restaurants, while normally higher labor costs in new
stores also contributed to the increase, particularly in the first
quarter. To improve labor costs as a percentage of sales, management
is focusing on new marketing programs to improve comparable-store
sales and on improved productivity and labor control systems.
Restaurant operating expenses as a percentage of sales for the
current three-month and six-month periods were 23.1% and 22.6%
compared to 21.1% and 20.5% for the same periods last year. A
pre-tax operating expense benefit of $264,000 (1.3% of sales) was
recorded during the quarter ended December 31, 1993 relating to
adjustments to the Company's accrual for restructuring reserves.
Relatively fixed costs, such as rent and utilities, generally
increased as a percentage of sales in the current three-month and
six-month periods due to lower comparable-store sales.
Depreciation and amortization increased $68,000 and $192,000 for the
three-months and six-months ended March 31, 1995 compared to the
prior year, due to the addition of new restaurants and other capital
spending.
General and administrative expenses as a percentage of sales
increased 0.5% for both the current three-month and six-month periods
compared to the same periods last year, primarily due to lower sales.
Greater debt levels and higher interest rates increased interest
expense $125,000 and $225,000 for the current three-month and
six-month periods compared to the same periods in 1994.
The effective tax rate decreased to 35% for the current three-month
and six-month periods compared to 36% in the prior year. The current
year rate is consistent with the effective tax rate for fiscal year
1994 of 34.7%.
Due to weak sales and other factors discussed above, the Company
reported a net loss of $725,000 for the six-month period ended March
31, 1995 compared to a net earnings of $1,078,000 for the same period
last year. These results were far below the expectations of both
management and the investment community, including those viewpoints
expressed on Page 6 of the Company's annual report under the caption
"What Wall Street Says About Pancho's Mexican Buffet"(1). Management
believes that appropriate adjustments are being made to return the
Company to consistent profitability. However, the restaurant
industry is intensely competitive, and the Company's future earnings
will largely depend on its ability to generate a sustained
improvement in sales.
-9-
<PAGE>
Other Uncertainties and Trends
Mexico is currently experiencing a financial and economic crisis
sparked by the December 20, 1994 devaluation of the Mexican peso.
The Company has substantially completed construction of the building
and installation of equipment for its planned restaurant in
Guadalajara, Mexico, but has delayed the restaurant opening to make
adjustments in menu and purchasing plans due to the high cost of
imported food products in Mexico following the devaluation.
Management cannot predict the long-term impact of this financial and
economic crisis on the Company's planned restaurant operations. For
the six-months ended March 31, 1995, the Company recorded an
unfavorable foreign currency translation adjustment of $573,000 in
stockholders' equity as a result of the devaluation. The Company has
invested $1.4 million in this restaurant and expects that an
additional $200,000 investment will be required. Future Company
restaurant development in Mexico will depend upon the success of the
Guadalajara restaurant.
- - - - - ---------------------------------------------------------------------
(1) Pursuant to Item 601(b)(13) of Regulation S-K promulgated by
the Securities and Exchange Commission (SEC), the section of
the Company's 1994 Annual Report on page 6 under the caption
"What Wall Street Says About Pancho's Mexican Buffet" is not
deemed to be filed with the SEC for purposes of the
Securities Exchange Act nor shall such section of the 1994
Annual Report be deemed to be incorporated by reference in
any past or future filing by the Company under the Securities
Exchange Act or the Securities Act of 1933, as amended.
-10-
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) On Wednesday, January 25, 1995, the registrant held its
Annual Meeting of Stockholders.
(b) (No response required)
(c) At the Annual Meeting, the stockholders were requested to
vote upon two matters, to wit, (i) the proposal to amend
the Certificate of Incorporation to eliminate the
requirement that a director be a U.S. citizen; and (ii) to
elect three directors.
With respect to the proposal to amend the Certificate of
Incorporation to eliminate the requirement that a director
be a U.S. citizen, voting was as follows:
For 4,066,981 Against 93,071 Abstain 42,691
With respect to the election of directors, voting was as
follows:
Nominee For Withheld
Mauricio Sanchez Garcia 4,131,394 71,350
Rudy Rodriguez 4,133,976 68,768
Samuel L. Carlson 4,137,624 65,120
-11-
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits Required by Item 601 of Regulation S-K
Exhibit
Number
2 Not applicable
4 Not applicable
10(p) Revolving Credit and Term Loan Agreement dated
February 16, 1994, between PMB Enterprises West,
Inc. and First Interstate Bank of Texas, N.A.
10(q) First Amendment to Revolving Credit and Term Loan
Agreement dated February 9, 1995, between PMB
Enterprises West, Inc. and First Interstate Bank
of Texas, N.A.
11 Not required--explanation of net earnings (loss)
per share computation is contained in notes to
consolidated condensed financial statements.
15 Letter re: unaudited interim financial
information
18 Not applicable
19 Not applicable
22 Not applicable
23 Not applicable
24 Not applicable
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter
ended March 31, 1995.
-12-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
PANCHO'S MEXICAN BUFFET, INC.
May 5, 1995 /s/ HOLLIS TAYLOR
Hollis Taylor, President and Chief
Executive Officer
(Principal Executive Officer)
May 5, 1995 /s/ DAVID ODEN
David Oden, Vice President, Treasurer,
Chief Financial Officer and
Assistant Secretary
(Principal Financial and Accounting
Officer)
-13-
<PAGE>
EXHIBIT 10 (p)
REVOLVING CREDIT AND TERM LOAN AGREEMENT
This Revolving Credit and Term Loan Agreement (the "Loan
Agreement") is entered into by and among PMB Enterprises West,
Inc., a New Mexico corporation ("Company), and First Interstate
Bank of Texas, N.A., a national banking association, ("Bank").
W I T N E S S E T H:
WHEREAS, Company has requested Bank to provide it with a
revolving credit and term loan facility for the financing of new
restaurants, working capital and general corporate purposes; and
WHEREAS, Bank is willing to provide such facility to
Company, upon the terms and subject to the conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the mutual promises
herein contained and for other valuable consideration, the
parties hereto do hereby agree as follows:
ARTICLE I
DEFINITION OF TERMS
For the purposes of this Loan Agreement, unless the context
requires otherwise, the following terms shall have the respective
meanings assigned to them in this Article I below:
"Adjusted Interbank Rate" shall, with respect to each
Interest Period, mean on any day thereof the quotient of (a) the
Interbank Offered Rate with respect to such Interest Period,
divided by (b) the remainder of 1.00 minus the Eurodollar Reserve
Requirement in effect on such day.
"Advance": Section 2.01.
"Affiliate" of any designated Person means any Person that
has a relationship with the designated Person whereby either of
such Persons directly or indirectly controls or is controlled by
or is under common control with the other, or holds or
beneficially owns five percent (5%) or more of any class of
voting securities of the other. For this purpose, "control"
means the power, direct or indirect, of one Person to direct or
cause direction of the management and policies of another,
whether by contract, through voting securities or otherwise.
Notwithstanding the foregoing, no Person shall be deemed to be an
Affiliate of another solely by reason of such Person's being a
participant in a joint operating group or joint undivided
ownership group.
<PAGE>
"Arbitration Program": Article XI.
"Business Day" shall mean a day upon which business is
transacted by national banks in Fort Worth, Texas and New York,
New York.
"Capital Lease" shall mean, as of any date, any lease of
property, real or personal, which would be capitalized on a
balance sheet of the lessee prepared as of such date, in
accordance with GAAP.
"Compliance Certificate" shall mean a certificate delivered
pursuant to Section 8.01(g) signed in the name of the Company by
its Chairman of the Board, Chief Executive Officer, President,
one of its Senior Vice Presidents or its Chief Financial Officer.
"Commitment": Section 2.01.
"Consequential Loss" shall, with respect to Company's
payment of all or any portion of the then outstanding principal
amount of Bank's Eurodollar Advance on a day other than the last
day of the Interest Period related thereto, mean any loss, cost
or expense actually incurred by Bank as a result of the timing of
such payment or in redepositing such principal amount, including
the sum of (i) the interest which, but for such payment, Bank
would have earned in respect of such principal amount so paid,
for the remainder of the Interest Period applicable to such sum,
reduced, if Bank is able to redeposit such principal amount so
paid for the balance of such Interest Period, by the interest
earned by Bank as a result of so redepositing such principal
amount plus (ii) any expense or penalty incurred by Bank on
redepositing such principal amount.
"Consolidated" shall mean the consolidation of any Person,
in accordance with GAAP, with its properly consolidated
subsidiaries. References herein to a Person's Consolidated
financial statements, financial position, financial condition,
liabilities, etc., refer to the consolidated financial
statements, financial position, financial condition, liabilities,
etc. of such Person and its properly consolidated subsidiaries.
"Consolidated Net Income" shall mean, with respect to any
period, consolidated net earnings (after income taxes) of
Pancho's Mexican Buffet, Inc. and its Subsidiaries for such
period, determined in accordance with Generally Accepted
Accounting Principles.
"Consolidated Indebtedness" shall mean all Indebtedness of
Pancho's Mexican Buffet, Inc. and its Subsidiaries on a
Consolidated basis.
<PAGE>
"Consolidated Net Worth" shall mean, as of any date, total
stockholder's equity as reflected on the balance sheet of
Pancho's Mexican Buffet, Inc. and its Subsidiaries on a
Consolidated basis in accordance with GAAP.
"Consolidated Tangible Net Worth" shall mean the
Consolidated Net Worth less Intangible Assets of Pancho's Mexican
Buffet, Inc. and its Subsidiaries, determined in accordance with
GAAP.
"Controlled Group" shall mean (i) the controlled group of
corporations as defined in section 1563 of the United States
Internal Revenue Code of 1986, as amended, or (ii) the group of
trades or business under common control as defined in section
414(c) of the United States Internal Revenue Code of 1986, as
amended, of which Company is part or may become a part.
"Conversion Date": Section 2.02(c).
"Dividends", in respect of any corporation, shall mean:
(1)Cash distributions or any other distributions on, or in
respect of, any class of capital stock of such corporation,
except for distributions made solely in shares of stock of the
same class; and
(2)Any and all funds, cash or other payments made in respect
of the redemption, repurchase or acquisition of such stock,
unless such stock shall be redeemed or acquired through the
exchange of such stock with stock of the same class.
"Dollars" and the sign "$" shall mean lawful currency of the
United States of America.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended, together with all regulations issued
pursuant thereto.
"Environmental Claim" shall mean any written notice by any
Person alleging potential liability or responsibility for (a) any
removal or remedial action, including, without limitation, any
clean-up, removal or treatment of any Hazardous Material or any
action to prevent or minimize the release or movement of any
Hazardous Materials through or in the air, soil, surface water,
ground water or other property, (b) damage to the environment, or
costs with respect thereto, or (c) personal injury (including
sickness, disease or death), resulting from or based upon (i) the
presence, release or movement (including sudden or nonsudden,
accidental or nonaccidental, leaks or spills) of any Hazardous
Material at, in or from the environment or any property, whether
or not owned by the Company, or (ii) circumstances forming the
<PAGE>
basis of any violation, or alleged violation, of any
Environmental Law or any permit issued to Pancho's Mexican
Buffet, Inc. or any of its Subsidiaries pursuant to any
Environmental Law.
"Environmental Laws" shall mean the Comprehensive
Environmental Response, Compensation, and Liability Act
(42 U.S.C. 9601 et seq.), the Hazardous Material Transportation
Act (49 U.S.C. 1801 et seq.), the Recourse Conservation and
Recovery Act (42 U.S.C. 6901 et seq.), the Federal Water
Pollution Control Act (33 U.S.C. 1251 et seq.), the Clean Air
Act (42 U.S.C. 7401 et seq.), the Toxic Substances Control Act
(15 U.S.C. 2601 et seq.), and the Occupational Safety and
Health Act (29 U.S.C. 651 et seq.), as such laws have been or
hereafter may be amended or supplemented, and any and all
analogous future federal, or present and future state or local
laws, and similar laws of jurisdictions other than the United
States, to which Company or any of its Subsidiaries or any of its
or their properties are subject.
"Eurodollar Advance" shall mean any principal amount under
the Note with respect to which the interest rate is calculated by
reference to the Adjusted Interbank Rate for a particular
Interest Period.
"Eurodollar Portion" shall mean that portion of the unpaid
principal balance of the Term Loan with respect for which the
interest rate is calculated by reference to the Adjusted
Interbank Rate for a particular Interest Period.
"Eurodollar Business Day" shall mean a Business Day on which
dealings in Dollars are carried out in the London Interbank
market.
"Eurodollar Reserve Requirement" shall, on any day, mean
that percentage (expressed as a decimal fraction rounded up to
the nearest 1/100th) which is in effect on such day, as provided
by the Board of Governors of the Federal Reserve System (or any
successor governmental body) applied for determining the maximum
reserve requirements (including without limitation, basic,
supplemental, marginal and emergency reserves) under Regulation D
with respect to "Eurocurrency liabilities" as currently defined
in Regulation D, or under any similar or successor regulation
with respect to Eurocurrency liabilities or Eurocurrency funding.
Each determination by Bank of the Eurodollar Reserve Requirement
shall, in the absence of manifest error, be conclusive and
binding.
"Event of Default" shall have the meaning assigned to it in
Article X hereof.
"FDIC" shall mean the Federal Deposit Insurance Corporation
(or any successor thereby).
<PAGE>
"Funded Debt" shall mean all Indebtedness of Pancho's
Mexican Buffet, Inc. and its Subsidiaries for borrowed money and
obligations under Capital Leases.
"Floating Prime Advance" shall mean any principal amount
under the Note with respect to which the interest rate is
calculated by reference to the Floating Prime Rate.
"Floating Prime Portion" shall mean that portion of the
unpaid principal balance of the Term Loan with respect for which
the interest rate is calculated by reference to the Floating
Prime Rate for the particular Interest Rate.
"Floating Prime Rate" shall mean the rate of interest per
annum quoted by First Interstate Bank of Texas, N.A., from time
to time as its prime commercial rate of interest (it being
understood that Bank may from time to time extend credit to other
borrowers at rates of interest varying from, and having no
relationship to, such prime commercial rate).
"Generally Accepted Accounting Principles" or "GAAP" shall
mean generally accepted accounting principles as applied in the
United States of America on a consistent basis. The requisite
that such principles be applied on a consistent basis shall mean
that the accounting principles observed in a current period are
comparable in all material respects to those applied in a
preceding period. Unless otherwise indicated herein, all
accounting terms shall be defined according to GAAP.
"Guarantors" shall mean Pancho's Mexican Buffet, Inc., PMB
International, Inc. and Pamex of Texas, Inc.
"Guaranty" of any Person shall mean any contract, agreement
or understanding of such Person pursuant to which such Person
guarantees, or in effect guarantees, any Indebtedness of any
other Person (the "Primary Obligor") in any manner, whether
directly or indirectly, including without limitation agreements:
(1) to purchase such Indebtedness or any property
constituting security therefor;
(2) to advance or supply funds (a) for the purchase or
payment of such Indebtedness, or (b) to maintain
working capital or other balance sheet conditions, or
otherwise to advance or make available funds for the
purchase or payment of such Indebtedness;
(3) to purchase property, securities or services primarily
for the purpose of assuring the holder of such
Indebtedness of the ability of the Primary Obligor to
make payment of the Indebtedness; or
<PAGE>
(4) otherwise to assure the holder of the Indebtedness of
the Primary Obligor against loss in respect thereof;
except that "Guaranty" shall not include the
endorsement by Company or a Subsidiary in the ordinary
course of business of negotiable instruments or
documents for deposit or collection.
"Guaranty Agreement" shall mean the guaranty agreement
executed by the Guarantors, in the form of Exhibit "B" hereto, as
the same may be amended or supplemented from time to time.
"Guarantor" shall mean any of the Guarantors.
"Hazardous Materials" shall mean those substances which are
regulated by or form the basis of liability under any
Environmental Laws.
"Indebtedness" shall mean, with respect to any person, all
indebtedness, obligations and liabilities of such Person,
including without limitation:
(1)all "liabilities" which would be reflected on a balance
sheet of such Person, prepared in accordance with Generally
Accepted Accounting Principles;
(2)all obligations of such Person in respect of any Capital
Lease; and
(3)all obligations of such Person in respect of any Guaranty.
"Intangible Assets" shall mean goodwill, patents,
tradenames, trademarks, copyrights, franchises, experimental
expense, organizational expense, unamortized debt discount and
expense, the excess of cost of shares acquired over book value of
related assets and such other assets as are properly classified
as "intangible assets" on the Consolidated balance sheet of
Pancho's Mexican Buffet, Inc. and its Subsidiaries in accordance
with GAAP, but in no event shall Intangible Assets include (i)
current prepaid expenses of Pancho's Mexican Buffet, Inc. or its
Subsidiaries or (ii) receivables of any kind of Pancho's Mexican
Buffet, Inc. or its Subsidiaries.
"Interbank Offered Rate" shall mean, with respect to each
Interest Period, that rate of interest determined by Bank on the
basis of the offered rates for deposits in Dollars commencing on
the first day of such Interest Period which appear on the Reuters
Screen LIBO Page as of 11:00 a.m., London time two (2) Eurodollar
Business Days preceding the first day of such Interest Period,
such deposits being for a period of time equal to or comparable
to such Interest Period and in an amount equal to or comparable
to the principal amount of the Eurodollar Loan to which such
Interest
<PAGE>
Period relates. If at least two (2) such offered rates appear on
the Reuters Screen LIBO Page, the rate in respect to the
applicable Interest Period will be the arithmetic mean of such
offered rates. If fewer than two (2) offered rates appear, the
rate in respect of such Interest Period will be determined on the
basis of the rates at which deposits in Dollars are offered by
Bank (at approximately 11:00 a.m. London time, on the day that is
two (2) Eurodollar Business Days prior to the first day of such
Interest Period) to first-class banks in the London Interbank
eurodollar market for delivery on the first day of such Interest
Period, such deposits being for a period of time equal or
comparable to such Interest Period and in an amount equal to or
comparable to the principal amount of the Eurodollar Loan to
which such Interest Period relates.
"Interest Period" shall mean, with respect to a Eurodollar
Advance or a Eurodollar Portion, a period commencing:
(i) on the borrowing date of such Eurodollar Advance or
Eurodollar Portion made pursuant to Section 2.02 or Section 3.03
of this Loan Agreement; or
(ii) on the Conversion Date pertaining to such Eurodollar
Advance or Eurodollar Portion, if such Eurodollar Advance or
Eurodollar Portion is made pursuant to a conversion as described
in Section 2.02(c) or Section 3.03 hereof; or
(iii) on the date of borrowing specified in the Request for
Advance in the case of a rollover to a successive Interest Period,
and ending one (1), two (2), or three (3) months thereafter (in
the case of a Eurodollar Advance or a Eurodollar Portion), as
Company shall elect in accordance with Section 2.02(c) or Section
3.03 of this Loan Agreement; provided, that:
(A) any Interest Period which would otherwise end on a day
which is not a Eurodollar Business Day shall be
extended to the next succeeding Eurodollar Business Day
unless such Eurodollar Business Day falls in another
calendar month in which case such Interest Period shall
end on the next preceding Eurodollar Business Day;
(B) any Interest Period which begins on the last Eurodollar
Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the
calendar month or at the end of such Interest Period)
shall, subject to clause (A) above, end on the last
Eurodollar Business Day of a calendar month; and
<PAGE>
(C) if the Interest Period for any Eurodollar Advance or
Eurodollar Portion would otherwise end after the
Termination Date or Maturity Date, such Interest Period
shall end on the Termination Date or the Maturity Date,
as the case may be.
"Investment" shall mean any direct or indirect purchase or
other acquisition of, or a beneficial interest in, capital stock
or other securities of any other Person, or any direct or
indirect loan, advance (other than advances to employees for
moving and travel expenses, drawing accounts and similar
expenditures in the ordinary course of business) or capital
contribution to or investment in any other Person, including
without limitation the incurrence or sufferance of Debt or
accounts receivable of any other Person which are not current
assets or do not arise from sales to that other Person in the
ordinary course of business.
"Law" shall mean all statutes, laws, ordinances, rules,
regulations, orders, writs, injunctions or decrees of any
Tribunal.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind, including without
limitation, any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, any lease in
the nature thereof, and the filing of or agreement to give any
financing statement or other similar form of public notice under
the Laws of any jurisdiction.
"Loan Documents" shall mean this Loan Agreement, the Note
(including any renewals, extensions and refundings thereof), the
Guaranty, and any agreements or documents (and with respect to
this Loan Agreement, and such other agreements and documents, any
amendments or supplements thereto or modifications thereof)
executed or delivered pursuant to the terms of this Loan
Agreement.
"Maturity Date" shall mean the date on which the entire
unpaid balance of the Term Loan is fully due and payable, such
Maturity Date being four (4) years after the earlier of the
Revolving Credit Conversion Date or the Termination Date, as such
Termination Date may be extended from time to time.
