Exhibit (a)(1)(xxv)
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") is made as of March _____, 2005
(the "Effective Date"), by and between GE CAPITAL FRANCHISE FINANCE CORPORATION,
a Delaware corporation ("Lender"), and ERI ACQUISITION CORP., an Oregon
corporation ("Borrower"). From and after the consummation of the Merger (as
defined in Section 1 below), all references to Borrower shall mean Elmer's,
including the obligations of Elmer's as successor by merger to Borrower from and
after the consummation of the Merger.
AGREEMENT:
In consideration of the mutual covenants and provisions of this
Agreement, the parties agree as follows:
1. DEFINITIONS. The following terms shall have the following meanings
for all purposes of this Agreement:
"Additional Collateral" means $2,000,000.00 in cash or cash equivalents
to be deposited with and held by Xxxxx Fargo pursuant to the Control Agreement
as contemplated by Section 2(b)(ii) below.
"Affiliate" means any Person which directly or indirectly controls, is
under common control with, or is controlled by any other Person. For purposes of
this definition, "controls", "under common control with" and "controlled by"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through
ownership of voting securities or otherwise.
"Anti-Money Laundering Laws" means all applicable laws, regulations and
government guidance on the prevention and detection of money laundering,
including 18 U.S.C. ss. ss. 1956 and 1957, and the BSA.
"Borrower's Business" means the business of owning and operating, and
franchising to third parties, Elmer's Breakfast-Lunch-Dinner Restaurants,
Mitzel's American Kitchens, Ashley's Cafes, Richard's Delis and Pubs and
Xxxxxx'x Xxxxx & Pubs.
"Borrower Entities" means the Borrower Parties other than the
Indemnitors.
"Borrower Parties" means, collectively, Borrower, Guarantors,
Subsidiaries and any Affiliate of any of Borrower, Guarantors and Subsidiaries
(including, in each case, any predecessors-in-interest).
"BSA" means the Bank Secrecy Act (31 U.S.C. ss. ss. 5311 et. seq.), and
its implementing regulations, Title 31 Part 103 of the U.S. Code of Federal
Regulations.
"Business Day" means any day on which Lender is open for business other
than a Saturday, Sunday or a legal holiday, ending at 5:00 P.M. Phoenix, Arizona
time.
"Change of Control" means a change in control of any of the Borrower
Entities, including, without limitation, a change in control resulting from
direct or indirect transfers of voting stock or partnership, membership or other
ownership interests, whether in one or a series of transactions. For purposes of
this definition, "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of any of
the Borrower Entities, as applicable, and a Change of Control will occur if any
of the following occur: (i) any merger or consolidation by any of the Borrower
Entities, as applicable, with or into any other entity; or (ii) if any "Person"
as defined in Section 3(a)(9) of the Securities and Exchange Act of 1934, as
amended (the "Exchange Act"), and as used in Section 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d) of the Exchange Act, subsequent
to the Closing, becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), of securities of any of the Borrower Entities, as applicable,
representing 50% or more of the combined voting power of Borrower's then
outstanding securities (other than indirectly as a result of the redemption by
any of the Borrower Entities, as applicable, of its securities).
"Closing" means the initial disbursement of the Loan Amount as
contemplated by Section 2(b) of this Agreement.
"Closing Date" means the date of the Closing.
"Code" means Title 11 of the United States Code, 11 U.S.C. Sec. 101 et
seq., as amended.
"Collateral' means, collectively, the Equipment, the Receivables, the
Franchise Notes, the Liquor Licenses, the Pledged Stock, the Additional
Collateral, the Franchise Agreements, the Royalties and the Intellectual
Property.
"Commitment Letter" means, collectively, that certain proposal letter
dated October 5, 2004 between Lender and Elmer's Acquisition Group and that
certain commitment letter dated as of December 3, 2004 between Lender and ERI
Acquisition Corp., as amended, modified and/or supplemented from time to time.
"Control Agreement" means the Securities Account Control Agreement to
be executed and delivered by Lender, Xxxxx Fargo Brokerage Services, LLC and
Borrower as of the Closing Date with respect to the Additional Collateral, as
the same may be amended, restated and/or supplemented from time to time. The
Control Agreement shall be in the form attached to this Agreement as Exhibit S.
"Default Rate" has the meaning set forth in the Notes.
"Elmer's" means Elmer's Restaurants, Inc., an Oregon corporation.
"Entity" means any entity that is not a natural person.
"Equipment" means all furniture, equipment, trade fixtures, seating,
decor, appliances and other tangible personal property now or hereafter owned by
Borrower wherever located, including, without limitation, at the Premises, and
all income therefrom and all proceeds thereof.
"ERI" means ERI Acquisition Corp., an Oregon corporation. Prior to the
Final Disbursement Date, ERI shall also be defined in this Agreement as
"Borrower".
"Event of Default" has the meaning set forth in Section 6.
"Existing GE Loans" means, collectively, the mortgage loan made by
Lender or an Affiliate of Lender to Elmer's on or about April 7, 2004 in the
original principal amount of $$1,288,500.00 (Loan Number 12500) and secured by
the Premises located in Beaverton, Oregon, and the two equipment loans made by
Lender or an Affiliate of Lender to Elmer's on or about June 22, 2001 and April
7, 2004 in the original principal amounts of $1,802,430.31 and $1,002,500.00
with respect to the June 22, 2001 financing and $337,500.00 with respect to the
April 7, 2004 financing, respectively, and secured by the Equipment located at
all of the Premises except the Premises located in Tacoma, Washington, Lynwood,
Washington and Boise, Idaho.
"Existing GE Loan Documents" means the documents and instruments
evidencing the Existing GE Loans.
"Final Disbursement Date" means the date of the Final Disbursement.
"Final Disbursement" means the disbursement by Lender to Borrower of
the remaining Loan Amount pursuant to Section 2(c) below.
"Fixed Rate Promissory Note" means the promissory note to be executed
pursuant to Section 2(b) below by Borrower in favor of Lender in the maximum
original principal amount of $3,500,000.00, as the same may be amended and
restated as contemplated by Section 2(b) below and as otherwise amended,
modified and supplemented from time to time. The Fixed Rate Promissory Note
shall be in the form attached to this Agreement as Exhibit E if the Initial
Disbursement is in an amount less than $3,500,000.00. The Fixed Rate Promissory
Note
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shall be in the form attached to this Agreement as Exhibit F if the Initial
Disbursement is in an amount equal to $3,500,000.00.
"Franchise Agreements" means, collectively, (i) the documents and
agreements listed on Exhibit B attached hereto, together with all amendments,
modifications and supplements thereto, (ii) any franchise or royalty agreements
entered into by any of the Borrower Parties after the Closing Date with respect
to the development or franchising of the Permitted Concept franchises, together
with all amendments, modifications and supplements thereto, and (iii) any area
development, area franchise, area subcontract, master license or similar
provisions or arrangements with respect to the development or franchising of the
Permitted Concept franchises within any area and any franchise agreements
containing any provisions described in this clause (iii), together with all
amendments, modifications and supplements thereto.
