<PAGE>
EXHIBIT 10.2
LOAN AGREEMENT
BY AND AMONG
FIRST TENNESSEE BANK NATIONAL ASSOCIATION,
"BANK"
AND
BACK YARD BURGERS, INC
"BORROWER"
AND
THE
SUBSIDIARIES
"GUARANTORS"
Dated: November 17, 2005
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TABLE OF CONTENTS
<TABLE>
<S>
<C>
1. DEFINITIONS AND REFERENCE
TERMS........................................................................
2
2.
LOANS..................................................................................................
4
3. CONDITIONS OF
LENDING..................................................................................
4
4. REPRESENTATIONS AND
WARRANTIES.........................................................................
5
5. AFFIRMATIVE
COVENANTS..................................................................................
8
6. DEFAULTS AND
REMEDIES..................................................................................
12
7.
NOTICE.................................................................................................
15
8. COSTS, EXPENSES AND
ATTORNEYS'
FEES....................................................................
15
9.
MISCELLANEOUS..........................................................................................
15
10.
ARBITRATION............................................................................................
17
11. NO ORAL
AGREEMENT......................................................................................
18
12. EXHIBIT A
.............................................................................................
20
13. EXHIBIT
B..............................................................................................
22
14. EXHIBIT
C..............................................................................................
23
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2
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LOAN AGREEMENT
(BYB 2005 Multistate)
This Loan
Agreement (this "Agreement") dated as of November 17, 2005, by
and among FIRST TENNESSEE BANK NATIONAL
ASSOCIATION, a national banking
association ("Bank"), and BACKYARD BURGERS,
INC., a Delaware Corporation
("Borrower"), and is joined herein by THE
SUBSIDIARIES, whose names appear
below.
RECITALS:
A. Borrower has applied to Bank for a loan as hereinafter
described
(the "Loan") to be used for the purposes of
hereinafter set forth.
B. Bank has issued its commitment to Borrower dated October 3,
2005
(the "Commitment") setting forth the basic
terms and conditions of the Loan.
C. One of the conditions of the Commitment from Bank to Borrower
is
the execution of this Agreement setting
forth the full terms and conditions of
the Loan according to the terms and
conditions set forth in the Commitment.
NOW
THEREFORE, in consideration of the Loan described below and the
mutual
covenants and agreements contained herein,
and intending to be legally bound
hereby, Bank and Borrower agree as
follows:
1.
DEFINITIONS AND REFERENCE TERMS. In addition to any other terms
defined
herein, the following terms shall have the
meaning set forth with respect
thereto:
A. CLOSING DATE: Closing Date shall mean the date of this
Agreement
as set forth in the introductory paragraph
of this Agreement.
B. COLLATERAL: Collateral means all real and personal property
estates and/or interests of every type and
kind belonging to Borrower now or
hereafter pledged to secure the Loan and
Borrower's obligations under this
Agreement or any of the other Loan
Documents, and includes, without limitation,
the Deeds of Trust encumbering the
Properties.
C. COMMITMENT: Commitment shall have the meaning set forth in
the
Recitals of fact hereinabove set forth.
D. COMPLIANCE CERTIFICATE: Compliance Certificate shall mean
the
certification submitted by Borrower to Bank
each quarter in the form attached
hereto as EXHIBIT "A", or in such other
form and content as may be acceptable to
Bank, showing compliance with the financial
covenants set forth in this
Agreement.
3
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E. DEBT COVERAGE RATIO: Debt Coverage Ratio means EBITDA minus
tax
expense divided by interest expense plus
scheduled principal payments on any
term loans or capital leases.
F. DEEDS OF TRUST: Deed or Deeds of Trust shall mean those
certain
Deeds of Trust or mortgages executed by
Borrower or any of the Subsidiaries from
time to time encumbering the estates and/or
interests of Borrower in one or more
of the Properties as part of the
Collateral.
G. FINANCING STATEMENTS: Financing Statements means those
certain
UCC-1 Financing Statements authorized by
Borrower or certain of the
Subsidiaries, as debtor therein, to be
filed in the appropriate filing office(s)
in order to perfect the security interests
in such of the Collateral in which
security interests may be perfected by
filing.
H. GUARANTORS: Guarantors shall mean all Subsidiaries executing
Guaranty Agreements and any other Person
from time to time executing a guaranty
agreement in connection with the Loan.
I. GUARANTY AGREEMENTS: Guaranty Agreements means the
agreements
executed by the Guarantors.