"Material Adverse Effect" shall mean any act, circumstance,
or event that (i) could have any adverse effect whatsoever upon
the validity or enforceability of the Loan Documents, (ii) causes
or reasonably could be expected to cause an Event of Default
under this Loan Agreement, (iii) is or might be material and
adverse to the financial condition or business operations of
Pancho's Mexican Buffet, Inc. and its Subsidiaries on a
consolidated basis, or (iv) could impair the ability of Company
or any of the Guarantors to perform their respective obligations
under the Loan Documents in any material respect.
<PAGE>
"Maximum Rate" shall mean, on any day, the highest
nonusurious rate of interest (if any) permitted by applicable law
on such day. Bank hereby notifies Company that, and disclose to
Company that, for purposes of Tex. Rev. Civ. Stat. Ann. Art.
5069-1.04, as it may from time to time be amended, the
"applicable rate ceiling" shall be the "indicated rate" ceiling
from time to time in effect as limited by Art. 5069-1.04(b);
provided, however, that to the extent permitted by applicable
law, Bank reserves the right to change the "applicable rate
ceiling" from time to time by further notice and disclosure to
Company; and, provided further, that the "highest nonusurious
rate of interest permitted by applicable law" for purposes of
this Loan Agreement and the Note shall not be limited to the
applicable rate ceiling under Art. 5069-1.04 if federal laws or
other state laws now or hereafter in effect and applicable to
this Loan Agreement and the Note (and the interest contracted
for, charged and collected hereunder or thereunder) shall permit
a higher rate of interest.
"Net Cash Flow" shall mean the sum of Consolidated Net
Income, depreciation and amortization less the amount of
Dividends paid.
"Note" shall mean the promissory note executed by Company
and delivered pursuant to the terms of this Loan Agreement,
together with any renewals, extensions or modifications thereof.
"Obligation" shall mean all present and future indebtedness,
obligations, and liabilities of Company to Bank, and all renewals
and extensions thereof, or any part thereof, arising pursuant to
this Loan Agreement or represented by the Note, and all interest
accruing thereon, and reasonable attorneys' fees incurred in the
enforcement or collection thereof, regardless of whether such
indebtedness, obligations and liabilities are direct, indirect,
fixed, contingent, joint, several or joint and several; together
with all indebtedness, obligations and liabilities of Company
evidenced or arising pursuant to any of the other Loan Documents,
and all renewals and extensions thereof, or part thereof.
"Past Due Rate" shall mean the lesser of (a) the Floating
Prime Rate in effect from day-to-day, plus five percent (5.0%),
or (b) the Maximum Rate.
"PBGC" shall mean the Pension Benefit Guaranty Corporation,
and any successor to all or any of the Pension Benefit Guaranty
Corporation's functions under ERISA.
"Permitted Liens" shall mean: (i) purchase money liens
relating to or securing obligations in an aggregate amount not to
exceed five hundred thousand dollars ($500,000); (ii) pledges or
deposits made to secure payment of Worker's Compensation (or to
participate in any fund in connection with Worker's
Compensation), unemployment insurance, pensions or social
security programs; (iii) Liens imposed by mandatory provisions of
law such as for materialmen's, mechanics, warehousemen's and
other like Liens arising in the ordinary course of business,
securing Indebtedness whose payment is not yet due unless the
same are being contested in good faith and for which adequate
reserves have been provided; (iv)
<PAGE>
Liens for taxes, assessments and governmental charges or levies
imposed upon a Person or upon such Person's income or profits or
property, if the same are not yet due and payable or if the same
are being contested in good faith and as to which adequate
reserves have been provided; (v) good faith deposits in
connection with tenders, leases, real estate bids or contracts
(other than contracts involving the borrowing of money), pledges
or deposits to secure public or statutory obligations, deposits
to secure (or in lieu of) surety, stay, appeal or customs bonds
and deposits to secure the payment of taxes, assessments, customs
duties or other similar charges; and (vi) encumbrances consisting
of zoning restrictions, easements, or other restrictions on the
use of real property, provided that such do not impair the use of
such property for the uses intended, and none of which is
violated by Company or any of its Subsidiaries in connection with
existing or proposed structures or land use.
"Person" shall mean and include an individual, partnership,
joint venture, corporation, trust, Tribunal, unincorporated
organization or government or any department, agency or political
subdivision thereof.
"Plan" shall mean an employee benefit plan or other plan
maintained by Company for employees of Company and any of its
Subsidiaries and/or covered by Title IV of ERISA, or subject to
the minimum funding standards under Section 412 of the Internal
Revenue Code of 1986, as amended.
"Regulation U" shall mean Regulation U promulgated by the
Board of Governors of the Federal Reserve System, 12 C.F.R. Part
221, or any other regulation hereafter promulgated by said Board
to replace the prior Regulation U and having substantially the
same function.
"Regulation X" shall mean Regulation X promulgated by the
Board of Governors of the Federal Reserve System, 12 C.F.R.
Part 224, or any other regulation hereafter promulgated by said
Board to replace the prior Regulation X and having substantially
the same function.
"Revolving Credit Conversion Date" shall mean the date on
which the Revolving Credit Loan is converted to a Term Loan
pursuant to Section 3.01 hereof.
"Revolving Credit Loan" shall have the meaning assigned to
it in Section 2.01 hereof.
"Subsidiary" shall mean, as to any particular parent
corporation, any corporation of which more than fifty percent (by
number of votes) of the Voting Stock shall be owned by such
parent corporation and/or one or more corporations which
themselves have more than fifty percent (by number of votes) of
their Voting Stock owned by such parent corporation. As used
herein, the term "Subsidiary" shall also mean any "Subsidiary" of
the Company.
<PAGE>
"Taxes" shall mean all taxes, levies, assessments, fees,
withholdings or other charges at any time imposed by any Laws or
Tribunal.
"Termination Date" shall mean (i) March 1, 1996, or (ii)
such later date to which the Revolving Credit Period is extended
pursuant to Section 2.01(b) hereof.
"Term Loan": Section 3.01.
"Tribunal" shall mean any municipal, state, commonwealth,
federal, foreign, territorial or other court, governmental body,
subdivision, agency, department, commission, board or bureau or
instrumentality.
"Voting Stock" shall mean, with respect to any Subsidiary,
any shares of any class of stock of such Subsidiary having
general voting power under ordinary circumstances to elect a
majority of the Board of Directors of such Subsidiary
irrespective of whether at the time stock of any other class or
classes shall have or might have voting power by reason of the
happening of any contingency.
Other Definitional Provisions.
(a) All terms defined in this Loan Agreement shall
have the above-defined meanings when used in the Note or any Loan
Documents, certificate, report or other document made or
delivered pursuant to this Loan Agreement, unless the context
therein shall otherwise require.
(b) Defined terms used herein in the singular shall import
the plural and vice versa.
(c) The words "hereof," "herein," "hereunder" and similar
terms when used in this Loan Agreement shall refer to this Loan
Agreement as a whole and not to any particular provision of this
Loan Agreement.
(d) All financial and other accounting terms not otherwise
defined herein shall be defined and calculated in accordance with
Generally Accepted Accounting Principles consistently applied.
ARTICLE II
REVOLVING CREDIT LOAN
2.01. Revolving Credit Commitment.
(a) Revolving Loan Commitments. Subject to the terms and
conditions of this Loan Agreement, Bank agrees to extend to
Company from the date hereof
<PAGE>
through the Termination Date (the "Revolving Credit Period"), a
revolving line of credit which shall not exceed ten million
dollars ($10,000,000) at any one time outstanding (such amount is
hereinafter referred to as its "Commitment"). Bank shall not be
obligated to make any Advance hereunder if, immediately after
giving effect thereto, the aggregate amount of the Obligations of
Company to Bank hereunder exceeds Bank's Commitment.
Within the limits of this Section 2.01, during the Revolving
Credit Period, Company may borrow, prepay pursuant to
Section 4.04 hereof and reborrow under this Section 2.01. Each
advance made by Bank under Section 2.01 and Section 2.02 is
herein called an "Advance" and all Advances made by Bank
hereunder are herein collectively called a "Revolving Credit
Loan".
(b) Review of Revolving Loan Commitments. Prior to March
1, 1995, Bank and Company shall review the revolving loan
commitments hereunder, and Bank and Company may, at that time,
mutually agree to extend the Termination Date of the revolving
line of credit until March 1, 1997. Thereafter, Bank and Company
shall review the revolving line of credit prior to March 1 of
each succeeding year and, at the time of each such review, Bank
and Company may mutually agree to extend the Termination Date for
one additional year. If, at the time of any of the
above-described reviews of the revolving line of credit, Bank and
Company do not mutually agree to extend the then existing
Termination Date of the revolving line of credit, then the
Termination Date shall not be extended and the unpaid balance of
the Note shall be due and payable in full on the then existing
Termination Date, unless converted into a Term Loan pursuant to
Section 3.01 hereof. Notwithstanding anything herein, Bank shall
have no obligation whatsoever to extend the Termination Date.
(c) Reduction of Commitment. Company shall have the right,
upon three (3) Business Days' prior written notice to Bank, to
terminate or to permanently reduce the unborrowed portion of the
Commitment, in whole or in part (provided any partial reduction
shall be in the minimum amount of $1,000,000 or any integral
multiple thereof), effective on the first day of any calendar
quarter hereafter.
(d) Commitment Fee. In addition to the payments provided
for in Article IV hereof, Company shall pay to Bank, on the first
day of each fiscal quarter of Company beginning April 1, 1994, a
revolving credit loan commitment fee at the rate of three eighths
percent (.375%) per annum (calculated on the basis of a year
consisting of 360 days) on the average daily amount of Bank's
Commitment which was unused during the immediately preceding
fiscal quarter of Company. Such commitment fee shall be paid to
Bank during the Revolving Credit Period and on the Termination
Date or the Revolving Credit Conversion Date. Company and Bank
acknowledge and agree that the commitment fees payable hereunder
are bona fide commitment fees and are
<PAGE>
intended as reasonable compensation to Bank for committing to
make funds available to Company as described herein and for no
other purpose.
2.02. Manner of Borrowing.
(a) Request for Advance. Each request by Company to Bank
for an Advance under Section 2.01 hereof (a "Request for
Advance") shall be in writing or by telephonic notice and specify
the aggregate amount of such requested Advance, the requested
date of such Advance and, when the Request for Advance specifies
a Eurodollar Advance, the Interest Period which shall be
applicable thereto; provided, however, that the aggregate number
of unpaid Eurodollar Advances shall not exceed four (4) at any
time. Company shall furnish to Bank the Request for Advance by
at least 11:00 a.m. (Fort Worth time) three (3) Eurodollar
Business Days prior to the requested Eurodollar Advance date
(which must be a Eurodollar Business Day) and by at least 2:00
p.m. (Fort Worth time) on the requested borrowing date (which
must be a Business Day) for a Floating Prime Advance. Any
written Request for Advance shall: (i) in the case of a Floating
Prime Advance, be in the form attached hereto as Exhibit "C," and
(ii) in the case of a Eurodollar Advance, be in the form attached
hereto as Exhibit "D." If such Request for Advance is by
telephonic notice, said telephonic notice shall be confirmed in
writing within two (2) Business Days of such telephonic notice
pursuant to a Confirmation of Request For Advance
(i) substantially in the form attached hereto as Exhibit "E" in
the case of a Floating Prime Advance and (ii) substantially in
the form attached hereto as Exhibit "F" in the case of a
Eurodollar Advance. Each Floating Prime Advance shall be in an
aggregate principal amount of ten thousand dollars ($10,000.00)
or any integral multiple of ten thousand dollars ($10,000.00).
Each Eurodollar Advance shall be in an amount of at least one
million dollars ($1,000,000.00) or any higher integral multiple
of $1,000,000.00.
Prior to making a Request for Advance, Company may (without
specifying whether the anticipated Advance shall be a Floating
Prime Advance or Eurodollar Advance) request that Bank provide
Company with the most recent Interbank Offered Rate available to
Bank. Bank shall endeavor to provide such quoted rates to
Company on the date of such request.
Each Request for Advance shall be irrevocable and binding on
Company and, in respect of the Advance specified in such Request
for Advance, Company shall indemnify Bank against any cost, loss
or expense incurred by Bank as a result of any failure to
fulfill, on or before the date specified for such Advance, the
conditions to such Advance set forth herein, including without
limitation, any cost, loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired
by Bank to fund the Advance to be made by Bank as part of such
Advance when such Advance, as a result of such failure, is not
made on such date.
<PAGE>
(b) Funding. Bank shall on the date of such Advance
specified in the Request for Advance, deposit the amount of such
Advance in an account maintained by Company at Bank.
(c) Selection of Interest Option. Upon making a Request
for Advance under Section 2.02(a) hereof, Company shall advise
Bank as to whether the Advance shall be (i) a Eurodollar Advance,
in which case Company shall specify the applicable Interest
Period therefor, or (ii) a Floating Prime Advance. At least
three (3) Eurodollar Business Days prior to the termination of
each Interest Period with respect to a Eurodollar Advance
(whether such termination occurs before or after the Termination
Date) Company shall give Bank written notice (the "Rollover
Notice") of the interest option which shall be applicable to such
Advance to be rolled over upon the expiration of such Interest
Period. If Company shall specify that such Advance shall be a
Eurodollar Advance, such Rollover Notice shall also specify the
length of the succeeding Interest Period selected by Company with
respect to such Advance. Each Rollover Notice shall be
irrevocable and effective upon notification thereof to Bank. If
the required Rollover Notice shall not have been timely received
by Bank prior to the expiration of the then relevant Interest
Period, then Company shall be deemed to have elected to have such
Advance be a Floating Prime Advance. With respect to any
Floating Prime Advance, Company shall have the right, on any
Eurodollar Business Day (a "Conversion Date") to convert such
Floating Prime Advance to a Eurodollar Advance by giving Bank a
Rollover Notice of such selection at least three (3) Eurodollar
Business Days prior to such Conversion Date.
Notwithstanding anything to the contrary contained herein,
Company shall have no right to request a Eurodollar Advance if
the interest rate applicable thereto under Section 2.03 hereof
would exceed the Maximum Rate in effect on the first day of the
Interest Period applicable to such Eurodollar Advance.
2.03. Interest Rates. The unpaid principal of each
Floating Prime Advance shall bear interest from the date of
advance until paid at a rate per annum which shall from day to
day be equal to the lesser of: (a) the Floating Prime Rate in
effect from day to day or (b) the Maximum Rate. The unpaid
principal of each Eurodollar Advance shall bear interest from the
date of advance until paid at a rate per annum which shall be
equal to the lesser of (a) the sum of the Adjusted Interbank Rate
for the applicable Interest Period, plus one and three eighths
percent (1.375%) or (b) the Maximum Rate if as of the end of the
most recent fiscal quarter the ratio of Funded Debt as of the end
of such quarter to Net Cash Flow for the four fiscal quarters
ending as of the end of the most recent fiscal quarter is equal
to or less than 1.0 to 1.0. The unpaid principal of each
Eurodollar Advance shall bear interest from the date of advance
until paid at a rate per annum which shall be equal to the lesser
of (a) the sum of the Adjusted Interbank Rate for the applicable
Interest Period, plus one and one half percent (1.5%) or (b) the
Maximum Rate if as of the end of the most recent fiscal quarter
the ratio of Funded Debt as of the end of such quarter to Net
<PAGE>
Cash Flow for the four fiscal quarters ending as of the end of
the most recent fiscal quarter is greater than 1.0 to 1.0 but
equal to or less than 1.5 to 1.0. The unpaid principal of each
Eurodollar Advance shall bear interest from the date of advance
until paid at a rate per annum which shall be equal to the lesser
of (a) the sum of the Adjusted Interbank Rate for the applicable
Interest Period, plus one and three quarter percent (1.75%) or
(b) the Maximum Rate if as of the end of the most recent fiscal
quarter the ratio of the Funded Debt as of the end of such
quarter to Net Cash Flow for the four fiscal quarters ending as
of the end of the most recent fiscal quarter is greater than 1.5
to 1.0. All past due principal of, and to the extent permitted
by applicable law, interest on the Note shall bear interest at
the Past Due Rate. If converted to Term Loan pursuant to Section
3.01 hereof, the converted principal amount of the Note shall
continue to bear interest as provided in Section 3.02.
Notwithstanding the foregoing, the unpaid principal balance of
the Note shall bear interest as provided in Section 4.05(c)
hereof, upon the occurrence of the circumstances described in
such section.
2.04. Loan Origination Fees. In consideration of Bank's
agreement to make funds available to Company during the Revolving
Credit Period, Company agrees to pay to Bank a nonrefundable loan
origination fee in the amount of $5,000 at the time of execution
of the Loan Agreement. In consideration of Bank's commitment to
make the Term Loan to Company, Company also agrees to pay to Bank
a nonrefundable loan origination fee in the amount of $20,000 at
the time of execution of this Loan Agreement.
ARTICLE III
CONVERSION TERM LOAN
3.01. Conversion to Term Loan. On or before the
Termination Date (as it may be extended pursuant to
Section 2.01(b) herein), so long as Company shall have fulfilled
all the conditions precedent set forth in Article VI hereof,
Company shall have the option, upon three (3) Business Days'
prior written notice thereof to Bank, to convert the outstanding
balance of the Note to a term loan (such loan being the "Term
Loan") to be repaid as provided herein.
3.02. Term Loan Interest Rates. Subject to the provisions
hereof, Company shall be entitled to designate portions of the
unpaid principal balance of the Term Loan to bear interest at the
Floating Prime Rate (a "Floating Prime Portion") and shall be
entitled to designate portions of the Term Loan (a "Eurodollar
Portion") to bear interest at a rate calculated by reference to
the Adjusted Interbank Rate. Each Floating Prime Portion shall
bear interest at a rate per annum which shall from day to day be
equal to the lesser of: (a) the Floating Prime Rate in effect
from day to day or (b) the Maximum Rate. Each Eurodollar Portion
shall bear interest at a rate per annum which shall be equal to
the lesser of (a) the sum of the Adjusted Interbank
<PAGE>
Rate for the applicable Interest Period, plus one and three
eighths percent (1.375%) or (b) the Maximum Rate if as of the end
of the most recent fiscal quarter the ratio of Funded Debt as of
the end of such quarter to Net Cash Flow for the four fiscal
quarters ending as of the most recent fiscal quarter is equal to
or less than 1.0 to 1.0. Each Eurodollar Portion shall bear
interest at a rate per annum which shall be equal to the lesser
of (a) the sum of the Adjusted Interbank Rate for the applicable
Interest Period, plus one and one half percent (1.5%) or (b) the
Maximum Rate if as of the end of the most recent fiscal quarter
the ratio of Funded Debt as of the end of such quarter to Net
Cash Flow for the four fiscal quarters ending as of the end of
the most recent fiscal quarter is greater than 1.0 to 1.0 but
equal to or less than 1.5 to 1.0. Each Eurodollar Portion shall
bear interest at a rate per annum which shall be equal to the
lesser of (a) the sum of the Adjusted Interbank Rate for the
applicable Interest Period, plus one and three quarter percent
(1.75%) or (b) the Maximum Rate if as of the end of the most
recent fiscal quarter the ratio of the Funded Debt as of the end
of such quarter to Net Cash Flow for the four fiscal quarters
ending as of the end of the most recent fiscal quarter is greater
than 1.5 to 1.0. All past due principal of, and to the extent
permitted by applicable law, interest on the Note shall bear
interest at the Past Due Rate. Notwithstanding the foregoing,
the unpaid principal balance of the Note shall bear interest as
provided in Section 4.05(c) hereof, upon the occurrence of the
circumstances described in such section.
3.03 Selection of Interest Option. At least three (3)
Eurodollar Business Days prior to the termination of each
Interest Period with respect to a Eurodollar Portion, Company
shall give Bank written notice (the "Rollover Notice") of the
interest option which shall be applicable to such Eurodollar
Portion upon the expiration of such Interest Period. If Company
shall specify that such Eurodollar Portion shall bear interest at
a rate based upon the Adjusted Interbank Rate, such Rollover
Notice shall also specify the length of the succeeding Interest
Period selected by Company with respect to such Eurodollar
Portion. Each Rollover Notice shall be irrevocable and effective
upon notification thereof to Bank. If the required Rollover
Notice shall not have been timely received by Bank prior to the
expiration of the then relevant Interest Period, then Company
shall be deemed to have elected to have such portion of the Term
Loan bear interest at the Floating Prime Rate. With respect to
any Floating Prime Portion, Company shall have the right, on any
Eurodollar Business Day (a "Conversion Date") to convert such
Floating Prime Portion to a Eurodollar Portion by giving Bank a
Rollover Notice of such selection at least three (3) Eurodollar
Business Days prior to such Conversion Date.