"Franchise Notes" means the promissory notes described on the attached
Exhibit O payable by the applicable franchisees under the Franchise Agreements
to Franchisor.
"Franchisor" means Elmer's Pancakes & Steakhouse, Inc., an Oregon
corporation, and its successors.
"GAAP" means generally accepted accounting principles consistently
applied.
"Governmental Authority" means any governmental authority, agency,
department, commission, bureau, board, instrumentality, court or
quasi-governmental authority having jurisdiction or supervisory or regulatory
authority over the Collateral or any of the Borrower Parties.
"Guarantors" means, collectively, Individual Guarantors and Subsidiary
Guarantors.
"Indemnity" means the Indemnity Agreement to be executed and delivered
as of the Closing Date by the Indemnitors for the benefit of Lender, as the same
may be amended, modified and supplemented from time to time. The Indemnity shall
be in the form attached to this Agreement as Exhibit T. To the extent required
by applicable law, the spouses of such individuals shall also join in the
execution and delivery of the Indemnity.
"Indemnified Parties" means Lender and any person or entity who is or
will have been involved in the origination of the Loan, any person or entity who
is or will have been involved in the servicing of the Loan, persons and entities
who may hold or acquire or will have held a full or partial interest in the
Loan, as well as the respective directors, officers, shareholders, partners,
members, employees, lenders, agents, servants, representatives, contractors,
subcontractors, affiliates, subsidiaries, participants, successors and assigns
of any and all of the foregoing (including, but not limited to, any other person
or entity who holds or acquires or will have held a participation or other full
or partial interest in the Loan or the Collateral, whether during the term of
the Loan or as a part of or following a foreclosure of the Loan and including,
but not limited to, any successors by merger, consolidation or acquisition of
all or a substantial portion of Lender's assets and business).
"Indemnitors" means the 21 individuals listed on the attached Exhibit C
"Individual Guarantors" means the individuals listed on the attached
Exhibit C-1.
"Individual Guaranty" means the limited recourse guaranty of payment
and performance to be executed and delivered as of the Closing Date by the
Individual Guarantors for the benefit of Lender, as the same may be amended,
modified and supplemented from time to time. The Individual Guaranty shall be in
the form attached to this Agreement as Exhibit Q. To the extent required by
applicable law, the spouses of such individuals shall also join in the execution
and delivery of the Individual Guaranty in order to encumber the Pledged Stock.
"Initial Disbursement" means such portion of the Loan Amount equal to
the [TENDER PRICE MULTIPLIED BY THE NUMBER OF SHARES OF TENDERED STOCK], but in
no event more than the Loan Amount.
"Initial Stock Pledge Agreements" means, collectively, (i) that certain
Stock Pledge Agreement to be executed and delivered as of the Closing Date by
the Indemnitors for the benefit of Lender pursuant to which the
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Indemnitors shall pledge to Lender all of the capital stock of ERI to secure the
obligations of the Indemnitors to Lender under the Individual Guaranty, as
amended, modified and supplemented from time to time; and (ii) that certain
Stock Pledge Agreement to be executed and delivered as of the Closing Date by
ERI for the benefit of Lender pursuant to which ERI shall pledge to Lender all
of the Tendered Stock to secure ERI's obligations to Lender under the Loan
Documents, as amended, modified and supplemented from time to time. The Initial
Stock Pledge Agreements shall be substantially in the form attached to this
Agreement as Exhibit G, with such modifications as necessary to evidence the
stock pledged pursuant to, and the obligations secured by, such Initial Stock
Pledge Agreement.
"Intellectual Property" shall mean, with respect to the Borrower
Entities and/or Borrower's Business, (i) all patents and patent applications in
the United States and all equivalents of the foregoing in any other jurisdiction
and all reissues, divisions, continuations and extensions of the foregoing,
including, without limitation, any patent and patent applications listed on
Exhibit A to the IP Security Agreement; (ii) all registered and unregistered
trademarks, trade names, service marks, trade dress, logos, slogans and
corporate names (including, but not limited to, the names listed on the attached
Exhibit H) together with all translations, adaptations, derivations and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations and renewals in connection therewith, including,
without limitation, any registrations and applications listed on Exhibit A to
the IP Security Agreement; (iii) all works of authorship, including, but not
limited to, all copyrightable works and all copyrights (including, but not
limited to, distinctive menus and manuals) and all applications, registrations
and renewals in connection therewith in the United States and all equivalents of
the foregoing in any other jurisdiction, including, without limitation, any
copyrights listed on Exhibit A to the IP Security Agreement, and all moral
rights; (iv) all trade secrets and other confidential information (including,
but not limited to, recipes, cuisine, culinary style, inventions, ideas, assets
under research and development, know-how, methods, techniques, diagnostic tools,
technology, specifications, customer and supplier lists, pricing and cost
information, and business, technical and marketing plans and proposals); (v) all
domain names, web addresses and websites; (vi) all computer software, in source
code and object code form, and all related data and documentation; (vii) all
other intellectual property and proprietary rights, whether or not subject to
statutory registration; and (viii) all copies and tangible embodiments of all of
the foregoing (i) through (vii) in any form or medium.
"IP Security Agreement" means the Intellectual Property Security
Agreement executed and delivered as of the Final Disbursement Date by Borrower,
Franchisor and the other Subsidiaries in favor of Lender, as the same may be
amended, restated and/or supplemented from time to time. The IP Security
Agreement shall be in the form attached to this Agreement as Exhibit I.
"Landlord's Agreements Regarding Equipment" has the meaning set forth
in Section 2(e)(iii).
"Leased Premises" means the 24 Premises described on the attached
Exhibit A-1.
"Leases" means the leases of the Leased Premises between the applicable
Lessor, as lessor, and Elmer's, as lessee, and all modifications, amendments and
supplements thereto disclosed in the Landlord's Agreements Regarding Equipment
delivered with respect thereto.
"Lessors" means the lessors under the Leases.
"Lender Entities" means, collectively, Lender (including any
predecessor-in-interest to Lender) and any Affiliate of Lender (including any
Affiliate of any predecessor-in-interest to Lender).
"Liquor Licenses" means the licenses, certificates, authorizations or
permits issued by applicable Governmental Authorities to Borrower, Elmer's or
any of the Subsidiaries for the sale of alcoholic beverages for on-site
consummation, including, without limitation, the licenses, certificates,
authorizations or permits described on the attached Exhibit P.
"Loan" means the loan by Lender to Borrower in the Loan Amount as
described in Section 2 below.
"Loan Amount" means the aggregate amount of $6,500,000.00.