J. LOAN: Loan shall have the meaning set forth in the Recitals
of
fact hereinabove set forth.
K. LOAN DOCUMENTS: Loan Documents means this Agreement, the
Note,
the Deeds of Trust, the Guaranty
Agreements, and any and all other documents,
instruments, guarantees, certificates and
agreements evidencing, securing or
relating to the Loan, including, but not
limited to, the Swap Documents.
L. NOTE: Note shall mean the lesser of (i) that certain
promissory
note in the principal amount of Six Million
Two Hundred Thousand and No/100
Dollars ($6,200,000.00) of even date
herewith, as such note may be modified,
amended, or restated from time to time or
(ii) eighty percent (80%) of the total
appraised value of the Properties.
M. PERSON: Person means any individual, partnership,
corporation,
trust, unincorporated organization, limited
liability company, association,
joint venture or other legally recognized
entity having the capacity to contract
in its own name.
N. PROPERTIES: Properties means the real property and all
improvements thereon now or hereafter owned
by Borrower or a Subsidiary and
pledged to Bank as part of the Collateral.
The Properties existing on the date
hereof are listed in EXHIBIT "B" attached
hereto.
4
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O. SECURED OBLIGATIONS: Secured Obligations shall mean all
indebtedness and obligations of Borrower to
Bank, whether now existing or
hereafter arising, including, but not
limited to, any obligations arising under
the Swap Documents.
P. SUBSIDIARIES: Subsidiaries means those corporations or other
entities now or hereafter existing in which
Borrower owns a controlling
interest, all of which existing on the date
hereof are listed in EXHIBIT "C"
attached hereto.
Q. SWAP DOCUMENTS. Swap Documents means any document entered into
by
and between Bank, or any affiliate of Bank,
and the Borrower related to any
interest rate swap agreement.
R. TANGIBLE STOCKHOLDERS' EQUITY: Tangible Stockholders' Equity
means stockholders' equity less intangible
assets, plus subordinated debt
acceptable to Bank.
S. UCC: UCC means the Uniform Commercial Code as in effect in
the
State of Tennessee from time to time.
2. PURPOSE
OF LOAN.
The Loan
shall be evidenced by the Note, and shall be payable as set
forth
in the Note. The Loan shall be used to
purchase the Properties.
3.
CONDITIONS OF LENDING.
A. CONDITIONS PRECEDENT TO CLOSING. The obligation of Bank to
close
and make the Loan available to Borrower is
subject to the conditions precedent
that Borrower shall have delivered or
provided, on or before the Closing Date,
and thereafter provide, as applicable or
required by Bank, all of the following
in form and substance satisfactory to
Bank:
(i) The
Commitment.
(ii) This
Agreement.
(iii) The Note.
(iv) The Guaranty
Agreements.
(v) The Deeds of
Trust.
(vi) The Financing
Statements.
5
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(vii) Current signed financial statements of Borrower and the
Guarantors in form satisfactory to Bank.
(viii) Certificate of insurance insuring the Collateral and
Borrower
from an insurance broker satisfactory to Bank setting forth
the information concerning insurance which is required by the
Deeds of Trust, or, if Bank shall so require, the original
insurance policies evidencing such insurance.
(ix) Title searches
acceptable on all of the Properties.
(x) Title
Commitments from title insurance companies acceptable to
Bank, providing for the issuance of mortgagee's loan policies
insuring the liens of the Deeds of Trusts in form substance
and amounts satisfactory to Bank, containing no exceptions
which are unacceptable to Bank, and containing such
endorsements as Bank may require.
(xi) Current surveys
of the Properties (except for the Panama City
property), indicating the location of all building lines,
easements (visible, reflected in the public records or
otherwise) and any existing improvements or encroachments,
with surveys shall contain no set of facts objectionable to
Bank and shall be certified by the surveyors to Bank in a
manner satisfactory to Bank.
(xii) Appraisals of the Properties.
(xiii) Transactional environmental reports on the Properties
showing
no violation of any Environmental Laws and no Hazardous
Substances, and containing such facts, findings and
recommendations as are acceptable to Bank.
(xiv) The certified charter and bylaws (and all amendments to
the
charter and bylaws) for Borrower and Guarantors, as well as
certified resolutions of Borrower, and as all Guarantors,
authorizing the execution, delivery and performance of this
Agreement, the Loan, and all other documents executed in
connection therewith, and certificates of existence, good
standing and/or authority, as the case may be, on Borrower and
all Guarantors, from the states in which Borrower and
Guarantors were organized and/or authorized to do business.