ARTICLE IV
NOTE AND PAYMENTS
4.01. Promissory Note. The Advances under Section 2.02(a)
hereof by Bank shall be evidenced by a promissory note (the
"Revolving Credit Note") of Company,
<PAGE>
which Revolving Credit Note shall (i) be dated the date hereof,
(ii) be in the amount of $10,000,000, (iii) be payable to the
order of Bank at the office of Bank, (iv) bear interest in
accordance with Section 2.03 hereof, and (v) be in the form of
Exhibit "A" attached hereto with blanks appropriately completed
in conformity herewith. Notwithstanding the principal amount of
the Revolving Credit Note as stated on the face thereof, the
amount of principal actually owing on the Revolving Credit Note
at any given time shall be in the aggregate of all Advances
theretofore made to Company hereunder, less all payments of
principal theretofore actually received hereunder by Bank. Bank
is authorized, but is not required, to endorse on the schedule
attached to the Note appropriate notations evidencing the date
and amount of each Advance as well as the amount of each payment
made by Company hereunder.
4.02. Principal Payments on Revolving Credit Loan. The
unpaid principal amount of the Revolving Credit Note, and all
accrued-but unpaid interest thereon, shall be due and payable on
the Termination Date unless converted to a Term Loan pursuant to
Section 3.01 hereof.
4.03. Principal Payments on Term Loan. Beginning on the
first day of the month beginning not less than thirty (30) days
after the Revolving Credit Conversion Date, the unpaid principal
amount of the Term Loan shall be payable in forty eight (48)
consecutive, monthly installments on the first day of each month
until the Term Loan shall be repaid in full. Each such
installment shall be in an amount equal to one forty eighth
(48th) (rounded to the nearest $1.00) of the original amount of
the Term Loan; provided, however, that the amount of the final
payment shall be in an amount equal to the then unpaid principal
of the Term Loan.
4.04. Prepayments.
(a) Optional Prepayments. Company may, without premium or
penalty, prepay the principal of the Note then outstanding, in
whole or in part, at any time or from time to time; provided,
however, that (i) each prepayment of less than the full
outstanding principal balance of the Note shall be in an amount
equal to ten thousand dollars ($10,000.00) or an integral
multiple thereof, and (ii) if Company shall prepay the principal
of any Eurodollar Advance or Eurodollar Portion on any date other
than the last day of the Interest Period applicable thereto,
Company shall make the payments required by Section 5.05 hereof.
(b) General Prepayment Provisions. Any prepayment of the
Note hereunder shall be (i) made together with interest accrued
(through the date of such prepayment) on the principal amount
prepaid, and (ii) applied first to accrued interest and then to
principal. After the Revolving Credit Conversion Date,
prepayments on the Note shall be applied to remaining
installments of principal on the Note in inverse order of
maturity.
<PAGE>
4.05. Payment of Interest on the Note.
(a) Revolving Credit Period. During the Revolving Credit
Period, the interest on the unpaid principal amount of each
Floating Prime Advance shall be payable monthly as it accrues on
the first Business Day of each month hereafter, commencing April
1, 1994, and on the Termination Date. Interest on the unpaid
principal amount of each Eurodollar Advance shall be payable on
the last day of such Interest Period. Should any installment of
interest on the Revolving Credit Loan become due and payable on a
day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day.
(b) Term Loan. After the Revolving Credit Conversion Date,
interest on the unpaid principal amount of each Floating Prime
Advance or Floating Prime Portion shall be payable monthly as it
accrues commencing on the first (1st) day of each month following
the Revolving Credit Conversion Date and continuing on the first
(1st) day of every month thereafter and on the Maturity Date.
Interest on the unpaid principal amount of each Eurodollar
Advance and each Eurodollar Portion shall be payable as it
accrues on the last day of such Interest Period. Should the
principal of, or any installment of the principal or interest on,
the Note, or any commitment fee, become due and payable on a day
other than a Business Day, the maturity thereof shall be extended
to the next succeeding Business Day.
(c) Recapture Rate. If, on any interest payment date, Bank
does not receive interest on the Note computed (as if no Maximum
Rate limitations were applicable) at the applicable contract rate
described herein, because the applicable contract rate exceeds or
has exceeded the Maximum Rate, then Company shall, upon the
written demand of Bank, pay to Bank, in addition to interest
otherwise required hereunder, on each interest payment date
thereafter, the Excess Interest Amount (hereinafter defined)
calculated as of such later interest payment date; provided,
however, that in no event shall Company be required to pay, for
any appropriate computation period, interest at a rate exceeding
the Maximum Rate effective during such period. The term "Excess
Interest Amount" shall mean, on any date, with respect to the
Note, the amount by which (a) the amount of all interest which
would have accrued prior to such date on the principal of the
Note (had the applicable contract rate(s) described herein at all
times been in effect, without limitation by the Maximum Rate)
exceeds (b) the aggregate amount of interest actually paid to
Bank on the Note on or prior to such date.
4.06. Calculation of Interest Rates. Interest on the
unpaid principal of each Eurodollar Advance and each Eurodollar
Portion shall be calculated on the basis of the actual days
elapsed in a year consisting of 360 days. Interest on the unpaid
principal of each Floating Prime Advance and Floating Prime
Portion shall be calculated on the basis of the actual days
elapsed in a year consisting of 360 days.
<PAGE>
4.07. Manner and Application of Payments. All payments of
principal of, and interest on, the Note shall be made by Company
to Bank before 2:00 p.m. (Fort Worth time), in Federal or other
immediately available funds at Bank's principal banking office in
Fort Worth. Should the principal of, or any installment of the
principal or interest on, the Note, become due and payable on a
day other than a Business Day or a Eurodollar Business Day, as
the case may be, the maturity thereof shall be extended to the
next succeeding Business Day or Eurodollar Business Day, as the
case may be. All payments made on the Note shall be credited, to
the extent of the amount thereof, in the following manner:
(i) first, against the amount of interest accrued and unpaid on
the Note as of the date of such payment; (ii) second, against all
principal (if any) due and owing on the Note; (iii) third, as a
prepayment of outstanding Floating Prime Advances or Floating
Prime Portions under the Note; and (iv) fourth, as a prepayment
of outstanding Eurodollar Advances or Eurodollar Portions under
the Note. Subject to the foregoing, payments and prepayments of
principal of the Note shall be applied first to such outstanding
Floating Prime Advances and Floating Prime Portions and then to
such Eurodollar Advances and Eurodollar Portions under the Note
as Company shall select; provided, however, that Company shall
select Floating Prime Advances, Floating Prime Portions,
Eurodollar Advances and Eurodollar Portions to be repaid in a
manner designated to minimize the Consequential Loss, if any,
resulting from such payments; and provided further that, if
Company shall fail to select the Floating Prime Advances or
Floating Prime Portions and Eurodollar Advances or Eurodollar
Portions to which such payments are to be applied, or if an Event
of Default has occurred and is continuing at the time of such
payment, then Bank shall apply the payment first to Floating
Prime Advances and Floating Prime Portions and then to Eurodollar
Advances and Eurodollar Portions.
4.08. Lending Office. Bank may (a) designate its principal
office or a foreign branch, subsidiary or affiliate of Bank as
its lending office (and the office to whose accounts payments are
to be credited) for any Eurodollar Advance or Eurodollar Portion,
(b) designate its principal office or a domestic branch,
subsidiary or affiliate as its lending office (and the office to
whose accounts payments are to be credited) for any Floating
Prime Advance or Floating Prime Portion and (c) change its
lending offices from time to time by notice to Bank and Company;
provided, however, Bank shall not designate a foreign branch
without the consent of Company if such designation would subject
interest payments hereunder to withholding for Taxes. In such
event, Bank shall continue to hold the Note evidencing its loan
for the benefit and account of such foreign branch, subsidiary or
affiliate. Bank shall be entitled to fund all or any portion of
the Revolving Credit Loan or Term Loan in any manner that it
deems appropriate not inconsistent with the terms and provisions
hereof, but for the purposes of this Loan Agreement Bank shall,
regardless of Bank's actual means of funding, be deemed to have
funded its Loan in accordance with the interest option from time
to time selected by Company for such Advance.
<PAGE>
4.09. Taxes.
(a) Any and all payments by Company hereunder or under the
Note shall be made, in accordance with Section 4.07, free and
clear of and without deduction for any and all present or future
Taxes, excluding, in the case of Bank, taxes imposed on its
income, and franchise taxes imposed on it, by the jurisdiction
under the laws of which Bank is organized or is or should be
qualified to do business or any political subdivision thereof.
If Company shall be required by law to deduct any Taxes (i.e.,
Taxes for which Company is responsible under the preceding
sentence) from or in respect of any sum payable hereunder or
under the Note, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this
Section 4.09) Bank receives an amount equal to the sum it would
have received had no such deductions been made, (ii) Company
shall make such deductions and (iii) Company shall pay the full
amount deducted to the relevant taxation authority or other
authority in accordance with applicable law.
(b) In addition, Company agrees to pay any present or
future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies which arise from any payment
made hereunder or under the Loan Documents from the execution,
delivery, or registration of, or otherwise with respect to, this
Agreement or the other Loan Documents (hereinafter referred to as
"Other Taxes").
(c) Company will indemnify Bank for the full amount of
Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under
this Section 4.09) paid by Bank or any liability (including
penalties and interest) arising therefrom or with respect
thereto. This indemnification shall be made within thirty (30)
days from the date Bank makes written demand therefor.
(d) Within thirty (30) days after the date of any payment
of Taxes, Company will furnish to Bank, at its address referred
to in Section 12.02, the original or a certified copy of a
receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other
agreement of Company hereunder, the agreements and obligations of
Company contained in this Section 4.09 shall survive the payment
in full of the Obligation.
(f) Bank agrees to use good faith efforts to carry out its
obligations under this Loan Agreement in such a way as to reduce
the amount of Taxes attributable to the Revolving Credit Loan and
Term Loan, including the use of a different lending office, as
long as in the good faith opinion of Bank such actions would not
adversely affect it.
<PAGE>
ARTICLE V
SPECIAL PROVISIONS FOR EURODOLLAR LOANS
5.01. Inadequacy of Eurodollar Loan Pricing. If with
respect to an Interest Period for any Eurodollar Advance or any
Eurodollar Portion:
(i) Bank determines that, by reason of circumstances
affecting the Interbank Eurodollar market generally,
deposits in Dollars (in the applicable amounts) are not
being offered to Bank in the Interbank eurodollar
market for such Interest Period, or
(ii) The Interbank Offered Rate as determined by Bank will
not adequately and fairly reflect the cost to Bank of
maintaining or funding the Eurodollar Advance or
Eurodollar Portion for such Interest Period,
then Bank shall forthwith give notice thereof to Company,
whereupon, until Bank notifies Company that the circumstances
giving rise to such suspension no longer exist, (a) the
obligation of Bank to make Eurodollar Advances and to offer
Eurodollar Portions shall be suspended and (b) Company shall
either (i) repay in full the then outstanding principal amount of
the Eurodollar Advances or the Eurodollar Portions, together with
accrued interest thereon on the last day of the then current
Interest Period applicable to such Eurodollar Advances or
Eurodollar Portions, as the case may be, or (ii) convert such
Eurodollar Advances or Eurodollar Portions to Floating Prime
Advances or Eurodollar Portions in accordance with Section
2.02(c) or Section 3.03 of this Loan Agreement on the last day of
the then current Interest Period applicable to each such
Eurodollar Advance or Eurodollar Portion.
5.02. Illegality. If, after the date of this Loan
Agreement, the adoption of any applicable law, rule or
regulation, or any change therein, or any change in the
interpretation or administration thereof by any Tribunal, central
bank or comparable agency charged with the interpretation or
administration thereof, or compliance by Bank with any request or
directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall make it
unlawful or impossible for Bank to make, maintain or fund its
Eurodollar Advances or Eurodollar Portions, and Bank shall
forthwith give notice thereof to Company. Before giving any
notice pursuant to this Subsection, Bank shall designate a
different Eurodollar lending office if such designation will
avoid the need for giving such notice and will not be materially
disadvantageous to Bank (as determined in good faith by Bank).
Upon receipt of such notice, Company shall either (i) repay in
full the then outstanding principal amount of the Eurodollar
Advance or Eurodollar Portion, together with accrued interest
thereon, or (ii) convert such Eurodollar Advance or Eurodollar
Portion to a Floating Prime Advance or Floating Prime Portion, in
either case on (a) the last day of the then current Interest
Period applicable to such
<PAGE>
Eurodollar Advance or Eurodollar Portion if Bank may lawfully
continue to maintain and fund such Eurodollar Advance or
Eurodollar Portion to such day or (b) immediately if Bank may not
lawfully continue to fund and maintain such Eurodollar Advance or
Eurodollar Portion to such day.
5.03. Increased Costs for Eurodollar Loan. If any
Tribunal, central bank or other comparable authority, shall at
any time after the date of this Agreement impose, modify or deem
applicable any reserve (including, without limitation, any
imposed by the Board of Governors of the Federal Reserve System
but excluding any reserve requirement included in the Eurodollar
Reserve Requirement of Bank), special deposit or similar
requirement against assets of, deposits with or for the account
of, or credit extended by, Bank, or shall impose on Bank (or its
Eurodollar lending office) or the Interbank eurodollar market any
other condition affecting its Eurodollar Advances or the
Eurodollar Portions, the Note, or its obligation to make
Eurodollar Advances or offer Eurodollar Portions; and the result
of any of the foregoing is to increase the cost to Bank of making
or maintaining its Eurodollar Advances or its Eurodollar
Portions, or to reduce the amount of any sum received or
receivable by Bank under this Agreement or the Note by an amount
reasonably deemed by Bank to be material; then, within five (5)
days after demand by Bank, Company shall pay to Bank, such
additional amount or amounts as will compensate Bank for such
increased cost or reduction. Bank will promptly notify Company
and Bank of any event of which it has knowledge, occurring after
the date hereof, which will entitle Bank to compensation
pursuant to this Section. A certificate of Bank claiming
compensation under this Section and setting forth the additional
amount or amounts to be paid to it hereunder shall be conclusive
in the absence of manifest error. If Bank demands compensation
under this Section, then Company may at any time, upon at least
five (5) Business Days' prior notice to Bank, either (i) repay in
full the then outstanding Eurodollar Advances or Eurodollar
Portions, together with accrued interest thereon to the date of
prepayment or (ii) convert such Eurodollar Advances or Eurodollar
Portions to Floating Prime Advances or Floating Prime Portions in
accordance with the provisions of this Loan Agreement; provided,
however, that Company shall be liable for any Consequential Loss
arising pursuant to such actions. Bank agrees to use good faith
efforts to carry out its obligations under this Loan Agreement in
such a way as to reduce the amount of Taxes attributable to the
Revolving Credit Loan and Term Loan, including the use of a
different lending office, as long as in the good faith opinion of
Bank such actions would not adversely affect it.
5.04. Effect on Interest Options. If notice has been given
pursuant to Section 5.02 or Section 5.03 requiring the Eurodollar
Advances or Eurodollar Portions of Bank to be repaid or
converted, then unless and until Bank notifies Company that the
circumstances giving rise to such repayment no longer apply, all
Advances shall be Floating Prime Advances and all portions of the
Term Loan shall be Floating Prime Portions. If Bank notifies
Company that the circumstances giving rise to such
<PAGE>
repayment no longer apply, Company may thereafter select Advances
to be Eurodollar Advances in accordance with Section 2.02(c) of
this Loan Agreement and portions of the unpaid principal balance
of the Term Loan to be Eurodollar Portions in accordance with
Section 3.03.
5.05. Payments Not At End of Interest Period. If Company
makes any payment of principal with respect to any Eurodollar
Advance or Eurodollar Portion on any day other than the last day
of an Interest Period applicable to such Eurodollar Advance, then
Company shall reimburse Bank on demand the Consequential Loss
incurred by it as a result of the timing of such payment. A
certificate of Bank setting forth the basis for the determination
of the amount of Consequential Loss shall be delivered to Company
through Bank and shall, in the absence of manifest error, be
conclusive and binding. Any conversion of a Eurodollar Advance
to a Floating Prime Advance or a Eurodollar Portion to a Floating
Prime Portion on any day other than the last day of the Interest
Period for such Eurodollar Advance or Eurodollar Portion shall be
deemed a payment for purposes of this Section.
ARTICLE VI
CONDITIONS PRECEDENT
6.01. Initial Advances. The obligation of Bank to make the
Revolving Credit Loan herein provided for and the initial
Advances thereunder is subject to the condition precedent that,
on or before the date of such Advance, Bank shall have received
the following, each dated the date of such initial Advance, in
form and substance satisfactory to Bank:
(a) Promissory Note. A duly executed promissory note,
drawn to the order of Bank in the form of Exhibit "A" attached
hereto with appropriate insertions.
(b) Guaranty Agreement. The Guaranty Agreement executed by
each of the Guarantors in the form of Exhibit "B" attached hereto.
(c) Articles of Incorporation of Company. A copy of the
Articles of Incorporation of Company and all amendments thereto.
(d) Resolutions of Company. Resolutions of Company
authorizing the execution of this Loan Agreement duly adopted by
the Board of Directors of Company and accompanied by a
certificate of the Secretary of Company stating that such
resolutions are true and correct, have not been altered or
repealed and are in full force and effect.
(e) Incumbency Certificate of Company. An incumbency
certificate with respect to Company executed by the appropriate
officers of Company.
<PAGE>
(f) Certificates of Existence and Account Status For
Company. A current certificate of existence and good standing
from the State of New Mexico and a current certificate of account
status from the Comptroller of Public Accounts of the State
of Texas.
(g) Authority to Transact Business. Certificate evidencing
the authority of Company to conduct or transact business in the
State of Texas.
(h) Articles of Incorporation of the Guarantors. A copy of
the Articles of Incorporation of each of the Guarantors and all
amendments thereto.
(i) Resolutions of Each Guarantor. Resolutions of each one
of the Guarantors approving the execution of the Guaranty
Agreement duly adopted by the Board of Directors of each of such
Guarantors and accompanied by a certificate of the Secretary of
each of such Guarantors stating that such resolutions are true
and correct, have not been altered or repealed and are in full
force and effect.
(j) Incumbency Certificates of Guarantors. An incumbency
certificate with respect to each Guarantor executed by the
appropriate officers of each such Guarantor.
(k) Certificates of Existence and Account Status For Each
Guarantor. A current certificate of existence from the state of
incorporation of each Guarantor and a certificate of account
status from the Comptroller of Public Accounts of the State of
Texas for each Guarantor.
(l) Opinion of Counsel. An executed opinion of counsel to
Company and each of the Guarantors.
(m) Loan Origination Fees. The loan origination fees in
the amount of $25,000 described in Section 2.04.
6.02. All Advances and Term Loan. The obligations of Bank
to make any Advance under this Loan Agreement (including the
initial Advance) and the right of Company to convert the
Revolving Credit Loan into the Term Loan shall be subject to the
following conditions precedent:
(a) No Defaults. As of the date of the making of such
Advance, there exists no Event of Default or event which with
notice or lapse of time or both could constitute an Event of
Default.
(b) Compliance with Loan Agreement. Company shall have
performed and complied in all material respects with all
agreements and conditions contained herein
<PAGE>
and in the Loan Documents which are required to be performed or
complied with by Company before or at the date of such Advance or
conversion.
(c) Request for Advance. In the case of any Advance, Bank
shall have received from Company a Request for Advance by
telephonic notice or in the form of either Exhibit "C" or
Exhibit "D" attached hereto, dated as of the date of such Advance
and signed by an authorized officer of Company, all of the
statements of which shall be true and correct, certifying that,
as of the date thereof, (i) all of the representations and
warranties of Company contained in this Loan Agreement and each
of the Loan Documents executed by Company are true and correct,
(ii) no event has occurred and is continuing, or would result
from the Advance, which constitutes an Event of Default or which,
with the lapse of time or giving of notice or both, would
constitute an Event of Default, and (iii) such other facts as
Bank may reasonably request. If any Advance was by telephonic
notice, said telephonic notice must be confirmed in writing
within two (2) Business Days of such telephonic notice pursuant
to a Confirmation of Request For Advance (1) substantially in the
form attached as Exhibit "E" in the case of a Floating Prime
Advance and (2) substantially in the form attached as Exhibit "F"
in the case of a Eurodollar Advance.
(d) No Material Adverse Change. As of the date of making
such Advance, no change has occurred in the business or financial
condition of Pancho's Mexican Buffet, Inc. and its Subsidiaries
on a Consolidated basis which causes or could cause a Material
Adverse Effect.
(e) Representations and Warranties. The representations
and warranties contained in Article VII (other than the
representations and warranties contained in Section 7.07) hereof
shall be true in all material respects on the date of making of
such Advance, with the same force and effect as though made on
and as of that date.
(f) Bankruptcy Proceedings. No proceeding or case under
the United States Bankruptcy Code shall have been commenced by or
against Company or any Guarantor.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
To induce Bank to make the Revolving Credit Loan and the
Term Loan, Company represents and warrants to Bank that:
7.01. Organization and Good Standing of Company. Company
is a corporation duly organized and existing in good standing
under the laws of the state of its incorporation, is duly
qualified as a foreign corporation and in good standing in all
states in which the failure to so qualify would have a Material
Adverse Effect and has
<PAGE>
the corporate power and authority to own its properties and
assets and to transact the business in which it is engaged and is
or will be qualified in those states wherein it will transact
business in the future and where the failure to so qualify would
have a Material Adverse Effect.