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"Loan Documents" means, collectively, this Agreement, the Notes, the
Stock Pledge Agreements, the Control Agreement, the Security Agreement, the
Guaranties, the IP Security Agreement, the Landlord's Agreements Regarding
Equipment, the UCC-1 Financing Statements and all other documents, instruments
and agreements executed in connection therewith or contemplated thereby.
"Loan" means the loan by Lender to Borrower in the aggregate amount of
$6,500,000.00.
"Loan Pool" means: (i) in the context of a Securitization, any pool or
group of loans that are a part of such Securitization; (ii) in the context of a
Transfer, all loans which are sold, transferred or assigned to the same
transferee; and (iii) in the context of a Participation, all loans as to which
participating interests are granted to the same participant.
"Material Adverse Effect" means (i) a material adverse effect on (X)
any of the Collateral (other than the Franchise Agreements), including without
limitation, the use of the Equipment at any of the Premises in the operation of
a Permitted Concept, or (Y) the ability of any of the Borrower Parties to
perform their obligations under the Loan Documents, or (ii) at least one-fifth
of the Franchise Agreements then in effect are in breach as a result of the
failure of the applicable franchisees to make required payments due Franchisor
in the amount of $10,000.00 or more under each such Franchise Agreement.
"Merger" means either the short-form merger or the long-form merger of
Borrower and Elmer's to be consummated under applicable Oregon law following the
completion of the Tender Offer, with Elmer's being the surviving entity of such
merger.
"Net Sale Proceeds" means the gross purchase price paid for the
applicable property, less (i) the ordinary and customary closing costs actually
incurred by the applicable Borrower Entities with respect to such sale, which
closing costs shall be subject to Lender's reasonable prior approval, and (ii)
if Borrower is an S-Corp for federal income tax purposes, the income taxes
payable by the shareholders of Borrower as a result of such sale, which taxes
shall be determined at the applicable federal and Oregon state law rates.
"Notes" means, collectively, the Fixed Rate Promissory Note and the
Variable Rate Promissory Note.
"Obligations" means, collectively, the obligations of the Borrower
Parties to pay the indebtedness and other sums under, and to perform all other
obligations and covenants contained in, the Notes, the other Loan Documents and
the Other Agreements.
"OFAC Laws and Regulations" means Executive Order 13224 issued by the
President of the United States of America, the Terrorism Sanctions Regulations
(Title 31 Part 595 of the U.S. Code of Federal Regulations), the Terrorism List
Governments Sanctions Regulations (Title 31 Part 596 of the U.S. Code of Federal
Regulations), the Foreign Terrorist Organizations Sanctions Regulations (Title
31 Part 597 of the U.S. Code of Federal Regulations), and the Cuban Assets
Control Regulations (Title 31 Part 515 of the U.S. Code of Federal Regulations),
and all other present and future federal, state and local laws, ordinances,
regulations, policies, lists (including, without limitation, the Specially
Designated Nationals and Blocked Persons List) and any other requirements of any
Governmental Authority (including, without limitation, the United States
Department of the Treasury Office of Foreign Assets Control) addressing,
relating to, or attempting to eliminate, terrorist acts and acts of war, each as
hereafter supplemented, amended or modified from time to time, and the present
and future rules, regulations and guidance documents promulgated under any of
the foregoing, or under similar laws, ordinances, regulations, policies or
requirements of other states or localities.
"Other Agreements" means, collectively, all agreements and instruments
between, among or by (1) any of the Borrower Parties and/or any Affiliate of any
of the Borrower Parties (including any Affiliate of any predecessor-in-interest
to any of the Borrower Parties), and, or for the benefit of, (2) any of the
Lender Entities, including, without limitation, promissory notes and guaranties,
including, without limitation, the Existing GE Loan Documents; provided,
however, the term "Other Agreements" shall not include the agreements and
instruments defined as the Loan Documents.
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"Participation" means one or more grants by Lender or any of the other
Lender Entities to a third party of a participating interest in notes evidencing
obligations to repay secured or unsecured loans owned by Lender or any of the
other Lender Entities or any or all servicing rights with respect thereto.
"Permitted Concepts" means the use as of the Effective Date of each of
the Premises as an Elmer's Breakfast-Lunch-Dinner Restaurant and a Xxxxxx'x
American Kitchen, Ashley's Cafe, Richard's Deli and Pub or Xxxxxx'x Deli & Pub,
as indicated on the attached Exhibit A.
"Person" means any individual, corporation, partnership, limited
liability company, trust, unincorporated organization, Governmental Authority or
any other form of entity.
"Pledged Stock" means (i) as of the Closing Date, all of the capital
stock of ERI and all of the Tendered Stock; and (ii) as of the Final
Disbursement Date, all of the Stock.
"Premises" means the 28 restaurant properties described by address in
Exhibit A attached hereto, together with all rights, privileges and
appurtenances associated therewith and all buildings, fixtures and other
improvements now or hereafter located thereon (whether or not affixed to such
real estate). The term "Premises" shall be deemed automatically amended from
time to time to include any additional restaurant properties owned or operated
by any of Borrower, Elmer's or the Subsidiaries
"Receivables" means the accounts receivable now or hereafter payable to
Borrower, Elmer's or any of the Subsidiaries, except the Royalties.
"Royalties" means all royalties, franchise and/or licensing fees and
all other sums payable to Franchisor under the Franchise Agreements.
"Securitization" means one or more sales, dispositions, transfers or
assignments by Lender or any of the other Lender Entities to a special purpose
corporation, trust or other entity identified by Lender or any of the other
Lender Entities of notes evidencing obligations to repay secured or unsecured
loans owned by Lender or any of the other Lender Entities (and, to the extent
applicable, the subsequent sale, transfer or assignment of such notes to another
special purpose corporation, trust or other entity identified by Lender or any
of the other Lender Entities), and the issuance of bonds, certificates, notes or
other instruments evidencing interests in pools of such loans, whether in
connection with a permanent asset securitization or a sale of loans in
anticipation of a permanent asset securitization. Each Securitization shall be
undertaken in accordance with all requirements which may be imposed by the
investors or the rating agencies involved in each such sale, disposition,
transfer or assignment or which may be imposed by applicable securities, tax or
other laws or regulations.
"Security Agreement" means that certain Security Agreement to be
executed and delivered as of the Final Disbursement Date by Elmer's and the
Subsidiaries for the benefit of Lender, as amended, modified and supplemented
from time to time. The Security Agreement shall be in the form attached to this
Agreement as Exhibit K.
"Stock" means all of the issued and outstanding shares of capital stock
of Elmer's. As of the Effective Date, the Stock consists of 1,842,945 shares of
common stock.
"Stock Pledge Agreements" means, collectively, the Initial Stock Pledge
Agreements and the Subsequent Stock Pledge Agreement.
