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Subsequent Events
12 Months Ended
Sep. 30, 2011
Subsequent Events

13.          Subsequent Events:

 

 

We entered into a purchase and sale agreement for the sale of one company-owned restaurant in Littleton, Colorado that was effective October 11, 2011. We anticipate the sale to close prior to December 31, 2011 with estimated net proceeds of $310,000.

 

As previously disclosed in the Company’s current report on Form 8-K filed December 9, 2011, we received notice from Wells Fargo Bank, N.A. (the “Bank”) that the Company is currently not in compliance with certain covenants under the Amended and Restated Credit Agreement dated December 10, 2010 (the “Credit Agreement”), including covenants requiring that the Company’s tangible net worth not be less than $2,500,000 at any time and that the Company deliver certain landlord’s disclaimer and consent documents to the Bank.   As previously disclosed in the Company’s current report on Form 8-K filed December 27, 2011 we entered into a First Amendment to the Amended Credit Agreement and Waiver of Defaults and a Second Amended and Restated Term Note with Wells Fargo Bank (together, the “Amendments”) that waived the current covenant defaults  and  modified the loan covenants and note terms.  The Amendments are conditioned upon the closing of the sale of the Littleton restaurant described above and provide for a prepayment of $100,000 in principal from the proceeds from the sale of the Littleton, Colorado restaurant, the release of collateral associated with that restaurant, the waiver of certain other collateral requirements, and a revision to the amortization and maturity date of the remaining loan balance as of January 2, 2012 of $349,000 to December 31, 2013.  There was no change to the interest rate of the loan.