<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED COMMISSION FILE NUMBER
JUNE 28, 1998 0-19810
BACK BAY RESTAURANT GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-2812651
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
284 NEWBURY STREET, BOSTON, MASSACHUSETTS 02115
(Address of principal executive offices)
(617) 536-2800
(Registrant's telephone number, including area code)
---------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 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
----- -----
On July 27, 1998, there were 3,453,256 shares of the registrant's Common Stock
outstanding.
1
<PAGE> 2
BACK BAY RESTAURANT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (in thousands)
<TABLE>
<CAPTION>
JUNE 28, 1998 DECEMBER 28, 1997
------------- -----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,560 $ 1,915
Accounts receivable 132 219
Inventories 690 783
Prepaid expenses and other current assets 865 874
Deferred income taxes 259 259
------- -------
Total current assets 3,506 4,050
------- -------
Buildings and improvements 4,303 4,303
Furniture, fixtures and equipment 18,535 18,119
Leasehold improvements 33,364 32,339
Lease rights 2,826 2,826
------- -------
59,028 57,587
Less: accumulated depreciation and amortization 28,022 27,182
------- -------
Net property, plant and equipment 31,006 30,405
------- -------
Other assets:
Goodwill, net of accumulated amortization 4,800 4,884
Trade names and trademarks, net of
accumulated amortization 1,230 1,252
Deferred income taxes 1,698 1,698
Other assets, net of accumulated amortization 852 783
------- -------
Total other assets 8,580 8,617
------- -------
Total assets $43,092 $43,072
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,794 $ 3,333
Accrued expenses 7,610 8,058
Income taxes payable 157 395
------- -------
Total current liabilities 10,561 11,786
------- -------
Deferred rent 204 216
Other long term liability 85 58
Long term debt 4,000 4,000
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value; authorized
20,000 shares; 3,431 shares issued and
outstanding in 1997 and 3,453 in 1998 37 36
Additional paid-in capital 23,201 23,118
Retained earnings 6,803 5,657
------- -------
30,041 28,811
Less treasury stock, 208 shares at cost in 1997
and 1998 1,799 1,799
------- -------
Total stockholders' equity 28,242 27,012
------- -------
Total liabilities and stockholders' equity $43,092 $43,072
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE> 3
BACK BAY RESTAURANT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
13 WEEKS ENDED
JUNE 28, 1998 JUNE 29, 1997
------------- -------------
Sales $24,586 $24,122
Costs and expenses:
Cost of sales 6,742 6,685
Payroll and related costs 7,591 7,569
Operating expenses 5,705 5,430
Depreciation and amortization 989 1,042
------- -------
Total restaurant operating expenses 21,027 20,726
------- -------
Income from restaurant operations 3,559 3,396
General and administrative expenses 2,238 2,274
------- -------
Operating income 1,321 1,122
Interest expense net 67 166
------- -------
Income before income taxes 1,254 956
Income taxes 464 354
------- -------
Net income $ 790 $ 602
======= =======
Net income per share
Basic $ .23 $ .18
======= =======
Diluted $ .22 $ .18
======= =======
Average common shares and equivalents
Basic 3,453 3,434
Diluted 3,672 3,436
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 4
BACK BAY RESTAURANT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
26 WEEKS ENDED
JUNE 28, 1998 JUNE 29, 1997
------------- -------------
Sales $47,712 $46,018
Costs and expenses:
Cost of sales 13,086 12,780
Payroll and related costs 15,136 14,945
Operating expenses 11,319 10,712
Depreciation and amortization 1,994 1,994
------- -------
Total restaurant operating expenses 41,535 40,431
------- -------
Income from restaurant operations 6,177 5,587
General and administrative expenses 4,461 4,440
------- -------
Operating income 1,716 1,147
Interest expense net 146 331
------- -------
Income before income taxes 1,570 816
Income taxes 424 302
------- -------
Net income $ 1,146 $ 514
======= =======
Net income per share
Basic $ .33 $ .15
======= =======
Diluted $ .32 $ .15
======= =======
Average common shares and equivalents
Basic 3,445 3,434
Diluted 3,637 3,435
The accompanying notes are an integral part of these consolidated financial
statements.
4
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BACK BAY RESTAURANT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(in thousands)
<TABLE>
<CAPTION>
ADDITIONAL TOTAL
COMMON PAID-IN RETAINED TREASURY STOCKHOLDERS'
STOCK CAPITAL EARNINGS STOCK EQUITY
------ ---------- -------- -------- -------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1995 $36 $23,031 $3,459 $(1,799) $24,727
Net income - - 467 - 467
Restricted stock compensation - 8 - - 8
--- ------- ------ ------- -------
Balance, December 29, 1996 36 23,039 3,926 (1,799) 25,202
Net income - - 1,731 - 1,731
Exercise of stock option - 7 - - 7
Restricted stock compensation - (8) - - (8)
Deferred stock compensation - 80 - - 80
--- ------- ------ ------- -------
Balance, December 28, 1997 36 23,118 5,657 (1,799) 27,012
Net income - - 1,146 - 1,146
Exercise of stock option 1 80 - - 81
Restricted stock compensation - 3 - - 3
--- ------- ------ ------- -------
Balance, June 28, 1998 $37 $23,201 $6,803 $(1,799) $28,242
=== ======= ====== ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE> 6
BACK BAY RESTAURANT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
26 WEEKS ENDED
JUNE 28, 1998 JUNE 29, 1997
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,146 $ 514
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,039 2,039
Loss on disposal of fixed assets 43 -
Changes in operating assets and liabilities:
(Increase)/decrease in accounts receivable 87 (31)
Decrease in inventories 93 13
Increase in prepaid expenses and
other current assets (65) (306)
Increase in other assets (87) (70)
Decrease in accounts payable and
accrued expenses (818) (67)
Increase/(decrease) in income taxes payable (238) 51
Decrease in deferred rent (12) (213)
Increase in other long term liability 27 53
------- -------
Net cash provided by operating activities 2,215 1,983
------- -------
Cash flows from investing activities:
Capital expenditures (2,661) (1,382)
Proceeds from disposal of property plant & equipment 7 -
------- -------
Net cash used for investing activities (2,654) (1,382)
------- -------
Cash flows from financing activities:
Principal payments of debt _ (25)
Restricted stock compensation 3 -
Exercise of stock option 81 -
------- -------
Net cash provided by (used for) financing activities 84 (25)
------- -------
Net increase/(decrease) in cash and cash equivalents (355) 576
Cash and cash equivalents at beginning of period 1,915 1,344
------- -------
Cash and cash equivalents at end of period $ 1,560 $ 1,920
======= =======
Supplemental disclosures of cash flow information:
Interest paid $ 154 $ 344
======= =======
Income taxes paid $ 852 $ 287
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
6
<PAGE> 7
BACK BAY RESTAURANT GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE TWENTY-SIX WEEKS ENDED
JUNE 28, 1998 AND JUNE 29, 1997
NOTE 1 -- BASIS OF PRESENTATION
The preceding data is unaudited but, in the opinion
of management, includes all adjustments (consisting of normal
recurring accruals and deferrals) that management considers
necessary for a fair presentation of the financial position
and results of operations for the interim periods presented in
accordance with generally accepted accounting principles and
practices consistently applied.
The results of operations for the twenty-six weeks ended June
28, 1998 and June 29, 1997 are not necessarily indicative of
the results that may be expected for the entire year, because
the Company's business is subject to seasonal influences.
NOTE 2 -- LONG TERM DEBT
The Company has a revolving credit and term loan
agreement which was amended and restated on May 7, 1998 (as
amended and restated, the "Loan Agreement") with BankBoston,
N.A. (the "Bank"). On December 28, 1997, the Company had an
outstanding balance of $4,000,000 under the Loan Agreement.
Under the Loan Agreement, the Company may borrow up to
$20,000,000 on a three year revolver that converts to a four
year term note. The pricing of the loan is on a sliding scale
based on a ratio of senior debt to EBITDA. The Company's
obligation under the Loan Agreement is collateralized by
certain property, plant and equipment and intangible assets.
The Loan Agreement contains restrictions relating to future
indebtedness, contingent liabilities, encumbrances, the
merger, acquisition or sale of assets, additional stock
issuance, equity distributions, cash dividends, and
redemptions, capital expenditures, ERISA and transactions with
affiliates. The Loan Agreement also requires the maintenance
of certain financial ratios and covenants, of which the most
restrictive covenant is the total debt service coverage. Under
this arrangement, the Company and its subsidiaries are
required, for each period of four consecutive fiscal quarters,
commencing with the period ending March 29, 1998, to maintain
a ratio of consolidated cash available to pay fixed charges of
not less than 1.50 to 1.
NOTE 3 -- INCOME TAXES
The income tax at March 29, 1998 includes a state tax refund
of approximately $157,000 from the Commonwealth of
Massachusetts for amended tax returns that were filed for 1994
and 1995 as a result of a change in the way the Commonwealth
of Massachusetts treats the taxation of investments in
subsidiaries.
7
<PAGE> 8
NOTE 4 -- NEWLY ISSUED ACCOUNTING STANDARD
In June 1997 the FASB issued Statement No. 131, "Disclosures
about Segments of an Enterprise and Related Information,"
which established standards for the reporting of information
about operating segments in annual financial statements by
public enterprises and requires that those enterprises report
selected information about operating segments in interim
financial reports issued to shareholders. It also establishes
standards for related disclosures about products and services,
geographic areas and major customers. This Statement requires
that a public business enterprise report financial and
descriptive information about its reportable operating
segments, which are components of an enterprise for which
separate financial information is available and is evaluated
regularly by the chief operating decision maker in deciding
how to allocate resources and in assessing performance. This
Statement is effective for financial statements for periods
beginning after December 15, 1997. Management is evaluating
this Statement to determine what information will be required
to be disclosed.
In April 1998, AcSec issued Statement of Position No. 98-5
(SOP 98-5) which requires start-up activities to be expensed
instead of capitalized. The Statement is effective for
financial statements for periods beginning after December 15,
1998. Initial application of the SOP should be as of the
beginning of the fiscal year in which the SOP is first
adopted. Management does not believe the implementation of
this Statement will have any significant effect on the
Company's financial statements.
As of the beginning of fiscal 1998, management adopted
Statement of Position No. 98-1 (SOP 98-1) which requires
certain costs incurred in developing or obtaining internal-use
computer software to be capitalized. The SOP is effective for
fiscal years beginning after December 15, 1998. However,
earlier application is encouraged in fiscal years for which
financial statements have not been issued. The Company has
made the early adoption election and has capitalized
approximately $31,000 as of June 28, 1998.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THIRTEEN WEEKS ENDED JUNE 28, 1998 COMPARED TO THIRTEEN WEEKS ENDED JUNE 29,
1997
The following table sets forth the percentage of net sales represented by
certain items included in the Company's income statements for the periods
indicated:
13 WEEKS ENDED
JUNE 28, 1998 JUNE 29, 1997
------------- -------------
Sales 100.0% 100.0%
Costs and expenses:
Cost of sales 27.4 27.7
Payroll and related costs 30.9 31.4
Operating expenses 23.2 22.5
Depreciation and amortization 4.0 4.3
Total restaurant operating expenses 85.5 85.9
Income from restaurant operations 14.5 14.1
General and administrative expenses 9.1 9.4
Operating income 5.4 4.7
Interest expense net 0.3 0.7
Income before income taxes 5.1 4.0
Income taxes 1.9 1.5
Net income 3.2% 2.5%
Number of restaurants:
Restaurants open at beginning
of period 33(1) 34
Restaurants open at end of period 33(1) 34
(1) Includes one restaurant that is currently being renovated and expected to
re-open in the third quarter of 1998.
9
<PAGE> 10
SALES
Sales increased by $464,000, or 1.9%, to $24,586,000 in the thirteen week
period ended June 28, 1998, from $24,122,000 in the same period in 1997. Same
store sales increased $1,354,000, or 6.2%, in the thirteen week period ended
June 28, 1998, compared to the same period in 1997.
The Company closed one location in June, 1997 and closed an additional
location during the first quarter of 1998. The Company is in the process of
renovating another location which is expected to re-open in the third quarter of
1998. The lost revenues from these locations in the second quarter of 1998 were
partially offset by one new location which opened in May, 1997.
The Company operated 33 restaurants at June 28, 1998, as compared to 34
restaurants at June 29, 1997. Total restaurant customer count for comparable
stores for the thirteen weeks ended June 28, 1998 increased 2.3% to 1,260,000
from 1,232,000 in the comparable period in 1997.
COST OF SALES
Cost of sales as a percentage of sales decreased to 27.4% in the thirteen
week period ended June 28, 1998, from 27.7% in the same period in 1997. This
decrease was attributable to a 0.1% decrease in food cost as a percentage of
food revenue (29.4% in the 1998 period versus 29.5% in the 1997 period), and a
0.4% decrease in beverage cost as a percentage of beverage revenue (22.4% in the
1998 period versus 22.8% in the 1997 period). The beverage cost decreases were
due principally to modest sales price increases in selected beverages for
certain locations.
PAYROLL AND RELATED COSTS
Payroll and related costs as a percentage of sales decreased to 30.9% in
the thirteen weeks ended June 28, 1998, from 31.4% in the same period in 1997.
The decrease in payroll and related costs as a percentage of sales is primarily
attributable to the Company having increased sales from same stores during the
thirteen weeks ended June 28, 1998 as compared to the same period in 1997, as
well as the Company closing two underperforming restaurants.
OPERATING EXPENSES
Operating expenses as a percentage of sales increased to 23.2% in the
thirteen weeks ended June 28, 1998, from 22.5% in the same period in 1997.
Operating expenses increased by $275,000 in the thirteen weeks ended June 28,
1998 to $5,705,000 from $5,430,000 in the same period in 1997. The increase in
operating expenses both in dollars and as a percentage of sales is primarily
attributable to increases in occupancy costs and other various operating
expenses.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization decreased by $53,000 in the thirteen weeks
ended June 28, 1998 to $989,000 from $1,042,000 in the same period in 1997.
Included in the 1998 and 1997 amortization is the amortization of pre-opening
costs of new restaurants opened during the prior 12-month period. The Company
amortizes such pre-opening costs over the 12-month period immediately following
an opening or conversion. The decrease in depreciation and amortization expense
is primarily attributable to the decrease in pre-opening amortization.
10
<PAGE> 11
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses decreased by $36,000 in the thirteen
weeks ended June 28, 1998 to $2,238,000 from $2,274,000 in the same period in
1997. The decrease is primarily attributable to decreases in advertising and
insurance expense which were partially offset by increases in salaries and wages
and legal expenses.
INTEREST EXPENSE
Interest expense decreased by $99,000 in the thirteen weeks ended June
28, 1998 to $67,000 from $166,000 in the same period in 1997. This decrease was
attributable to decreased borrowings as well as a decrease in the Company's
effective borrowing rate.
INCOME TAXES
Income taxes increased by $110,000 in the thirteen weeks ended June 28,
1998 to $464,000 from $354,000 in the same period in 1997. The increased expense
in the thirteen weeks ended June 28, 1998 reflects the pre-tax income of
$1,254,000 as compared to $956,000 for the same period in 1997. The estimated
effective tax rate was 37% for both periods.
11
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
TWENTY-SIX WEEKS ENDED JUNE 28, 1998 COMPARED TO TWENTY-SIX WEEKS ENDED JUNE 29,
1997
The following table sets forth the percentage of net sales represented by
certain items included in the Company's income statements for the periods
indicated:
26 WEEKS ENDED
JUNE 28, 1998 JUNE 29, 1997
------------- -------------
Sales 100% 100%
Costs and expenses:
Cost of sales 27.4 27.8
Payroll and related costs 31.7 32.5
Operating expenses 23.7 23.3
Depreciation and amortization 4.2 4.3
Total restaurant operating expenses 87.0 87.9
Income from restaurant operations 13.0 12.1
General and administrative expenses 9.4 9.6
Operating income 3.6 2.5
Interest expense net 0.3 0.7
Income before income taxes 3.3 1.8
Income taxes 0.9 0.7
Net income 2.4% 1.1%
Number of restaurants:
Restaurants open at beginning of period 34 34
Restaurants open at end of period 33(1) 34
(1) Includes one restaurant that is currently being renovated and expected to
re-open sometime in the third quarter of 1998.
12
<PAGE> 13
SALES
Sales increased by $1,694,000 or 3.7%, to $47,712,000 in the twenty-six
week period ended June 28, 1998, from $46,018,000 in the same period in 1997.
Same store sales increased $2,588,000, or 6.1%, in the twenty-six week period
ended June 28, 1998, compared to the same period in 1997.
The Company closed one location in June, 1997 and closed an additional
location during the first quarter of 1998. The Company is in the process of
renovating another location which is expected to re-open in the third quarter of
1998. The lost revenues from these locations in the first half of 1998 were
partially offset by one new location which opened in May, 1997.