"Subsequent Stock Pledge Agreement" means that certain Stock Pledge
Agreement to be executed and delivered as of the Final Disbursement Date by
Indemnitors for the benefit of Lender pursuant to which Indemnitors shall pledge
to Lender all of the Stock to secure the obligations of Individual Guarantors
under the Individual Guaranty, as amended, modified and supplemented from time
to time. The Subsequent Stock Pledge Agreement shall be in the form attached to
this Agreement as Exhibit M.
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"Subsidiaries" means Franchisor, Grass Valley Ltd., Inc., an Oregon
corporation, and CBW Food Company, LLC, an Oregon limited liability company.
"Subsidiary Guaranty" means the limited guaranty of payment and
performance to be executed and delivered as of the Final Disbursement Date by
the Subsidiaries for the benefit of Lender, as the same may be amended, modified
and supplemented from time to time. The Subsidiary Guaranty shall be in the form
attached to this Agreement as Exhibit R.
"Tender Offer" means the cash-tender offer for common stock of Elmer's
to be made by the Individual Guarantors as described in that certain Schedule
13D for Elmer's filed with the Securities and Exchange Commission on or about
August 5, 2004, as amended.
"Tender Price" means a price of $7.50 for each share of common stock of
Elmer's.
"Tendered Stock" means the number of shares of Stock tendered pursuant
to the Tender Offer.
"Transfer" means one or more sales, transfers or assignments by Lender
or any of the other Lender Entities to a third party of notes evidencing
obligations to repay secured or unsecured loans owned by Lender or any of the
other Lender Entities or any or all servicing rights with respect thereto.
"UCC" means the Uniform Commercial Code as adopted in the State of
Arizona.
"UCC-1 Financing Statements" means such UCC-1 Financing Statements as
Lender shall file with respect to the transactions contemplated by this
Agreement.
"U.S. Publicly-Traded Entity" is an Entity whose securities are listed
on a national securities exchange or quoted on an automated quotation system in
the U.S. or a wholly-owned subsidiary of such an Entity.
"VA Report" means the Elmer's Restaurants, Inc. Valuation Analysis
dated August 5, 2004 prepared by Xxxxxx Partners, as updated by [letter] from
Xxxxxx Partners dated [], 2005.
"Variable Rate Promissory Note" means the promissory note to be
executed pursuant to Section 2(b) and/or 2(c) below by Borrower in favor of
Lender in the maximum original principal amount of $3,000,000.00, as the same
may be amended and restated as contemplated by Section 2(c) below and as
otherwise amended, modified and supplemented from time to time. The Variable
Rate Promissory Note shall be in the form attached to this Agreement as Exhibit
L.
"Xxxxx Fargo" means Xxxxx Fargo Bank, NA or Xxxxx Fargo Brokerage
Securities, LLC, and their successors, as applicable.
"Xxxxx Fargo Loan Documents" means the documents now in effect and
evidencing the mortgage loans made by Xxxxx Fargo Bank, NA to Elmer's and
secured by mortgages on the three Premises described by address on the attached
Exhibit D. The Xxxxx Fargo Loan Documents shall not include any modifications,
amendments, supplements or refinancing of such Xxxxx Fargo Loan Documents
without Lender's prior written consent, which consent may be withheld in
Lender's sole discretion.
2. TRANSACTION; CONDITIONS PRECEDENT; DEPOSIT; SECURITY AGREEMENT IN
ADDITIONAL COLLATERAL. (a) Loan. On the terms and subject to the conditions set
forth in the Loan Documents, Lender shall make the Loan to Borrower. The Loan
will be evidenced by the Notes and secured:
(i) from and after the Closing Date until the Final
Disbursement Date by the Pledged Stock pursuant to the Initial Stock
Pledge Agreements;
(ii) by the Additional Collateral pursuant to the Control
Agreement as contemplated by Section 2(e) below; and
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(iii) from and after the Final Disbursement Date, in addition
to the Additional Collateral as contemplated by the preceding subitem
(ii), by (1) the Equipment, the Receivables and the Liquor Licenses
pursuant to the Security Agreement, (2) the Pledged Stock pursuant to
the Subsequent Stock Pledge Agreement, (3) the Franchise Agreements,
the Royalties and the Franchise Notes pursuant to the Security
Agreement, and (4) the Intellectual Property pursuant to the IP
Security Agreement, all as contemplated by this Agreement.
Borrower shall repay the outstanding principal amount of the Loan together with
interest thereon in the manner and in accordance with the terms and conditions
of the Notes and the other Loan Documents. The Loan shall be guaranteed from and
after the Final Disbursement Date by the Individual Guaranty and the Subsidiary
Guaranty.
(b) Initial Disbursement of Loan. (i) Subject to the satisfaction of
the conditions precedent set forth in this subsection, Lender shall advance to
Borrower the Initial Disbursement on the Closing Date.
(1) If the Initial Disbursement is in an amount less than
$3,500,000.00, the obligation of Borrower with respect to the repayment
of such Initial Disbursement shall be evidenced by the Fixed Rate
Promissory Note in the original principal amount of such Initial
Disbursement. Such Fixed Rate Promissory Note shall provide for
interest only payments prior to the Final Disbursement Date at a
variable rate of interest as determined pursuant to such Fixed Rate
Promissory Note, and shall be amended and restated at the time of the
Final Disbursement as contemplated by subsection (c) below.
(2) If the Initial Disbursement is equal to or in excess of
$3,500,000.00, the obligation of Borrower with respect to such Initial
Disbursement shall be evidenced by:
(X) the Fixed Rate Promissory Note in the original
principal amount of $3,500,000.00. Such Fixed Rate Promissory
Note shall bear interest at a fixed rate of interest and shall
be amortized in equal monthly payments over a ten year period
of time ending on the first day of the first calendar month
after the tenth anniversary of the Closing Date, all as set
forth in such Fixed Rate Promissory Note; and
(Y) to the extent applicable, the Variable Rate
Promissory Note in the amount by which such Initial
Disbursement exceeds $3,500,000.00. Such Variable Rate
Promissory Note shall provide for interest only payments prior
to the Final Disbursement Date at a variable rate of interest
as determined pursuant to such Variable Rate Promissory Note.
(ii) The obligation of Lender to disburse the Initial Disbursement is
subject to the fulfillment by Borrower, or waiver by Lender, of each of the
following conditions:
(1) Condition of Equipment. Lender shall have approved the
condition of the Equipment.
(2) Tender Offer. The Tender Offer shall have been completed
and at least [ ] shares of the Stock shall have been tendered pursuant
to such Tender Offer and Borrower shall own at least 81% of the Stock.
Borrower shall have delivered (i) a stock power to Lender with respect
to the Pledged Stock, in form and substance reasonably acceptable to
Lender and endorsed in blank, and (ii) the stock certificates
evidencing the Pledged Stock to Lender.