(xv) Such other
information and documentation required by the
Commitment and as Bank may otherwise now or hereafter
reasonably require.
4.
REPRESENTATIONS AND WARRANTIES. Borrower and Guarantors hereby
represent and warrant to Bank as
follows:
6
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A. STATUS. Each is duly organized, validly existing and in good
standing under the laws of the state of its
formation, and has the necessary
power to own and operate all its
properties, to carry on its business as now
conducted and to enter into and to perform
its obligations under this Agreement
and the other Loan Documents. Each is duly
qualified to do business and in good
standing in each state in which a failure
to be so qualified would have a
material adverse effect on its financial
position or its ability to conduct its
respective businesses in the manner now
conducted.
B. AUTHORIZATION. Each has the full legal right, power and
authority
to conduct its business and affairs in the
manner contemplated by the Loan
Documents, and to enter into and perform
its obligations thereunder, without the
consent or approval of any other person,
firm, governmental agency or other
legal entity. The execution and delivery of
this Agreement, the borrowing
hereunder, the execution and delivery of
each Loan Document to which each is a
party, and the performance by each one of
its obligations thereunder are within
its powers and has been duly and properly
authorized by all necessary company
action, has received all necessary
governmental approvals, if any were required,
and does not and will not contravene or
conflict with any provision of law, any
applicable judgment, ordinance, regulation
or order of any court or governmental
agency, its charter, articles of
incorporation or by-laws or operating
agreement, or any agreement binding upon it
or its properties. The Persons
executing this Agreement and all of the
other Loan Documents to which each is a
party are duly authorized to act on behalf
of Borrower or Guarantors as
applicable.
C. VALIDITY AND BINDING EFFECT. This Agreement and the other
Loan
Documents are the legal, valid and binding
obligations of the parties thereto,
enforceable in accordance with their
respective terms, subject to applicable
bankruptcy, reorganization, insolvency,
moratorium, fraudulent conveyance, and
other laws affecting creditors' rights
generally from time to time in effect and
to general equitable principles (whether
considered in a proceeding at law or in
equity).
D. OTHER TRANSACTIONS. Except as specifically set forth in this
Agreement and the other Loan Documents,
there are no prior loans, liens,
security interests, agreements or other
financings upon which each is obligated
or by which each is bound that will in any
way permit any third person to have
or obtain priority over Bank as to any of
the security interests or liens
granted to Bank pursuant to this Agreement
and the other Loan Documents.
Consummation of the transactions hereby
contemplated and the performance of the
obligations of each under and by virtue of
the Loan Documents will not result in
any breach of, or constitute a default
under, any mortgage, security deed or
agreement, deed of trust, lease, bank loan
or credit agreement, corporate
charter or by-laws, agreement or
certificate of limited partnership, partnership
agreement, license, franchise or any other
instrument or agreement to which each
is a party or by which each or its
properties may be bound or affected.
7
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E. PLACES OF BUSINESS. The records with respect to all
Collateral
for the Secured Obligations are maintained
at its chief place of business and
chief executive office, which has the
address of 1657 North Shelby Oaks Drive,
Suite 105, Memphis, TN 38134.
F. LITIGATION. There are no actions, suits or proceedings
pending,
or, to its knowledge, threatened, against
or affecting it or involving the
validity or enforceability of any of the
Loan Documents or the priority of the
liens thereof, at law or in equity, or
before any governmental or administrative
agency, except actions, suits and
proceedings that are fully covered by
insurance and that, if adversely
determined, would not impair their ability to
perform each and every one of their
obligations under and by virtue of the Loan
Documents; and they are not in default with
respect to any order, writ,
injunction, decree or demand of any court
or any governmental authority.
G. FINANCIAL STATEMENTS. The financial statements of Borrower
and
each of the Guarantors heretofore delivered
to Bank are true and correct in all
respects, have been prepared in accordance
with generally applied accounting
principles consistently applied, and fairly
present the financial condition of
the subjects thereof as of the date(s)
thereof. No material adverse change has
occurred in the financial condition of
Borrower or any of the Guarantors since
the date(s) thereof.