The Company operated 33 restaurants at June 28, 1998, as compared to 34
restaurants at June 29, 1997. Total restaurant customer count for comparable
stores for the twenty-six weeks ended June 28, 1998 increased 2.2% to 2,441,000
from 2,388,000 in the comparable period in 1997.
COST OF SALES
Cost of sales as a percentage of sales decreased to 27.4% in the
twenty-six week period ended June 28, 1998, from 27.8% in the same period in
1997. This decrease was attributable to a 0.2% decrease in food cost as a
percentage of food revenue (29.3% in the 1998 period versus 29.5% in the 1997
period), and a 0.6% decrease in beverage cost as a percentage of beverage
revenue (22.5% in the 1998 period versus 23.1% in the 1997 period). The beverage
cost decreases were due principally to modest sales price increases in selected
beverages for certain locations.
PAYROLL AND RELATED COSTS
Payroll and related costs as a percentage of sales decreased to 31.7% in
the twenty-six weeks ended June 28, 1998, from 32.5% in the same period in 1997.
The decrease in payroll and related costs as a percentage of sales is primarily
attributable to the Company having increased sales from same stores during the
twenty-six weeks ended June 28, 1998 as compared to the same period in 1997.
OPERATING EXPENSES
Operating expenses as a percentage of sales increased to 23.7% in the
twenty-six weeks ended June 28, 1998, from 23.3% in the same period in 1997.
Operating expenses increased by $607,000 in the twenty-six weeks ended June 28,
1998 to $11,319,000 from $10,712,000 in the same period in 1997. The increase in
operating expenses both in dollars and as a percentage of sales is primarily
attributable to increased occupancy costs and increases in other various
operating expenses.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization was $1,994,000 for both the twenty-six
weeks ended June 28, 1998 and June 29, 1997. Included in the 1998 and 1997
amortization is the amortization of pre-opening costs of new restaurants opened
during the prior 12-month period. The Company amortizes such pre-opening costs
over the 12-month period immediately following an opening or conversion.
13
<PAGE> 14
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses increased by $21,000 in the
twenty-six weeks ended June 28, 1998 to $4,461,000 from $4,440,000 in the same
period in 1997. The increase is primarily attributable to an increase in
salaries and wages, which was partially offset by decreases in advertising and
insurance expenses.
INTEREST EXPENSE
Interest expense decreased by $185,000 in the twenty-six weeks ended June
28, 1998 to $146,000 from $331,000 in the same period in 1997. This decrease was
attributable to decreased borrowings as well as a decrease in the Company's
effective borrowing rate.
INCOME TAXES
Income taxes increased by $122,000 in the twenty-six weeks ended June 28,
1998 to $424,000 from $302,000 in the same period in 1997. The increased expense
in the twenty six weeks ended June 28, 1998 reflects the pre-tax income of
$1,716,000 as compared to $1,147,000 for the same period in 1997. The income tax
expense at June 28, 1998 includes a state tax refund of approximately $157,000
from the Commonwealth of Massachusetts for amended tax returns that were filed
for 1994 and 1995 as a result of a change in the way the Commonwealth of
Massachusetts treats the taxation of investments in subsidiaries. The estimated
effective tax rate was 37% for both periods.
LIQUIDITY AND CAPITAL RESOURCES
The Company, similar to many restaurant businesses, requires little or no
working capital because it does not have significant inventory or trade
receivables and receives several weeks of trade credit in purchasing food and
supplies. At June 28, 1998, the Company's cash position was $1,560,000 and the
Company had a net working capital deficit of $7,055,000.
The Company requires capital primarily for the development and
construction of new restaurants and the conversion of existing restaurants. In
recent years, the Company's primary sources of capital have been cash flow from
its operations, borrowings and landlord contributions to restaurant construction
costs. The Company intends to be very selective in its approval of sites for new
units and will be limiting the number of restaurant openings in 1998. The
Company expects to fund any capital expenditures for 1998 from internally
generated cash. The Company believes that cash flow from operations and credit
available under the revolving loan agreement will be sufficient to meet future
needs.
On May 7, 1998, the Company executed an Amended and Restated Loan
Agreement with BankBoston, NA. Under the Amended Loan Agreement, the Company can
borrow up to $20,000,000 on a three year revolver that thereafter converts to a
four year term note.
14
<PAGE> 15
YEAR 2000 DISCLOSURE
Certain of the Company's internal computer systems are not Year 2000
ready (i.e., such systems use only two digits to represent the year in date data
fields and, consequently, may not accurately distinguish between the 20th and
21st centuries or may not function properly at the turn of the century). The
Company has been taking actions intended to either correct such systems or
replace them with Year 2000 ready systems. The Company expects to implement
successfully the systems and programming changes necessary to address Year 2000
issues and does not believe that the cost of such actions will have a material
effect on the Company's results of operations or financial condition.
CAUTIONARY STATEMENT
The foregoing Form 10Q contains various "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1993, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking
statements represent the Company's expectation or belief concerning future
events, including the following: any statements regarding future sales and gross
profit percentages, any statements regarding the continuation of historical
trends, and any statements regarding the sufficiency of the Company's cash
balances and cash generated from operating and financing activities for the
Company's future liquidity and capital resource needs. Without limiting the
forgoing, the words "believes," "anticipates," "plans," "expects," and similar
expressions are intended to identify forward-looking statements. The Company
cautions that these statements are further qualified by important economic and
competitive factors that could cause actual results to differ materially from
those in the forward-looking statements, including, without limitation, risks of
the restaurant industry, including a highly competitive industry with many
well-established competitors with greater financial and other resources than the
Company, and the impact of changes in consumer tastes, local, regional and
national economic conditions, demographic trends, traffic patterns, employee
availability and cost increases. In addition, the Company's ability to expand is
dependant upon various factors, such as the availability of attractive sites for
new restaurants, the ability to negotiate suitable lease terms, the ability to
generate or borrow funds to develop new restaurants and obtain various
government permits and licenses and the recruitment and training of skilled
management and restaurant employees. Accordingly, such forward-looking
statements do not purport to be predictions of future events or circumstances
and may not be realized.
15
<PAGE> 16
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Exhibit 10 Amended and Restated Revolving
Credit and Term Loan Agreement
between BankBoston, N.A. and Back
Bay Restaurant Group,
Inc. (and its subsidiaries) dates
as of May 7, 1998
Exhibit 27 Financial Data Schedule
(b) REPORTS ON FORM 8-K
None
16
<PAGE> 17
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.
BACK BAY RESTAURANT GROUP, INC.
August 3, 1998 /s/ Francis P. Bissaillon
------------------------------------
Francis P. Bissaillon
Executive Vice President and Chief
Financial Officer
August 3, 1998 /s/ Robert J. Ciampa
------------------------------------
Robert J. Ciampa
Vice President, Chief Accounting
Officer and Treasurer
17
<PAGE> 18
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
10 Amended and Restated Revolving Credit and Term Loan Agreement
between BankBoston, N.A. and Back Bay Restaurant Group, Inc.
(and its subsidiaries) dates as of May 7, 1998
27 Financial Data Schedule
18
<PAGE> 1
EXHIBIT 10
================================================================================
AMENDED AND RESTATED REVOLVING CREDIT
AND TERM LOAN AGREEMENT
BACK BAY RESTAURANT GROUP, INC.
PHEASANT MALL RESTAURANT GROUP, INC.
DANVERS RESTAURANT GROUP, INC.
THE WESTWOOD COPLEY RESTAURANT GROUP, INC.
THE WESTWOOD WOBURN RESTAURANT GROUP, INC.
THE WESTWOOD HARTFORD RESTAURANT GROUP, INC.
THE WESTWOOD TRUMBULL RESTAURANT GROUP, INC.
THE WATERFORD RESTAURANT GROUP, INC.
WESTFOUR, INC.
THE WESTWOOD DEDHAM RESTAURANT, INC.
PRA, INC.
THE WESTWOOD NEWTON RESTAURANT, INC.
THE 199, INC.
EASTERN PURCHASING & DESIGN, INC.
BORASCHI CAFE, INC.
THE WESTWOOD WHITE PLAINS RESTAURANT, INC.
THE WESTWOOD SHORT HILLS RESTAURANT, INC.
THE WESTWOOD BOYLSTON RESTAURANT, INC.
BBRG MASSACHUSETTS RESTAURANTS, INC.
BBRG RHODE ISLAND RESTAURANTS, INC.
BBRG WASHINGTON RESTAURANTS, INC.
BACK BAY MEDIA, INC.
BBRG OPERATING, INC.
BBRG NEW JERSEY RESTAURANTS, INC.
LINPRO GREENTREE, INC.
BBRG ROTISSERIE, INC.
BBRG PARAMUS RESTAURANT, INC.
BBRG WATERFRONT, INC.
BBRG RYE RESTAURANT, INC.
Dated as of May 7, 1998
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BANKBOSTON, N.A.
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TABLE OF CONTENTS
SECTION I ...................................................................1
1.1. General......................................................1
1.2. Definitions..................................................2
1.3. Accounting Terms............................................10
SECTION II ..................................................................11
2.1. The Loans ..................................................11
2.2. Notice and Manner of Borrowing of Loans 12
2.3. Fees to the Bank ...........................................12
2.4. Reduction of Commitment Amount .............................13
2.5. The Note ...................................................13
2.6. Letters of Credit...........................................14
2.7. Application of Proceeds.....................................14
2.8. Duration of Interest Periods................................15
2.9. Interest Rates and Payments of Interest ....................15
2.10. Changed Circumstances ......................................15
2.11. Capital Requirements........................................16
2.12. Payments and Prepayments of the Loans ......................16
2.13. Method of Payment...........................................16
2.14. Additional Payments ........................................16
2.15. Payments Not at End of Interest Period .....................17
2.16. Computation of Interest and Fees ...........................17
2.17. Designation of Back Bay as Agent for the Companies .........17
SECTION III..................................................................18
3.1. Conditions Precedent to Initial Loan .......................18
3.2. Conditions Precedent to all Loans ..........................19
SECTION IV ..................................................................19
4.1. Organization and Qualification .............................19
4.2. Corporate Authority ........................................19
4.3. Valid Obligations ..........................................20
4.4. Consents or Approvals ......................................20
4.5. Title to Properties; Absence of Encumbrances ...............20
4.6. Financial Statements .......................................20
4.7. Changes ....................................................20
4.8. Defaults ...................................................20
4.9. Taxes ......................................................20
4.10. Litigation .................................................20
4.11. Use of Proceeds ............................................21
4.12. Subsidiaries ...............................................21
4.13. Investment Company Act .....................................21
4.14. Compliance with ERISA ......................................21
4.15. Environmental Matters ......................................21
4.16. Transactions with Affiliates ...............................22
4.17. Trademarks, Service Marks, Licenses, etc. ..................22
4.18. Compliance with Laws and Agreements ........................23
ii
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4.19 Satisfaction of Contingent Obligations ...................23
SECTION V ...................................................................23
5.1. Financial Statements and other Reporting Requirements ......23
5.2. Conduct of Business ........................................25
5.3. Maintenance and Insurance ..................................25
5.4. Taxes ......................................................25
5.5. Inspection by the Bank .....................................25
5.6. Maintenance of Books and Records ...........................26
5.7 Consolidated Net Worth .....................................26
5.8. Leverage ...................................................26
5.9. Interest Change ............................................26
5.10. Debt Service Coverage ......................................26
5.11. Infringement Claim .........................................26
5.12. Further Assurances .........................................26
SECTION VI ..................................................................27
6.1. Indebtedness ...............................................27
6.2. Contingent Liabilities .....................................37
6.3. Encumbrances ...............................................28
6.4. Merger; Acquisition; Consolidation; Sale or Lease of
Assets ....................................................29
6.5. Additional Stock Issuance ..................................29
6.6. Equity Distributions and Redemptions .......................29
6.7. Capital Expenditures. ......................................29
6.8. Investments ................................................30
6.9. ERISA ......................................................30
6.10. Transactions with Affiliates ...............................30
SECTION VII..................................................................30
7.1. Events of Default ..........................................30
7.2. Remedies ...................................................33
SECTION VIII.................................................................33
8.1. Notices ....................................................33
8.2. Expenses ...................................................35
8.3. Indemnity ..................................................35
8.4. Set-Off ....................................................36
8.5. Term of Agreement ..........................................36
8.6. No Waivers .................................................36
8.7. Governing Law ..............................................36
8.8. Amendments .................................................36
8.9. Binding Effect of Agreement ................................36
8.10. Counterparts ...............................................37
8.11. Partial Invalidity .........................................37
8.12. Captions ...................................................37
8.13. WAIVER OF JURY TRIAL .......................................37
8.14. Entire Agreement ...........................................37
iii
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Exhibits
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Exhibit A Investment Policy
Exhibit B Intentionally omitted
Exhibit C Form of Promissory Note
Exhibit D Location of Pledged Assets
Exhibit E Form of Service Mark and Trademark Security Agreement
Exhibit F Form of Confirmation of Notice of Borrowing or Conversions
Exhibit G Form of Legal Opinion
Exhibit H Form of Collateral Assignment of Trademark Licenses
Exhibit I Intentionally omitted
Exhibit J Excluded Assets
Exhibit K Intentionally omitted
Exhibit L Litigation
Exhibit M Subsidiaries/Joint Ventures
Exhibit N Transactions with Affiliates
Exhibit O Trademarks, Service Marks, Trade Names
Exhibit P Financial Statements
Exhibit Q Existing Indebtedness
Exhibit R Existing Guarantees
Exhibit S Intentionally omitted
Exhibit T Permitted Encumbrances
Exhibit U Transactions with Westwood
iv
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AMENDED AND RESTATED REVOLVING CREDIT
AND TERM LOAN AGREEMENT
Dated as of May 7, 1998
THIS AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT is
made as of May 7, 1998, by and among BACK BAY RESTAURANT GROUP, INC., a Delaware
corporation with a chief executive office at 855 Boylston Street, Boston,
Massachusetts ("BACK BAY"), PHEASANT MALL RESTAURANT GROUP, INC., a New
Hampshire corporation, DANVERS RESTAURANT GROUP, INC., a Massachusetts
corporation, THE WESTWOOD COPLEY RESTAURANT GROUP, INC., a Massachusetts
corporation, THE WESTWOOD WOBURN RESTAURANT GROUP, INC., a Massachusetts
corporation, THE WESTWOOD HARTFORD RESTAURANT GROUP, INC., a Connecticut
corporation, THE WESTWOOD TRUMBULL RESTAURANT GROUP, INC., a Connecticut
corporation, THE WATERFORD RESTAURANT GROUP, INC., a Connecticut corporation,
WESTFOUR, INC., a Florida corporation, THE WESTWOOD DEDHAM RESTAURANT, INC., a
Massachusetts corporation, PRA, INC., a Massachusetts corporation, THE WESTWOOD
NEWTON RESTAURANT, INC., a Massachusetts corporation, THE 199, INC., a
Massachusetts corporation, EASTERN PURCHASING & DESIGN, INC., a Massachusetts
corporation, BORASCHI CAFE, INC., a Massachusetts corporation, THE WESTWOOD
WHITE PLAINS RESTAURANT, INC., a New York corporation, THE WESTWOOD SHORT HILLS
RESTAURANT, INC., a New Jersey corporation, THE WESTWOOD BOYLSTON RESTAURANT,
INC., a Massachusetts corporation, BBRG MASSACHUSETTS RESTAURANTS, INC., a
Massachusetts corporation, BBRG RHODE ISLAND RESTAURANTS, INC., a Rhode Island
corporation, BBRG WASHINGTON RESTAURANTS, INC., a Washington, D.C. corporation,
BACK BAY MEDIA, INC., a Massachusetts corporation, BBRG OPERATING, INC., a
Delaware corporation, BBRG NEW JERSEY RESTAURANTS, INC., a Delaware corporation,
LINPRO GREENTREE, INC., a New Jersey corporation, BBRG ROTISSERIE, INC., a
Massachusetts corporation, BBRG PARAMUS RESTAURANT, INC., a New Jersey
corporation, BBRG WATERFRONT, INC., a Massachusetts corporation, and BBRG RYE
RESTAURANT, INC., a New York corporation (each (including Back Bay), a "Company"
and collectively, the "Companies") and BANKBOSTON, N.A., (f/k/a the First
National Bank of Boston), a national banking association having its head office
at 100 Federal Street, Boston, Massachusetts (together with its successors and
assigns, the "Bank").