7.02. Organization and Good Standing of the Guarantors.
Each of the Guarantors is a corporation duly organized and
existing in good standing under the laws of the state of its
incorporation, is duly qualified as a foreign corporation and in
good standing in all states in which the failure to so qualify
would have a Material Adverse Effect and has the corporate power
and authority to own its properties and assets and to transact
the business in which it is engaged and is or will be qualified
in those states wherein it will transact business in the future
and where the failure to so qualify would have a Material Adverse
Effect.
7.03. Authorization and Power. Company has the corporate
power and requisite authority to execute, deliver and perform
this Loan Agreement and the other Loan Documents to be executed
by Company; Company is duly authorized to, and has taken all
corporate action necessary to authorize such Company to, execute,
deliver and perform this Loan Agreement, the Note and such other
Loan Documents and is and will continue to be duly authorized to
perform this Agreement, the Note and such other Loan Documents.
Each of the Guarantors has the corporate power and requisite
authority to execute, deliver and perform the Guaranty Agreement.
7.04. No Conflicts or Consents. Neither the execution and
delivery of this Loan Agreement, the Note, the Guaranty Agreement
or the other Loan Documents, nor the consummation of any of the
transactions herein or therein contemplated, nor compliance with
the terms and provisions hereof or with the terms and provisions
thereof, will contravene or materially conflict with any
provision of law, statute or regulation to which Company or any
of the Guarantors is subject or any judgment, license, order or
permit applicable to Company or any of the Guarantors, or any
indenture, loan agreement, mortgage, deed of trust, or other
agreement or instrument to which Company or any of the Guarantors
is a party or by which Company or any of the Guarantors may be
bound, or to which Company or any of the Guarantors may be
subject, or violate any provision of the Charter or Bylaws of
Company or any of the Guarantors. No consent, approval,
authorization or order of any court or governmental authority or
third party is required in connection with the execution and
delivery by Company or any of the Guarantors of the Loan
Documents or to consummate the transactions contemplated hereby
or thereby.
7.05. Enforceable Obligations. This Loan Agreement, the
Note, the Guaranty Agreement and the other Loan Documents are the
legal and binding obligations of the corporation executing such
Loan Documents, enforceable in accordance with their respective
terms, except as limited by bankruptcy, insolvency or other laws
of general application relating to the enforcement of creditors'
rights.
<PAGE>
7.06. No Liens. Except for Permitted Liens, all of the
properties and assets of Pancho's Mexican Buffet, Inc. and its
Subsidiaries are free and clear of all mortgages, liens,
encumbrances and other adverse claims of any nature, and such
corporation has and will have good and marketable title to such
properties and assets.
7.07. Financial Condition. Company has delivered to Bank
copies of the consolidated statement of operations of Pancho's
Mexican Buffet, Inc. and its Subsidiaries as of December 31,
1993, a consolidated statement of cash flows of Pancho's Mexican
Buffet and its Subsidiaries as of December 31, 1993 and a
consolidated balance sheet of Pancho's Mexican Buffet, Inc. and
its Subsidiaries as of December 31, 1993; such financial
statements are true and correct in all material respects, fairly
present the financial condition of Pancho's Mexican Buffet, Inc.
and its Subsidiaries as of such date and have been prepared in
accordance with Generally Accepted Accounting Principles applied
on a basis consistent with that of prior periods except for the
exclusion of footnotes; as of the date hereof, there are no
obligations, liabilities or indebtedness (including contingent
and indirect liabilities and obligations or unusual forward or
long-term commitments) of Pancho's Mexican Buffet, Inc. and its
Subsidiaries which are (separately or in the aggregate) material
and are not reflected in such financial statements or disclosed
in writing to Bank; no changes having a Material Adverse Effect
have occurred in the financial condition or business of Company
since December 31, 1993.
7.08. Full Disclosure. There is no material fact that
Company has not disclosed to Bank which could have a Material
Adverse Effect on the properties business, prospects or condition
(financial or otherwise) of Company or any of the Guarantors.
Neither the financial statements referred to in Section 7.07
hereof, nor any certificate or statement delivered herewith or
heretofore by Company to Bank in connection with negotiation of
this Loan Agreement, contains any untrue statement of a material
fact or omits to state any material fact known to Company
necessary to keep the statements contained herein or therein from
being misleading in any material respect.
7.09. No Default. No event has occurred and is continuing
which constitutes an Event of Default or which, with the lapse of
time or giving of notice or both, would constitute an Event of
Default.
7.10. No Litigation. Except as described in Exhibit "G"
attached hereto, there are no actions, suits or legal, equitable,
arbitration or administrative proceedings pending, or to the
knowledge of Company threatened, against Company or any of the
Guarantors that would, if adversely determined, have a Material
Adverse Effect.
7.11. Use of Proceeds; Margin Stock. The proceeds of the
Revolving Credit Loan will be used by the Company solely for the
purposes specified in the preamble.
<PAGE>
None of such proceeds will be used for the purpose of purchasing
or carrying any "margin stock" as defined in Regulation U or G of
the Board of Governors of the Federal Reserve System (12 C.F.R.
Part 221 and 207), or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or carry a
margin stock or for any other purpose which might constitute this
transaction a "purpose credit" within the meaning of such
Regulation U or G. Company is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin
stocks. Neither Company nor any Person acting on behalf of
Company has taken or will take any action which might cause the
Note or any of the other Loan Documents, including this Loan
Agreement, to violate Regulations U or G or any other regulations
of the Board of Governors of the Federal Reserve System or to
violate Section 7 of the Securities Exchange Act of 1934 or any
rule or regulation thereunder, in each case as now in effect or
as the same may hereinafter be in effect. Company does not own
any "margin stock" except for that described in the financial
statements referred to in Section 7.06 hereof and, as of the
date hereof, the aggregate value of all "margin stock" owned by
Company does not exceed 25% of the aggregate value of all of the
assets of Company.
7.12. No Financing of Corporate Takeovers. No proceeds of
the Revolving Credit Loan will be used to acquire any security in
any transaction which is subject to Section 13 or 14 of the
Securities Exchange Act of 1934, including particularly (but
without limitation) Sections 13(d) and 14(d) thereof.
7.13. Taxes. Except as previously disclosed to Bank, all
tax returns required to be filed by the Company and the
Guarantors in any jurisdiction have been filed or will be filed
prior to the date on which the tax payable with respect to such
return will become delinquent and all taxes (including mortgage
recording taxes), assessments, fees and other governmental
charges upon Company or the Guarantors or upon any of its or
their properties, income or franchises have been paid prior to
the time that such taxes could give rise to a lien thereon. To
the best of Company's knowledge, there is no proposed tax
assessment against Company and there is no basis for such
assessment.
7.15. Principal Office, Etc. The principal office, chief
executive office and principal place of business of Company is at
3500 Noble Avenue, Fort Worth, Tarrant County, Texas 76111, and
Company maintains its principal records and books at such address.
7.16. ERISA. (a) No Reportable Event has occurred and is
continuing with respect to any Plan; (b) PBGC has not instituted
proceedings to terminate any Plan; (c) neither the Company, any
member of the Controlled Group, nor any duly appointed
administrator of a Plan (i) has incurred any liability to PBGC
with respect to any Plan other than for premiums not yet due or
payable or (ii) has instituted or intends to institute
proceedings to terminate any Plan under Section 4041 or 4041A
<PAGE>
of ERISA or withdraw from any Multi-Employer Pension Plan (as
that term is defined in Section 3(37) of ERISA); and (d) each
Plan of Company has been maintained and funded in all material
respects in accordance with its terms and with all provisions of
ERISA applicable thereto except for a liability in the
approximate amount of $1,000,000 under the Voluntary Employee
Injury Benefit Plan of Company.
7.17. Compliance with Law. Except as described on
Exhibit "H", Company and each of the Guarantors are in compliance
in all material respects with all laws, rules, regulations,
ordinances, orders and decrees which are applicable to Company,
the Guarantors or any of their respective properties or business,
the failure to comply with which could have a Material Adverse
Effect, including all Environmental Laws. Neither Company nor
the Guarantors has been notified by any Governmental Authority
that Company or the Guarantors has failed to comply with any such
laws, rules, regulations, orders or decrees, the failure to
comply with which would result in a Material Adverse Effect, nor
has Company or the Guarantors been notified of any Environmental
Claim except as described in Exhibit "I".
7.18. Government Regulation. Neither Company nor any of
the Guarantors are subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the
Investment Company Act of 1940, the Interstate Commerce Act (as
any of the preceding acts have been amended), or any other law
(other than Regulation X) which regulates the incurring by
Company or any of the Guarantors of indebtedness, including but
not limited to laws relating to common contract carriers or the
sale of electricity, gas, steam, water, or other public utility
services.
7.19. Insider. Company is not, and no Person having
"control" (as that term is defined in 12 U.S.C. 375(b)(5) or in
regulations promulgated pursuant thereto) of Company is, an
"executive officer", "director", or "person who directly or
indirectly or in concert with one or more persons owns, controls,
or has the power to vote more than 10% of any class of voting
securities" (as those terms are defined in 12 U.S.C. 375(b) or
in regulations promulgated pursuant thereto) of Bank, of a bank
holding company of which Bank is a subsidiary, or of any
subsidiary of a bank holding company of which Bank is a
subsidiary, or of any bank at which Bank maintains a
correspondent account, or of any bank which maintains a
correspondent account with Bank.
7.20. Subsidiaries. Pancho's Mexican Buffet, Inc. directly
owns all of the capital stock of Borrower and PMB International,
Inc. and forty nine percent (49%) of all of the outstanding
capital stock of Pamex of Texas, Inc., in each case free and
clear from all liens, security interests, charges and
encumbrances.
7.21. Solvency. Except for PAMEX of Texas, Inc. and PMB
International, Inc., Pancho's Mexican Buffet, Inc. and each of
its Subsidiaries now have capital sufficient
<PAGE>
to carry on their businesses and transactions and all business
and transactions in which they are about to engage, and for which
they have projected, and are now solvent and able to pay their
debts as they mature and Pancho's Mexican Buffet, Inc. and its
Subsidiaries now owns property having a value, both at fair
valuation and at present fair saleable value greater than the
amount required to pay its respective debts. Without giving
effect to the Guaranty Agreement, no Guarantor is "insolvent" on
the date hereof (that is, the sum of such Guarantor's absolute
and contingent liabilities does not exceed the fair market value
of such Guarantor's assets). After giving effect to the Guaranty
Agreement, no Guarantor other than possibly PAMEX of Texas, Inc.,
and PMB International, Inc., is insolvent on the date hereof
(that is, the sum of such Guarantor's absolute and contingent
liabilities including under the Guaranty Agreement, does not
exceed the fair market value of such Guarantor's assets). Each
Guarantor has received or will receive good and fair
consideration for its liability and obligations incurred in
connection with the Guaranty Agreement, and the incurrence of its
liability under the Guaranty Agreement in return for such
consideration may reasonably be expected to benefit each
Guarantor, directly or indirectly.
7.22. Environmental Matters. Except as described in
Exhibit "I" attached hereto, none of the properties of Company or
the Guarantors has been used at any time during their ownership
to generate, manufacture, refine, transport, treat, store,
handle, dispose, transfer, produce, process, or in any manner
deal with Hazardous Materials. Except as described in Exhibit
"I" attached hereto, there are no past, pending or, to the best
of Company's knowledge, threatened or potential Environmental
Claims against Company or any of the Guarantors or with respect
to any properties owned or controlled by Company or any of the
Guarantors. Except as described in Exhibit "I" attached hereto,
there are no underground storage tanks located on any of the
properties owned or controlled by Company or any of the
Guarantors and, to Company's best knowledge, there never have
been any underground storage tanks located on any of the
properties owned or controlled by Company or any of the
Guarantors, and the Company has received no actual (as contrasted
with constructive) notification of any Environmental Claims
relating to any property contiguous to any property owned or
controlled by Company or any of the Guarantors.
7.23. Representations and Warranties. Each Request for
Advance shall constitute, without the necessity of specifically
containing a written statement, a representation and warranty by
Company that no Event of Default exists and that all
representations and warranties contained in this Article VII
(other than in Section 7.07) or in any other Loan Document are
true and correct at and as of the date the Advance is to be made.
7.24. Survival of Representations, Etc. All representa-
tions and warranties made herein are true and correct when made
by Company and shall survive delivery
<PAGE>
of the Note and the Guaranty Agreement and the making of the
Revolving Credit Loan and any investigation at any time made by
or on behalf of Bank shall not diminish Bank's right to rely
thereon.
ARTICLE VIII
AFFIRMATIVE COVENANTS
So long as Bank has any commitment to make Advances
hereunder and until payment in full of the Note and the
Obligation, Company agrees and covenants that Company will
(unless Bank shall otherwise consent in writing):
8.01. Financial Statements. Deliver to Bank in duplicate:
(a) Quarterly Statements: as soon as practicable and in
any event within 45 days after the end of each
quarterly period (other than the last quarterly period)
in each fiscal year, a Consolidated statement of
operations of Pancho's Mexican Buffet, Inc. and its
Subsidiaries and a Consolidated statement of cash flows
of Pancho's Mexican Buffet, Inc. and its Subsidiaries,
as at the end of such quarterly period, setting forth
in each case in comparative form figures for the
corresponding period in the preceding fiscal year, all
in reasonable detail and prepared by an authorized
financial officer of the Company and a Consolidated
balance sheet of Pancho's Mexican Buffet, Inc. and its
Subsidiaries as of the end of such quarterly period,
setting forth in each case in comparative form figures
for the prior fiscal year end, in reasonable detail and
prepared by an authorized financial officer of the
Company.
(b) Annual Statements: as soon as practicable and in any
event within 90 days after the end of each fiscal year,
a Consolidated statement of operations of Pancho's
Mexican Buffet, Inc. and its Subsidiaries, and a
Consolidated statement of cash flows of Pancho's
Mexican Buffet, Inc. and its Subsidiaries for such
year, and a Consolidated balance sheet of Pancho's
Mexican Buffet, Inc. and its Subsidiaries as at the end
of such year, setting forth in each case in comparative
form corresponding Consolidated figures from the
preceding year, all in reasonable detail and
satisfactory in scope to Bank, together with an opinion
by independent public accountants of recognized
standing selected by the Pancho's Mexican Buffet, Inc.
and satisfactory to Bank, whose opinion or letter shall
(a) state that such financial statements have been
prepared in accordance with GAAP and fairly present the
Consolidated financial position of Pancho's Mexican
Buffet, Inc. and its Subsidiaries as of the date
thereof and the Consolidated results of their
operations for the period thereof, (b) state that their
audit examination has
<PAGE>
included a review of the Company's compliance with Sections 9.01,
9.02, 9.07, 9.08, 9.10 and 9.11 of this Loan Agreement as it
relates to accounting matters, and (c) state whether, in the
course of their audit examination, they obtained knowledge (and
state whether they have knowledge of the existence as of the date
of such written statement) of any condition or event which
constitutes an Event of Default, and if so, specifying the nature
and period of existence thereof;
(c) Consolidating Statements: as soon as practicable in
any event within 90 days after the end of each fiscal
year, a consolidating statement of operations of
Pancho's Mexican Buffet, Inc. and its Subsidiaries and
a consolidating balance sheet of Pancho's Mexican
Buffet, Inc. and its Subsidiaries.
(d) SEC and Other Reports: promptly upon transmission
thereof, copies of all such financial statements, proxy
statements, notices and reports as Pancho's Mexican
Buffet, Inc. shall send to its public security holders
and copies of all registration statements (without
exhibits) and all reports which it files with the
Securities and Exchange Commission (or any governmental
body or agency succeeding to the functions of the
Securities and Exchange Commission);
(e) Other Notices: promptly upon the occurrence thereof,
notice of any of the following: (a) the occurrence of
any condition or event which constitutes an Event of
Default, specifying the nature and period of existence
thereof, (b) that any Person has given any notice to
the Company with respect to a claimed Default or Event
of Default, or (c) that any Person has given any notice
to the Company or any Subsidiary or taken any other
action with respect to a claimed default or event of
default with respect to any other indebtedness which in
the aggregate exceeds the sum of two hundred fifty
thousand dollars ($250,000) and, with respect to any of
such events specified in subdivisions (a), (b) or (c)
above of this Section 8.01(e), what action the Company
or such Subsidiary has taken, is taking or proposes to
take;
(f) ERISA Events: promptly upon any officer of the Company
obtaining knowledge of the occurrence thereof, notice
of the occurrence of any (a) "reportable event," as
such term is defined in section 4043 of ERISA, or (b)
"prohibited transaction," as such term is defined in
section 4975 of the Code, in connection with any Plan
or any trust created thereunder, specifying the nature
thereof, what action the Company or its Subsidiary has
taken, is taking or proposes to take with respect
thereto, and, when known, any action taken or
threatened by the Internal Revenue Service or the
Pension Benefit Guaranty Corporation
<PAGE>
with respect thereto; provided that with respect to the
occurrence of any "reportable event" as to which the Pension
Benefit Guaranty Corporation has waived the 30-day reporting
requirement, such written notice need be given only at such time
as notice is given to the Pension Benefit Guaranty Corporation;
and
(g) Requested Information: with reasonable promptness,
such other financial data or other data or information
related to the business or operations of Pancho's
Mexican Buffet, Inc. or its Subsidiaries as Bank may
reasonably request and which is available to Company on
a "best efforts" basis. Bank agrees that Bank will not
intentionally disclose any information given to Bank by
the Company which is either proprietary or confidential
and which is prominently marked as such; provided,
however, that this restriction shall not apply to
information which has at the time in question entered
the public domain, nor will this restriction prohibit
Bank from disclosing such information (a) as is
required to be disclosed by Law or by any order, rule
or regulation (whether valid or invalid) of any
Tribunal, (b) to Bank's auditors, attorneys, or agents,
or (c) to purchasers or prospective purchasers or
assignees of interests in the Loan Agreement or the
Obligation.
Together with each delivery of financial statements required by
Section 8.01(a) and Section 8.01(b) above, the Company will
deliver to Bank a Compliance Certificate demonstrating (with
computations in reasonable detail) compliance by the Company,
Pancho's Mexican Buffet, Inc. and its Subsidiaries with the
provisions of Sections 9.01 and 9.02 and stating that there
exists no Event of Default with respect to such covenants or
otherwise under this Loan Agreement or, if any Event of Default
exists with respect to such covenants or under this Loan
Agreement, specifying the nature and period of existence thereof
and what action the Company proposes to take with respect
thereto. By delivery of such Compliance Certificate, the officer
executing such certificate represents and warrants that the
statements made therein are based upon the level of investigation
normally and customarily taken by officers of similarly situated
corporations of established reputation in performing their
regular duties.
8.02. Payment of Obligations; Maintain Books and Reserves.
Duly and punctually pay the Obligation in accordance with the
terms of this Loan Agreement. Company will, and will cause each
of the Guarantors to, keep proper books of record and account and
set aside appropriate reserves, all in accordance with GAAP.
8.03. Inspection of Property. Permit any Person designated
by Bank, at Bank's expense and with reasonable notice to the
Company, to visit and inspect any of the properties of Pancho's
Mexican Buffet, Inc. and its Subsidiaries, to examine the
corporate books and financial records of Pancho's Mexican Buffet,
Inc. and its Subsidiaries and make copies thereof or extracts
therefrom and to discuss the affairs,
<PAGE>
finances and accounts of any such corporations with officers and
employees of the Company and its independent public accountants,
all at such reasonable times and as often as may reasonably
request. Bank agrees that Bank will keep confidential any
proprietary or confidential information given to Bank by the
Company or its Subsidiaries upon the same terms and conditions as
agreed to with respect to information Bank have obtained pursuant
to Section 8.01(g) hereof.
8.04. Compliance with Laws, Etc. Comply and cause Pancho's
Mexican Buffet, Inc. and each of its Subsidiaries to comply, in
all material respects with all applicable laws, rules,
regulations and orders applicable to its business, such
compliance to include, without limitation, paying before the same
become delinquent all taxes, assessments, and governmental
charges imposed upon it or upon its property, except to the
extent contested in good faith by appropriate proceedings and for
which adequate reserves have been established in accordance with
GAAP, and provided by Company or the Guarantors, as the case may
be, retains good and marketable title to and the right to use and
enjoyment of its properties or other assets which may be affected
by any such contest. Company will timely pay and will cause the
Guarantors to timely pay, all payments due for labor, services
and materials rendered or furnished in the ordinary course of
business which are secured by inchoate statutory Liens, except to
the extent contested in good faith by appropriate proceedings,
and provided that the Company or the Guarantors, as the case may
be, retains good and marketable title to and the right to the use
and enjoyment of its properties or other assets which may be
affected by any such contest. Company will promptly notify Bank
if the Company receives any notice, claim or demand from any
governmental agency which alleges that the Company is in
violation of any Laws or has failed to comply with any order
issued pursuant to any federal, state or local statute regulating
its operation and business, the result of which may have a
Material Adverse Effect.