H. NO DEFAULTS. No default or event of default exists under
this
Agreement or any of the other Loan
Documents, or under any other instrument or
Agreement to which Borrower is a party or
by which it or its properties may be
bound or affected, and no event has
occurred and is existing that with notice or
the passage of time or both would
constitute a default or event of default
thereunder.
I. COMPLIANCE WITH LAW. They have obtained all necessary
licenses,
permits and governmental approvals and
authorizations necessary or proper in
order to conduct its businesses and affairs
as heretofore conducted and as
intended to be conducted hereafter. To
their knowledge they are in compliance
with all laws, regulations, decrees and
orders applicable to it (including but
not limited to laws, regulations, decrees
and orders relating to occupational
and health standards and controls,
antitrust, monopoly, restraint of trade or
unfair competition). They have not
received, and do not expect to receive, any
order or notice of any violation or claim
of violation of any law, regulation,
decree, rule, judgment or order of any
governmental authority or agency relating
to their ownership and/or operation of
their respective properties, as to which
the cost of compliance is or might be
material and the consequences of
noncompliance would or might be materially
adverse to their respective
businesses, operations, properties or
financial conditions, or which would or
might impair their abilities to perform its
obligations under the Loan
Documents.
J. NO BURDENSOME RESTRICTIONS. No instrument, document or
agreement
to which they are a party, or by which they
or their properties may be bound or
affected, materially adversely affects, or
may reasonably be expected so to
affect, their businesses, operations,
properties or financial conditions.
8
<PAGE>
K. TAXES. They have filed or caused to be filed all tax returns
that
are required to be filed (except for
returns that are not yet due), and have
paid all taxes shown to be due and payable
on said returns and all other taxes,
impositions, assessments, fees or other
charges imposed on it by any
governmental authority, agency or
instrumentality, prior to any delinquency with
respect thereto (other than taxes,
impositions, assessments, fees and charges
currently being contested in good faith by
appropriate proceedings, for which
appropriate amounts have been reserved). No
tax liens have been filed against
them or any of their properties.
L. SUBSIDIARIES. There are no subsidiaries of Borrower existing
on
the date hereof other than the Persons
listed on EXHIBIT "C". Atlanta Burgers
BYB Corporation has no assets and receives
no income. In the event it does
acquire any assets in the future, Borrower
will immediately notify Bank and
cause such entity to execute a Guaranty
Agreement.
M.
ERISA. They are in compliance with all applicable provisions of
the Employees Retirement Income Security
Act of 1974 ("ERISA") and all other
laws, state or federal, applicable to any
employees' retirement plan maintained
or established by them.
N. ACCURACY OF SUBMISSIONS. All documents and information
submitted
by Borrower or the Guarantors to Bank were,
as of the date of submission, and
now, remain true, complete and correct in
all material respects. All financial
statements submitted Bank in connection
with the Loan are correct and complete
and fairly present the financial condition
of Borrower or the Guarantors as the
case may be, as of the date or for the
period therein stated; and there are no
material contingent liabilities or
obligations which are not duly noted therein.
O. NO MATERIAL CHANGE. There has occurred no material change in
the
business, Properties or condition,
financial or otherwise, of Borrower or the
Guarantors since the date of their
financial statements submitted to Bank.
P. TITLE TO ASSETS PLEDGED. Borrower has good and marketable
title
to the Properties and assets pledged or
mortgaged to Bank as security for the
Loan, subject only to liens and
encumbrances to which Bank has consented in
writing.
Q. HAZARDOUS SUBSTANCES. No Hazardous Substances are located on
or
have been stored, processed or disposed of
on or released or discharged
(including ground water contamination) from
the Properties and no above or
underground storage tanks exist on the
Properties. No private or governmental
lien or judicial or administrative notice
or action related to Hazardous
Substances or other environmental matters
has been filed against the Properties
or otherwise issued to or received by
Borrower.
5.
AFFIRMATIVE COVENANTS. Until full payment and performance of
all
Secured Obligations, Borrower and
Guarantors each covenant and agree as follows:
9
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A. PAYMENT OF SECURED OBLIGATIONS. They shall pay the
indebtednesses
evidenced by the Notes according to the
terms thereof, and Borrower shall timely
pay or perform, as the case may be, all of
the other Secured Obligations.
B. SALES OF AND ENCUMBRANCES ON COLLATERAL. They will not sell,
exchange, lease, negotiate, pledge, assign
or grant any security interest in, or
otherwise dispose of, the Collateral to
anyone other than Bank, except in the
ordinary course of business, no