SECTION I
1.1. GENERAL. Effective as of the date hereof (the "Restatement Date"), this
Agreement amends and restates in its entirety the Revolving Credit and Term Loan
Agreement dated as of August 7, 1993, as amended by a First Amendment to
Revolving Credit and Term Loan Agreement dated as of March 18, 1994, a Second
Amendment to revolving Credit and Term Loan Agreement dated as of June 7, 1994,
a Third Amendment to Revolving Credit and Term Loan Agreement dated as of
February 24, 1995, a Fourth Amendment to Revolving Credit and Term Loan
Agreement dated as of June 7, 1995, a Fifth Amendment to Revolving Credit and
Term Loan Agreement dated as of March 5, 1996, a modification letter dated
September 5, 1996, and a Sixth Amendment to Revolving Credit and Term Loan
Agreement dated as of April 30, 1997, and as in effect immediately prior to the
amendment and restatement thereof effected hereby (collectively, the "Existing
Credit Agreement"). Effective as of the Restatement Date, the Revolving Loans
outstanding under the Existing Credit Agreement, as evidenced by that certain
Promissory Note dated April 30, 1997, shall be deemed to be the Revolving
<PAGE> 6
Loans under Section 2.1(a) hereof and shall be evidenced by the Note (as defined
herein). Amounts in respect of interest, fees and other amounts payable to or
for the account of the Bank shall be calculated in accordance with the
provisions of (i) the Existing Credit Agreement with respect to any period (or
portion of any period) ending prior to the Restatement Date, and (ii) this
Agreement as in effect on the Restatement Date after giving effect to the
amendment and restatement effected hereby and as from time to time thereafter in
effect with respect to any period (or portion of any period) commencing on or
after the Restatement Date.
1.2. DEFINITIONS
All capitalized terms used in this Agreement or in the Note or in any
certificate, report or other document made or delivered pursuant to this
Agreement (unless otherwise defined therein) shall have the meanings assigned to
them below:
AFFILIATE. (a) Any director or executive officer of any Company, (b) any
Person that controls, is controlled by or is under common control with any
Company and (c) any Person which owns greater than ten percent (10%) of the
capital stock of any Company.
AGREEMENT. This Agreement, as the same may be supplemented or amended
from time to time.
ALIGNED DIRECTORS. For any period for which such status shall be
determined, (A) individuals who at the beginning of such period constituted the
Board of Directors of Back Bay, together with (B) any newly-elected directors
whose election by the Board of Directors was approved by a vote of 66 2/3% of
the directors then still in office who are either directors at the beginning of
such period or whose nomination for election was previously so approved.
ALTERNATE BASE RATE. The greater of (i) the rate of interest announced
from time to time by the Bank at its head office at 100 Federal Street, Boston,
Massachusetts as its Base Rate, and (ii) the Federal Funds Effective Rate plus
one-half of one percent (0.50%) per annum (rounded upwards, if necessary, to the
next 1/16th of 1%).
ALTERNATE BASE RATE LOAN. Any portion of the Loans for which interest is
determined with reference to the Alternate Base Rate.
APPLICABLE MARGIN.
(i) During any fiscal quarter of the Companies ending on or
after March 31, 1998, for which the Leverage Ratio is less than
or equal to 1.25 to 1.0, 0% for any Alternate Base Rate Loan and
1.0% for any LIBOR Loan;
(ii) During any fiscal quarter of the Companies ending on or
after March 31, 1998, for which the Leverage Ratio is greater
than 1.25 to 1.0 and less than or equal to 2.00 to 1.0, 0% for
any Alternate Base Rate Loan and 1.50% for any LIBOR Loan;
(iii) During any fiscal quarter of the Companies ending on or
after March 31, 1998, for which the Leverage Ratio is greater
than 2.00 to 1.0 and less than or equal to 3.00 to 1.0, 0.25%
for any Alternate Base Rate Loan and 2.00% for any LIBOR Loan;
and
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<PAGE> 7
(iv) During any fiscal quarter of the Companies ending on or
after March 31, 1998, for which the Leverage Ratio is greater
than 3.00 to 1.0 and less than or equal to 4.00 to 1.0, 0.50%
for any Alternate Base Rate Loan and 2.50% for any LIBOR Loan.
APPLICABLE RATE.
(i) With respect to each portion of the Loans subject to a LIBOR
Pricing Option, the sum of the Applicable Margin plus the LIBOR
Rate with respect to such LIBOR Pricing Option; and
(ii) With respect to each other portion of the Loans, the sum of
the Applicable Margin plus the Alternate Base Rate.
AQUISITION CRITERIA. With respect to an acquisition permitted under
Section 6.4, (i) such acquisition is not a tender offer under Section 14 of the
Securities Exchange Act of 1934 which has been or is being opposed by management
of the acquisition target, (ii) personnel of the Bank have been given the
opportunity to tour the facilities, examine the operations and meet with the
management of the acquisition target prior to the consummation of the
acquisition, and (iii) the acquisition target satisfies such other criteria as
may be reasonably determined by the Bank from time to time.
BANK. See Preamble.
BOARD OF DIRECTORS. The Board of Directors of Back Bay or any committee
of the Board of Directors of Back Bay authorized with respect to any particular
matter to exercise the power of the Board of Directors of Back Bay.
BUSINESS DAY. (i) For all purposes other than as covered by clause (ii)
below, any day other than a Saturday, Sunday or legal holiday on which banks in
Boston, Massachusetts are open for the conduct of a substantial part of their
commercial banking business, and (ii) with respect to all notices and
determinations in connection with, and payments of principal and interest on,
Eurodollar Loans, any day that is a Business Day described in clause (i) and
that is also a day for trading by and between banks in U.S. Dollar deposits in
the Interbank Eurodollar market.
CAPITAL STOCK. With respect to any Person, any and all shares,
interests, participations, rights in or other equivalents (however designated)
of corporate stock of such Person, including each class of common stock and
preferred stock and any rights (other than debt securities convertible into
capital stock), warrants or options exchangeable for or convertible into such
capital stock.
CASH TAXES. With respect to any period for which the amount thereof
shall be determined, the amount of federal, state or local taxes actually paid
during such period.
CHANGE OF CONTROL. The occurrence of one or more of the following
events: (i) any Person or group of related Persons for purposes of Section 13(d)
or 14(d) of the Exchange Act (a "Group"), together with any Affiliates thereof
(other than a Permitted Stockholder) acquires in one or more transactions
"beneficial ownership" (within the meaning of Section 13(d) of the Exchange Act)
of any Capital Stock of Back Bay, such that as a result of such acquisition,
such Person or Group either (A) acquires beneficial ownership, directly or
indirectly, of more than 35% of the sum of all issued and outstanding shares of
the Voting Stock and Unissued Shares of Back Bay, or (B) otherwise has the
ability to elect, directly or indirectly, over a period of 24 months or less, a
majority of the members of
3
<PAGE> 8
Back Bay's Board of Directors; or (ii) during any consecutive two-year period,
Aligned Directors, cease for any reason to constitute a majority of the Board of
Directors then in office.
CODE. The Internal Revenue Code of 1986 and the rules and regulations
thereunder, collectively, as the same may from time to time be supplemented or
amended and remain in effect.
COMMITMENT AMOUNT. $20,000,000 or any lesser amount, including zero,
resulting from a reduction or termination of such amount in accordance with
Section 2.4 or Section 7.2.
COMPANIES. See Preamble.
COMPANY. See Preamble.
CONSOLIDATED EBITDA. For any period for which the amount thereof shall
be determined, the sum of (i) consolidated net earnings of Back Bay and its
Subsidiaries before income taxes paid or accrued for such period, excluding
extraordinary items or one-time accounting charges of a non-cash nature, PLUS
(ii) consolidated interest expense (including imputed interest on capital lease
obligations) and amortized debt discount for such period ("Consolidated Interest
Expense"), PLUS (iii) consolidated depreciation, amortization and other non-cash
expenses of Back Bay and its Subsidiaries for such period.
CONSOLIDATED INTEREST EXPENSE. See Definition of Consolidated EBITDA.
CONSOLIDATED NET INCOME. For any period for which the amount thereof
shall be determined, the sum of consolidated net income of Back Bay and its
Subsidiaries for such period as reflected on the consolidated statement of
operations thereof, prepared in accordance with generally accepted accounting
principles consistently applied ("GAAP").
CONSOLIDATED NET WORTH. At any date as of which the amount thereof shall
be determined, the consolidated total stockholders' equity of Back Bay and its
Subsidiaries, as reflected on the consolidated balance sheet of Back Bay and its
Subsidiaries as of such date, prepared in accordance with GAAP.
CONTROLLED GROUP. All trades or businesses (whether or not incorporated)
under common control that, together with each Company, are treated as a single
employer under Section 414(b) or 414(c) of the Code or Section 4001 of ERISA.
CURRENT TERM INDEBTEDNESS. For any period for which the amount thereof
shall be determined, current maturities of principal of all obligations
described in clauses (i) and (ii) of the definition of Indebtedness herein below
of Back Bay and its Subsidiaries outstanding at the end of such period, other
than the Revolving Loans.
DEFAULT. An Event of Default or event or condition that, but for the
requirement that time elapse or notice be given, or both, would constitute an
Event of Default.
ENCUMBRANCES. See Section 6.3.
4
<PAGE> 9
ERISA. The Employee Retirement Income Security Act of 1974 and the rules
and regulations thereunder, collectively, as the same may from time to time be
supplemented or amended and remain in effect.
ENVIRONMENTAL LAWS. Any and all applicable foreign, federal, state and
local environmental, health or safety statutes, laws, regulations, rules,
ordinances, policies and rules or common law (whether now existing or hereafter
enacted or promulgated), of all governmental agencies, bureaus or departments
which may now or hereafter have jurisdiction over the Companies and all
applicable judicial and administrative and regulatory decrees, judgments and
orders, including common law rulings and determinations, relating to injury to,
or the protection of, real or personal property or human health or the
environment, including, without limitation, all requirements pertaining to
reporting, licensing, permitting, investigation, remediation and removal of
emissions, discharges, releases or threatened releases of Hazardous Materials,
chemical substances, pollutants or contaminants whether solid, liquid or gaseous
in nature, into the environment or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of such
Hazardous Materials, chemical substances, pollutants or contaminants.
EVENT OF DEFAULT. Any event described in Section 7.1.
EXCHANGE ACT. The Securities and Exchange Act of 1934 and the rules and
regulations promulgated thereunder, each as amended from time to time.
FEDERAL FUNDS EFFECTIVE RATE. For any day, a fluctuating interest rate
per annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as determined for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Treasury of the Bank, or, if
such rate is not so determined for any day that is a Business Day, the average
of the quotations for such day on such transactions received by the Bank from
three Federal funds brokers of recognized standing selected by the Bank. Each
determination by the Bank of the Federal Funds Effective Rate shall, in the
absence of manifest error, be conclusive.
FOUR QUARTER ROLLING CONSOLIDATED EBITDA. For any period, Consolidated
EBITDA for the four (4) consecutive fiscal quarters most recently completed.
GAAP. See definition of Consolidated Net Income.
GUARANTEES. As applied to each Company, all guarantees, endorsements or
other contingent or surety obligations with respect to obligations of others
(other than to other Companies) whether or not reflected on the consolidated
balance sheet of Back Bay and its Subsidiaries, including any obligation to
furnish funds, directly or indirectly (whether by virtue of partnership
arrangements, by agreement to keep-well or otherwise), through the purchase of
goods, supplies or services, or by way of stock purchase, capital contribution,
advance or loan, or to enter into a contract for any of the foregoing, for the
purpose of payment of obligations of any other person or entity.
HAZARDOUS MATERIAL. Any substance (i) the presence of which requires or
may hereafter require notification, investigation or remediation under any
Environmental Law; (ii) which is or becomes defined as a "hazardous waste",
"hazardous material" or "hazardous substance" or "controlled industrial waste"
or "pollutant" or "contaminant" under any present or future Environmental Law or
amendments thereto including, without limitation, the Comprehensive
Environmental Response,
5
<PAGE> 10
Compensation and Liability Act (42 U.S.C. Section 9601 ET SEQ.) and any
applicable local statutes and the regulations promulgated thereunder; (iii)
which is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous and is or becomes regulated by
any governmental authority, agency, department, commission, board, agency or
instrumentality of any foreign country, the United States, any state of the
United States, or any political subdivision thereof to the extent any of the
foregoing has or had jurisdiction over any Company; or (iv) without limitation,
which contains gasoline, diesel fuel or other petroleum products, asbestos or
polychlorinated biphenyls ("PCB's").
INDEBTEDNESS. As applied to the Companies, (i) all obligations for
borrowed money or other extensions of credit whether or not secured or
unsecured, absolute or contingent, including, without limitation, unmatured
reimbursement obligations with respect to letters of credit or guarantees issued
for the account of or on behalf of any Company and all obligations representing
the deferred purchase price of property, other than accounts payable arising in
the ordinary course of business, (ii) all obligations evidenced by bonds, notes,
debentures or other similar instruments, (iii) all obligations secured by any
mortgage, pledge, security interest or other lien on property owned or acquired
by any Company whether or not the obligations secured thereby shall have been
assumed, (iv) that portion of all obligations arising under capital leases that
is required to be capitalized on the consolidated balance sheet of Back Bay and
its Subsidiaries (v) all Guarantees, PROVIDED, however, obligations described in
(i) through (v) above between and among the Companies shall not constitute
Indebtedness hereunder.
INTEREST PERIOD.
(1) With respect to each LIBOR Loan, the period commencing on the
date of the making or continuation of or conversion to such
LIBOR Loan and ending one or three months thereafter, as Back
Bay may elect in the applicable Notice of Borrowing or
Conversion; and
(2) with respect to each Alternate Base Rate Loan, the period
commencing on the date of the making or continuation of or
conversion to such Alternate Base Rate Loan and ending on the
last day of the calendar month in which such date falls, or if
such Alternate Base Rate Loan is made or continued or converted
on the last day of any calendar month, ending on the last day of
the immediately following calendar month provided that:
(i) any Interest Period (other than an Interest
Period determined pursuant to clause (iii) below) that would
otherwise end on a day that is not a Business Day shall be
extended to the next succeeding Business Day unless, in the case
of LIBOR Loans, such Business Day falls in the next calendar
month, in which case such Interest Period shall end on the
immediately preceding Business Day;
(ii) any Interest Period applicable to a LIBOR Loan
that begins on the last Business Day of a calendar month (or on
a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall,
subject to clause (iii) below, end on the last Business Day of a
calendar month;
(iii) any Interest Period during the Revolving Credit
Period that would otherwise end after the Revolving Credit
Termination Date shall end on the Revolving Credit Termination
Date and any Interest Period related to the Term Loan that would
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<PAGE> 11
otherwise end after the Term Loan Maturity Date shall end on the
Term Loan Maturity Date;
(iv) notwithstanding clause (iii) above, no Interest
Period applicable to a LIBOR Loan shall have a duration of less
than one month, and if any Interest Period applicable to such
Loans would be for a shorter period, such Interest Period shall
not be available hereunder.
INVESTMENT. As applied to the Companies, the purchase or acquisition of
any share of capital stock, partnership interest, evidence of indebtedness or
other equity security of any other person or entity, any loan, advance or
extension of credit to, or contribution to the capital of, any other person or
entity, any real estate held for sale or investment, any commodities futures
contracts held other than in connection with bona fide hedging transactions, any
other investment in any other person or entity, and the making of any commitment
or acquisition of any option to make an Investment.
INVESTMENT POLICY. The investment policy attached hereto as EXHIBIT A.
JOINT VENTURE INVESTMENTS. An investment by Back Bay or any of its
Subsidiaries in joint ventures solely for the acquisition and operation of
restaurants.
LEASEHOLD MORTGAGES. The Leasehold Mortgages from BBRG Operating, Inc.
and BBRG Massachusetts Restaurants, Inc. executed and delivered to the Bank on
January 25, 1996, by which such Subsidiaries have assigned to the Bank as
security for the Obligations all of their right, title and interest as tenant in
the leases by which such Subsidiaries operate certain restaurants in Concord,
Massachusetts and Wellesley, Massachusetts.
LEGAL REQUIREMENT. Any present or future requirement imposed upon the
Bank or Back Bay and any of its Subsidiaries by any law, statute, rule,
regulation, directive, order, decree, or guideline (or any interpretation
thereof by court or administrative bodies) or by any board, administrative
agency, central bank or monetary authority. Any such law, regulation, directive,
decree, order, guideline or interpretation imposed on the Bank now having the
force of law shall be deemed to be a Legal Requirement for purposes of this
Agreement if the Bank reasonably believes that compliance therewith is customary
commercial practice of similarly situated lending institutions generally.
LETTERS OF CREDIT. See Section 2.6.
LEVERAGE RATIO. The ratio of Total Funded Indebtedness at the end of
each fiscal quarter of the Companies to the Four Quarter Rolling Consolidated
EBITDA thereof at the same date.