8.05. Maintenance of Existence and Qualifications.
Maintain and preserve and cause each of the Guarantors to
maintain and preserve its corporate existence and its rights and
franchises in full force and effect and obtain and maintain and
cause the Guarantors to obtain and maintain all permits and
licenses necessary to the proper conduct of its business,
including without limitation qualifying to do business as a
foreign corporation in all states or jurisdictions where required
by applicable Law.
8.06. Maintenance of Properties; Insurance. Maintain,
preserve, protect, and keep and cause each of the Guarantors to
maintain, preserve, protect and keep, all property used or useful
in the conduct of its business in good condition and in
compliance with all applicable Laws, and will from time to time
make all repairs, renewals and replacements needed to enable the
business and operations carried on in connection therewith to be
promptly and advantageously conducted at all times. Company
will, and will cause each of the Guarantors, to carry and
maintain in full
<PAGE>
force and effect at all times with financially sound and
reputable insurers (or, in an insurance fund or by self-insurance
authorized by the jurisdiction in which its operations are
carried on) insurance in such amounts (and with co-insurance and
deductibles) as such insurance is usually carried by corporations
of established reputation engaged in the same or similar
businesses and similarly situated, and the Company and the
Guarantors shall maintain self-insurance only to the extent that
a prudent corporation of established reputation engaged in the
same or similar businesses and similarly situated would rely upon
self-insurance.
8.07. Yield Maintenance. If at any time after the date
hereof, and from time to time, Bank determines that the adoption
or modification of any applicable law, rule or regulation
regarding taxation, Bank's required levels of reserves, deposits,
insurance or capital (including any allocation of capital
requirements or conditions), or similar requirements, or any
interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation, administration or compliance of Bank with any of
such requirements, has or would have the effect of (1) materially
increasing Bank's costs relating to the obligation hereunder, or
(2) reducing the yield or rate of return of Bank on the
Obligation hereunder to a level below that which Bank could have
achieved but for the adoption or modification of any such
requirements, Company shall, within fifteen (15) days of any
request by Bank, pay to Bank such additional amounts as (in the
Bank's sole judgment, after good faith and reasonable
computation) will compensate Bank. No failure by Bank to
immediately demand payment of any additional amounts payable
hereunder shall constitute a waiver of Bank's right to demand
payment of such amounts that may accrue at any subsequent time.
Nothing herein contained shall be construed or so operate as to
require Company to pay any interest, fees, costs or charges
greater than is permitted by applicable law.
8.08. Transactions With Affiliates. Conduct and cause each
Guarantor to conduct all of their respective transactions with
any Affiliate on an arm's length basis and pursuant to the
reasonable requirements of Company's and/or such Guarantor's
business.
8.09. Compliance with Loan Documents. Company will
promptly comply in all material respects with any and all
covenants and provisions of this Loan Agreement, the Note and all
other of the Loan Documents.
8.10. Compliance with Material Agreements. Company will
comply with all material agreements, indentures, mortgages or
documents binding on it or affecting its properties or business
where the failure to so comply would have a Material Adverse
Effect.
8.11. Operations and Properties. Company will act
prudently and in accordance with customary industry standards in
managing or operating its assets,
<PAGE>
properties, business and investments; Company will keep in good
working order and condition, ordinary wear and tear excepted, all
of its assets and properties which are necessary to the conduct
of its business.
8.12. Books and Records; Access. Upon three (3) Business
Days prior written notice, Company will give any representative
of Bank access during all business hours to, and permit such
representatives to examine, copy or make excerpts from, any and
all books, records and documents in the possession of Company and
relating to its affairs, and to inspect any of the properties of
Company. Company will maintain complete and accurate books and
records of its transactions in accordance with good accounting
practices.
8.13. Additional Information. Company shall promptly
furnish to Bank, at Bank's request, such additional financial or
other information concerning assets, liabilities, operations and
transactions of Company or any Guarantor as Bank may from time to
time reasonably request.
8.14. Principal Depository. Company and the Guarantors
shall use Bank as its principal depository and shall maintain all
of their primary operating accounts with Bank.
8.15. Further Assurances. Upon request of the Bank,
promptly cure any defects in the creation, issuance, execution
and delivery of this Loan Agreement or in the Loan Documents.
Company, at its expense, will further promptly execute and
deliver to Bank upon request all such other and further
documents, agreements and instruments in compliance with or
accomplishment of the covenants and agreements of Company
hereunder, or to further evidence and more fully describe the
obligations of Company hereunder, or to correct any omissions
herein, or to more fully state the obligations set out herein.
ARTICLE IX
NEGATIVE COVENANTS
So long as Bank has any commitment to make Advances
hereunder, and until full payment of the Note and the performance
of the Obligation, Company covenants and agrees that neither
Pancho's Mexican Buffet, Inc. nor any of its Subsidiaries will,
unless Bank otherwise consents in writing:
9.01. Funded Debt to Net Cash Flow. Permit the ratio of
Funded Debt as of the end of any fiscal quarter to Net Cash Flow
of Pancho's Mexican Buffet, Inc. and its Subsidiaries for the
four quarter period ending as of the end of the preceding fiscal
quarter at any time to be greater than 2.0 to 1.0; or
<PAGE>
9.02. Indebtedness to Net Worth. Permit the ratio of the
total Indebtedness of Pancho's Mexican Buffet, Inc. and its
Subsidiaries as of the end of the most recent fiscal quarter to
Consolidated Tangible Net Worth as of the end of the most recent
fiscal quarter to be greater than .70 to 1.0; or
9.03. Subsidiaries. Create or organize any Subsidiary;
or
9.04. Transfer of Assets. Transfer more than $3,000,000
in the aggregate to PMB International, Inc. and its Subsidiaries;
or
9.05. Acquisitions. Acquire the assets or stock of any
Person not engaged in a line of business similar in nature to the
lines of business engaged in by Company or any of its
Subsidiaries; or
9.06. Negative Pledge. Create or suffer to exist any
mortgage, pledge, security interest, conditional sale or other
title retention agreement, charge, encumbrance or other Lien
(whether such interest is based on common law, statute, other law
or contract) upon any of its property or assets, now owned or
hereafter acquired, except for Permitted Liens; or
9.07. No Grant of Negative Pledge. Agree with any Person
not to create or suffer to exist any mortgage, pledge, security
interest or encumbrance or Lien upon any of its property or
assets now owned or hereafter acquired; or
9.08. Limitation on Additional Indebtedness. Incur or
assume or permit any Guarantor to incur or assume any
Indebtedness for borrowed money, except for (i) the indebtedness
evidenced by the Note; (ii) Consolidated Indebtedness (excluding
the indebtedness evidenced by the Note) not to exceed five
hundred thousand dollars ($500,000) in the aggregate at any one
time; and (iii) trade debt incurred in the ordinary course of
business; or
9.09. Sale of Accounts Receivable. Sell or permit any
Guarantor to sell any of its accounts receivable, with or without
recourse; or
9.10. Liquidation, Mergers and Disposition of Substantial
Assets. Liquidate, dissolve or reorganize; merge or consolidate
with any other company, firm or association in a transaction in
which Company is not the surviving corporation except for a
merger or consolidation with Pancho's Mexican Buffet, Inc. or one
of its Subsidiaries; or make any other substantial change in its
capitalization or its business; or
9.11. Net Income. Permit its Consolidated Net Income to be
less than $1.00 during any fiscal quarter; or
<PAGE>
9.12. Ownership of Assets. Permit less than eighty
percent (80%) of the net book value of the plant, property and
equipment as reflected on the Consolidated financial statements
of Pancho's Mexican Buffet, Inc. and its Subsidiaries to be owned
by Company.
ARTICLE X
EVENTS OF DEFAULT; REMEDIES UPON EVENT OF DEFAULT
10.01. Events of Default. An "Event of Default" shall
exist if any one or more of the following events (herein
collectively called "Events of Default") shall occur and be
continuing:
(a) Company shall fail to pay when due any principal of, or
interest on any Note, or any other fee or payment due hereunder
or under any of the Loan Documents and the continuance thereof
for a period of at least three (3) days; or
(b) Failure or refusal of Company to observe, keep and
perform any of the covenants, agreements and obligations
hereunder or any of the Loan Documents and the continuance of
such failure or refusal for a period of thirty (30) days after
receipt of written notice from Bank to Company specifying such
failure; or
(c) Pancho's Mexican Buffet, Inc. or any of its
Subsidiaries shall (i) apply for or consent to the appointment of
a receiver, custodian, trustee, intervenor or liquidator of all
or a substantial part of its assets, (ii) voluntarily become the
subject of a bankruptcy, reorganization or insolvency proceeding
or be insolvent or admit in writing that it is unable to pay its
debts as they become due, (iii) make a general assignment for the
benefit of creditors, (iv) file a petition or answer seeking
reorganization or an arrangement with creditors or to take
advantage of any bankruptcy or insolvency laws, (v) file an
answer admitting the material allegations of, or consent to, or
default in answering, a petition filed against it in any
bankruptcy, reorganization or insolvency proceeding, (vi) become
the subject of an order for relief under any bankruptcy,
reorganization or insolvency proceeding, or (vii) fail to pay any
money judgment against it in excess of fifty thousand dollars
($50,000) before the expiration of thirty (30) days after such
judgment becomes final and no longer subject to appeal; or
(d) An order, judgment or decree shall be entered by any
court of competent jurisdiction or other competent authority
approving a petition appointing a receiver, custodian, trustee,
intervenor or liquidator of Pancho's Mexican Buffet, Inc. or any
of its Subsidiaries or of all or substantially all of their
respective assets, and such order, judgment or decree shall
continue unstayed and in effect for a period of sixty (60) days;
or a complaint or petition shall be filed against Pancho's
Mexican Buffet, Inc. or any of its Subsidiaries seeking or
instituting a bankruptcy, insolvency,
<PAGE>
reorganization, rehabilitation or receivership proceeding of
Pancho's Mexican Buffet, Inc. or any of its Subsidiaries, and
such petition or complaint shall not have been dismissed within
sixty (60) days; or
(e) Company shall default in the payment of any material
Indebtedness of Company to Bank other than the Note and the
obligations hereunder; or
(f) Company shall default in the payment of any
Indebtedness of Company to Persons other than Bank then having a
principal balance in excess of two hundred fifty thousand dollars
($250,000); or
(g) There shall occur any change in the condition
(financial or otherwise) of Company, Pancho's Mexican Buffet,
Inc. or any Subsidiary of Pancho's Mexican Buffet, Inc. which has
a Material Adverse Effect; or
(h) Any Guaranty Agreement shall for any reason cease to be
in full force and effect, or be declared null and void or
unenforceable in whole or in part; or the validity or
enforceability of such Guaranty Agreement shall be challenged or
denied by any Guarantor; or
(i) The liquidation or dissolution of Company.
10.02. Remedies Upon Event of Default. If an Event of
Default shall have occurred and be continuing, then Bank shall
exercise any one or more of the following rights and remedies,
and any other remedies in any of the Loan Documents, as Bank in
its sole discretion, may deem necessary or appropriate:
(i) declare the principal of, and all interest then accrued on,
the Note and any other liabilities hereunder to be forthwith
due and payable, whereupon the same shall forthwith become due
and payable without presentment, demand, protest, notice of
default, notice of acceleration or notice of intention to
accelerate or other notice of any kind, all of which Company
hereby expressly waives, anything contained herein or in the Note
to the contrary notwithstanding, (ii) refuse to make any
additional Advances under the Note, (iii) reduce any claim to
judgment, and/or (iv) without notice of default or demand, pursue
and enforce any of Bank's rights and remedies under the Loan
Documents or otherwise provided under or pursuant to any
applicable law or agreement.
10.03. Performance by Bank. Should Company fail to perform
in any material respect any covenant, duty or agreement contained
herein or in any of the Loan Documents, Bank may, at its option,
perform or attempt to perform such covenant, duty or agreement on
behalf of the Company following written notice to Company of such
intention to perform. In such event, Company shall, at the
request of Bank, promptly pay any amount reasonably expended by
Bank in performance or attempted performance to Bank at its
principal office in Fort Worth, Texas, together with
<PAGE>
interest thereon at the Past Due Rate from the date of such
expenditure until paid. Notwithstanding the foregoing, it is
expressly understood that Bank will assume no liability or
responsibility (except liability attributable to their gross
negligence or willful misconduct) for the performance of any
duties of Company hereunder or under any of the Loan Documents or
other control over the management and affairs of the Company.
10.04. Remedies Cumulative. All covenants, conditions,
provisions, warranties, indemnities and other undertakings of
Company contained in this Agreement, or in any document referred
to herein or in any agreement supplementary hereto or in any of
the Loan Documents shall be deemed cumulative to and not in
derogation or substitution of any of the terms, covenants,
conditions or agreements of Company contained herein. The
failure or delay of Bank to exercise or enforce any rights,
liens, powers or remedies hereunder or under any of the aforesaid
agreements or other documents against any security shall not
operate as a waiver of such liens, rights, powers and remedies,
but all such rights, powers and remedies shall continue in full
force and effect until the loan evidenced by the Note and the
entire Obligation of Company to Bank shall have been fully
satisfied, and all rights, liens, powers and remedies herein
provided for are cumulative and none are exclusive.
ARTICLE XI
ARBITRATION PROGRAM
11.01. Binding Arbitration. Upon the demand of any party,
whether made before or after the institution of any judicial
proceeding, any Dispute (as defined below) shall be resolved by
binding arbitration in accordance with the terms of this
Arbitration Program. A "Dispute" shall include any action,
dispute, claim, or controversy of any kind (e.g., whether in
contract or in tort, statutory or common law, legal or equitable,
or otherwise) now existing or hereafter arising between the
parties in any way arising out of, pertaining to or in connection
with (1) the agreement, document or instrument to which this
Arbitration Program is attached or in which it is referred to or
any related agreements, documents, or instruments (the
"Documents"), (2) all past, present or future loans, notes,
instruments, drafts, credits, accounts, deposit accounts, safe
deposit boxes, safekeeping agreements, guarantees, letters of
credit, goods or services, or other transactions, contracts or
agreements of any kind whatsoever, (3) any past, present or
future incidents, omissions, acts, practices, or occurrences
causing injury to either party whereby the other party or its
agents, employees, or representatives may be liable, in whole or
in part, or (4) any aspect of the past, present or future
relationships of the parties including any agency, independent
contractor or employment relationship but excluding claims for
workers' compensation and unemployment benefits ("Relationship").
Any party to this Arbitration Program may, by summary proceedings
(e.g., a plea in abatement or
<PAGE>
motion to stay further proceedings), bring any action in court to
compel arbitration of any Disputes. Any party who fails or
refuses to submit to binding arbitration following a lawful
demand by the opposing party shall bear all costs and expenses
incurred by the opposing party in compelling arbitration of any
Dispute. The parties agree that by engaging in activities with
or involving each other as described above, they are
participating in transactions involving interstate commerce.
11.02. Governing Rules. All Disputes between the parties
shall be resolved by binding arbitration administered by the
American Arbitration Association (the "AAA") in accordance with,
and in the following priority: (1) the terms of this Arbitration
Program, (2) the Commercial Arbitration Rules of the AAA, (3) the
Federal Arbitration Act (Title 9 of the United States Code) and
(4) to the extent the foregoing are inapplicable, unenforceable
or invalid, the laws of the State of Texas. The validity and
enforceability of this Arbitration Program shall be determined in
accordance with this same order of priority. In the event of
any inconsistency between this Arbitration Program and such rules
and statutes, this Arbitration Program shall control. Judgment
upon any award rendered hereunder 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 Texas
Banking Code Art. 342-609.
11.03. No Waiver; Preservation of Remedies; Multiple
Parties. No provision of, nor the exercise of any rights under,
this Arbitration Program shall limit the right of any party,
during any Dispute to seek, use, and employ ancillary or
preliminary remedies, judicial or otherwise, for the purpose of
realizing upon, preserving, protecting, foreclosing or proceeding
under forcible entry and detainer for possession of any real or
personal property, and any such action shall not be deemed an
election of remedies. Such rights shall include, without
limitation, rights and remedies relating to (1) foreclosing
against any real or personal property collateral or other
security by the exercise of a power of sale under a deed of
trust, mortgage, or other security agreement or instrument, or
applicable law, (2) exercising self-help remedies (including
setoff rights) or (3) obtaining provisional or ancillary remedies
such as injunctive relief, sequestration, attachment,
garnishment, or the appointment of a receiver from a court having
jurisdiction. Such rights can be exercised at any time except to
the extent such action is contrary to a final award or decision
in any arbitration proceeding. The institution and maintenance
of an action for judicial relief or pursuit of provisional or
ancillary remedies or exercise of self-help remedies shall not
constitute a waiver of the right of any party, including the
plaintiff, to submit the Dispute to arbitration nor render
inapplicable the compulsory arbitration provisions hereof. In
Disputes involving indebtedness or other monetary obligations,
each party agrees that the other party may proceed against all
liable persons, jointly and severally, or against one or more of
them, less than all, without impairing rights against other
liable persons. Nor shall a party be required to join the
principal obligor or any other liable persons (e.g., sureties or
guarantors) in any proceeding
<PAGE>
against a particular person. A party may release or settle with
one or more liable persons as the party deems fit without
releasing or impairing rights to proceed against any persons not
so released.
11.04. Statute of Limitations. All statutes of limitation
shall apply to any proceeding in accordance with this Arbitration
Program.
11.05. Arbitrator Powers and Qualifications; Awards;
Modification or Vacation of Award. Arbitrators are empowered to
resolve Disputes by summary rulings substantially similar to
summary judgments and motions to dismiss. Arbitrators shall
resolve all Disputes in accordance with the applicable
substantive law. Any arbitrator selected shall be required to be
a practicing attorney licensed to practice law in the State of
Texas and shall be required to be experienced and knowledgeable
in the substantive laws applicable to the subject matter of the
Dispute. With respect to a Dispute in which the claims or
amounts in controversy do not exceed $1,000,000, a single
arbitrator shall be chosen and shall resolve the Dispute. In
such case, the arbitrator shall be required to make specific,
written findings of fact, and shall have authority to render an
award up to but not to exceed $1,000,000, including all damages
of any kind whatsoever, including costs, fees and expenses. A
Dispute involving claims or amounts in controversy exceeding
$1,000,000 shall be decided by a majority vote of a panel of
three arbitrators (an "Arbitration Panel"), the determination of
any two of the three arbitrators constituting the determination
of the Arbitration Panel, provided, however, that all three
Arbitrators on the Arbitration Panel must actively participate in
all hearings and deliberations. Arbitrators, including any
Arbitration Panel, may grant any remedy or relief deemed just and
equitable and within the scope of this Arbitration Program and
may also grant such ancillary relief as is necessary to make
effective any award. Arbitration Panels shall be required to
make specific, written findings of fact and conclusions of law,
and in such proceedings before an Arbitration Panel only, the
parties shall have the additional right to seek vacation or
modification of any award of an Arbitration Panel that is based
in whole, or in part, on an incorrect or erroneous ruling of law
by appeal to a Federal or State Court of Appeals, following the
entry of judgment on the award in Federal or State District
Court, as appropriate. For these purposes, the award and
judgment entered by the Federal or State District Court shall be
considered to be the same as the award and judgment of the
Arbitration Panel. All requirements applicable to appeals from
any Federal or State District Court judgment shall be applicable
to appeals from judgments entered on decisions rendered by
Arbitration Panels. The Appellate Courts shall have the power
and authority to vacate or modify an award based upon a
determination that there has been an incorrect or erroneous
ruling of law. The Appellate Court shall also have the power to
reverse and/or remand the decision of an Arbitration Panel.
Subject to the foregoing, the determination of an Arbitrator or
Arbitration Panel shall be binding on all parties and shall not
be subject to further review or appeal except as otherwise
allowed by applicable law.
<PAGE>
11.06. Other Matters and Miscellaneous. To the maximum
extent practicable, the AAA, the Arbitrator (or the Arbitration
Panel, as appropriate) and the parties shall take any action
necessary to require that an arbitration proceeding hereunder be
concluded within 180 days of the filing of the Dispute with the
AAA. Arbitration proceedings hereunder shall be conducted in
Fort Worth. Arbitrators shall be empowered to impose sanctions
and to take such other actions as they deem necessary to the same
extent a judge could do pursuant to the Federal Rules of Civil
Procedure, the Texas Rules of Civil Procedure and applicable law.
With respect to any Dispute, each party agrees that all discovery
activities shall be expressly limited to matters directly
relevant to the Dispute and any Arbitrator, Arbitration Panel and
the AAA shall be required to fully enforce this requirement.