(3) Valuation Report. Borrower shall have delivered to Lender
a bring down comfort letter to the VA Report that is dated within three
(3) weeks of the Closing Date and that indicates no material adverse
change has taken place to the VA Report.
(4) Business Valuation Opinion. Borrower shall have received
and approved an independent Business Valuation Opinion completed by FTI
Consulting, which opinion shall determine the fair market value of
Elmer's assets, including general intangibles and other assets after
giving effect to the consummation of the Merger.
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(5) Documents. Lender and/or Borrower, as may be appropriate,
shall have executed and delivered or shall have caused to be executed
and delivered to Lender, or as Lender may otherwise direct, the Fixed
Rate Promissory Note, the Variable Rate Promissory Note, as applicable,
the Initial Stock Pledge Agreements, the Control Agreement, the
Indemnity and the Individual Guaranty, and such other documents,
payments, instruments and certificates as Lender may reasonably
require, all in form and substance reasonably acceptable to Lender.
(6) Leases. The Leases shall be in full force and effect and
Elmer's shall be entitled to occupy the Leased Premises. Lender shall
have approved the Leases in its reasonable discretion.
(7) Representations and Warranties. All of the representations
and warranties of Borrower set forth in Section 4 of this Agreement
shall be true, correct and complete, and Borrower shall be in
compliance with each of the covenants set forth in Section 5 of this
Agreement. No event shall have occurred or condition shall exist or
information shall have been disclosed by Borrower or discovered by
Lender which has had or would be reasonably likely to have a material
adverse effect on the Premises, the Collateral, any of the Borrower
Parties or Lender's willingness to consummate the transaction
contemplated by this Agreement, as determined by Lender in its sole and
absolute discretion. No Event of Default shall have occurred and be
continuing.
(8) Costs and Expenses. Borrower shall have paid all costs of
the transaction described in this Agreement incurred through the
Closing Date, including, without limitation, UCC search and litigation
search charges, the attorneys' fees of the Borrower Parties, reasonable
attorneys' fees and expenses of Lender, stamp taxes, mortgage taxes,
transfer fees, and escrow, filing and recording fees (including
preparation, filing and recording fees for UCC continuation
statements). Borrower shall be obligated to pay all costs of the
transaction described in this Agreement, regardless of whether this
Agreement is terminated and/or the Closing or the Final Disbursement
occurs. Borrower shall promptly reimburse Lender upon demand for any
costs incurred by Lender in connection with the transactions described
in this Agreement. The provisions of this subsection (8) shall survive
the termination of this Agreement.
(9) Opinion. Borrower shall have caused legal counsel
reasonably acceptable to Lender to issue such legal opinions to Lender
as Lender shall reasonably require, which opinions shall be in form and
substance reasonably acceptable to Lender.
(10) Tax Lien. Borrower shall have provided Lender with
evidence reasonably satisfactory to Lender of the release of a certain
county tax lien in the approximate amount of $211 filed against Grass
Valley Ltd. and reported on or about January 1996.
(11) Separate Financial Statements. Lender shall have received
separate financial statements (balance sheet and income statements) in
form and substance reasonably acceptable to Lender for the last fiscal
year end, the interim period subsequent to such last fiscal year end
and prior year comparable for Franchisor, Grass Valley Ltd. and CBW
Food Company, LLC.
(12) Securities Laws Violation Indemnity. Borrower shall have
caused the Indemnitors to execute and deliver the Indemnity.
(13) Source of Additional Collateral. Borrower shall have
provided evidence of the source of the Additional Collateral.
(iii) The disbursement of the Initial Disbursement by Lender to
Borrower (the "Closing") shall occur upon the satisfaction of the conditions
precedent set forth in this subsection (b), but in no event later than March 31,
2005 (the "Outside Closing Date"). If the Closing has not occurred on or before
the Outside Closing Date, Lender shall have no obligation to fund the Loan and
this Agreement shall terminate and be of no further force and effect, except
that Borrower's obligation to pay all costs and expenses incurred by GE with
respect to this Agreement, including, without limitation, Lender's reasonable
attorneys' fees and expenses, shall survive such termination.
9
(c) Final Disbursement of Loan. (i) Subject to the satisfaction of the
applicable conditions precedent set forth in this subsection, Lender shall
advance to Borrower the remaining portion of the Loan Amount on the Final
Disbursement Date. If the Initial Disbursement was in an amount less than
$3,500,000.00, the Fixed Rate Promissory Note shall be amended and restated
effective as of the Final Disbursement Date to increase the outstanding
principal balance of such note to $3,500,000.00. Such amended and restated
promissory note shall be substantially in the form of the Fixed Rate Promissory
Note attached to this Agreement as Exhibit F, shall bear interest at a fixed
rate of interest and shall be amortized in equal monthly payments over a ten
year period of time ending on the first day of the first calendar month after
the tenth anniversary of the Final Disbursement Date, all as set forth in such
amended and restated Fixed Rate Promissory Note. If the Initial Disbursement was
in an amount in excess of $3,500,000.00, the Variable Rate Promissory Note shall
be amended and restated effective as of the Final Disbursement Date to increase
the outstanding principal amount of the Variable Rate Promissory Note to
$3,000,000.00. Such amended and restated promissory note shall be substantially
in the form of the Variable Rate Promissory Note attached to this Agreement as
Exhibit L, shall bear interest at a variable rate of interest and shall be
amortized in monthly payments over a ten year period of time ending on the first
day of the first calendar month after the tenth anniversary of the Final
Disbursement Date, all as set forth in such Variable Rate Promissory Note.
(ii) The obligation of Lender to disburse the remaining Loan Amount
shall be subject to the fulfillment by Borrower, or waiver by Lender, of the
following conditions precedent on or before May 15, 2005 (the "Outside Final
Disbursement Date"):
(1) Merger. The Merger shall have been completed and Elmer's
shall, by operation of law, be the surviving entity of such merger and
liable for all of the obligations of Borrower under the Loan Documents.
The documents evidencing the Merger shall be in form and substance
reasonably satisfactory to Lender. All of the stock options to acquire
capital stock in Elmer's shall have been terminated other than options
to acquire 341,992 shares of common stock in Elmer's held by one or
more of the Indemnitors or certain employees of Elmer's who are not
Indemnitors (the "Continuing Options"); provided, however, pursuant to
the Subsequent Stock Pledge Agreement, such Indemnitors and/or
employees shall agree to pledge to Lender all shares of common stock in
Elmer's acquired pursuant to the exercise of the Continuing Options as
a condition to the exercise of such Continuing Options.