LIBOR BASE RATE. With respect to each day during each Interest Period
pertaining to any LIBOR Loans, the interest rate per annum (rounded upward, if
necessary, to the nearest 1/16th of 1%) at which the Bank is offered deposits in
U.S. Dollars at or about 10 a.m. (Eastern Time), two London business days prior
to the beginning of such Interest Period in the London interbank market for
delivery on the first day of such Interest Period, for the number of days
compromised therein and in an amount comparable to the amount of its portion of
the LIBOR Loans to be outstanding during such Interest Period. Each
determination of the LIBOR Rate shall, in the absence of manifest error, be
conclusive.
LIBOR LOANS. Loans bearing interest at a rate determined on the basis of
the LIBOR Rate.
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<PAGE> 12
LIBOR PRICING OPTION. The option to have the interest on any portion of
the Loans computed on the basis of a LIBOR Rate.
LIBOR RATE. With respect to each day during each Interest Period
pertaining to a LIBOR Loan, a rate per annum determined for such day in
accordance with the following formula (rounded upward, if necessary, to the
nearest 1/16th of 1%):
LIBOR BASE RATE
---------------------------------
1.00 - LIBOR Reserve Requirements
provided, however, that if at any time during such Interest Period the LIBOR
Reserve Requirements applicable to any outstanding LIBOR Pricing Option changes,
the LIBOR Rate for such Interest Period shall automatically be adjusted to
reflect such change, effective as of the date of such change to the extent
required.
LIBOR RESERVE REQUIREMENTS. For any date as applied to a LIBOR Loan, the
aggregate (without duplication) of the rates (expressed as a decimal fraction)
of reserve requirements in effect on such day (including without limitation
basic, supplemental, marginal and emergency reserves) under any regulations of
the Board of Governors of the Federal Reserve System or other Governmental
Authority having jurisdiction with respect thereto) prescribed for eurocurrency
funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of
such Board) maintained by a member bank of such System.
LOAN. A loan made to the Companies by the Bank pursuant to Section II of
this Agreement, and "Loans" means all of such loans, collectively.
NON-EXPANSION CAPITAL EXPENDITURES. For any period for which the amount
thereof shall be determined, amounts added or required to be added to the fixed
assets account on the consolidated balance sheet of the Companies in respect of
capitalized repairs and maintenance; provided however, that such amounts shall
not exceed $2,000,000 in the aggregate in any fiscal year.
NOTE. A promissory note of the Companies, jointly and severally,
substantially in the form of EXHIBIT C hereto, evidencing the obligation of each
Company to the Bank to repay the Loans.
NOTICE OF BORROWING. See Section 2.2.
OBLIGATIONS. Any and all obligations of each Company to the Bank of
every kind and description, direct or indirect, absolute or contingent, primary
or secondary, due or to become due, now existing or hereafter arising,
regardless of how they arise or by what agreement or instrument, if any, and
including without limitation (i) obligations to perform acts and refrain from
taking action as well as obligations to pay money, and (ii) all obligations of
Back Bay to the Bank pursuant to the Letters of Credit.
PBGC. The Pension Benefit Guaranty Corporation or any entity succeeding
to any or all of its functions under ERISA.
PERMITTED ENCUMBRANCES. See Section 6.5.
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PERMITTED STOCKHOLDER. (i) Charles F. Sarkis and (ii) any Person (a) of
which Charles F. Sarkis is a director or executive officer, (b) which Charles F.
Sarkis controls, either directly or indirectly, and (c) of which Charles F.
Sarkis owns, directly or indirectly greater than ten percent (10%) of the
capital stock.
PERSON. Any individual, sole proprietorship, partnership, joint venture,
trust, unincorporated organization, association, corporation, public authority,
or any other entity.
PLAN. At any time, an employee pension or other benefit plan that is
subject to Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either (i) maintained by the Companies or any
member of the Controlled Group for employees of the Companies or any member of
the Controlled Group or (ii) if such Plan is established, maintained pursuant to
a collective bargaining agreement or any other arrangement under which more than
one employer makes contributions and to which any Company or any member of the
Controlled Group is then making or accruing an obligation to make contributions
or has within the preceding five Plan years made contributions.
PLEDGED RESTAURANT ASSETS. The restaurants owned and operated by a
Subsidiary, including all real and personal property and licenses to operate and
serve liquor of such Subsidiary used in connection therewith, at the locations
described on EXHIBIT D hereto and any additional restaurants owned and operated
by a Subsidiary and so designated by Back Bay from time to time.
QUALIFIED INVESTMENTS. As applied to the Companies, investments in (i)
notes, bonds or other obligations of the United States of America or any agency
thereof that as to principal and interest constitute direct obligations of or
are guaranteed by the United States of America; (ii) certificates of deposit or
other deposit instruments or accounts of banks or trust companies organized
under the laws of the United States or any state thereof that have capital and
surplus of at least $100,000,000; (iii) commercial paper that is rated not less
than prime-one or A-1 or their equivalents by Moody's Investors Service, Inc. or
Standard & Poor's Corporation, respectively, or their successors; and (iv) any
repurchase agreement secured by any one or more of the foregoing.
RELATED BUSINESS. Any Person that owns or operates restaurants as its
principal business.
REVOLVING CREDIT PERIOD. The period beginning on the date of this
Agreement and extending through and including the Revolving Credit Termination
Date or such earlier date on which the commitment to make Revolving Loans is
terminated or the Commitment Amount is reduced to zero in accordance with the
terms hereof.
REVOLVING CREDIT TERMINATION DATE. April 30, 2001.
REVOLVING LOANS. The Loans made to the Companies, jointly and severally,
pursuant to Section 2.1(a) of this Agreement.
SECURITY AGREEMENTS. The Security Agreements by and between BBRG
Operating, Inc. and BBRG Massachusetts, Inc. and the Bank executed on January
25, 1996, by which, among other things, such Subsidiaries granted to the bank a
security interest in the Pledged Restaurant Assets.
SERVICE MARK AND TRADEMARK SECURITY AGREEMENT. The Service Mark and
Trademark Security Agreement by and between certain Subsidiaries and the Bank in
substantially the form of EXHIBIT E
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hereto, by which, among other things, such Subsidiaries have granted or will
grant to the Bank a security interest in all of the trademarks, service marks
and tradenames used or contemplated to be used in the conduct of the business of
the Companies.
STANDBY LETTER OF CREDIT. A certain Irrevocable Standby Letter of Credit
No. 1-069-NEMM-50087619 dated as of March 10, 1998, pursuant to which the Bank
issued a $51,590 stand-by letter of credit on behalf of Back Bay in favor of The
Town of Fairfield, Connecticut and relating to certain restaurant operations in
Fairfield, Connecticut.
SUBSIDIARY. Any corporation, association, joint stock company, business
trust or other similar organization of which 100% of the equity or other
beneficial interest is owned, directly or indirectly, by a Company or any
Subsidiary of a Company.
TERM LOAN. The loan made to the Companies pursuant to Section 2.1(b) of
this Agreement.
TERM LOAN MATURITY DATE. April 30, 2005.
TERM LOAN PERIOD. The period beginning on the Revolving Credit
Termination Date and extending through and including the Term Loan Maturity
Date.
TOTAL DEBT SERVICE COVERAGE RATIO. See Section 5.10.
TOTAL FUNDED INDEBTEDNESS. At any time, as to any of the Companies, all
obligations of the Companies described in clauses (i) and (ii) of the definition
of Indebtedness hereinabove, including any borrowed portion of the Commitment
Amount.
UNISSUED SHARES. With respect to any Person, shares of Voting Stock of
such Person which are not outstanding at the time, but have been reserved for
issuance upon the exercise of rights to purchase, options or warrants,
convertible into or exchangeable for shares of Voting Stock of such Person
(including debt securities convertible into Voting Stock), to the extent that
such options, warrants and rights are exercisable at the sole option of the
holder within sixty days of the date of determination.
UNIT CONTRIBUTION. For any period for which the amount thereof shall be
determined, for any restaurant, (i) the total revenue of such restaurant, MINUS
(ii) the cost of sales of such restaurant, MINUS (iii) payroll and fringe
benefit expenses of such restaurant, MINUS (iv) controllable expenses (as
defined in Back Bay's and its Subsidiaries' internal financial statements
consistently applied) of such restaurant.
VOTING STOCK. Any class or classes of Stock pursuant to which the
holders thereof have the general voting power under ordinary circumstances to
vote for the election of directors, managers or trustees of any Persons
(irrespective of whether or not at the time stock of any class or classes will
have or might have, voting power by the reason of the happening of any
contingency).
WESTWOOD. The Westwood Group, Inc.
1.3 ACCOUNTING TERMS. All terms of an accounting character shall have
the meanings assigned thereto by generally accepted accounting principles
applied on a basis consistent with the financial statements referred to in
Section 4.6 of this Agreement, modified to the extent, but only to the extent,
that such meanings are specifically modified herein.
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SECTION II
DESCRIPTION OF CREDIT
2.1. THE LOANS.
(a) Subject to the terms and conditions hereof, the Bank will
make Revolving Loans to the Companies, jointly and severally, from time to time
until the close of business on the Revolving Credit Termination Date, in such
sums as Back Bay, as agent for the Companies, may request, PROVIDED that the
aggregate principal amount of all Loans at any one time outstanding hereunder
shall not exceed the Commitment Amount. The Companies may borrow, prepay
pursuant to Section 2.8 and reborrow, from the date of this Agreement until the
Revolving Credit Termination Date, the full amount of the Commitment Amount or
any lesser sum that is at least $50,000 and an integral multiple of $50,000. Any
Revolving Loan not repaid by the Revolving Credit Termination Date shall be due
and payable on the Revolving Credit Termination Date.
(b) Subject to the terms hereof, the Bank will lend to the
Companies, jointly and severally, on the Revolving Credit Termination Date, a
Term Loan that shall not exceed, in the aggregate principal amount, the lesser
of (i) the Commitment Amount and (ii) the aggregate principal amount of
Revolving Loans then outstanding (the "TERM LOAN"). The Term Loan shall be
payable in 16 quarterly installments on the last day of each April, July,
October and January of each year, commencing July 31, 2001, with the first 15
installments in an amount equal to the sum of quarterly interest (at the
Applicable Rate), plus quarterly principal in equal amounts sufficient to fully
amortize the Term Loan over forty-eight (48) months, on the Revolving Credit
Termination Date, each, and a final installment payable on the Term Loan
Maturity Date equal to the outstanding balance of the Term Loan, together with
(i) all unpaid interest thereon and all fees and other amounts due hereunder,
and (ii) all amounts due under the Standby Letter of Credit and the Letters of
Credit.
(c) Provided that no Event of Default shall have occurred and be
continuing, the Companies may convert all or any part (in integral multiples of
$100,000) of any outstanding Loan into a Loan of any other type provided for in
this Agreement in the same aggregate principal amount. Provided that no Event of
Default shall have occurred and be continuing, the Companies may convert all or
any part (in integral multiples of $100,000) of any outstanding LIBOR Loan to an
Alternate Base Rate Loan in the same aggregate principal amount. Any such
conversion shall be on any Business Day (which, in the case of a conversion of a
LIBOR Loan, shall be the last day of the Interest Period applicable to such
LIBOR Loan). Back Bay shall give the Bank prior notice of each such conversion
(which notice shall be effective upon receipt) in accordance with Section 2.2.
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2.2. NOTICE AND MANNER OF BORROWING OF LOANS.
(a) Whenever the Companies desire to obtain or continue a Loan
hereunder or to convert an outstanding Loan into a Loan of another type provided
for in this Agreement, Back Bay, in its capacity as agent for the Companies
shall notify the Bank (which notice shall be irrevocable) by telex, telegraph or
telephone received no later than (i) 10:00 a.m. Boston time on the date which is
one (1) Business Day before the day on which the requested Loan is to be made or
continued as or converted to an Alternate Base Rate Loan, and (ii) 10:00 a.m.
Boston time on the date which is two (2) Business Days before the day on which
the requested Loan is to be made or continued as or converted to a LIBOR Loan.
Such notice shall specify (x) the effective date and amount of each Loan or
portion thereof to be continued or converted, subject to the limitations set
forth in Section 2.1, (y) the pricing option to be applicable thereto, and (z)
the duration of the applicable Interest Period, if any (subject to the
provisions of the definition of Interest Period and Section 2.5(a)). Each such
notification (a "Notice of Borrowing or Conversion") shall be immediately
followed by a written confirmation thereof by Back Bay in substantially the form
of EXHIBIT F attached hereto, PROVIDED that if such written confirmation differs
in any material respect from the action taken by the Bank, the records of the
Bank shall control absent manifest error.
(b) Subject to all of the terms and conditions hereof and so
long as no Default exists, the Companies may elect to have such portion of the
Loans as Back Bay may specify in the applicable Notice of Borrowing or
Conversion accrue and bear interest during the Interest Period selected in such
Notice of Borrowing or Conversion at the Applicable Rate computed on the basis
of the LIBOR Rate. In the event the Companies at any time fail to elect a LIBOR
Pricing Option under this Section 2.2(b) for any portion of the Loans (upon
initial funding, conversion, termination of a previously elected LIBOR Pricing
Option or otherwise), then such portion of the Loans will accrue and bear
interest at the Applicable Rate based on the Alternate Base Rate. No election of
a LIBOR Pricing Option will become effective if, prior to the commencement of
the applicable Interest Period, the Bank determines that (i) the election or
granting of the LIBOR Pricing Option in question would violate a Legal
Requirement, (ii) LIBOR deposits in an amount comparable to the principal amount
of the Loan as to which such LIBOR Pricing Option has been elected and which
have a term corresponding to the proposed Interest Period applicable to such
Loan are not readily available in the inter-bank LIBOR market, or (iii) by
reason of circumstances affecting the inter-bank LIBOR market, adequate and
reasonable methods do not exist for ascertaining the interest rate applicable to
such deposits for the proposed Interest Period applicable to such Loan. If any
Legal Requirements shall prevent the Bank from funding or maintaining through
the purchase of deposits in the inter-bank LIBOR market any portion of the Loans
subject to a LIBOR Pricing Option or otherwise from giving effect to the Bank's
obligations under this Agreement, the Bank may terminate all of the affected
LIBOR Pricing Options and the portion of the Loans subject to such terminated
LIBOR Pricing Options shall immediately bear interest thereafter at the
Applicable Rate computed on the basis of the Alternate Base Rate.
(c) Subject to the terms and conditions hereof, the Bank shall
make each Loan on the effective date specified therefor by crediting the amount
of such Loan to the demand deposit account of Back Bay with the Bank.
2.3. FEES TO THE BANK.
(a) COMMITMENT FEE. In consideration of the Bank's commitment to
make the extension of credit provided for in this Agreement, the Companies,
jointly and severally, shall pay to the Bank, while such commitment is
outstanding, a commitment fee computed at the rate of one-eighth
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of one percent (0.125%) per annum on the Commitment Amount. Such Commitment Fee
shall be payable annually on the Restatement Date and each anniversary thereof.
(b) UNUSED FACILITY FEE. The Companies, jointly and severally,
shall pay to the Bank during the Revolving Credit Period an unused facility fee
computed at the rate of (i) one quarter of one percent (0.25%) per annum on the
average daily amount of the unborrowed portion of the Commitment Amount during
each quarter or portion thereof, if the Leverage Ratio at the time such fee is
calculated is less than or equal to 2.00 to 1.0, and (ii) one-half of one
percent (0.50%) per annum on the average daily amount of the unborrowed portion
of the Commitment Amount during each quarter or portion thereof if the Leverage
Ratio at the time such fee is calculated is greater than 2.00 to 1.0 and less
than or equal to 4.00 to 1.0. Unused facility fees shall be payable quarterly in
arrears, on the last day of April, July, October and January of each year
beginning July 31, 1998, and on the last day of the Revolving Credit Period.
(c) LETTER OF CREDIT FEE. The Companies jointly and severally
will pay to the Bank, in arrears, on the last day of April, July, October and
January of each year (commencing on July 31, 1998) until the expiration of the
Letters of Credit, a nonrefundable letter of credit fee for the prior
three-month period, in an amount equal to the product of (i) one-quarter (1/4)
of the then existing per annum Applicable Margin for any LIBOR Loan, times (ii)
the aggregate average daily maximum amount available to be drawn under such
Letters of Credit from time to time during such period, calculated on the basis
of the 360 day year of twelve 30-day months.
(d) CONTINUED PAYMENT ON DEFAULT. Upon the occurrence and during
the continuance of an Event of Default, the fees due and payable under
subsections (b) and (c) of this Section 2.3 shall continue to be payable at the
rate payable immediately prior to the occurrence of such Event of Default.
2.4. REDUCTION OF COMMITMENT AMOUNT. Back Bay, as agent for the
Companies may from time to time by written notice delivered to the Bank at least
two Business Days prior to the date of the requested reduction, reduce by
integral multiples of $500,000 any unborrowed portion of the Commitment Amount.