This Arbitration Program constitutes the entire agreement of the
parties with respect to its subject matter and supersedes all
prior discussions, arrangements, negotiations, and other
communications on dispute resolution. The provisions of this
Arbitration Program shall survive any termination, amendment, or
expiration of the Documents or the Relationship, unless the
parties otherwise expressly agree in writing. To the extent
permitted by applicable law, Arbitrators, including any
Arbitration Panel, shall have the power to award recovery of all
costs and fees (including attorneys' fees, administrative fees,
and arbitrators' fees) to the prevailing party. This Arbitration
Program may be amended, changed, or modified only by the express
provisions of a writing which specifically refers to this
Arbitration Program and which is signed by all the parties
hereto. If any term, covenant, condition, or provision of this
Arbitration Program is found to be unlawful, invalid or
unenforceable, such illegality or invalidity or unenforceability
shall not affect the legality, validity, or enforceability of the
remaining parts of this Arbitration Program, and all such
remaining parts hereof shall be valid and enforceable and have
full force and effect as if the illegal, invalid, or
unenforceable part had not been included. The captions or
headings in this Arbitration Program are for convenience of
reference only and are not intended to constitute any part of the
body or text of this Arbitration Program. Each party agrees to
keep all Disputes and arbitration proceedings strictly
confidential, except for disclosures of information required in
the ordinary course of business of the parties or by applicable
law or regulation. To the maximum extent permitted by law, this
Arbitration Program modifies and supersedes any and all prior
agreements for arbitration between the parties.
ARTICLE XII
MISCELLANEOUS
12.01. Waiver. No failure to exercise, and no delay in
exercising, on the part of Bank, any right hereunder shall
operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other further exercise thereof or
the exercise of any other right. The rights of Bank hereunder
and under the Loan Documents shall be in addition to all other
rights provided by law. No notice or demand given
<PAGE>
in any case shall constitute a waiver of the right to take other
action in the same, similar or other instances without such
notice or demand.
12.02. Notices. Any notices or other communications
required or permitted to be given by this Agreement or any other
documents relating to the loan evidenced by the Note (the "Loan
Documents") must be given in writing and personally delivered,
sent by telecopy or telex (answerback received) or mailed by
prepaid certified or registered mail, return receipt requested,
to the party to whom such notice or communication is directed at
the address of such party as follows:
Company: PMB Enterprises West, Inc.
3500 Noble Avenue
Fort Worth, Texas 76111
Attn: Chief Financial Officer
Fax No. (817) 838-1408
Bank: First Interstate Bank of Texas, N.A.
Suite 1100
309 W. Seventh Street
Fort Worth, Texas 76102
Attn: Steve Wood
Fax No. (817) 885-1110
Any such notice or other communication shall be deemed to have
been given on the date it is personally delivered or sent by
telecopy or telex as aforesaid or, if mailed, on the second day
after it is mailed as aforesaid (whether actually received or
not). Any party may change its address for purposes of this Loan
Agreement by giving notice of such change to all other parties
pursuant to this Section 12.02.
12.03. Payment of Expenses. Company agrees to pay all
costs and expenses of Bank (including, without limitation, the
reasonable attorneys' fees of Bank's outside legal counsel)
incurred by Bank in connection with the preservation and
enforcement of Bank's rights under this Loan Agreement, the
Note, and/or the other Loan Documents, and all reasonable costs
and expenses of Bank (including without limitation the reasonable
fees and expenses of Bank's outside legal counsel) in connection
with the negotiation, preparation, execution and delivery of this
Loan Agreement, the Note, and the other Loan Documents and any
and all amendments, modifications and supplements thereof or
thereto.
12.04. Maximum Interest Rate. Regardless of any provisions
contained in this Loan Agreement, the Note or in any of the other
Loan Documents, Bank shall never be deemed to have contracted for
or be entitled to receive, collect or apply as interest on the
Note any amount in excess of the Maximum Rate, and, in the event
Bank ever
<PAGE>
receives, collects or applies as interest any such excess, such
amount which would be excessive interest shall be deemed to be a
partial prepayment of principal and treated hereunder as such,
and, if the principal amount of the Obligations is paid in full,
any remaining excess shall forthwith be paid to Company. In
determining whether or not the interest paid or payable under any
specific contingency exceeds the Maximum Rate, Company and Bank
shall, to the maximum extent permitted by applicable law, (i)
characterize any nonprincipal payments (other than payments which
are expressly designated as interest payments hereunder) as an
expense, fee, or premium, rather than as interest, (ii) exclude
voluntary prepayments and the effect thereof, and (iii) amortize,
prorate, allocate and spread, in equal parts, the total amount of
interest throughout the entire contemplated term of the
indebtedness so that interest paid by Company does not exceed the
Maximum Rate; provided that, if a Note is paid and performed in
full prior to the end of the full contemplated term thereof, and
if the interest received for the actual period of existence
thereof exceeds the Maximum Rate, Bank shall refund to Company
the amount of such excess or credit the amount of such excess
against the principal amount of the Note and, in such event, Bank
shall not be subject to the penalties provided by any laws for
contracting for, charging, taking, reserving or receiving
interest in excess of the Maximum Rate.
12.05. Amendments. This Loan Agreement and the other Loan
Documents may be amended only by an instrument in writing
executed by the party, or an authorized officer of the party,
against whom such amendment is sought to be enforced.
12.06. Governing Law. This Loan Agreement has been
prepared, is being executed and delivered, and is intended to be
performed in the State of Texas, and the substantive laws of such
state and the applicable federal laws of the United States of
America shall govern the validity, construction, enforcement and
interpretation of this Loan Agreement and all of the other Loan
Documents.
12.07. Invalid Provisions. If any provision of any Loan
Document is held to be illegal, invalid or unenforceable under
present or future laws during the term of this Loan Agreement,
such provision shall be fully severable; such Loan Document shall
be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of such Loan
Document; and the remaining provisions of such Loan Document
shall remain in full force and effect and shall not be affected
by the illegal, invalid or unenforceable provision or by its
severance from such Loan Document. Furthermore, in lieu of each
such illegal, invalid or unenforceable provision shall be added
as part of such Loan Document a provision mutually agreeable to
Company and Bank as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid
and enforceable. In either case, the effective date of the added
provision shall be the date upon which the prior provision was
held to be illegal, invalid or unenforceable.
<PAGE>
12.08. Headings. Section headings are for convenience of
reference only and shall in no way affect the interpretation of
this Loan Agreement.
12.09. Participations. Company expressly recognizes and
agrees that Bank may sell other lenders participations in the
loan evidenced by the Note; provided, however that such
participation shall not affect the rights and duties of Bank
hereunder vis-a-vis Company.
12.10. Article 15.10(b). Company and Bank hereby agree
that, except for Article 15.10(b) thereof, the provisions of
Charter 15 of Title 79 of the Revised Civil Statutes of Texas,
1925, as amended (regulating certain revolving credit loans and
revolving triparty accounts) shall not apply to the Loan
Documents.
12.11. Survival. All representations and warranties made
by Company herein shall survive delivery of the Note and the
making of the Revolving Credit Loan.
12.13. No Third Party Beneficiary. The parties do not
intend the benefits of this Agreement to inure to any third
party, nor shall this Loan Agreement be construed to make or
render Bank liable to any materialman, supplier, contractor,
subcontractor, purchaser or lessee of any property owned by
Company, or for debts or claims accruing to any such persons
against Company. Notwithstanding anything contained herein or in
the Note, or in any other Loan Document, or any conduct or course
of conduct by any or all of the parties hereto, before or after
signing this Loan Agreement or any of the other Loan Documents,
neither this Loan Agreement nor any other Loan Document shall be
construed as creating any right, claim or cause of action against
Bank, or any of its officers, directors, agents or employees, in
favor of any materialman, supplier, contractor, subcontractor,
purchaser or lessee of any property owned by Company, nor to any
other person or entity other than Company.
12.14. Counterpart Execution. This Loan Agreement may be
executed in multiple counterparts, all of which taken together
shall constitute one and the same instrument.
12.15. Final Agreement. THIS WRITTEN AGREEMENT AND THE
OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
<PAGE>
EXECUTED effective as of the 16th day of February, 1994.
PMB ENTERPRISES WEST, INC., a New
Mexico corporation
By: /s/ David Oden
David Oden, Vice President
BORROWER
FIRST INTERSTATE BANK OF TEXAS, N.A.
By: /s/ Steve Wood
Steve Wood, Vice President
BANK
f-0017708.01
<PAGE>
EXHIBIT "A"
PROMISSORY NOTE
$10,000,000.00
February 16, 1994
FOR VALUE RECEIVED, the undersigned PMB Enterprises West,
Inc., a New Mexico corporation (the "Company"), hereby
unconditionally promises to pay to the order of First Interstate
Bank of Texas, N.A. (the "Bank") the principal sum of ten million
dollars ($10,000,000.00), or such lesser aggregate amount of
Advances as may be made pursuant to Bank's Commitment, which
principal shall be payable as provided in Sections 4.01, 4.02,
4.03, 4.04 and 4.07 of the Loan Agreement, together with the
interest on the unpaid principal balance until maturity (whether
by acceleration or otherwise), which interest shall be determined
at the varying rates per annum, and shall be payable as provided
in Sections 2.03, 3.02, 4.04, 4.05, 4.06 and 4.07 of the Loan
Agreement. Payments of both principal and interest herein shall
be made to Bank's account at 309 W. Seventh Street, Fort Worth,
Texas, in lawful money of the United States of America and in
immediately available funds.
This Note has been executed and delivered pursuant to the
terms of that certain Revolving Credit and Term Loan Agreement
(the "Loan Agreement") by and between Company, and First
Interstate Bank of Texas, N.A., dated as of February 16, 1994,
and is the "Note" referred to therein. Reference is hereby made
to the Loan Agreement for a statement of the repayment rights and
obligations of Company and for a statement of the events upon
which the maturity of this Note may be accelerated.
Each capitalized term used herein shall have the same
meaning assigned to it in the Loan Agreement, unless the context
hereof otherwise requires or provides.
Company agrees to pay all costs and expenses of Bank
incurred in the collection of this Note, including but not
limited to court costs and reasonable attorneys' fees and all
other costs and expenses described in Section 12.03 of the Loan
Agreement.
Company and each surety, endorser, guarantor and any other
party now or hereafter liable for payment of any sums of money
payable on this Note, jointly and severally waive presentment and
demand for payment, protest, notice of protest and nonpayment,
notice of intent to accelerate, notice of acceleration and all
other notices, filing of suit and diligence in collecting this
Note or enforcing any security with respect to same, and agree
that their liability under this Note shall not be affected by any
renewal or extension in the time of payment hereof, or in any
indulgences, or by any release, substitution or change in any
security for the payment of this Note, and hereby consent to any
and all renewals, extensions, indulgences, releases or
<PAGE>
changes, regardless of the number of such renewals, extensions,
indulgences, releases or changes.
Regardless of any provision contained in this Note, the Loan
Agreement or any other document executed or delivered in
connection therewith, neither Bank nor any holder hereof shall be
deemed to have contracted for or be entitled to receive, collect
or apply as interest (including any fee, charge or amount which
is not denominated as "interest" but is legally deemed to be
interest under applicable law) on this Note, the Loan Agreement,
the Loan Documents or otherwise, any amount in excess of the
Maximum Rate, and, in the event that Bank or any holder hereof
ever receives, collects or applies as interest any such excess,
such amount which would be excessive interest shall be applied to
the reduction of the unpaid principal balance of this Note, and,
if the principal balance of this Note is paid in full, any
remaining excess shall forthwith be paid to Company. In
determining whether or not the interest paid or payable under any
specific contingency exceeds the Maximum Rate, Company, Bank and
any other holder hereof shall, to the maximum extent permitted
under applicable law, (i) characterize any non-principal payment
(other than payments which are expressly designated as interest
payments hereunder) as an expense or fee rather than as interest,
(ii) exclude voluntary prepayments and the effect thereof, and
(iii) amortize, prorate, allocate and spread the total amount of
interest throughout the entire contemplated term of this Note so
that the interest rate is uniform throughout the entire term;
provided that, if this Note is finally paid and performed in full
prior to the end of the full contemplated term hereof, and if the
interest received for the actual period of existence thereof
exceeds the Maximum Rate, Bank or any holder hereof shall refund
to Company the amount of such excess, or credit the amount of
such excess against the principal amount of this Note and, in
such event, neither Bank nor any other holder shall be subject to
any penalties provided by any laws for contracting for, charging,
taking, reserving or receiving interest in excess of the Maximum
Rate.
This Note is being executed and delivered, and is intended
to be performed in the State of Texas. Except to the extent that
the laws of the United States may apply to the terms hereof, the
substantive laws of the State of Texas shall govern the validity,
construction, enforcement and interpretation of this Note.
PMB ENTERPRISES WEST, INC.
David Oden, Vice President
f-0017708.01
<PAGE>
EXHIBIT "B"
UNCONDITIONAL GUARANTY AGREEMENT
THIS UNCONDITIONAL GUARANTY AGREEMENT is executed as of
February 16, 1994, by Pancho's Mexican Buffet, Inc., a Delaware
corporation, PMB International, Inc., a Delaware corporation, and
PAMEX of Texas, Inc., a Texas corporation (such parties being
referred to herein, jointly and severally, as "Guarantor" and
each use of the term "Guarantor" or reference thereto shall mean
or be a reference to each such person jointly and severally), for
the benefit of First Interstate Bank of Texas, N.A. ("Lender").
W I T N E S S E T H:
WHEREAS, PMB Enterprises West, Inc., a New Mexico
corporation ("Borrower"), may from time to time be indebted to
Lender pursuant to that certain Revolving Credit and Term Loan
Agreement dated February 16, 1994 by and between Borrower and
Lender (such loan agreement, together with all amendments thereto
and restatements thereof, is herein referred to as the "Loan
Agreement"); and
WHEREAS, Lender is not willing to make the loans under the
Loan Agreement or otherwise extend credit to Borrower unless each
Guarantor unconditionally guarantees payment of the Guaranteed
Debt (as hereinafter defined); and
WHEREAS, each Guarantor will benefit from Lender's extension
of credit to Borrower; and
WHEREAS, all capitalized terms not defined herein shall have
the meaning assigned to such terms in the Loan Agreement unless
otherwise provided herein or the context hereof otherwise
requires; and
NOW, THEREFORE, as an inducement to Lender to enter into the
Loan Agreement and to make loans to Borrower thereunder, and to
extend credit to Borrower as Lender may from time to time agree
to extend, and for other good and valuable consideration, the
receipt and legal sufficiency of which are hereby acknowledged,
Guarantor hereby guarantees payment of the Guaranteed Debt
<PAGE>
(hereinafter defined) as more specifically described hereinbelow
in Section 1.03 and hereby agrees as follows:
Article I
NATURE AND SCOPE OF GUARANTY
Section 1.01. Definition of Guaranteed Debt. As used
herein, the term "Guaranteed Debt" means:
(a) All principal, interest, attorneys fees,
commitment fees, liabilities for costs and expenses and
other indebtedness, obligations and liabilities of Borrower
to Lender at any time created or arising in connection with
the Loan Agreement, or any amendment thereto or substitution
therefor, including but not limited to all indebtedness,
obligations and liabilities of Borrower to Lender arising
under the Note (as defined in the Loan Agreement), under any
renewals, modifications, increases and extensions of the
Note (the "Guaranteed Note") and under the Loan Documents
(as defined in the Loan Agreement); and
(b) All reasonable costs, expenses and fees, including
but not limited to court costs and reasonable attorneys
fees, arising in connection with the collection of any or
all amounts, indebtedness, obligations and liabilities of
Borrower to Lender described above in item (a) of this
Section 1.01.
As used herein, the term "Unguaranteed Debt" means
indebtedness or other liabilities, if any, of Borrower to Lender
that is not Guaranteed Debt.
Section 1.02. Guaranteed Debt Not Reduced by Defenses of
Borrower. The Guaranteed Note, indebtedness, liabilities,
obligations and other Guaranteed Debt guaranteed hereby, and the
liabilities and obligations of Guarantor to Lender hereunder,
shall not be reduced, discharged or released because or by reason
of any existing or future claim, counterclaim or defense of
Borrower, or any other party, against Lender or against payment
of the Guaranteed Debt, whether such claim, counterclaim or
defense arises in connection with the Guaranteed Debt (or the
transactions creating the Guaranteed Debt) or otherwise. Without
limiting the foregoing or the Guarantor's liability hereunder, to
the extent that Lender advances funds or extends credit to
Borrower, and does not receive payments or benefits thereon in
the amounts and at the times required or provided by applicable
agreements or laws, Guarantor is absolutely liable to make such
payments to (and confer such benefits on) Lender, on a timely
basis.
Section 1.03. Guaranty of Obligation. Each Guarantor
hereby irrevocably and unconditionally guarantees to Lender and
its successors and assigns the due and
<PAGE>
punctual payment of the Guaranteed Debt. Each Guarantor hereby
irrevocably and unconditionally covenants and agrees that it is
liable for the Guaranteed Debt as primary obligor.
Section 1.04. Nature of Guaranty. This Guaranty Agreement
is intended to be an irrevocable, absolute, continuing guaranty
of payment and is not a guaranty of collection. This Guaranty
Agreement may not be revoked by Guarantor (provided, however, if,
according to applicable law, it shall ever be determined or held
that a guarantor under a continuing guaranty such as this
Guaranty Agreement shall have the absolute right, notwithstanding
the express agreement of such a guarantor otherwise, to revoke
such guaranty as to Guaranteed Debt which has then not yet
arisen, then Guarantor may deliver to the cashier of Lender
written notice, in addition to giving such notice as provided in
Section 5.02 hereof, that the Guarantor will not be liable
hereunder for any Guaranteed Debt created, incurred, or arising
after the giving of such notice, and such notice will be
effective as to the Guarantor from and after (but not before)
such times as said written notice is actually delivered to, in
addition to giving such notice as provided in Section 5.02
hereof, and received by and receipted for in writing by the
cashier of Lender, provided that such notice shall not in anywise
affect, impair, or limit the liability and responsibility of any
other Guarantor hereunder or other person or entity with respect
to any Guaranteed Debt theretofore existing or thereafter
existing, arising, renewed, extended or modified and provided,
further, that such notice shall not affect, impair, or release
the liability and responsibility of the Guarantor with respect to
Guaranteed Debt created, incurred, or arising (or in respect of
any Guaranteed Debt agreed or contemplated, in any respect, to be
created, whether advanced or not and whether committed to by
Lender or not, including, without limitation, any discretionary
advances or extensions of credit which may be made by Lender at
its option in the future under any type of loan or credit
agreement, arrangement or undertaking) prior to the receipt of
such notice by the cashier of Lender as aforesaid, or in respect
of any renewals, extensions, or modifications of such Guaranteed
Debt, or in respect of interest or costs of collection thereafter
accruing on or with respect to such Guaranteed Debt, or with
respect to attorneys' fees thereafter becoming payable hereunder
with respect to such Guaranteed Debt), and shall continue to be
effective with respect to any Guaranteed Debt arising or created
after any attempted revocation by Guarantor. The fact that at
any time or from time to time the Guaranteed Debt may be
increased, reduced or paid in full shall not release, discharge
or reduce the obligation of Guarantor with respect to
indebtedness or obligations of Borrower to Lender thereafter
incurred (or other Guaranteed Debt thereafter arising) under the
Guaranteed Note or otherwise. This Guaranty Agreement may be
enforced by Lender and any subsequent holder of the Guaranteed
Debt and shall not be discharged by the assignment or negotiation
of all or part of the Guaranteed Debt.
<PAGE>
Section 1.05. Payment by Guarantor. If all or any part of
the Guaranteed Debt shall not be paid within three (3) days of
the due date thereof, whether at maturity or earlier by
acceleration or otherwise, Guarantor shall, immediately upon
demand by Lender, and without presentment, protest, notice of
protest, notice of nonpayment, notice of intention to accelerate
or acceleration or any other notice whatsoever, pay in lawful
money of the United States of America, the amount due on the
Guaranteed Debt to Lender at Lender's principal office in Fort
Worth, Texas. Such demand(s) may be made at any time coincident
with or after the time for payment of all or part of the
Guaranteed Debt, and may be made from time to time with respect
to the same or different items of Guaranteed Debt. Such demand
shall be deemed made, given and received in accordance with
Section 5.02 hereof.
Section 1.06. Payment of Expenses. In the event that
Guarantor should breach or fail to timely perform any provisions
of this Guaranty Agreement, Guarantor shall, immediately upon
demand by Lender, pay Lender all reasonable costs and expenses
(including court costs and reasonable attorneys' fees) incurred
by Lender in the enforcement hereof or the preservation of
Lender's rights hereunder. The covenant contained in this
Section 1.06 shall survive the payment of the Guaranteed Debt.
Section 1.07. No Duty to Pursue Others. It shall not be
necessary for Lender (and Guarantor hereby waives any rights
which Guarantor may have to require Lender), in order to enforce
such payment by Guarantor, first to (i) institute suit or exhaust
its remedies against Borrower or others liable on the Guaranteed
Debt or any other person, (ii) enforce Lender's rights against
any security which shall ever have been given to secure the
Guaranteed Debt, (iii) enforce Lender's rights against any other
guarantors of the Guaranteed Debt, (iv) join Borrower or any
others liable on the Guaranteed Debt in any action seeking to
enforce this Guaranty Agreement, (v) exhaust any remedies
available to Lender against any security which shall ever have
been given to secure the Guaranteed Debt, or (vi) resort to any
other means of obtaining payment of the Guaranteed Debt. Lender
shall not be required to mitigate damages or take any other
action to reduce, collect or enforce the Guaranteed Debt.