(2) Documents. Lender and/or Borrower, as may be appropriate,
shall have executed and delivered or shall have caused to be executed
and delivered to Lender, or as Lender may otherwise direct, the amended
and restated Fixed Rate Promissory Note, as applicable, the Variable
Rate Promissory Note or the amended and restated Variable Rate
Promissory Note, as applicable, the Security Agreement, the Subsequent
Stock Pledge Agreement, the IP Security Agreement, the Subsidiary
Guaranty and such other documents, payments, instruments and
certificates as Lender may reasonably require, all in form and
substance reasonably acceptable to Lender. The Individual Guarantors
shall have delivered (i) stock powers to Lender with respect to the
Stock, in form and substance reasonably acceptable to Lender and
endorsed in blank, and (ii) the stock certificates evidencing the Stock
to Lender.
(3) Leases. The Leases shall be in full force and effect and
Elmer's shall be entitled to occupy the Leased Premises.
(4) Priority of Liens. Lender shall have received evidence
reasonably acceptable to Lender that Lender has:
(X) a first priority lien on (i) the Equipment
located at the Premises described as [], (ii) the Receivables,
(iii) the Liquor Licenses, (iv) Intellectual Property, (v) the
Franchise Agreements, the Royalties and the Franchise Notes;
and (v) the Pledged Stock; and
(Y) a second priority lien on all of the other
Collateral.
(5) Representations and Warranties. All of the representations
and warranties of Borrower set forth in Section 4 of this Agreement
shall be true, correct and complete in all material respects, and
Borrower shall be in compliance with each of the covenants set forth in
Section 5 of this Agreement. None of the following events shall have
occurred: (i) a material adverse change in Borrower's financial
condition
10
prior to the Closing Date; (ii) any facts which would, in Lender's sole
judgement, have the effect of impairing the Collateral; (iii) any facts
not previously disclosed to Lender with respect to Borrower which, in
Lender's sole judgement, would have caused Lender to refuse to issue
the Commitment; (iv) the financial information or financial statements
submitted to Lender in connection with the transaction described in
this Agreement were not true, correct and complete in all material
respects when submitted; (v) Borrower has made any material
misrepresentations to Lender or withheld any other material information
with regard to the transaction described in this Agreement; or (vi)
Borrower is in default under any contractual obligations to Lender or
any Affiliate of Lender. No Event of Default shall have occurred and be
continuing.
(6) Costs and Expenses. Borrower shall have paid all costs of
the transaction described in this Agreement, including, without
limitation, UCC search and litigation search charges, the attorneys'
fees of Borrower, reasonable attorneys' fees and expenses of Lender,
stamp taxes, mortgage taxes, transfer fees, and escrow, filing and
recording fees (including preparation, filing and recording fees for
UCC continuation statements).
(7) Opinion. Borrower shall have caused legal counsel
reasonably acceptable to Lender to issue such legal opinions in
addition to those issued pursuant to subsection (b) above as Lender
shall reasonably require, which opinions shall be in form and substance
reasonably acceptable to Lender.
If the conditions precedent set forth in this subsection (c)(ii) are
not satisfied on or before the Outside Final Disbursement Date, Lender shall
have no obligation to fund the remaining portion of the Loan, an Event of
Default shall be deemed to have occurred under the Loan Documents, the
outstanding principal balance of the Loan, all accrued but unpaid interest and
all other sums payable under the Loan Documents shall be immediately due and
payable, and Lender shall be entitled to exercise all rights and remedies
available at law or in equity.
(d) Deposit. Borrower made a deposit to the Commitment and such deposit
shall be applied as contemplated by the Commitment.
(e) Security Interest in Additional Collateral. (i) To secure the
Obligations, Borrower grants to Lender a security interest in and to
$2,000,000.00 in U.S. dollars deposited in immediately available funds prior to
the Closing in Xxxxx Fargo Brokerage Services, LLC Account Number [] (the
"Account"), the Account, all claims against Bank with respect to the Account and
all sums on deposit in the Account from time to time (collectively, the "Account
Funds"), and all certificates and instruments, if any, from time to time
representing or evidencing the Account and the Account Funds; all investments
held within or representing the Account and the Account Funds, and all
certificates and instruments, if any, from time to time representing or
evidencing such investments; and all interest, dividends, earnings, profits,
cash, instruments and other property from time to time received, receivable, or
otherwise distributed in respect of or in exchange for any or all of the
foregoing (collectively, the "Account Collateral"). All interest accruing on the
Account shall be added to the Account Funds and held by Lender pursuant to this
Agreement. Borrower shall be responsible for the payment, or reimbursement to
Lender, of all income taxes imposed on the interest earned on the Account Funds;
and all income therefrom and all proceeds thereof.
(ii) The Account Collateral shall secure the Obligations.
(iii) Provided no Event of Default shall have occurred and be
continuing, upon the later to occur of (1) 91 days after the date of the Final
Disbursement and (2) the delivery to Lender of a landlord's agreement regarding
equipment from each Lessor with respect to at least 18 of the Leased Premises,
the form and substance of which shall be satisfactory to Lender in its
reasonable discretion (the "Landlord's Agreements Regarding Equipment"), Lender
shall release its lien on the Account and the Account Funds; provided, however,
if, Borrower has exercised its best faith efforts to cause Lender to receive at
least 18 Landlord Agreements Regarding Equipment and Borrower has determined in
its reasonable business judgment that it will be unable to obtain 18 Landlord
Agreements Regarding Equipment, but Lender has received at least 16 or 17 of the
Landlord Agreements Regarding Equipment and Borrower is permitted at that time
under the terms of the Variable Rate Promissory Note to prepay at least
$1,500,000.00 of the outstanding principal balance of the Variable Rate
Promissory Note, Lender shall authorize $500,000.00 of proceeds from the Account
Funds to be released to Borrower provided that as conditions precedent to such
release no Event of Default shall have occurred and be continuing and Xxxxx
Fargo shall have remitted to
11
Lender in immediately available funds the remaining balance in the Account, but
in no event less than $1,500,000.00, whch funds shall be applied by Lender
toward the prepayment of the Variable Rate Promissory Note. Upon Lender's
receipt of such immediately available funds, Lender shall release its lien on
the Account Collateral.
(iv) Upon the occurrence and during the continuance of an Event of
Default, in addition to the remedies Lender shall have under Section 6 below and
under any of the other Loan Documents, Lender shall have the right to withdraw
the Account Funds from the Account and apply the Account Funds toward the
obligations of Borrower to Lender under the Loan Documents in such order and in
such amounts as Lender shall determine in its sole discretion, and collecting,
appropriating, redeeming, realizing upon or otherwise enforcing its rights with
respect to the Account Funds and the Account, without notice to Borrower and
Guarantors and without the need to institute any legal action, make demand,
exhaust any other remedies or otherwise proceed to enforce its rights. The
remedies of Lender hereunder are cumulative and the exercise of any one or more
of the remedies provided for herein or under the Uniform Commercial Code or
other applicable law shall not be construed as a waiver of any of the other
remedies of Lender so long as any part of the Obligations secured hereby remains
unsatisfied. Lender shall have no duty to mitigate any loss to the Elmer's
Entities occasioned by enforcement of any remedy hereunder and shall have no
duty of any kind to any subordinated creditor of the Elmer's Entities.