No reduction of the Commitment Amount shall be subject to reinstatement.
2.5. THE NOTE.
(a) The Loans shall be evidenced by the Note, executed jointly
and severally by the Companies, payable to the order of the Bank and having a
final maturity of the Term Loan Maturity Date. The Note shall be dated on or
before the date of the first Loan and shall have the blanks therein
appropriately completed.
(b) The Bank shall, and is hereby irrevocably authorized by the
Companies to, enter on the schedule forming a part of the Note or otherwise in
its records appropriate notations evidencing the date and the amount of each
Loan and the date and amount of each payment of principal made by the Companies
with respect thereto; and in the absence of manifest error, such notations shall
constitute conclusive evidence thereof. The Bank is hereby irrevocably
authorized by the Companies to attach to and make a part of the Note a
continuation of any such schedule as and when required. No failure on the part
of the Bank to make any notation as provided in this subsection (b) shall in any
way affect any Loan or the rights or obligations of the Bank or the Companies
with respect thereto.
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2.6. LETTERS OF CREDIT.
(a) Subject to all of the terms and conditions of this Agreement
and so long as no Default exists, the Bank will from time to time during the
Revolving Credit Period issue for the account of any of the Companies one or
more standby letters of credit (the "Letters of Credit") in such amounts as may
be required by the Companies; PROVIDED, HOWEVER, that the aggregate face amount
of such Letters of Credit outstanding for the account of all of the Companies at
any time shall not cause the total obligations of the Companies hereunder to
exceed the Commitment Amount. Any Company may from time to time request a Letter
of Credit to be issued by providing notice to the Bank received not less than
three (3) Business Days prior to the requested closing date for such Letter of
Credit specifying (i) the amount of the requested Letter of Credit, (ii) the
beneficiary thereof, (iii) the purpose thereof, and (iv) the requested closing
date therefor. As a condition to the issuance of any Letter of Credit, the
requesting Companies will provide the Bank with a signed application therefor
and will execute such other agreements, documents and instruments relating to
the issuance of Letters of Credit as are customarily required by the Bank.
(b) Each Letter of Credit and each draft accepted or paid under
a Letter of Credit shall be issued, accepted or paid as the case may be by the
Bank at its Boston office. No Letter of Credit shall provide for the payment of
drafts drawn thereunder, and no draft shall be payable, at a date that is later
than the earlier of (i) the date twelve (12) months after the date of issuance
or (ii) the Revolving Credit Termination Date. Each Letter of Credit and each
draft accepted under a Letter of Credit shall be in such form and minimum
amount, and shall contain such terms, as the Bank and the Companies requesting
such Letter of Credit may agree upon at the time such Letter of Credit is
issued, including a requirement of not less than three (3) Business Days after
presentation of a draft before payment must be made thereunder, the term of such
Letter of Credit and any rights of cancellation with respect thereto.
(c) At such time as the Bank makes any payment on a draft
presented or accepted under a Letter of Credit, the Companies will pay to the
Bank in immediately available funds on demand the amount of such payment. If the
Companies do not pay to the Bank the amount required by the foregoing provision,
the Bank may in its sole and complete discretion, add the amount of such draft
to the Revolving Credit Loans, and such amount shall be immediately due and
payable on the Revolving Credit Termination Date. It is understood and agreed by
the parties that the issuance of any Letter of Credit hereunder shall result in
a reduction of the Commitment Amount in the face amount of such Letter of Credit
during the period of time such Letter of Credit is outstanding.
2.7. APPLICATION OF PROCEEDS.
(a) Subject to Section 2.7(c) and Sections V and VI hereunder,
the Companies will apply the proceeds of the Loans only for working capital,
acquisitions permitted by Section 6.4 hereof, and other lawful corporate
purposes or capital expenditures of the Companies related to the ownership and
operation of the restaurant business thereof.
(b) Subject to Section 2.7(c) and Sections V and VI hereunder,
Letters of Credit shall be issued only for such lawful corporate purposes as the
Companies have requested in writing and to which the Bank, in its reasonable
discretion, may agree.
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(c) None of the Companies will, directly or indirectly, apply
any part of the proceeds of any of the Loans (i) to purchase or carry "Margin
Stock" (as defined in Section 4.11), (ii) to any transaction prohibited by any
laws or regulations applicable to the Bank, or (iii) to effect an acquisition of
the capital stock or assets of any Related Business except as permitted by
Section 6.4.
2.8. DURATION OF INTEREST PERIODS.
(a) Subject to the provisions of the definition of Interest
Period, the duration of each Interest Period applicable to a Loan shall be as
specified in the applicable Notice of Borrowing or Conversion. The Companies
shall have the option to elect a subsequent Interest Period to be applicable to
such Loan by Back Bay delivering to the Bank a Notice of Borrowing or Conversion
evidencing such election received no later than 10:00 a.m. Boston time on the
date one (1) Business Day before the end of the then applicable Interest Period
if such Revolving Loan is to be continued as or converted to an Alternate Base
Rate Loan and two (2) Business Days before the end of the then applicable
Interest Period if such Revolving Loan is to be continued as or converted to a
LIBOR Loan.
(b) If the Bank does not receive a notice of election of
duration of an Interest Period for a LIBOR Loan pursuant to subsection (a) above
within the applicable time limits specified therein, or if, when such notice
must be given, a Default exists, the Companies shall be deemed to have elected
to convert such Loan in whole into an Alternate Base Rate Loan on the last day
of the then current Interest Period with respect thereto.
(c) Notwithstanding the foregoing, the Companies may not select
an Interest Period that would end, but for the provisions of the definition of
Interest Period, after the Term Loan Maturity Date.
2.9. INTEREST RATES AND PAYMENTS OF INTEREST. The Loans shall accrue and
bear interest at a rate per annum which shall at all times equal the Applicable
Rate, and such rate shall change contemporaneously with any change in the
Applicable Margin. Interest on each Alternate Base Rate Loan shall be payable in
arrears on the last day of each quarter commencing July 31, 1998, and when such
Loan is due (whether at maturity, by reason of acceleration or otherwise).
Interest on each LIBOR Loan shall be payable for such Interest Period applicable
thereto on the last day thereof and when such Loan is due (whether at maturity,
by reason of acceleration or otherwise). Upon the occurrence and during the
continuance of an Event of Default, the Bank may require accrued interest to be
payable on demand or at regular intervals more frequent than the times set forth
in this Section 2.9.
2.10. CHANGED CIRCUMSTANCES. In case any change in law, regulation,
treaty or official directive or the interpretation or application thereof by any
court or by any governmental authority charged with the administration thereof
or the compliance with any guideline or request of any central bank or other
governmental authority (whether or not having the force of law):
(i) subjects the Bank to any tax with respect to payments of principal
interest or any other amounts payable hereunder by the Companies or otherwise
with respect to the transactions contemplated hereby (except for taxes on the
overall net income of the Bank imposed by the United States of America or any
political subdivision thereof); or
(ii) imposes, modifies or deems applicable any deposit insurance,
reserve, special deposit or similar requirement against assets held by, or
deposits in or for the account of, or loans by, the Bank (other than such
requirements as are already included in the determination of the LIBOR Rate); or
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(iii) imposes upon the Bank any other condition with respect to its
performance under this Agreement;
and the result of any of the foregoing is to increase the cost to the Bank,
reduce the income receivable by the Bank or impose any expense upon the Bank
with respect to any Loans, the Bank shall notify the Companies thereof. The
Companies agree to pay to the Bank the amount of such increase in cost,
reduction in income or additional expense as and when such cost, reduction or
expense is incurred or determined, upon presentation by the Bank of a statement
in the amount and setting forth the Bank's calculation thereof, which statement
shall be deemed true and correct absent manifest error.
2.11. CAPITAL REQUIREMENTS. If after the date hereof the Bank determines
that (i) the adoption of or change in any law, rule, regulation or guideline
regarding capital requirements for banks or bank holding companies, or any
change in the interpretation or application thereof by any governmental
authority charged with the administration thereof, or (ii) compliance by the
Bank or its parent bank holding company with any guideline, request or directive
of any such entity regarding capital adequacy (whether or not having the force
of law), has the effect of reducing the return on the Bank's or such holding
Company's capital as a consequence of the Bank's commitment to make Loans
hereunder to a level below that which the Bank or such holding company could
have achieved but for such adoption, change or compliance (taking into
consideration the Bank's or such holding Company's then existing policies with
respect to capital adequacy and assuming the full utilization of such entity's
capital) by any amount deemed by the Bank to be material, then the Bank shall
notify the Companies thereof. The Companies, jointly and severally, agree to pay
to the Bank the amount of such reduction of the return on the Bank's or such
holding company's capital as and when such reduction is determined, upon
presentation by the Bank of a statement in the amount and setting forth the
Bank's calculation thereof, which statement shall be deemed true and correct
absent manifest error. In determining such amount, the Bank may use any
reasonable averaging and attribution methods.
2.12. PAYMENTS AND PREPAYMENTS OF THE LOANS. LIBOR Loans may be prepaid
at any time, without premium or penalty, on the last day of any Interest Period
applicable thereto, upon three (3) Business Days' notice. Alternate Base Rate
Loans may be prepaid at any time, without premium or penalty, upon one (1)
Business Day's notice. Any interest accrued on the amounts so prepaid to the
date of such payment must be paid at the time of any such payment. Except as set
forth in Section 2.4 hereof, no prepayment of the Revolving Loans during the
Revolving Credit Period shall affect the Commitment Amount or impair the
Company's right to borrow as set forth in Section 2.1. Prepayments of the Term
Loan shall be applied to installments of principal due thereunder in the inverse
order of maturity.
2.13. METHOD OF PAYMENT. All payments and prepayments of principal and
all payments of interest shall be made by the Companies to the Bank at 100
Federal Street, Boston, Massachusetts in immediately available funds, on or
before 11:00 a.m. (Boston time) on the due date thereof, free and clear of, and
without any deduction or withholding for, any taxes or other payments. The Bank
may, and each Company hereby authorizes the Bank to, debit the amount of any
payment not made by such time to the demand deposit account of the Companies
with the Bank.
2.14. ADDITIONAL PAYMENTS. During the continuance of any Event of
Default, the Companies shall pay to the Bank interest on the unpaid principal
balance of the Loans and, to the extent permitted by law, on any overdue
installment of interest and fees or any other amounts payable hereunder or
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under the Note, compounded daily and payable on demand, at a rate per annum
equal to one and one-half percent (1.50%) above the then Applicable Rate.
2.15. PAYMENTS NOT AT END OF INTEREST PERIOD. If the Companies for any
reason make any payment of principal with respect to any LIBOR Loan on any day
other than the last day of an Interest Period applicable to such LIBOR Loan, or
fails to borrow or continue or convert to a LIBOR Loan after giving a Notice of
Borrowing or Conversion Pursuant to Section 2.2, or if any LIBOR Loan is
accelerated pursuant to Section 7.2, the Companies shall pay to the Bank, an
amount computed pursuant to the following formula.
L = (R - T) X P X D
---------------
360
L = amount payable to the Bank
R = interest rate on such Loan
T = effective interest rate per annum at which any readily
marketable bond or other obligation of the United States,
selected at the Bank's sole discretion, maturing on or near the
last day of the then applicable Interest Period of such Loan and
in approximately the same amount as such Loan can be purchased
by the Bank on the day of such payment of principal or failure
to borrow or continue or convert
P = the amount of principal prepaid or the amount of the requested
Loan
D = the number of days remaining in the Interest Period as of the
date of such payment or the number of days of the requested
Interest Period
The Companies shall pay such amount upon presentation by the Bank of a
statement setting forth the amount and the Bank's calculation thereof pursuant
hereto, which statement shall be deemed true and correct absent manifest error.
2.16. COMPUTATION OF INTEREST AND FEES. All Interest and fees payable
hereunder shall be computed daily on the days for which due. If the due date of
any payment of principal is extended by operation of law, interest shall be
payable for such extended time. If any payment required by this Agreement
becomes due on a day that is not a Business Day such payment may be made on the
next succeeding Business Day (subject to clause 2(i) of the definition of
Interest Period), and such extension shall be included in computing interest in
connection with such payment. The rate of interest payable with respect to Base
Rate Loans shall vary from time to time as the Base Rate varies, and any change
in the rate of interest will become effective on the effective date of a change
in the Base Rate. Interest on Base Rate Loans shall be computed on the basis of
a 360-day year for the actual number of days elapsed.
2.17. DESIGNATION OF BACK BAY AS AGENT FOR THE COMPANIES. Each Company
hereby irrevocably designates, authorizes, empowers and appoints Back Bay and
such of Back Bay's executive officers as Back Bay shall appoint from time to
time, to act as agent and attorney-in-fact for such Company in connection with
this Agreement, and to execute and deliver any and all notices and other
documents and to perform any and all acts required to be executed, delivered or
performed by such Company hereunder. Each Company agrees that the Bank may rely
upon any notice or other document which purports to be executed or made or which
the Bank in good faith believes to have been executed or made by Back Bay or any
of its executive officers, in its or their capacity as agent for such Company.
Each Company further agrees to indemnify and hold the Bank harmless for any
actions, including the making of each Loan hereunder, and any loss or expense,
taken or incurred by it as a result of the Bank's good faith reliance upon any
such notice or other document.
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SECTION III
CONDITIONS OF LOANS
3.1. CONDITIONS PRECEDENT TO INITIAL LOAN. The obligation of the Bank to
make its initial Loan is subject to the condition precedent that the Bank shall
have received, in form and substance satisfactory to the Bank and its counsel,
the following:
(a) this Agreement and the Note, duly executed by each Company;
(b) a certificate of the Secretary/Clerk or an Assistant
Secretary/Clerk of each Company with respect to resolutions of the Board of
Directors of each Company authorizing the execution and delivery of this
Agreement and the Note and identifying the officer(s) authorized to execute,
deliver and take all other actions required under this Agreement, and providing
specimen signatures of such officers;
(c) the charter documents of each Company and all amendments and
supplements thereto, filed in the office of the Secretary of State of such
Company's state of incorporation and not actually delivered to the Bank
previously pursuant to the Existing Credit Agreement, each certified by the
Secretary/Clerk or an Assistant Secretary/Clerk as being a true and correct copy
thereof;
(d) the Bylaws of each Company and all amendments and
supplements thereto not actually delivered to the Bank previously pursuant to
the Existing Credit Agreement, each certified by the Secretary/Clerk or an
Assistant Secretary/Clerk as being a true and correct copy thereof;
(e) for each Company, a certificate of the Secretary of State of
such Company's state of incorporation, as to legal existence and good standing
in such state;
(f) an opinion addressed to it from Hutchins, Wheeler & Dittmar,
counsel to the Companies, substantially in the form of EXHIBIT G hereto;
(g) the Service Mark and Trademark Security Agreement executed
by each Company;
(h) a Collateral Assignment of Trademark Licenses in or
substantially in the form of EXHIBIT H attached hereto, executed by each
Company;
(i) appropriate UCC-1 Financing Statements and other documents
necessary to enable the Bank to perfect a first priority security interest in
all intangible assets owned or controlled by each Company, duly executed by each
Company, as applicable. The Bank shall also have received satisfactory reports
dated no earlier than 30 days prior to the closing of the initial Loan
concerning the results of searches of Uniform Commercial Code filing offices in
each jurisdiction where the Companies or any of them operates;
(j) the initial annual commitment fee in the amount of $25,000
and all other fees, costs and expenses of closing (including fees of the Bank's
special loan counsel presented as of the date hereof); and
(k) such other documents, and completion of such other matters,
as counsel for the Bank may deem necessary or appropriate, including such other
documents as may be reasonably
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necessary to evidence the Bank's security interest in the service marks and
trademarks of the Companies on the records of the United States Patent and
Trademark Office.
3.2. CONDITIONS PRECEDENT TO ALL LOANS. The obligation of the Bank to
make each Loan, including the initial Loan, is further subject to the following
conditions:
(a) timely receipt by the Bank of the Notice of Borrowing as
provided in Section 2.2;
(b) the representations and warranties contained in Section IV
shall be true and accurate in all material respects on and as of the date of
such Notice of Borrowing and on the effective date of the making, continuation
or conversion of each Loan as though made at and as of each such date (except to
the extent that such representations and warranties expressly relate to an
earlier date), and no Default shall have occurred and be continuing, or would
result from such Loan;
(c) the resolutions referred to in Section 3.1(b) shall remain
in full force and effect;
(d) no change shall have occurred in any law or regulation or
interpretation thereof that, in the opinion of counsel for the Bank, would make
it illegal or against the policy of any governmental agency or authority for the
Bank to make Loans hereunder; and
(e) no material adverse change shall have occurred in the
financial condition, operations, assets, liabilities, business or prospects of
Back Bay and its Subsidiaries taken as a whole.