Further, Guarantor expressly waives until the Guaranteed Debt is
paid in full each and every right to which it may be entitled by
virtue of the suretyship law of the state of Texas, including
without limitation, any rights pursuant to Rule 31, Texas Rules
of Civil Procedure, Section 17.001 of the Texas Civil Practice
and Remedies Code, and Chapter 34 of the Texas Business and
Commerce Code.
Section 1.08. Waiver of Notices, etc. Guarantor agrees to
the provisions of the Guaranteed Note, and hereby waives notice
of (i) any loans or advances made by Lender to Borrower, (ii)
acceptance of this Guaranty Agreement, (iii) any amendment or
extension of the Guaranteed Note or the Loan Agreement or of any
other instrument or document pertaining to all or any part of the
Guaranteed Debt, (iv) the execution and delivery by Borrower and
Lender of any other loan or credit agreement
<PAGE>
or of Borrower's execution and delivery of any promissory notes
or other documents in connection therewith, (v) the occurrence of
any breach by Borrower or Event of Default (as defined in the
Loan Agreement and collateral documents thereto), (vi) Lender's
transfer or disposition of the Guaranteed Debt, or any part
thereof, (vii) sale or foreclosure (or posting or advertising for
sale or foreclosure) of any collateral for the Guaranteed Debt,
(viii) protest, proof of nonpayment or default by Borrower, or
(ix) any other action at any time taken or omitted by Lender,
and, generally, all demands and notices of every kind in
connection with this Guaranty Agreement, the Loan Agreement, and
any documents or agreements evidencing, securing or relating to
any of the Guaranteed Debt and the obligations hereby guaranteed.
Section 1.09. Effect of Bankruptcy, Other Matters. In the
event that, pursuant to any insolvency, bankruptcy,
reorganization, receivership or other debtor relief law, or any
judgment, order or decision thereunder, or for any other reason,
(i) Lender must rescind or restore any payment, or any part
thereof, received by Lender in satisfaction of the Guaranteed
Debt, as set forth herein, any prior release or discharge from
the terms of this Guaranty Agreement given to Guarantor by Lender
shall be without effect, and this Guaranty Agreement shall remain
in full force and effect, (ii) Borrower shall cease to be liable
to Lender for any of the Guaranteed Debt (other than by reason of
the indefeasible payment in full thereof by Borrower), the
obligations of Guarantor under this Guaranty Agreement shall
remain in full force and effect. It is the intention of Lender
and Guarantor that Guarantor's obligations hereunder shall not be
discharged except by Guarantor's performance of such obligations
and then only to the extent of such performance. Without
limiting the generality of the foregoing, it is the intention of
Lender and Guarantor that the filing of any bankruptcy or similar
proceeding by or against Borrower or any other person or party
obligated on any portion of the Guaranteed Debt shall not affect
the obligations of Guarantor under this Guaranty Agreement or the
rights of Lender under this Guaranty Agreement, including,
without limitation, the right or ability of Lender to pursue or
institute suit against Guarantor for the entire Guaranteed Debt.
Section 1.10. Application of Payments from Borrower and
Other Sources. If, at any time, there be Unguaranteed Debt,
Lender, without in any manner impairing its rights hereunder,
may, at its option: (i) apply, first, to Unguaranteed Debt any
amounts paid to or received by or coming into the hands of Lender
from or attributable to Borrower or any other person or entity
(other than Guarantor) liable for indebtedness of Borrower to
Lender; (ii) exercise rights of offset by applying, first, to the
Unguaranteed Debt any deposit balances to the credit of Borrower;
and (iii) except as stated in the last sentence of this
paragraph, apply, first, to Unguaranteed Debt all amounts
realized by Lender from collateral or security held by Lender for
the payment of Borrower's indebtedness to Lender. If a
particular security instrument expressly requires an application
different from that permitted under the preceding sentence,
proceeds realized by Lender from such security instrument shall
be applied as provided in such instrument.
<PAGE>
Article II
ADDITIONAL EVENTS AND CIRCUMSTANCES NOT REDUCING
OR DISCHARGING GUARANTOR'S OBLIGATIONS
Each Guarantor hereby consents and agrees to each of the
following, and agrees that Guarantor's obligations under this
Guaranty Agreement shall not be released, diminished, impaired,
reduced or adversely affected by any of the following, and waives
any common law, equitable, statutory or other rights (including
without limitation rights to notice) which Guarantor might
otherwise have as a result of or in connection with any of the
following:
Section 2.01. Modifications, etc. Any renewal,
extension, increase, modification, alteration or rearrangement of
all or any part of the Guaranteed Debt, or of the Guaranteed
Note, or any loan agreement, security agreement, collateral
document or other document, instrument, contract or understanding
between Borrower and Lender, or any other parties, pertaining to
the Guaranteed Debt;
Section 2.02. Adjustment, etc. Any adjustment,
indulgence, forbearance or compromise that might be granted or
given by Lender to Borrower or Guarantor;
Section 2.03. Condition, Composition or Structure of
Borrower or Guarantor. The insolvency, bankruptcy,
arrangement, adjustment, composition, structure, liquidation,
disability, dissolution or lack of power of Borrower or any other
party at any time liable for the payment of all or part of the
Guaranteed Debt; or any dissolution of Borrower or Guarantor, or
any sale, lease or transfer of any or all of the assets of
Borrower or Guarantor, or any changes in name, business,
location, composition, structure or changes in the shareholders,
partners or members (whether by accession, secession, cessation,
death, dissolution, transfer of assets or other matter) of
Borrower or Guarantor; or any reorganization of Borrower or
Guarantor;
Section 2.04. Invalidity of Guaranteed Debt. The
invalidity, illegality or unenforceability of all or any part of
the Guaranteed Debt, or any document or agreement executed in
connection with the Guaranteed Debt, for any reason whatsoever,
including without limitation the fact that (i) the Guaranteed
Debt, or any part thereof, exceeds the amount permitted by law,
(ii) the act of creating the Guaranteed Debt or any part thereof
is ultra vires, (iii) the officers or representatives executing
the Guaranteed Note or other documents or otherwise creating the
Guaranteed Debt acted in excess of their authority, (iv) the
Guaranteed Debt violates applicable usury laws, (v) the Borrower
has valid defenses, claims or counterclaims (whether at law, in
equity or by agreement) which render the Guaranteed Debt wholly
or partially uncollectible from Borrower, (vi) the creation,
performance or repayment of the Guaranteed Debt (or the
execution, delivery and performance of any document or instrument
representing part of the Guaranteed Debt or executed in
<PAGE>
connection with the Guaranteed Debt, or given to secure the
repayment of the Guaranteed Debt) is illegal, uncollectible or
unenforceable, or (vii) the Guaranteed Note, Loan Agreement or
other documents or instruments pertaining to the Guaranteed Debt
have been forged or otherwise are irregular or not genuine or
authentic.
Section 2.05. Release of Obligors. Any full or partial
release of the liability of Borrower on the Guaranteed Debt or
any part thereof, or any other person or entity now or hereafter
liable, whether directly or indirectly, jointly, severally, or
jointly and severally, to pay, perform, guarantee or assure the
payment of the Guaranteed Debt or any part thereof, it being
recognized, acknowledged and agreed by Guarantor that Guarantor
may be required to pay the Guaranteed Debt in full without
assistance or support of any other party, and Guarantor has not
been induced to enter into this Guaranty Agreement on the basis
of a contemplation, belief, understanding or agreement that other
parties will be liable to perform the Guaranteed Debt, or that
Lender will look to other parties to perform the Guaranteed Debt;
notwithstanding the foregoing, Guarantor does not hereby waive or
release (expressly or impliedly) any rights of subrogation,
reimbursement or contribution which it may have, after payment in
full of the Guaranteed Debt, against others liable on the
Guaranteed Debt; Guarantor's rights of subrogation and
reimbursement are, however, subordinate to the rights and claims
of Lender;
Section 2.06. Other Security. The taking or accepting of
any other security, collateral or guaranty, or other assurance of
payment, for all or any part of the Guaranteed Debt;
Section 2.07. Release of Collateral, etc. Any release,
surrender, exchange, subordination, deterioration, waste, loss or
impairment (including without limitation negligent, willful,
unreasonable or unjustifiable impairment) of any collateral,
property or security, at any time existing in connection with, or
assuring or securing payment of, all or any part of the
Guaranteed Debt;
Section 2.08. Care and Diligence. The failure of Lender or
any other party to exercise diligence or reasonable care or act,
fail to act or comply with any duty in the administration,
preservation, protection, enforcement, sale application, disposal
or other handling or treatment of all or any part of Guaranteed
Debt or any collateral, property or security at any time securing
any portion thereof, including, without limiting the generality
of the foregoing, the failure to conduct any foreclosure in such
a way so as to obtain the best possible price as long as the
foreclosure is conducted in a commercially reasonable manner or
otherwise act or fail to act;
Section 2.09. Status of Liens. The fact that any
collateral, security, security interest or lien contemplated or
intended to be given, created or granted as security for the
repayment of the Guaranteed Debt shall not be properly perfected
or created,
<PAGE>
or shall prove to be unenforceable or subordinate to any other
security interest or lien, it being recognized and agreed by
Guarantor that Guarantor is not entering into this Guaranty
Agreement in reliance on, or in contemplation of the benefits of,
the validity, enforceability, collectibility or value of any of
the collateral for the Guaranteed Debt; notwithstanding the
foregoing, Guarantor does not hereby waive or release (expressly
or impliedly) any right to be subrogated to the rights of Lender
in any collateral or security for the Guaranteed Debt after
payment in full of the Guaranteed Debt; Guarantor's rights of
subrogation are, however, subordinate to the rights, claims,
liens and security interests of Lender;
Section 2.10. Claims of Borrower. The Guaranteed Note and
other Guaranteed Debt guaranteed hereby, and the liabilities and
obligations of Guarantor to Lender hereunder, shall not be
reduced, discharged or released because of or by reason of any
existing or future claim, counterclaim or defense of Borrower of
any nature whatsoever against Lender, or any other party, or
against payment of the Guaranteed Debt, whether such claim,
counterclaim or defense arises in connection with the Guaranteed
Debt (or the transactions creating the Guaranteed Debt) or
otherwise;
Section 2.11. Merger. The reorganization, merger or
consolidation of Borrower into or with any other corporation or
entity;
Section 2.12. Preference. Any payment by Borrower to
Lender is held to constitute a preference under bankruptcy laws,
or for any reason Lender is required to refund such payment or
pay such amount to Borrower or someone else; or
Section 2.13. Other Actions Taken or Omitted. Any other
action taken or omitted to be taken with respect to the Loan
Agreement, the Guaranteed Debt, or the security and collateral
therefor, whether or not such action or omission prejudices
Guarantor or increases the likelihood or risk that Guarantor will
be required to pay the Guaranteed Debt pursuant to the terms
hereof; it is the unambiguous and unequivocal intention of
Guarantor that Guarantor shall be obligated to pay the Guaranteed
Debt when due, notwithstanding any occurrence, circumstance,
event, action, or omission whatsoever, whether contemplated or
uncontemplated, and whether or not otherwise or particularly
described herein, except for the full and final payment and
satisfaction of the Guaranteed Debt.
Article III
REPRESENTATIONS AND WARRANTIES
To induce Lender to enter into the Loan Agreement and extend
credit to Borrower, each Guarantor represents and warrants to
Lender that:
<PAGE>
Section 3.01. Benefit. Each Guarantor has received, or
will receive, direct or indirect benefit from the making of this
Guaranty and the Guaranteed Debt;
Section 3.02. Familiarity and Reliance. Each Guarantor is
familiar with, and has independently reviewed books and records
regarding, the financial condition of the Borrower and is
familiar with the value of any and all collateral intended to be
created as security for the payment of the Guaranteed Debt;
however, Guarantor is not relying on such financial condition or
the collateral as an inducement to enter into this Guaranty
Agreement; and
Section 3.03. No Representation by Lender. Neither Lender
nor any other party has made any representation, warranty or
statement to Guarantor in order to induce the Guarantor to
execute this Guaranty Agreement.
Article IV
SUBORDINATION OF CERTAIN INDEBTEDNESS
Section 4.01. Subordination of All Guarantor Claims. As
used herein, the term "Guarantor Claims" shall mean all debts and
liabilities of Borrower to Guarantor, whether such debts and
liabilities now exist or are hereafter incurred or arise, or
whether the obligations of Borrower thereon be direct,
contingent, primary, secondary, several, joint and several, or
otherwise, and irrespective of whether such debts or liabilities
be evidenced by note, contract, open account, or otherwise, and
irrespective of the person or persons in whose favor such debts
or liabilities may, at their inception, have been, or may
hereafter be created, or the manner in which they have been or
may hereafter be acquired by Guarantor. The Guarantor Claims
shall include without limitation all rights and claims of
Guarantor against Borrower (arising as a result of subrogation or
otherwise) as a result of Guarantor's payment of all or a portion
of the Guaranteed Debt. Until the Guaranteed Debt shall be paid
and satisfied in full and Guarantor shall have performed all of
its obligations hereunder, Guarantor shall not receive or
collect, directly or indirectly, from Borrower or any other party
any amount upon the Guarantor Claims.
Section 4.02. Claims in Bankruptcy. In the event of
receivership, bankruptcy, reorganization, arrangement, debtor's
relief, or other insolvency proceedings involving Borrower as
debtor, Lender shall have the right to prove its claim in any
such proceeding so as to establish its rights hereunder and
receive directly from the receiver, trustee or other court
custodian dividends and payments which would otherwise be payable
upon Guarantor Claims. Guarantor hereby assigns such dividends
and payments to Lender. Should Lender receive, for application
upon the Guaranteed Debt, any such dividend or payment which is
otherwise payable to Guarantor, and which, as between Borrower
and Guarantor, shall constitute a credit
<PAGE>
upon the Guarantor Claims, then upon payment to Lender in full of
the Guaranteed Debt, Guarantor shall become subrogated to the
rights of Lender to the extent that such payments to Lender on
the Guarantor Claims have contributed toward the liquidation of
the Guaranteed Debt, and such subrogation shall be with respect
to that proportion of the Guaranteed Debt which would have been
unpaid if Lender had not received dividends or payments upon the
Guarantor Claims.
Section 4.03. Payments Held in Trust. In the event that,
notwithstanding Sections 4.01 and 4.02 above, any Guarantor
should receive any funds, payment, claim or distribution which is
prohibited by such Sections, Guarantor agrees to hold in trust
for Lender, in kind, all funds, payments, claims or distributions
so received, and agrees that he shall have absolutely no dominion
over such funds, payments, claims or distributions so received
except to pay them promptly to Lender, and Guarantor covenants
promptly to pay the same to Lender.
Section 4.04. Liens Subordinate. Guarantor agrees that any
liens, security interests, judgment liens, charges or other
encumbrances upon Borrower's assets securing payment of the
Guarantor Claims shall be and remain inferior and subordinate to
any liens, security interests, judgment liens, charges or other
encumbrances upon Borrower's assets securing payment of the
Guaranteed Debt, regardless of whether such encumbrances in favor
of Guarantor or Lender presently exist or are hereafter created
or attach. Without the prior written consent of Lender,
Guarantor shall not (i) exercise or enforce any creditor's right
it may have against Borrower, or (ii) foreclose, repossess,
sequester or otherwise take steps or institute any action or
proceedings (judicial or otherwise, including without limitation
the commencement of, or joinder in, any liquidation, bankruptcy,
rearrangement, debtor's relief or insolvency proceeding) to
enforce any liens, mortgages, deeds of trust, security interest,
collateral rights, judgments or other encumbrances on assets of
Borrower held by Guarantor.
Section 4.05. Notation of Records. All promissory notes,
accounts receivable ledgers or other evidences of the Guarantor
Claims accepted by or held by Guarantor shall contain a specific
written notice thereon that the indebtedness evidenced thereby is
subordinated under the terms of this Guaranty Agreement.
Article V
MISCELLANEOUS
Section 5.01. Waiver. No failure to exercise, and no delay
in exercising, on the part of Lender, any right hereunder shall
operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof
or the exercise of any other right. The rights of Lender
hereunder shall be in addition to all other rights provided by
law. No modification or waiver of any provision of this
<PAGE>
Guaranty Agreement, nor consent to departure therefrom, shall be
effective unless in writing and no such consent or waiver shall
extend beyond the particular case and purpose involved. No
notice or demand given in any case shall constitute a waiver of
the right to take other action in the same, similar or other
instances without such notice or demand.
Section 5.02. Notices. Any notices or other
communications required or permitted to be given by this Guaranty
Agreement must be (i) given in writing and personally delivered
or mailed by prepaid certified or registered mail, return receipt
requested, or (ii) made by tested telex delivered or transmitted,
to the party to whom such notice or communication is directed, to
the address of such party as follows:
Guarantor:
Pancho's Mexican Buffet, Inc.
3500 Noble Avenue
Fort Worth, Texas 76111
With a copy to:
Decker, Jones, McMackin,
McClane, Hall & Bates
Suite 2400
301 Commerce Street
Fort Worth, Texas 76102
Lender:
First Interstate Bank of Texas, N.A.
309 West Seventh Street, Suite 1100
Fort Worth, Texas 76102
Attn: Steve Wood
Any such notice or other communication shall be deemed to have
been given (whether actually received or not) on the day it is
personally delivered as aforesaid or, if mailed, on the day it is
mailed as aforesaid, or, if transmitted by telex, on the day that
such notice is transmitted as aforesaid. Any party may change
its address for purposes of this Guaranty Agreement by giving
notice of such change to the other party pursuant to this Section
5.02.
Section 5.03. Governing Law. This Guaranty Agreement has
been prepared, and is intended to be performed in the State of
Texas, and the substantive laws of such state shall govern the
validity, construction, enforcement and interpretation of this
Guaranty Agreement. For purposes of this Guaranty Agreement and
the
<PAGE>
resolution of disputes hereunder, Guarantor hereby irrevocably
submits and consents to, and waives any objection to, the
non-exclusive jurisdiction of the courts of the State of Texas
located in Tarrant County, Texas and of the federal court located
in the Northern Judicial District of Texas, Fort Worth Division.
Section 5.04. Invalid Provisions. If any provision of this
Guaranty Agreement is held to be illegal, invalid, or
unenforceable under present or future laws effective during the
term of this Guaranty Agreement, such provision shall be fully
severable and this Guaranty Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision
had never comprised a part of this Guaranty Agreement, and the
remaining provisions of this Guaranty Agreement shall remain in
full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance from this
Guaranty Agreement, unless such continued effectiveness of this
Guaranty Agreement, as modified, would be contrary to the basic
understandings and intentions of the parties as expressed herein.
Section 5.05. Entirety and Amendments. This Guaranty
Agreement embodies the entire agreement between the parties and
supersedes all prior agreements and understandings, if any,
relating to the subject matter hereof, and this Guaranty
Agreement may be amended only by an instrument in writing
executed by an authorized officer of the party against whom such
amendment is sought to be enforced.
Section 5.06. Parties Bound; Assignment. This Guaranty
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors, assigns and legal
representatives; provided, however, that Guarantor may not,
without the prior written consent of Lender, assign any of its
rights, powers, duties or obligations hereunder.
Section 5.07. Headings. Section headings are for
convenience of reference only and shall in no way affect the
interpretation of this Guaranty Agreement.
Section 5.08. Rights and Remedies. If Guarantor becomes
liable for any indebtedness owing by Borrower to Lender, by
endorsement or otherwise, other than under this Guaranty
Agreement, such liability shall not be in any manner impaired or
affected hereby and the rights of Lender hereunder shall be
cumulative of any and all other rights that Lender may ever have
against Guarantor. The exercise by Lender of any right or remedy
hereunder or under any other instrument, or at law or in equity,
shall not preclude the concurrent or subsequent exercise of any
other right or remedy.
Section 5.09. Counterpart Execution. This Guaranty
Agreement may be executed in any number of counterparts, all of
which taken together shall constitute
<PAGE>
one and the same instrument, and any of the parties hereto may
execute this Guaranty Agreement by signing any such counterpart.
Section 5.10. Arbitration. The parties agree to be bound
by the terms and provisions of the Arbitration Program (dated
9-1-92) of Lender which is incorporated by reference herein and
is acknowledged as received by the parties pursuant to which any
and all disputes shall be resolved by mandatory binding
arbitration upon the request of any party.
SECTION 5.11. FINAL AGREEMENT. THIS WRITTEN AGREEMENT
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES RELATING TO
THE SUBJECT MATTER THEREOF AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
EXECUTED as of the day and year first above written.