3. REPRESENTATIONS AND WARRANTIES OF BORROWER. The representations and
warranties of Borrower contained in this Section are being made by Borrower as
of the Effective Date, the Closing Date and the Final Disbursement Date to
induce Lender to enter into this Agreement and consummate the transactions
contemplated herein and shall survive the Closing and the Final Disbursement.
Borrower represents and warrants to Lender as follows:
A. Financial Information. Borrower has delivered to Lender certain
financial statements and other information concerning the Borrower Parties in
connection with the transaction described in this Agreement (collectively, the
"Financial Information"). The Financial Information is true, correct and
complete in all material respects; there have been no amendments to the
Financial Information since the date such Financial Information was prepared or
delivered to Lender. Borrower understands that Lender is relying upon the
Financial Information and Borrower represents that such reliance is reasonable.
All financial statements included in the Financial Information were prepared in
accordance with GAAP and fairly present as of the date of such financial
statements the financial condition of each individual or entity to which they
pertain. No change has occurred with respect to the financial condition of any
of the Borrower Parties and/or the Collateral as reflected in the Financial
Information which has not been disclosed in writing to Lender or has had, or
could reasonably be expected to result in, a Material Adverse Effect.
B. Organization and Authority. Each of the Borrower Parties (other than
individuals), as applicable, is duly organized or formed, validly existing and
in good standing under the laws of its state of incorporation or formation, and
qualified as a foreign corporation, partnership or limited liability company, as
applicable, to do business in the state(s) where the Premises are located, and
each of the Borrower Parties is qualified as a foreign corporation, partnership
or limited liability company, as applicable, to do business in any other
jurisdiction where the failure to be qualified would reasonably be expected to
result in a Material Adverse Effect. All necessary action has been taken to
authorize the execution, delivery and performance by the Borrower Parties of
this Agreement and the other Loan Documents. The person(s) who have executed
this Agreement on behalf of Borrower are duly authorized so to do. Borrower,
Elmer's and the Subsidiaries are not "foreign corporations", "foreign
partnerships", "foreign trusts", "foreign estates" or "foreign persons" (as
those terms are defined by the Internal Revenue Code of 1986, as amended).
Borrower's U.S. Federal Tax Identification number, Organization Identification
number and principal place of business are correctly set forth on the signature
page of this Agreement. None of the Borrower Parties, and no individual or
entity owning directly or indirectly any interest in any of the Borrower
Parties, is an individual or entity whose property or interests are subject to
being blocked under any of the OFAC Laws and Regulations or is otherwise in
violation of any of the OFAC Laws and Regulations; provided, however, the
representation contained in this sentence shall not apply to any Person to the
extent such Person's interest is in or through a U.S. Publicly-Traded Entity.
C. Enforceability of Documents. Upon execution by the Borrower Parties,
this Agreement and the other Loan Documents shall constitute the legal, valid
and binding obligations of the Borrower Parties, respectively, enforceable
against the Borrower Parties in accordance with their respective terms, except
as such enforceability
12
may be limited by applicable bankruptcy, insolvency, liquidation, reorganization
and other laws affecting the rights of creditors generally and general
principles of equity.
D. Litigation. There are no suits, actions, proceedings or
investigations pending, or to the best of its knowledge, threatened against or
involving the Borrower Parties, the Collateral or the Premises before any
arbitrator or Governmental Authority, except for such suits, actions,
proceedings or investigations which, individually or in the aggregate, have not
had, and could not reasonably be expected to result in, a Material Adverse
Effect.
E. Absence of Breaches or Defaults; Compliance with Laws. The Borrower
Parties are not, and the authorization, execution, delivery and performance of
this Agreement and the other Loan Documents will not result, in any breach or
default under any other document, instrument or agreement to which any of the
Borrower Parties is a party or by which any of the Borrower Parties, the
Premises, the Collateral or any of the property of any of the Borrower Parties
is subject or bound, except for such breaches or defaults which, individually or
in the aggregate, have not had, and could not reasonably be expected to result
in, a Material Adverse Effect. The authorization, execution, delivery and
performance of this Agreement and the other Loan Documents will not violate any
applicable law, statute, regulation, rule, ordinance, code or order. None of the
Premises or the Collateral is subject to any right of first refusal, right of
first offer or option to purchase or lease granted to a third party. The
Premises and the Collateral are in compliance with all applicable statutes,
regulations, rules, ordinances, codes, licenses, permits, orders and approvals
of each Governmental Authority having jurisdiction over the Premises and the
Collateral, and all policies or rules of common law, in each case, as amended,
and any judicial or administrative interpretation thereof, including any
judicial order, consent, decree or judgment applicable to any of the Borrower
Parties, except for such noncompliance which has not had, and could not
reasonably be expected to result in, a Material Adverse Effect.
F. Licenses and Permits. All required licenses and permits, both
governmental and private, including, without limitation, the Liquor Licenses, to
use and operate the Collateral, as applicable, and the Premises in connection
with Permitted Concepts are in full force and effect, except for such licenses
and permits the failure of which to obtain has not had, and could not reasonably
be expected to result in, a Material Adverse Effect.
G. Condition of Equipment. The Equipment is in good condition and
repair and well maintained, ordinary wear and tear excepted, and is fully
operational.
H. Title to Collateral; Lien Priority. Elmer's owns the Equipment, the
Receivables, the Liquor Licenses, the Intellectual Property and the Receivables,
free and clear of all liens, encumbrances, charges and security interests of any
nature whatsoever except (1) the liens in favor of Lender pursuant to the
Existing GE Loan Documents and (2) Xxxxx Fargo pursuant to the Xxxxx Fargo Loan
Documents. Franchisor is the franchisor under the Franchise Agreements and is
entitled to receive the Royalties, and Franchisor's rights with respect to the
Franchise Agreements and the Royalties are free and clear of all liens and
encumbrances. Upon Closing, Lender shall have a first priority lien upon and
security interest in (i) the Pledged Stock pursuant to the Initial Stock Pledge
Agreements and (ii) the Additional Collateral pursuant to the Control Agreement.
Upon the Final Disbursement, Lender shall have a first priority lien upon and
security interest in the Equipment located at the Premises at [] and the
Receivables derived from such Premises, the Pledged Stock, the Intellectual
Property and the Liquor Licenses, and Lender shall have a second priority lien
upon and security interest in all other Collateral.