The making of each Loan shall be deemed to be a representation and
warranty by each Company on the date of the making or continuation of such Loan
as to the accuracy of the facts referred to in subsection (b) of this Section
3.2.
SECTION IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to enter into this Agreement and to make
Loans hereunder, each Company represents and warrants to the Bank that:
4.1. ORGANIZATION AND QUALIFICATION. Each Company (a) is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, (b) has all requisite corporate power to own its
property and conduct its business as now conducted and as presently
contemplated, and (c) is duly qualified and in good standing as a foreign
corporation and is duly authorized to do business in each jurisdiction where the
nature of its properties or business requires such qualification, except where
the failure to be so qualified would not have a material adverse effect on the
business, financial condition or operations of the Companies, taken as a whole.
4.2. CORPORATE AUTHORITY. The execution, delivery and performance of
this Agreement and the Note and the transactions contemplated hereby are within
the corporate power and authority of each Company and have been authorized by
all necessary corporate proceedings, and do not and will not (a) require any
consent or approval of the stockholders of any Company, (b) contravene any
provision of the charter documents or by-laws of any Company or any law, rule or
regulation applicable to any Company, (c) contravene any provision of, or
constitute an event of default or event that, but for the requirement that time
elapse or notice be given, or both, would constitute an event of default under,
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any other agreement, instrument, order or undertaking binding on any Company, or
(d) result in or require the imposition of any Encumbrance on any of the
properties, assets or rights of any Company.
4.3. VALID OBLIGATIONS. This Agreement and the Note and all of their
respective terms and provisions are the legal, valid and binding obligations of
each Company, jointly and severally, enforceable in accordance with their
respective terms except as limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting the enforcement of creditors' rights
generally, and by general equitable principles.
4.4. CONSENTS OR APPROVALS. The execution, delivery and performance of
this Agreement and the Note and the transactions contemplated herein do not
require any approval or consent of, or filing or registration with, any
governmental or other agency or authority, or any other party.
4.5. TITLE TO PROPERTIES; ABSENCE OF ENCUMBRANCES. Each Company has good
and marketable title to all of the properties, assets and rights of every name
and nature now purported to be owned by it, including, without limitation, such
properties, assets and rights as are reflected in the financial statements
referred to in Section 4.6 (except such properties, assets or rights (i) as have
been disposed of in the ordinary course of the Companies' business since the
date thereof and (ii) as set forth on EXHIBIT J hereto), free from all
Encumbrances except Permitted Encumbrances, and, except as so disclosed, free
from all defects of title that might materially adversely affect such
properties, assets or rights, taken as a whole.
4.6. FINANCIAL STATEMENTS. Back Bay has furnished the Bank its
consolidated balance sheet as of December 28, 1997 and its consolidated
statements of income, changes in stockholders' equity and cash flow for the
fiscal year then ended, and related footnotes, audited and certified by Coopers
& Lybrand. All such financial statements were prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods specified and present fairly the financial position of
Back Bay and its Subsidiaries as of such date and the results of the operations
of Back Bay and its Subsidiaries for such periods.
4.7. CHANGES. Since the date of the financial statements referred to in
Section 4.6, there have been no changes in the assets, liabilities, financial
condition, business or prospects of Back Bay and its Subsidiaries other than
changes in the ordinary course of business, the effect of which has not, in the
aggregate, been materially adverse to the business, financial condition or
operations of Back Bay and its Subsidiaries, taken as a whole.
4.8. DEFAULTS. As of the date of this Agreement, no Default exists.
4.9. TAXES. Each Company has filed all federal, state and other tax
returns required to be filed (except where such Company has sought and obtained
routine extensions), and all taxes, assessments and other governmental charges
shown on such returns as due from each Company have been fully paid. The
Companies have established on their books reserves adequate for the payment of
all federal, state and other tax liabilities.
4.10. LITIGATION. Except as set forth on EXHIBIT L hereto, there is no
litigation, arbitration, proceeding or investigation pending, or, to the
knowledge of the Companies' officers, threatened, against any Company that, if
adversely determined, could reasonably be expected to result in a material
judgment not fully covered by insurance, could result in a forfeiture of all or
any substantial part of the
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property of the Companies, or could otherwise have a material adverse effect on
the assets, business or prospects of the Companies, taken as a whole.
4.11. USE OF PROCEEDS. No portion of any Loan is to be used for the
"purpose of purchasing or carrying" any "margin stock" as such terms are used in
Regulations U and X of the Board of Governors of the Federal Reserve System, 12
C.F.R. 221 and 224, as amended; and following the application of the proceeds of
each Loan, the value of all "margin stock" of the Companies will not exceed 25%
of the value of the total assets of the Companies that are subject to the
restrictions set forth in Section 6.5 and 6.6.
4.12. SUBSIDIARIES. The names and business addresses of all the
Subsidiaries of Back Bay as of the date of this Agreement, are listed on EXHIBIT
M hereto. Each Company or a Subsidiary of such Company is the owner, free and
clear of all liens and encumbrances, of all of the issued and outstanding stock
of each of its Subsidiaries. All shares of such stock have been validly issued
and are fully paid and nonassessable, and no rights to subscribe to any
additional shares have been granted, and no options, warrants or similar rights
are outstanding. All Joint Venture Investments are listed on EXHIBIT M hereto,
which EXHIBIT M may be amended from time to time by Back Bay to describe any
additional Joint Venture Investments permitted hereunder.
4.13. INVESTMENT COMPANY ACT. Neither the Companies nor any of their
Subsidiaries is subject to regulation under the Investment Company Act of 1940,
as amended.
4.14. COMPLIANCE WITH ERISA. Each Company and each member of the
Controlled Group has fulfilled its obligations under the minimum funding
standards of ERISA and the Code with respect to each Plan and are in compliance
in all material respects with the applicable provisions of ERISA and the Code,
and have not incurred any liability to the PBGC or a Plan under Title IV of
ERISA; and no "prohibited transaction" or "reportable event" (as such terms are
defined in ERISA) has occurred with respect to any Plan.
4.15. ENVIRONMENTAL MATTERS.
(a) Each Company has obtained all permits, licenses and other
authorizations which are required under all Environmental Laws, except to the
extent failure to have any such permit, license or authorization would not have
a material adverse effect on the business, financial condition or operations of
the Companies taken as a whole. Each Company is in compliance with the terms and
conditions of all such permits, licenses and authorizations, and is also in
compliance with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
any applicable Environmental Law or in any regulation, code, plan, order,
decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, except to the extent failure to comply would
not have a material adverse effect on the business, financial condition or
operations of the Companies, taken as a whole.
(b) No notice, notification, demand, request for information,
citation, summons or order has been issued, no complaint has been filed, no
penalty has been assessed and no investigation or review is pending or, to the
best of each Company's knowledge, threatened by any governmental or other entity
with respect to any alleged failure by any Company to have any permit, license
or authorization required in connection with the conduct of its business or with
respect to any Environmental Laws, including, without limitation, Environmental
Laws relating to the generation, treatment, storage, recycling, transportation,
disposal or release of any Hazardous Materials, except to
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the extent that such notice, complaint, penalty or investigation did not or
could not result in the remediation of any property owned or used by any Company
costing in excess of $200,000 per occurrence or $400,000 in the aggregate.
(c) To the best of each Company's knowledge no material oral or
written notification of a release of a Hazardous Material has been filed by or
on behalf of any Company and no property now or previously owned, leased or used
by any Company is listed or proposed for listing on the National Priorities List
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended, or on any similar state list of sites requiring
investigation or clean-up.
(d) There are no liens or encumbrances arising under or pursuant
to any Environmental Laws on any of the real property or properties owned,
leased or used by any Company and no governmental actions have been taken or are
in process which could subject any of such properties to such liens or
encumbrances or as a result of which any Company would be required to place any
notice or restriction relating to the presence of Hazardous Materials at any
property owned by it in any deed to such property.
(e) No Company, nor, to the best knowledge of each Company, any
previous owner, tenant, occupant or user of any property owned, leased or used
by any Company has (i) engaged in or permitted any operations or activities upon
or any use or occupancy of such property, or any portion thereof, for the
purpose of or in any way involving the handling, manufacture, treatment,
storage, use, generation, release, discharge, refining, dumping or disposal
(whether legal or illegal, accidental or intentional) of any Hazardous Materials
on, under, in or about such property, except to the extent commonly used in
day-to-day operations of such property and in such case only in compliance with
all Environmental Laws, or (ii) transported any Hazardous Materials to, from or
across such property except to the extent commonly used in day-to-day operations
of such property and, in such case, in compliance with all Environmental Laws;
nor to the best knowledge of each Company have any Hazardous Materials migrated
from other properties upon, about or beneath such property, nor, to the best
knowledge of each Company, are any Hazardous Materials presently constructed,
deposited, stored or otherwise located on, under, in or about such property
except to the extent commonly used in day-to-day operations of such property
and, in such case, in compliance with all Environmental Laws.
4.16. TRANSACTIONS WITH AFFILIATES. EXHIBIT N sets forth a description
of all transactions, loans, advances, investments, and other cash payments
during the one-year period ending on the date hereof between Back Bay and any of
its Subsidiaries, on the one hand, and Westwood and any of its subsidiaries,
officers, directors and affiliates, on the other, which transactions, loans,
advances, investments and other cash payments are required to be disclosed as
"Related Transactions" in the Form 10-K Annual Report of Back Bay, including but
not limited to a certain concession agreement among Westwood, Back Bay and its
Subsidiaries.
4.17. TRADEMARKS, SERVICE MARKS, LICENSES, ETC. Each of the Companies
has such right, title ownership of, or licenses under all trademarks, service
marks, tradenames, copyrights, licenses, trade secrets, information, proprietary
rights and processes as is necessary for the lawful conduct of their business as
now conducted or proposed to be conducted by them, without any known conflict
with the valid rights of others, and in each case, free of any lien not
permitted by Section 4.5. Each of the tradenames, trademarks, service marks and
copyrights, registered or unregistered, owned or controlled by any of the
Companies is described in EXHIBIT O attached hereto. None of the Companies has
any rights or licenses with respect to any such tradenames, trademarks, service
marks and copyrights other than as set forth on EXHIBIT O.
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4.18. COMPLIANCE WITH LAWS AND AGREEMENTS. No Company is a party to any
agreement or instrument or subject to any corporate or other restriction
materially and adversely affecting the business, operations, properties, assets
or condition, financial or otherwise of any Company. No Company is in violation
of any provision of its corporate charter, by-laws, certificate of organization,
operating agreement or other organizational agreement, as the case may be. No
Company is in violation of any material indenture, agreement or instrument to
which it is a party or by which it is bound or any provision of law, the
violation of which could have a material adverse effect on the business,
financial condition or operations of Back Bay and its Subsidiaries taken as a
whole, or of any order, judgment or decree of any court of other governmental
authority having jurisdiction. Without limiting the scope of the foregoing, each
Company represents and warrants that it is in compliance in all material
respects with all federal and state laws and regulations, including all wage and
employment laws and regulations and all laws and regulations governing the
service of alcoholic beverages.
4.19. SATISFACTION OF CONTINGENT OBLIGATIONS. All contingent
obligations of the Companies to Westwood disclosed on Exhibits to the Existing
Credit Agreement or otherwise to reimburse Westwood for any payments made by
Westwood under Westwood's guaranty of the lease obligations of any Company have
been fully satisfied or terminated as of the date hereof.
SECTION V
AFFIRMATIVE COVENANTS
So long as the Bank has any commitment to lend hereunder or any Loan or
other Obligation remains outstanding, each Company covenants as follows:
5.1. FINANCIAL STATEMENTS AND OTHER REPORTING REQUIREMENTS. The
Companies shall furnish to the Bank:
(a) as soon as available to Back Bay, but in any event within 90
days after the end of its fiscal year, a consolidated balance sheet as of the
end of, and a related consolidated statement of income, changes in stockholders
equity and cash flow for, such year, audited and certified by Coopers & Lybrand
(or other independent certified public accountants acceptable to the Bank); and,
as soon as available to Back Bay, but in any event within 120 days after the end
of its fiscal year, a copy of said certified public accountants' management
report and a written statement by such accountants that, in the making of the
audit necessary for their report and opinion upon such financial statements they
have obtained no knowledge of any Default or, if in the opinion of such
accountants any such Default exists, they shall disclose in such written
statement the nature and status thereof;
(b) as soon as available to Back Bay, but in any event within 45
days after the end of each of their fiscal quarters, a consolidated balance
sheet as of the end of, and a related consolidated statement of income for, the
period then ended, certified by the principal financial officer of Back Bay but
subject, however, to normal, recurring year-end adjustments that shall not in
the aggregate be material in amount;
(c) as soon as available, and in any event within 60 days after
the end of each fiscal year, an annual budget and/or operating projections of
Back Bay and its Subsidiaries for the upcoming fiscal year, which budget shall
set forth in reasonable detail, on a quarterly basis, the projected
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performance of Back Bay and its Subsidiaries as determined in good faith by the
management of Back Bay based on prior history or performance;
(d) as soon as available, and in any event within 45 days after
the end of each fiscal quarter, management's report and analysis of the
operating results of each restaurant operated by the Companies as compared to
(i) the budget for the current fiscal year, and (ii) the operating results of
such restaurants for the corresponding quarter during the previous fiscal year;
(e) as soon as available, but in any event within 100 days after
the end of each fiscal year, management's report and analysis of the operating
results of each restaurant operated by the Companies as compared to (i) the
budget for said fiscal year, and (ii) the operating results of such restaurants
for the previous fiscal year;
(f) concurrently with the delivery of each financial statement
pursuant to subsections (a) through (e) of this Section 5.1, a report in
substantially the form of EXHIBIT P hereto signed on behalf of each Company by
the chief financial officer of Back Bay;
(g) promptly after the receipt thereof by any Company, copies of
any reports submitted to such Company by independent public accountants in
connection with any interim review of the accounts of any Company made by such
accountants;
(h) promptly after the same are available, copies of all proxy
statements, financial statements and reports as any Company shall send to its
stockholders or as any Company may file with the Securities and Exchange
Commission or any governmental authority at any time having jurisdiction over
such Company;
(i) as soon as available, any material updates of the budgets
and projections delivered pursuant to subsection (c) above;
(j) if and when any Company gives or is required to give notice
to the PBGC of any "Reportable Event" (as defined in Section 4043 of ERISA) with
respect to any Plan that might constitute grounds for a termination of such Plan
under Title IV of ERISA, or knows that any member of the Controlled Group or the
plan administrator of any Plan has given or is required to give notice of any
such Reportable Event, a copy of the notice of such Reportable Event given or
required to be given to the PBGC;
(k) immediately upon becoming aware of the existence of any
condition or event that constitutes a Default, written notice thereof specifying
the nature and duration thereof and the action being or proposed to be taken
with respect thereto;
(l) promptly upon becoming aware of any litigation or of any
investigative proceedings by a governmental agency or authority commenced or
threatened against any Company of which it has notice, the outcome of which
would or might reasonably be expected to have a materially adverse effect on the
assets, business or prospects of the Companies on a consolidated basis, written
notice thereof and the action being or proposed to be taken with respect
thereto;
(m) promptly upon becoming aware of any investigative
proceedings by a governmental agency or authority commenced or threatened
against any Company regarding any
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potential violation of Environmental Laws or any spill, release, discharge or
disposal of any Hazardous Material, written notice thereof and the action being
or proposed to be taken with respect thereto;
(n) promptly upon becoming aware of any infringement or apparent
infringement by a third party of any trademark, service mark, tradename,
copyright or other intellectual property right or license of any of the
Companies, written notice thereof and the action being or proposed to be taken
with respect thereto;
(o) from time to time, such other financial data and information
about any Company as the Bank may reasonably request; and
5.2. CONDUCT OF BUSINESS. Each Company shall:
(a) duly observe and comply in all material respects with all
applicable laws and valid requirements of any governmental authorities relative
to its corporate existence, rights and franchises, to the conduct of its
business and to its property and assets (including without limitation all
Environmental Laws and ERISA), and shall maintain and keep in full force and
effect all licenses and permits necessary in any material respect to the proper
conduct of its business;
(b) maintain its corporate existence; and
(c) remain engaged substantially in the business of restaurant
development, ownership and operation or a business ancillary thereto, which
ancillary business provides direct service to those Companies engaged in
restaurant development, ownership or operation.
5.3. MAINTENANCE AND INSURANCE. Each Company shall maintain its
properties in good repair, working order and condition as required for the
normal conduct of its business. Each Company shall at all times maintain
liability and casualty insurance with financially sound and reputable insurers
in such amounts as the officers of such Company in the exercise of their
reasonable judgment deem to be adequate. In the event of failure to provide and
maintain insurance as herein provided, the Bank may, at its option, provide such
insurance and charge the amount thereof to the account of the Companies with the
Bank. The Companies shall furnish to the Bank certificates or other evidence
satisfactory to the Bank of compliance with the foregoing insurance provisions.