GUARANTOR:
PANCHO'S MEXICAN BUFFET, INC.
a Delaware corporation
By:
Name:
Title:
PMB INTERNATIONAL, INC.,
a Delaware corporation
By:
Name:
Title:
PAMEX OF TEXAS, INC., a Texas
corporation
By:
Name:
Title:
<PAGE>
EXHIBIT "C"
REQUEST FOR ADVANCE - FLOATING PRIME ADVANCE
Date:
First Interstate Bank of Texas, N.A.
309 W. Seventh Street
Fort Worth, Texas 76102
Re: Request For Floating Prime Advance
This Request for Advance has been prepared and is being
delivered to Bank pursuant to Section 2.02(a) of that certain
Revolving Credit and Term Loan Agreement ("Agreement") dated as
of February 16, 1994 by and between PMB Enterprises West, Inc., a
New Mexico corporation ("Company"), and First Interstate Bank of
Texas, N.A. Capitalized terms shall have the meanings assigned
to them in the Agreement unless otherwise provided herein or the
context hereof otherwise requires.
On this date the undersigned does hereby request that Bank
make an Advance for a Floating Prime Advance (i) in the aggregate
principal amount of $ (such amount shall be in an
integral multiple of $10,000.00 unless such Advance would exhaust
the Total Commitment in which case, such amount may be in an
amount of the unused portion of the Total Commitment) (ii) on
____________________, 199___.
The undersigned (in his representative capacity and not in
his individual capacity) hereby represents and warrants to Bank
that all of the representations and warranties contained in
Article VII of the Agreement (except Section 7.07) are true and
correct in all material respects as of the date hereof, with the
same force and effect as if made on the date hereof, and that no
Event of Default or condition, event or act which with the giving
of notice or lapse of time, or both, would constitute an Event of
Default exists and is continuing on this date, unless noted below
(if such a condition, event or act is so noted, there shall also
be noted below the nature, period of existence thereof and the
action which the Company is taking or proposes to take with
respect thereto):
PMB ENTERPRISES WEST, INC.
By:
Name:
Title:
f-0017708.01
<PAGE>
EXHIBIT "D"
REQUEST FOR ADVANCE - EURODOLLAR ADVANCE
Date:
First Interstate Bank of Texas, N.A.
309 W. Seventh Street
Fort Worth, Texas 76102
Re: Request For Eurodollar Advance
This Request for Advance has been prepared and is being
delivered to Bank pursuant to Section 2.02(a) of that certain
Revolving Credit and Term Loan Agreement ("Agreement") dated as
of February 16, 1994, by and between PMB Enterprises West, Inc.,
a New Mexico corporation ("Company"), and First Interstate Bank
of Texas, N.A. Capitalized terms shall have the meanings
assigned to them in the Agreement unless otherwise provided
herein or the context hereof otherwise requires. (Check
applicable box below.)
/ / [For New Advances] On this date the undersigned does hereby
request that Bank make Advances for a Eurodollar Advance (i) in
the aggregate principal amount of $ (such amount
shall be in an integral multiple of $1,000,000.00), (ii) for the
following Interest Period (one (1), two (2) or three
(3) months), (iii) on , 199 (which date shall
be at least three (3) Eurodollar Business Days after the date on
which this Request for Advance shall be submitted to Bank).
After taking into account the Advance requested hereby, the total
number of unpaid Eurodollar Advances does not exceed four (4).
/ / [For Rollover Notices] On this date the undersigned does
hereby request a Eurodollar Advance (i) in the aggregate
principal amount of $ (such amount shall be in
an integral multiple of $1,000,000.00), (ii) for the following
Interest Period (one (1), two (2) or three (3)
months), (iii) on , 199____ (which date shall be
at least three (3) Eurodollar Business Days after the date on
which this Request for Advance shall be submitted to Bank).
After taking into account the Advance requested hereby, the total
number of unpaid Eurodollar Advances does not exceed four (4).
This Request for Advance shall serve as a Rollover Notice under
Section 2.02(c) of the Agreement, with respect to the Eurodollar
Advance made on , 199 ("Prior Advance").
This Rollover Notice is being submitted at least three (3)
Eurodollar Business Days (if the Prior Advance was a Eurodollar
Advance) prior to the termination of the Interest Period for the
Prior Advance.
The undersigned (in his representative capacity and not in
his individual capacity) hereby represents and warrants to Bank
that all of the representations and warranties contained in
Article VII of the Agreement (except Section 7.07) are true and
correct in all material respects as of the date hereof, with the
same force and
<PAGE>
effect as if made on the date hereof, and that no Event of
Default or condition, event or act which with the giving of
notice or lapse of time, or both, would constitute an Event of
Default, exists and is continuing on this date, unless noted
below (if such a condition, event or act is so noted, there shall
also be noted below the nature, period of existence thereof and
the action which the Company is taking, or proposes to take with
respect thereto):
PMB ENTERPRISES WEST, INC.
By:
Name:
Title:
f-0017708.01
<PAGE>
EXHIBIT "E"
CONFIRMATION OF
REQUEST FOR ADVANCE - FLOATING PRIME ADVANCE
Date:
First Interstate Bank of Texas, N.A.
309 W. Seventh Street
Fort Worth, Texas 76102
Re: Request For Floating Prime Advance
This Confirmation of Request for Advance has been prepared
and is being delivered to Bank pursuant to Section 2.02(a) of
that certain Revolving Credit and Term Loan Agreement
("Agreement") dated as of February 16, 1994 by and between PMB
Enterprises West, Inc., a New Mexico corporation ("Company"), and
First Interstate Bank of Texas, N.A. Capitalized terms shall
have the meanings assigned to them in the Agreement unless
otherwise provided herein or the context hereof otherwise
requires.
On the undersigned requested that Bank makes
Floating Prime Advances in the aggregate principal amount of $
on , 199 .
The undersigned (in his representative capacity and not in
his individual capacity) hereby represents and warrants to Bank
that all of the representations and warranties contained in
Article VII of the Agreement (except Section 7.07) are true and
correct in all material respects as of the date hereof, with the
same force and effect as if made on the date hereof, and that no
Event of Default or condition, event or act which with the giving
of notice or lapse of time, or both, would constitute an Event of
Default exists and is continuing on this date, unless noted below
(if such a condition, event or act is so noted, there shall also
be noted below the nature, period of existence thereof and the
action which the Company is taking or proposes to take with
respect thereto):
PMB ENTERPRISES WEST, INC.
By:
Name:
Title:
f-0017708.01
<PAGE>
EXHIBIT "F"
CONFIRMATION OF
REQUEST FOR ADVANCE - EURODOLLAR ADVANCE
Date:
First Interstate Bank of Texas, N.A.
309 W. Seventh Street
Fort Worth, Texas 76102
Re: Request For Eurodollar Advance
This Confirmation of Request for Advance has been prepared
and is being delivered to Bank pursuant to Section 2.02(a) of
that certain Revolving Credit and Term Loan Agreement
("Agreement") dated as of February 16, 1994, by and between PMB
Enterprises West, Inc., a New Mexico corporation ("Company"), and
First Interstate Bank of Texas, N.A. Capitalized terms shall
have the meanings assigned to them in the Agreement unless
otherwise provided herein or the context hereof otherwise
requires.
On the undersigned requested that Bank make
Eurodollar Advances (i) in the aggregate principal amount of $
, (ii) for the following Interest Period (one
(1), two (2) or three (3) months), (iii) on ,
199___. After taking into account such Advance, the total number
of unpaid Eurodollar Advance does not exceed four (4).
The undersigned (in his representative capacity and not in
his individual capacity) hereby represents and warrants to Bank
that all of the representations and warranties contained in
Article VII of the Agreement (except Section 7.07) are true and
correct in all material respects as of the date hereof, with the
same force and effect as if made on the date hereof, and that no
Event of Default or condition, event or act which with the giving
of notice or lapse of time, or both, would constitute an Event of
Default, exists and is continuing on this date, unless noted
below (if such a condition, event or act is so noted,
there shall also be noted below the nature, period of existence
thereof and the action which the Company is taking, or proposes
to take with respect thereto):
PMB ENTERPRISES WEST, INC.
By:
Name:
Title:
f-0017708.01
<PAGE>
EXHIBIT "G"
TO REVOLVING CREDIT AND TERM LOAN AGREEMENT
BETWEEN PMB ENTERPRISES WEST, INC., AND
FIRST INTERSTATE BANK OF TEXAS, N.A.
LITIGATION
None
f-0017708.01
<PAGE>
EXHIBIT "H"
TO REVOLVING CREDIT AND TERM LOAN AGREEMENT
BETWEEN PMB ENTERPRISES WEST, INC., AND
FIRST INTERSTATE BANK OF TEXAS, N.A.
COMPLIANCE WITH LAW
None
f-0017708.01
<PAGE>
EXHIBIT "I"
TO REVOLVING CREDIT AND TERM LOAN AGREEMENT
BETWEEN PMB ENTERPRISES WEST, INC., AND
FIRST INTERSTATE BANK OF TEXAS, N.A.
ENVIRONMENTAL MATTERS
Exceptions to Section 7.22:
1. All Company restaurant locations include underground
storage tanks for capturing from the waste water system
grease produced through normal restaurant operations.
2. Underground storage tanks formerly used for gasoline
storage at the Company's headquarters office facility at
3500 Noble Avenue, Fort Worth, Texas, has been removed.
See attached copy of a closure review letter from the
Texas Water Commission dated January 25, 1993 regarding
this matter.
3. An underground storage tank formerly used for gasoline
storage at a Company facility at 3565 McCart Street, Fort
Worth, Texas, has been removed. See attached copy of a
closure review letter from the Texas Water Commission
dated April 6, 1993 regarding this matter.
4. The Company plans to purchase property located at 4604
Seawall Boulevard, Galveston, Texas for the construction
of a Pancho's Mexican Buffet restaurant. Environmental
studies commissioned on behalf of the Company have
identified contamination from underground gasoline
storage tanks removed in 1990 on property located
approximately 100 feet northeast of the proposed site.
The environmental studies did not reveal, however,
contamination of the 4604 Seawall Boulevard site
requiring any type of corrective action or further
testing.
f-0017708.01
<PAGE>
EXHIBIT 10(q)
FIRST AMENDMENT TO REVOLVING
CREDIT AND TERM LOAN AGREEMENT
This First Amendment To Revolving Credit and Term Loan
Agreement (this "First Amendment") is made by and among PMB
Enterprises West, Inc., a New Mexico corporation, and First
Interstate Bank of Texas, N.A.
WHEREAS, the parties entered into that one certain Revolving
Credit and Term Loan Agreement dated february 16, 1994 (the "Loan
Agreement"); and
WHEREAS, the parties desire to amend the Loan Agreement in
certain respects.
NOW THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which hereby acknowledged, it is
agreed by and among the parties as follows:
1.
The definition of Termination Date in Article I of the Loan
Agreement is amended to read in its entirety as follows:
"Termination Date" shall mean (i) March 1, 1997, or
(ii) such later date to which the Revolving Credit Period is
extended pursuant to Section 2.01(b) hereof.
2.
Section 2.01(a) of the Loan Agreement is amended to read in
its entirety as follows:
(a) Revolving Loan Commitments. Subject to the terms
and conditions of this Loan Agreement, Bank agrees to extend
to Company from the date hereof through the Termination Date
(the "Revolving Credit Period"), a revolving line of credit
which shall not exceed twelve million dollars ($12,000,000)
at any one time outstanding prior to January 1, 1996
or ten million dollars ($10,000,000)
at any one time outstanding on and after January
<PAGE>
1, 1996 (such amount is hereinafter referred to as its
"Commitment"). Bank shall not be obligated to make any
Advance hereunder if, immediately after giving effect
thereto, the aggregate amount of the Obligations of Company
to Bank hereunder exceeds Bank's Commitment.
Within the limits of this Section 2.01, during the
Revolving Credit Period, Company may borrow, prepay pursuant
to Section 4.04 hereof and reborrow under this Section 2.01.
Each advance made by Bank under Section 2.01 and Section
2.02 is herein called an "Advance" and all Advances made by
Bank hereunder are herein collectively called a "Revolving
Credit Loan".
3.
Section 4.01 of the Loan Agreement is amended to read in its
entirety as follows:
4.01. Promissory Note. The Advances under Section
2.02(a) hereof by Bank shall be evidenced by a promissory
note (the "Revolving Credit Note") of Company, which
Revolving Credit Note shall (i) be dated February 9, 1995,
(ii) be in the amount of twelve million dollars
($12,000,000), (iii) be payable to the order of Bank at the
office of Bank, (iv) bear interest in accordance with
Section 2.03 hereof, and (v) be in the form of Exhibit "A"
attached hereto with blanks appropriately completed in
conformity herewith. Notwithstanding the principal amount
of the Revolving Credit Note as stated on the face thereof,
the amount of principal actually owing on the Revolving
Credit Note at any given time shall be in the aggregate of
all Advances theretofore made to Company hereunder, less all
payments of principal theretofore actually received
hereunder by Bank. Bank is authorized, but is not required,
to endorse on the schedule attached to the Note appropriate
notations evidencing the date and amount of each Advance as
well as the amount of each payment made by Company hereunder.
4.
Section 9.01 of the Loan Agreement is amended to read in its
entirety as follows:
9.01. Funded Debt to Net Cash Flow. Permit the ratio
of Funded Debt as of the end of any fiscal quarter to Net
Cash Flow of Pancho's Mexican Buffet, Inc. and its
Subsidiaries for the four quarter period ending as of the
end of the preceding fiscal quarter at any time to be
greater than 2.5 to 1.0 prior to January 1, 1996 or be
greater than 2.0 to 1.0 on or after January 1, 1996.
<PAGE>
5.
At the time of execution of this First Amendment, Borrower
agrees to pay to Bank a fee in the amount of $2,500 and all
expenses incurred by Bank in connection with this First Amendment
(including reasonable attorneys fees).
6.
This First Amendment shall be binding upon and inure to the
benefit of the parties and their respective heirs, successors and
assigns.
7.
THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT AMONG
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS AMONG THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
Executed to be effective as of February 9, 1995.
PMB ENTERPRISES WEST, INC.
By:_/s/ David Oden____________
David Oden, Vice President
BORROWER
FIRST INTERSTATE BANK OF TEXAS,
N.A.
By:_/s/ Steve Wood____________
Steve Wood, Senior Vice
President
BANK
<PAGE>
EXHIBIT A
PROMISSORY NOTE
$12,000,000.00
February 9, 1995
FOR VALUE RECEIVED, the undersigned PMB Enterprises West,
Inc., a New Mexico corporation (the "Company"), hereby
unconditionally promises to pay to the order of First Interstate
Bank of Texas, N.A. (the "Bank") the principal sum of twelve
million dollars ($12,000,000.00), or such lesser aggregate amount
of Advances as may be made pursuant to Bank's Commitment, which
principal shall be payable as provided in Sections 4.01, 4.02,
4.03, 4.04 and 4.07 of the Loan Agreement, together with the
interest on the unpaid principal balance until maturity (whether
by acceleration or otherwise), which interest shall be determined
at the varying rates per annum, and shall be payable as provided
in Sections 2.03, 3.02, 4.04, 4.05, 4.06 and 4.07 of the Loan
Agreement. Payments of both principal and interest herein shall
be made to Bank's account at 309 W. Seventh Street, Fort Worth,
Texas, in lawful money of the United States of America and in
immediately available funds.
This Note has been executed and delivered pursuant to the
terms of that certain Revolving Credit and Term Loan Agreement
(the "Loan Agreement") by and between Company and First
Interstate Bank of Texas, N.A., dated as of February 16, 1994, as
amended, and is the "Note" referred to therein. Reference is
hereby made to the Loan Agreement for a statement of the
obligations of Bank to make Advances, the repayment rights and
obligations of Company and the events upon which the maturity of
this Note may be accelerated.
Each capitalized term used herein shall have the same
meaning assigned to it in the Loan Agreement, unless the context
hereof otherwise requires or provides.
Company agrees to pay all costs and expenses of Bank
incurred in the collection of this Note, including but not
limited to court costs and reasonable attorneys' fees and all
other costs and expenses described in Section 12.03 of the Loan
Agreement.
Company and each surety, endorser, guarantor and any other
party now or hereafter liable for payment of any sums of money
payable on this Note, jointly and severally waive presentment and
demand for payment, protest, notice of protest and nonpayment,
notice of intent to accelerate, notice of acceleration and all
other notices, filing of suit and diligence in collecting this
Note or enforcing any security with respect to same, and agree
that their liability under this Note shall not be affected by any
renewal or extension in the time of payment hereof, or in any
indulgences, or by any release, substitution or change in any
security for the payment of this Note, and hereby consent to any
and all renewals, extensions, indulgences, releases or changes,
regardless of the number of such renewals, extensions,
indulgences, releases or changes.
<PAGE>
Regardless of any provision contained in this Note, the Loan
Agreement or any other document executed or delivered in
connection therewith, neither Bank nor any holder hereof shall be
deemed to have contracted for or be entitled to receive, collect
or apply as interest (including any fee, charge or amount which
is not denominated as "interest" but is legally deemed to be
interest under applicable law) on this Note, the Loan Agreement,
the Loan Documents or otherwise, any amount in excess of the
Maximum Rate, and, in the event that Bank or any holder hereof
ever receives, collects or applies as interest any such excess,
such amount which would be excessive interest shall be applied to
the reduction of the unpaid principal balance of this Note, and,
if the principal balance of this Note is paid in full, any
remaining excess shall forthwith be paid to Company. In
determining whether or not the interest paid or payable under any
specific contingency exceeds the Maximum Rate, Company, Bank and
any other holder hereof shall, to the maximum extent permitted
under applicable law, (i) characterize any non-principal payment
(other than payments which are expressly designated as interest
payments hereunder) as an expense or fee rather than as interest,
(ii) exclude voluntary prepayments and the effect thereof, and
(iii) amortize, prorate, allocate and spread the total amount of
interest throughout the entire contemplated term of this Note so
that the interest rate is uniform throughout the entire term;
provided that, if this Note is finally paid and performed in full
prior to the end of the full contemplated term hereof, and if the
interest received for the actual period of existence thereof
exceeds the Maximum Rate, Bank or any holder hereof shall refund
to Company the amount of such excess, or credit the amount of
such excess against the principal amount of this Note and, in
such event, neither Bank nor any other holder shall be subject to
any penalties provided by any laws for contracting for, charging,
taking, reserving or receiving interest in excess of the Maximum
Rate.
This Note is being executed and delivered, and is intended
to be performed in the State of Texas. Except to the extent that
the laws of the United States may apply to the terms hereof, the
substantive laws of the State of Texas shall govern the validity,
construction, enforcement and interpretation of this Note.
This Note is given in renewal and extension of the
promissory note dated February 16, 1994 executed by Company in
the amount of $10,000,000 payable to the order of Bank.
PMB ENTERPRISES WEST, INC.
By:
David Oden, Vice President
f-0038328.01
<PAGE>
EXHIBIT 15
Pancho's Mexican Buffet, Inc.:
We have made a review in accordance with standards established by the
American Institute of Certified Public Accountants of the unaudited
interim financial information of Pancho's Mexican Buffet, Inc. and
subsidiaries for the three-month and six-month periods ended
March 31, 1995 and 1994, as indicated in our report dated May 5, 1995.
Because we did not perform an audit, we expressed no opinion on that
information.
We are aware that our report referred to above, which is included in
your Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995, is incorporated by reference in Registration
Statements No. 2-86238 and No. 33-60178 on Form S-8.
We are also aware that the aforementioned report, pursuant to Rule
436(c) under the Securities Act, is not considered a part of the
Registration statement prepared or certified by an accountant or a
report prepared or certified by an accountant within the meaning of
Sections 7 and 11 of that Act.
DELOITTE & TOUCHE LLP
Fort Worth, Texas
May 5, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED BALANCE SHEETS AS OF MARCH 31, 1995 AND THE CONSOLIDATED
CONDENSED STATEMENT OF OPERATIONS FOR THE SIX-MONTHS THEN ENDED, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> MAR-31-1995
<CASH> 782,000
<SECURITIES> 0
<RECEIVABLES> 389,000
<ALLOWANCES> 0
<INVENTORY> 1,304,000
<CURRENT-ASSETS> 3,913,000
<PP&E> 74,679,000
<DEPRECIATION> (32,247,000)
<TOTAL-ASSETS> 48,848,000
<CURRENT-LIABILITIES> 4,939,000
<BONDS> 0
<COMMON> 555,000
0
0
<OTHER-SE> 31,038,000
<TOTAL-LIABILITY-AND-EQUITY> 48,848,000
<SALES> 40,778,000
<TOTAL-REVENUES> 40,778,000
<CGS> 11,744,000
<TOTAL-COSTS> 38,957,000
<OTHER-EXPENSES> 2,771,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 232,000
<INCOME-PRETAX> (1,115,000)
<INCOME-TAX> (390,000)
<INCOME-CONTINUING> (725,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (725,000)
<EPS-PRIMARY> (.16)
<EPS-DILUTED> (.16)
</TABLE>