5.4. TAXES. Each Company shall pay or cause to be paid all taxes,
assessments or governmental charges on or against it or its properties on or
prior to the time when they become due; PROVIDED that this covenant shall not
apply to any tax, assessment or charge that is being contested in good faith by
appropriate proceedings and with respect to which adequate reserves have been
established and are being maintained in accordance with generally accepted
accounting principles if no proceedings shall have been commenced to foreclose
any lien securing such tax, assessment or charge.
5.5. INSPECTION BY THE BANK. Each Company shall permit the Bank or its
designees, at any reasonable time, and upon reasonable notice (or if a Default
shall have occurred and is continuing, at any time and without prior notice), to
(i) visit and inspect the properties of such Company, (ii) examine and make
copies of and take abstracts from the books and records of such Company, and
(iii) discuss the affairs, finances and accounts of each Company with its
appropriate officers, employees and accountants. In handling such information
the Bank shall exercise the same degree of care that it exercises with respect
to its own proprietary information of the same types to maintain the
confidentiality of any non-public information thereby received or received
pursuant to subsections
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5.1(a), (b), or (c) and of any other information received hereunder and
designated by a Company as "Confidential" or "Non-Public" except that disclosure
of such information may be made (i) to the subsidiaries or affiliates of the
Bank in connection with their present or prospective business relations with the
Companies, (ii) to prospective transferees or purchasers of an interest in the
Loans, (iii) as required by law, regulation, rule or order, subpoena, judicial
order or similar order and (iv) as may be required in connection with the
examination, audit or similar investigation of the Bank.
5.6. MAINTENANCE OF BOOKS AND RECORDS. Each Company shall keep adequate
books and records of account, in which true and complete entries will be made
reflecting all of its business and financial transactions, and such entries will
be made in accordance with generally accepted accounting principles consistently
applied and applicable law.
5.7 CONSOLIDATED NET WORTH. Back Bay and its Subsidiaries (i) shall have
Consolidated Net Worth of at least $26,000,000 at the Restatement Date, and (ii)
thereafter for each fiscal year period ending on the last Sunday in December
each year, shall maintain Consolidated Net Worth of an amount which is at least
equal to the required Consolidated Net Worth of the prior similar period plus
fifty percent (50%) times annual Consolidated Net Income for the preceding
fiscal year (without deducting for losses).
5.8. LEVERAGE. On a combined basis, the Companies will, as at the end of
each fiscal quarter ending on or after March 31, 1998 (each a "Quarterly Date"),
maintain a Leverage Ratio of no more than 4.00 to 1.0.
5.9. INTEREST COVERAGE. On a combined bases, the Companies will, as at
each Quarterly Date, maintain a ratio of Consolidated EBITDA to Consolidated
Interest Expense for the four (4) consecutive fiscal quarters most recently
completed of at least 3.00 to 1.0.
5.10. DEBT SERVICE COVERAGE. On a combined basis, the Companies will, as
at each Quarterly Date, maintain a Total Debt Service Coverage Ratio (as
hereinafter defined) for the four (4) consecutive fiscal quarters most recently
completed of at least 1.50 to 1.0. For purposes of this Section 5.10, the term
"Total Debt Service Coverage Ratio" means in relation to any Reference Period,
the ratio of (i) Consolidated EBITDA MINUS Non-Expansion Capital Expenditures
MINUS Cash Taxes, to (ii) the sum of (A) Consolidated Interest Expense, PLUS (B)
Current Term Indebtedness.
5.11. FURTHER ASSURANCES. At any time and from time to time each Company
shall execute and deliver such further instruments and take such further action
as may reasonably be requested by the Bank to effect the purposes of this
Agreement and the Note.
5.12. INFRINGEMENT CLAIMS. Upon learning of any infringement or apparent
infringement by a third party of any trademark, service mark, tradename,
copyright or other intellectual property rights or license of any of the
Companies which infringement could have material adverse effect on the business,
financial condition or operations of Back Bay or any of its Subsidiaries that
represents more than 10% of revenues of the Companies taken as a whole, Back Bay
shall or shall cause the affected Subsidiaries to commence suit or other
proceeding to stop such infringement. In addition, Back Bay shall or shall cause
one or more of its Subsidiaries (as the case may be) to (i) control the defense
of (but only if no Event of Default has occurred and is continuing) and defend
all actions, suits or proceedings based on claims of infringement that may be
brought against any of them or the Bank on account of the ownership, use or sale
of such marks and other intellectual property, (ii) shall pay all expenses
associated with such action, suit or proceeding, and (iii) shall pay all sums
for which any of them or the
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Bank is liable as result thereof; provided, however, that neither Back Bay nor
any of such Subsidiaries shall be severally liable for any settlement in any
such action, suit or proceeding which was effected without its consent.
SECTION VI
NEGATIVE COVENANTS
So long as the Bank has any commitment to lend hereunder or any Loan or
other Obligation remains outstanding, each Company covenants as follows:
6.1. INDEBTEDNESS. Neither Back Bay nor any of its Subsidiaries shall
create, incur, assume, guarantee or be or remain liable with respect to any
Indebtedness without the prior written consent of the Bank, other than the
following:
(a) Indebtedness of the Companies to the Bank or any of its
affiliates;
(b) Indebtedness existing as of the date of this Agreement and
disclosed on EXHIBIT Q hereto or in the financial statements referred to in
Section 4.6;
(c) Indebtedness secured by Encumbrances permitted under
Sections 6.3(c), (f) and (g) hereof;
(d) Contingent Liabilities permitted pursuant to Section 6.2
hereof;
(e) Indebtedness consisting of that portion of all obligations
arising under capital leases that is required to be capitalized on the
consolidated balance sheet of Back Bay and its Subsidiaries; and
(f) Other Indebtedness not exceeding in the aggregate at any
time $100,000.
6.2. CONTINGENT LIABILITIES. Neither Back Bay nor any of its
Subsidiaries shall create, incur, assume, guarantee or remain liable with
respect to any Guarantees other than the following:
(a) Guarantees in favor of the Bank or any of its affiliates;
(b) Guarantees existing on the date of this Agreement and
disclosed on EXHIBIT R hereto or in the financial statements referred to in
Section 4.6;
(c) Guarantees resulting from the endorsement of negotiable
instruments for collection in the ordinary course of business;
(d) Guarantees with respect to surety, appeal performance and
return-of-money and other similar obligations incurred in the ordinary course of
business (exclusive of obligations for the payment of borrowed money) not
exceeding in the aggregate at any time $200,000;
(e) Guarantees of normal trade debt relating to the acquisition
of goods and supplies; and
27
<PAGE> 32
(f) Guaranties by Back Bay of the obligations of another Company
or any Subsidiary hereafter created with respect to such Company's or
Subsidiary's obligations under its restaurant lease and related obligations.
6.3. ENCUMBRANCES. Neither Back Bay nor any of its Subsidiaries shall
create, incur, assume or suffer to exist any mortgage, pledge, security
interest, lien or other charge or encumbrance, including the lien or retained
security title of a conditional vendor upon or with respect to any of its
property or assets ("ENCUMBRANCES"), or assign or otherwise convey any right to
receive income, including the sale or discount of accounts receivable with or
without recourse, except the following (" PERMITTED ENCUMBRANCES"):
(a) Encumbrances in favor of the Bank or any of its affiliates;
(b) Encumbrances existing as of the date of this Agreement and
disclosed in EXHIBIT T hereto;
(c) liens for taxes, fees, assessments and other governmental
charges to the extent that payment of the same may be postponed or is not
required in accordance with the provisions of Section 5.4;
(d) landlords' and lessors' liens in respect of rent not in
default or liens in respect of pledges or deposits under workmen's compensation,
unemployment insurance, social security laws, or similar legislation (other than
ERISA) or in connection with appeal and similar bonds incidental to litigation;
mechanics', laborers', materialmen's and warehousemen's and similar liens, if
the obligations secured by such liens are not then delinquent; liens securing
the performance of bids, tenders, contracts (other than for the payment of
money); and statutory obligations incidental to the conduct of its business and
that do not in the aggregate materially detract from the value of its property
or materially impair the use thereof in the operation of its business;
(e) judgment liens that do not exceed, in the aggregate,
$100,000 and that shall not have been in existence for a period longer than 30
days after the creation thereof or, if a stay of execution shall have been
obtained, for a period longer than 30 days after the expiration of such stay;
(f) rights of lessors under capital leases;
(g) Encumbrances in respect of any purchase money obligations
for tangible property used in its business, PROVIDED that any such Encumbrances
shall not extend to property and assets of any Company not financed by such a
purchase money obligation;
(h) easements, rights of way, restrictions and other similar
charges or Encumbrances relating to real property and not interfering in a
material way with the ordinary conduct of its business; and
(i) Encumbrances on any Company's property or assets created in
connection with the refinancing of Indebtedness secured by Permitted
Encumbrances on such property, PROVIDED that the amount of Indebtedness secured
by any such Encumbrance shall not be increased as a result of such refinancing
and no such Encumbrance shall extend to property and assets of any Company not
encumbered prior to any such refinancing.
28
<PAGE> 33
6.4. MERGER; ACQUISITION; CONSOLIDATION; SALE OR LEASE OF ASSETS.
Neither Back Bay nor any of its Subsidiaries shall a sell, lease or otherwise
dispose of, except in the ordinary course of business, assets or properties
(valued at the lower of cost or market), other than (i) sales of inventory in
the ordinary course of business; (ii) liquidation of Investments as permitted in
Section 6.8 hereof; and (iii) sales of old, obsolete or unusable equipment for
fair market value in the ordinary course of business, or (b) liquidate, merge,
acquire or consolidate into or with any other person or entity without the prior
written consent of the Bank, PROVIDED that (x) any Subsidiary of any Company may
merge or consolidate into or with such Company if no Default has occurred and is
continuing or would result from such merger and if such Company is the surviving
company, (y) any Subsidiary of any Company may merge or consolidate into or with
any other wholly-owned Subsidiary of such Company if no Default has occurred and
is continuing or would result from such merger and if a wholly owned Subsidiary
of such Company is the surviving company, (z) any Company or any Subsidiary of
any Company may acquire the capital stock or assets of any Related Business
PROVIDED that no Default has occurred and is continuing or would result from
such acquisition, and FURTHER PROVIDED that either (i) the purchase price of
such acquisition does not exceed Two Million Dollars ($2,000,000), or (ii) the
acquisition satisfies the Acquisition Criteria; and (xx) the Companies, taken as
a whole, may sell the stock or assets of not more than one restaurant during
each fiscal year, PROVIDED that such restaurant's Unit Contribution is below the
median Unit Contribution for all restaurants owned and operated by the Companies
during the prior fiscal year. Without limiting the generality of the foregoing,
Back Bay and its Subsidiaries hereby acknowledge and agree that sales or leases
of restaurants, modifications of restaurant leases and joint venturing and
shared management arrangements for restaurants will constitute sales, leases and
disposition of assets which are not in the ordinary course of business.
6.5. ADDITIONAL STOCK ISSUANCE. Neither Back Bay nor any of its
Subsidiaries shall permit any of its Subsidiaries to issue any additional shares
of its capital stock or other equity securities, any options therefor or any
securities convertible thereto other than to such Company. Neither Back Bay nor
any of its Subsidiaries shall sell, transfer or otherwise dispose of any of the
capital stock or other equity securities of a Subsidiary, except (i) to Back Bay
or any of its wholly-owned Subsidiaries, or (ii) in connection with a
transaction permitted by Section 6.4 or 6.6.
6.6. EQUITY DISTRIBUTIONS AND REDEMPTIONS. Neither Back Bay nor any of
its Subsidiaries shall pay any dividends on any class of its capital stock or
make any other distribution or payment on account of or in redemption,
retirement or purchase of such capital stock without the prior written consent
of the Bank; PROVIDED that this Section shall not apply to (i) the issuance,
delivery or distribution by any Company of shares of its common stock pro rata
to its existing shareholders and (ii) the purchase or redemption by any Company
of its capital stock with the proceeds of the issuance of additional shares of
capital stock.
6.7. CAPITAL EXPENDITURES. Back Bay and its Subsidiaries shall not,
except for the application of insurance proceeds, (a) purchase or agree to
purchase, or incur any obligations (including that portion of the obligations
arising under capital leases that is required to be capitalized on the
consolidated balance sheet of the Companies) for any equipment or other property
constituting fixed assets or (b) make any Joint Venture Investments, to the
extent that the total of (a) and (b) in the aggregate in any fiscal year exceeds
the sum of $10,000,000. Back Bay and its Subsidiaries shall not commit to make
or incur any single or series of related capital expenditures or obligations for
an amount in excess of $1,000,000 without the Bank's prior written consent. The
Bank hereby confirms its consent to the making of capital expenditures in the
amounts of $1,500,000, $1,600,000 and $1,7000,000, respectively, in connection
with following proposed restaurants: Abe & Louie's in Boston, Massachusetts; Abe
& Louie's, Rye, New York; and Joe's Bar & Grille in Fairfield, Connecticut.
29
<PAGE> 34
6.8. INVESTMENTS. Neither Back Bay nor any of its Subsidiaries shall
make or maintain any Investments other than (i) Investment made pursuant to and
in compliance with the Investment Policy, (ii) Investments in Subsidiaries,
(iii) Qualified Investments, (iv) Joint Venture Investments to the extent
permitted under Section 6.7, (v) Investments in new wholly-owned Subsidiaries
for the purpose of opening and operating new restaurants, acquiring existing
restaurants, or providing ancillary services to restaurants owned and operated
by Back Bay and its Subsidiaries, and (vi) Investments in Companies for cash
management purposes, PROVIDED that such new Subsidiary becomes a party to this
Agreement and the Note as an additional Company on terms and conditions
satisfactory to the Bank and in connection therewith provides the Bank with
documentation regarding such Subsidiary similar to documentation previously
provided with respect to the Companies.
6.9. ERISA. Neither Back Bay nor any of its Subsidiaries nor any member
of the Controlled Group shall permit any Plan maintained by it to (i) engage in
any "prohibited transaction" (as defined in Section 4975 of the Code, (ii) incur
any "accumulated funding deficiency" (as defined in Section 302 of ERISA)
whether or not waived, or (iii) terminate any Plan in a manner that could result
in the imposition of a lien or encumbrance on the assets of any Company pursuant
to Section 4068 of ERISA.
6.10. TRANSACTIONS WITH AFFILIATES.
(a) Neither Back Bay nor any of its Subsidiaries shall enter
into any transaction with or make any loans, investments, advances or other cash
payments or provide any services to Westwood or any other Affiliate without the
prior written consent of the Bank, except for (i) transactions by and among the
Companies, (ii) employment and compensation of executive officers and directors
in the ordinary course of business, and (iii) the transactions with and loans or
advances to Charles F. Sarkis and Westwood existing on the date of this
Agreement and disclosed on EXHIBIT U hereto.
(b) With the prior written consent of the Bank, which consent
will not be unreasonably withheld, the Companies may enter into transactions
with their respective officers and directors in the ordinary course of business,
on terms no less favorable than would be available in bona fide arm's length
transactions with a non-affiliated person or entity.
SECTION VII
DEFAULTS
7.1. EVENTS OF DEFAULT. There shall be an Event of Default hereunder if
any of the following events occurs:
30
<PAGE> 35
(a) the Companies shall fail to pay when due (i) any amount of
principal of any Loans, or (ii) any amount of interest thereon or any fees or
expenses payable hereunder or under the Note within five days of the due date
therefor; or
(b) Back Bay or any of its Subsidiaries shall fail to perform
any term, covenant or agreement contained in Sections 5.5, 5.7 through 5.12 or
6.1 through 6.10; or
(c) Back Bay or any of its Subsidiaries shall fail to perform
any covenant contained in Sections 5.1(j), 5.1(k), 5.1(l) or 5.2, and such
failure shall continue for 15 days after written notice thereof has been given
to the Company by the Bank; or
(d) Back Bay or any of its Subsidiaries shall fail to perform
any term, covenant or agreement (other than in respect of subsections 7.1(a)
through (c) hereof) contained in this Agreement and such default shall continue
for 30 days after written notice thereof has been given to the Companies by the
Bank; or
(e) any material representation or warranty of any Company made
in this Agreement or in the Note or any other documents or agreements executed
in connection with the transactions contemplated by this Agreement or in any
certificate delivered hereunder shall prove to have been false in any material
respect upon the date when made or deemed to have been made;
(f) there shall occur any material adverse change in the assets,
liabilities, operations, financial condition, business or prospects of Back Bay
and its Subsidiaries taken as a whole; or
31
<PAGE> 36
(g) Back Bay or any of its Subsidiaries shall fail to pay at
maturity, or within any applicable period of grace, any obligations in excess of
$200,000 in the aggregate for borrowed monies or advances, or for the use of
real or personal property, or fail to observe or perform any term, covenant or
agreement evidencing or securing such obligations for borrowed monies or
advances, or relating to such use of real or personal property, the result of
which failure to pay is to permit the holder or holders of such Indebtedness to
cause such Indebtedness to become due prior to its stated maturity upon delivery
of required notice, if any; or
(h) Back Bay or any of its Subsidiaries shall (i) apply for or
consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee, liquidator or similar official of itself or of all or a
substantial part of its property, (ii) be generally not paying its debts as such
debts become due, (iii) make a general assignment for the benefit of its
creditors, (iv) commence a voluntary case under the Federal Bankruptcy Code (as
now or hereafter in effect), (v) take any action or commence any case or
proceeding under any law relating to bankruptcy, insolvency, reorganization,
winding-up or composition or adjustment of debts, or any other law providing for
the relief of debtors, PROVIDED that Back Bay or any of its Subsidiaries may
join in commencing such a proceeding against an entity that is not a Company, an
Affiliate of or a Subsidiary of Back Bay or any of its Subsidiaries, (vi) fail
to contest in a timely or appropriate manner, or acquiesce in writing to, any
petition filed against it in an involuntary case under the Federal Bankruptcy
Code or other law, (vii) take any action under the laws of its jurisdiction of
incorporation or organization similar to any of the foregoing, or (viii) take
any corporate action for the purpose of effecting any of the foregoing; or
(i) a proceeding or case shall be commenced, without the
application or consent of any Company in any court of competent jurisdiction,
seeking (i) the liquidation, reorganization, dissolution, winding up, or
composition or readjustment of its debts, (ii) the appointment of a trustee,
receiver, custodian, liquidator or the like of it or of all or any substantial
part of its assets, or (iii) similar relief in respect of it, under any law
relating to bankruptcy, insolvency, reorganization, winding-up or composition or
adjustment of debts or any other law providing for the relief of debtors, and
such proceeding or case shall continue undismissed, or unstayed and in effect,
for a period of 45 days; or an order for relief shall be entered in an
involuntary case under the Federal Bankruptcy Code, against Back Bay or any of
its Subsidiaries; or action under the laws of the jurisdiction of incorporation
or organization of Back Bay or any of its Subsidiaries similar to any of the
foregoing shall be taken with respect to Back Bay or any of its Subsidiaries and
shall continue unstayed and in effect for any period of 30 days; or
32
<PAGE> 37
(j) a judgment or order for the payment of money shall be
entered against any Company by any court, or a warrant of attachment or
execution or similar process shall be issued or levied against property of Back
Bay or any of its Subsidiaries, that in the aggregate exceeds $300,000 in value
and such judgment, order, warrant or process shall continue undischarged or
unstayed for 30 days; or
(k) Back Bay or any of its Subsidiaries or any member of the
Controlled Group shall fail to pay when due an amount or amounts aggregating in
excess of $200,000 that it shall have become liable to pay to the PBGC or to a
Plan under Title IV of ERISA; or notice of intent to terminate a Plan or Plans
shall be filed under Title IV of ERISA by Back Bay or any of its Subsidiaries,
any member of the Controlled Group, any plan administrator or any combination of
the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA
to terminate or to cause a trustee to be appointed to administer any such Plan
or Plans or a proceeding shall be instituted by a fiduciary of any such Plan or
Plans against Back Bay or any of its Subsidiaries and such proceedings shall not
have been dismissed within 30 days thereafter; or a condition shall exist by
reason of which the PBGC would be entitled to obtain a decree adjudicating that
any such Plan or Plans must be terminated; or
(l) Any two of Charles F. Sarkis, Francis P. Bissaillon and Mark
Hartzfeld shall cease to be employed and actively engaged full time by Back Bay,
or any two of the positions of Chief Executive Officer, Chief Financial Officer
and Chief Operating Officer, of Back Bay are held by individual(s) other than
Charles F. Sarkis, Francis P. Bissaillon and Mark Hartzfeld, in either case for
any reason (including without limitation by reason of death or disability); or
(m) Intentionally omitted; or
(n) Charles F. Sarkis and Westwood together shall cease to own,
in the aggregate, at least 19.60% of the capital stock of Back Bay; or
(o) the occurrence of a Change of Control; or
(p) Any material representation or warranty of Back Bay or any
Subsidiary in the Leasehold Mortgages or the Security Agreements shall prove to
have been false in any material respect upon the date when made or deemed to
have been made, or Back Bay or any Subsidiary shall fail to perform any material
term, covenant or agreement contained in the Leasehold Mortgages or the Security
Agreements; or
7.2. REMEDIES. Upon the occurrence of an Event of Default described in
subsections 7.1(h) and (i), immediately and automatically, and upon the
occurrence of any other Event of Default, at any time thereafter while such
Event of Default is continuing, at the Bank's option and upon the Bank's
declaration:
(a) the Bank's commitment to make any further Loans hereunder
shall terminate;
(b) the unpaid principal amount of the Loans together with
accrued interest and all other Obligations shall become immediately due and
payable without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived; and
(c) the Bank may exercise any and all rights it has under this
Agreement, the Note or any other documents or agreements executed in connection
herewith, or at law or in equity, and
33
<PAGE> 38
proceed to protect and enforce the Bank's rights by any action at law, in equity
or other appropriate proceeding.
SECTION VIII
MISCELLANEOUS
8.1. NOTICES. Unless otherwise specified herein, all notices hereunder
to any party hereto shall be in writing and shall be deemed to have been given
when delivered by hand, three business days after having been properly deposited
in the mails postage prepaid, when sent by telex, answerback received, or
electronic facsimile transmission, or when delivered to the telegraph company or
overnight courier, addressed to such party at its address indicated below:
If to any Company, to Back Bay, at
284 Newbury Street
Boston, MA 02116
Attention: Mr. Francis P. Bissaillon,
Chief Financial Officer
Telecopy No.: (617) 536-2800
With a copy to
Hutchins Wheeler & Dittmar, a Professional Corporation
101 Federal Street
Boston, MA 02110
Attention: Francis J. Feeney Jr., Esq.
Telecopy No.: (617) 951-1295
If to the Bank, at
100 Federal Street
Boston, MA 02110
Attention: Carlton F. Williams,
Director
Telecopy No.: (617) 434-8102
34
<PAGE> 39
With a copy to
Lane Altman & Owens LLP
101 Federal Street, 26th Floor
Boston, MA 02110
Attention: Katherine M. Kozub, Esq. and Frank D. Aronson, Esq.
Telecopy No.: (617) 345-0400
or at any other address specified by such party in writing.
8.2. EXPENSES. The Companies, jointly and severally, will pay on demand
all expenses of the Bank in connection with the preparation and duplication,
waiver or amendment of this Agreement, the Note or other documents executed in
connection herewith and therewith and with the transactions contemplated hereby
and thereby, and all expenses of the administration, default or collection of
the Loans or other Obligations or in connection with the Bank's exercise,
preservation or enforcement of any of its rights, remedies or options
thereunder, including, without limitation, reasonable fees of outside legal
counsel, accounting, consulting, brokerage or other similar professional fees or
expenses, any recording and filing fees and transfer or similar taxes at any
time payable in respect of this Agreement or any security or other agreement
executed in connection herewith, any fees or expenses associated with any travel
or other costs relating to any appraisals or examinations conducted in
connection with the Obligations or any collateral therefor, and the amount of
all such expenses shall, until paid, bear interest at the rate applicable to
principal hereunder (including any default rate).
8.3 INDEMNITY.
(a) The Companies will jointly and severally indemnify the Bank
and hold it harmless from any liability, loss or damage resulting from the
violation by the Companies of Section 2.2. The Companies will also indemnify the
Bank and each of its directors, officers and employees (each, and "Indemnitee")
and hold each of them harmless from and against any and all claims, damages,
liabilities and reasonable expenses (including reasonable fees and disbursements
of counsel with whom any Indemnitee may consult in connection therewith and all
reasonable expenses of litigation or preparation therefor) which any Indemnitee
may incur or which may be asserted against any Indemnitee in connection with (i)
the existence or exercise of any of the security rights with respect to any
assets of the Company granted as security to the Bank in accordance with this
Agreement, or (ii) any other litigation or investigation involving the
Companies, any Subsidiaries or Affiliates, or any officer, director or employee
thereof (including the Bank's compliance with or contest of any subpoena or
other process issued against them in any proceeding involving the Companies or
any Subsidiaries or Affiliates), other than litigation commenced by the
Companies against the Bank which seeks enforcement of any of the rights of the
Companies hereunder or under any other document executed in connection herewith
and is finally determined adversely to the Lenders and except to the extent such
claims, damages, liabilities and expenses result from an Indemnitee's gross
negligence or willful misconduct.
(b) Any action, inaction or omission on the part of the Bank or
any of its correspondents under or in connection with any Letter of Credit or
the related instruments, documents or property, if in good faith and not
constituting gross negligence, shall be binding upon each Company and shall not
place the Bank of any of its correspondents under any liability to any Company.
Each Company agrees to indemnify the Bank and its correspondents and hold them
harmless form and against any an all claims, losses, liabilities and damages,
including without
35
<PAGE> 40
limitation reasonable attorneys' fees, arising from or in connection with any
Letter of Credit, including any such claim, loss, liability or damage arising
out of any transfer, sale, delivery, surrender or endorsement of any invoice,
bill of lading, warehouse receipt or other document at any time held by the
Bank, or held for its account by any of its correspondents, in connection with
any Letter of Credit; provided, however, that the foregoing shall not extend to
actions taken by the Bank unless such actions were taken in good faith and do
not constitute gross negligence by the Bank and, with respect to drafts
presented for payment, if it determines in good faith that the drafts and
related documents appear on their face to be in accordance with the terms and
conditions of the Letter of Credit in question, and any action or failure to act
in accordance with a written opinion of its counsel shall conclusively be deemed
to be in good faith.
8.4. SET-OFF. Regardless of the adequacy of any collateral or other
means of obtaining repayment of the Obligations, any deposits, balances or other
sums credited by or due from the head office of the Bank or any of its branch
offices to any of the Companies may, at any time and from time to time after the
occurrence of an Event of Default hereunder, without notice to the Companies or
compliance with any other condition precedent now or hereafter imposed by
statute, rule of law, or otherwise (all of which are hereby expressly waived) be
set off, appropriated, and applied by the Bank against any and all obligations
of the Companies to the Bank or any of its affiliates in such manner as the head
office of the Bank or any of its branch offices in their sole discretion may
determine, and each Company hereby grants the Bank a continuing security
interest in such deposits, balances or other sums for the payment and
performance of all such obligations.
8.5. TERM OF AGREEMENT. This Agreement shall continue in force and
effect so long as the Bank has any commitment to make Loans hereunder or any
Loan or any Obligation shall be outstanding.
8.6. NO WAIVERS. No failure or delay by the Bank in exercising any
right, power or privilege hereunder or under the Note or under any other
documents or agreements executed in connection herewith 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, power or
privilege. The rights and remedies herein and in the Note provided are
cumulative and not exclusive of any rights or remedies otherwise provided by
agreement or law.
8.7. GOVERNING LAW. This Agreement and the Note shall be deemed to be
contracts made under seal and shall be construed in accordance with and governed
by the laws of The Commonwealth of Massachusetts (without giving effect to any
conflicts of laws provisions contained therein).
8.8. AMENDMENTS. Neither this Agreement nor the Note nor any provision
hereof or thereof may be amended, waived, discharged or terminated except by a
written instrument signed by the Bank and, in the case of amendments, by each
Company.
8.9. BINDING EFFECT OF AGREEMENT. This Agreement shall be binding upon
and inure to the benefit of the Companies and the Bank and their respective
successors and assigns; PROVIDED that the Companies may not assign or transfer
their rights or obligations hereunder. The Bank may sell, transfer or grant
participations in the Note to any entity that is an affiliate or subsidiary of
the Bank without the prior written consent of the Companies, and each Company
agrees that any transferee or participant shall be entitled to the benefits of
Sections 2.8, 2.11, 5.5 and 8.4 to the same extent as if such transferee or
participant were the Bank hereunder; PROVIDED that notwithstanding any such
transfer or participation, the Companies may, for all purposes of this
Agreement, treat the Bank as the person entitled to exercise all rights
hereunder and under the Note and to receive all payments with
36
<PAGE> 41
respect thereto. The Bank shall not sell, transfer or grant participation in the
Note to any entity that is not an affiliate or subsidiary of the Bank without
the prior written consent of Back Bay, as agent for the Companies, which consent
will not be unreasonably withheld.
8.10. COUNTERPARTS. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures hereto and thereto were
upon the same instrument.
8.11. PARTIAL INVALIDITY. The invalidity or unenforceability of any one
or more phrases, clauses or sections of this Agreement shall not affect the
validity or enforceability of the remaining portions of it.
8.12. CAPTIONS. The captions and headings of the various sections and
subsections of this Agreement are provided for convenience only and shall not be
construed to modify the meaning of such sections or subsections.
8.13. WAIVER OF JURY TRIAL. THE BANK AND EACH COMPANY AGREE THAT NONE OF
THEM NOR ANY ASSIGNEE OR SUCCESSOR SHALL (A) SEEK A JURY TRIAL IN ANY LAWSUIT,
PROCEEDING, COUNTERCLAIM OR ANY OTHER ACTION BASED UPON, OR ARISING OUT OF, THIS
AGREEMENT, ANY RELATED INSTRUMENTS, ANY COLLATERAL OR THE DEALINGS OR THE
RELATIONSHIP BETWEEN OR AMONG ANY OF THEM, OR (B) SEEK TO CONSOLIDATE ANY SUCH
ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN
WAIVED. THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY DISCUSSED BY THE BANK
AND THE COMPANIES, AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS.
NEITHER THE BANK NOR ANY COMPANY HAS AGREED WITH OR REPRESENTED TO THE OTHER
THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL
INSTANCES.
8.14. ENTIRE AGREEMENT. This Agreement, the Note and the documents and
agreements executed in connection herewith constitute the final agreement of the
parties hereto and supersede any prior agreement or understanding, written or
oral, with respect to the matters contained herein and therein.
37
<PAGE> 42
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
BACK BAY RESTAURANT GROUP, INC.
PHEASANT MALL RESTAURANT GROUP, INC.
DANVERS RESTAURANT GROUP, INC.
THE WESTWOOD COPLEY RESTAURANT GROUP, INC.
THE WESTWOOD WOBURN RESTAURANT GROUP, INC.
THE WESTWOOD HARTFORD RESTAURANT GROUP, INC.
THE WESTWOOD TRUMBULL RESTAURANT GROUP, INC.
THE WATERFORD RESTAURANT GROUP, INC.
WESTFOUR, INC.
THE WESTWOOD DEDHAM RESTAURANT, INC.
PRA, INC.
THE WESTWOOD NEWTON RESTAURANT, INC.
THE 199, INC.
EASTERN PURCHASING & DESIGN, INC.
BORASCHI CAFE, INC.
THE WESTWOOD WHITE PLAINS RESTAURANT, INC.
THE WESTWOOD SHORT HILLS RESTAURANT, INC.
THE WESTWOOD BOYLSTON RESTAURANT, INC.
BBRG MASSACHUSETTS RESTAURANTS, INC.
BBRG RHODE ISLAND RESTAURANTS, INC.
BBRG WASHINGTON RESTAURANTS, INC.
BACK BAY MEDIA, INC.
BBRG OPERATING, INC.
BBRG NEW JERSEY RESTAURANTS, INC.
LINPRO GREENTREE, INC.
BBRG ROTISSERIE, INC.
BBRG PARAMUS RESTAURANT, INC.
BBRG WATERFRONT, INC.
BBRG RYE RESTAURANT, INC.
By: __________________________________
Title: _______________________________ of each Company
BANKBOSTON, N.A.
By: __________________________________
Title:
38
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF BACK BAY RESTAURANT GROUP, INC. FOR THE QUARTER ENDED
JUNE 28, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS
</LEGEND>
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-27-1998
<PERIOD-START> DEC-29-1997
<PERIOD-END> JUN-28-1998
<EXCHANGE-RATE> 1
<CASH> 1,560,000
<SECURITIES> 0
<RECEIVABLES> 132,000
<ALLOWANCES> 0
<INVENTORY> 690,000
<CURRENT-ASSETS> 3,506,000
<PP&E> 59,028,000
<DEPRECIATION> 28,022,000
<TOTAL-ASSETS> 43,092,000
<CURRENT-LIABILITIES> 10,561,000
<BONDS> 4,289,000
0
0
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<INCOME-TAX> 464,000
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<EPS-PRIMARY> .23
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</TABLE>