I. Franchise Agreements Provisions. Borrower has delivered to Lender
true, correct and complete copy of the Franchise Agreements. The Franchise
Agreements are the only agreements in effect with Franchisor with respect to the
operation of Permitted Concepts. The Franchise Agreements are in full force and
effect and constitute the legal, valid and binding obligations of the parties to
the Franchise Agreements enforceable in accordance with their terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
liquidation, reorganization and other laws affecting the rights of creditors
generally and general principles of equity. None of the Borrower Parties has
assigned, transferred, mortgaged, hypothecated or otherwise encumbered any of
the Franchise Agreements or any rights thereunder or any interests therein, and
none of the Borrower Parties has received any notice that any franchisee has
made any assignment, pledge or hypothecation of all or any part of its rights or
interests in the applicable Franchise Agreement(s). No notice of default from
Franchisor has been received under any of the Franchise Agreements which has not
been cured and no notice of default to Franchisor has been given under any of
the Franchise Agreements which has not been cured, except as set forth on the
attached Exhibit
13
B. No event has occurred and no condition exists which, with the giving of
notice or the lapse of time or both, would constitute a default under any of the
Franchise Agreements except as set forth on the attached Exhibit X.
X. Stock. The number of shares of issued and outstanding common stock
of ERI is [] and no additional classifications of capital stock of ERI have been
issued and are outstanding. As of the Closing Date, the Individual Guarantors
will own all of the capital stock of ERI, and Borrower will own all of the
Tendered Stock, free and clear of all liens and encumbrances other than the
liens created pursuant to the Initial Stock Pledge Agreements. The number of
shares of issued and outstanding common stock of Elmer's is 1,842,945 and no
additional classifications of capital stock of Elmer's have been issued and are
outstanding; provided, however, stock options to acquire up to 341,992 shares of
Elmer's common stock are issued and outstanding, including the Continuing
Options. As of the Final Disbursement Date, Borrower will own all of the Stock,
free and clear of all liens and encumbrances other than the lien created
pursuant to the Subsequent Stock Pledge.
K. Money Laundering. (1) Borrower has taken all reasonable measures, in
accordance with all applicable Anti-Money Laundering Laws, with respect to each
holder of a direct or indirect interest in the Borrower Parties, to assure that
funds invested by such holders in the Borrower Parties are derived from legal
sources; provided, however, none of the foregoing shall apply to any Person to
the extent that such Person's interest is in or through a U.S. Publicly-Traded
Entity.
(2) To Borrower's knowledge after making due inquiry, neither any of
the Borrower Parties nor any holder of a direct or indirect interest in the
Borrower Parties (a) is under investigation by any Governmental Authority for,
or has been charged with, or convicted of, any violation of any Anti-Money
Laundering Laws, or drug trafficking, terrorist-related activities or other
money laundering predicated crimes or a violation of the BSA, (b) has been
assessed civil penalties under these or related laws, or (c) has had any of its
funds seized or forfeited in an action under these or related laws; provided,
however, none of the foregoing shall apply to any Person to the extent that such
Person's interest is in or through a U.S. Publicly-Traded Entity.
(3) Borrower has taken reasonable steps, consistent with industry
practice for comparable organizations and in any event as required by law, to
ensure that the Borrower Parties are and shall be in compliance with all (i)
Anti-Money Laundering Laws and (ii) OFAC Laws and Regulations.
L. Leases. Borrower has delivered to Lender a true, correct and
complete copy of each of the Leases. The Leases are the only leases or
agreements between the Lessors and Elmer's with respect to the Leased Premises.
The Leases are in full force and effect and constitute the legal, valid and
binding obligations of Elmer's and the Lessors, enforceable against Elmer's and
the Lessors in accordance with their terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, liquidation, reorganization and
other laws affecting the rights of creditors generally and general principles of
equity. Each of the Leases has a remaining term as set forth on the attached
Exhibit X. Xxxxx'x has not assigned, transferred, mortgaged, hypothecated or
otherwise encumbered the Leases or any rights thereunder or any interest
therein, and Elmer's has not received any notice that any of the Lessors have
made any assignment, pledge or hypothecation of all or any part of their rights
or interests in the applicable Lease(s). No notice of default from any of the
Lessors has been received under the Leases which have not been cured and no
notice of default to any of the Lessors has been given under the Leases which
have not been cured. No event has occurred and no condition exists which, with
the giving of notice or the lapse of time or both, would constitute a default
under the Leases.
M. Solvency. Borrower, Elmer's and the Subsidiaries have not incurred
any indebtedness, secured or unsecured, direct or indirect, absolute or
contingent, including, without limitation, liability for the debts of any other
Person (and such entities have not held themselves out as being liable for the
debts of any other Person), other than the Loan, the Xxxxx Fargo Loan, the
Existing GE Loan and trade and operational debt incurred in the ordinary course
of business with trade creditors and in amounts as are normal and reasonable
under the circumstances. Borrower, Elmer's and Subsidiaries (i) are not
guarantors of any obligations or presently a party to a pledge of any of their
assets for the benefit of other Persons other than as set forth in the Xxxxx
Fargo Loan Documents, the Existing GE Loan Documents and the leases decribed on
the attached Exhibit U; (ii) have not made any loans or advances to any third
party (including any Affiliate or constituent party of any of the Borrower
Parties) other than the indebtedness represented by the Franchise Notes; (iii)
have each conducted its affairs strictly in accordance with its organizational
documents including its applicable organizational documents and has observed all
necessary,
14
appropriate and customary formalities; (iv) each are solvent, able to pay its
obligations as they become due and is not and shall not be engaged in any
business or transaction for which its remaining capital is or may be
unreasonably small; (v) each have no actual intent to hinder, delay or defraud
creditors in connection with any of the transactions contemplated herein or
intent to incur (or belief that it is incurring) debts beyond its ability to pay
the same as they mature; and (vi) have not, as to themselves or as to other
Persons, (1) commenced any case, proceeding or other action under any existing
or future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of any of the Borrower Parties, seeking to
have an order for relief entered with respect to any of the Borrower Parties or
other Persons or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to any of the
Borrower Parties or its debts or other Persons or their debts or (2) sought
appointment of a receiver, trustee, custodian or other similar official for any
of the Borrower Parties or for all or any substantial part of its or other
Person's assets or made a general assignment for the benefit of any of the
creditors of any of the Borrower Parties.
N. Tender Offer. Borrower has delivered to Lender a true, correct and
complete copy of the documentation evidencing the Tender Offer and any exhibits,
schedules and amendments thereto. The Tender Offer does not contain any material
misstatements or omissions.
O. Common Enterprise. As of the Final Disbursement Date, Borrower
represents and warrants that (i) Borrower, Elmer's and the Subsidiaries are
Affiliates of each other, (ii) each of such entities is subject to the same
control, directly or indirectly, as such other entities, and (iii) each of such
entities are financially interdependent on each other. As a result of such
common control, Borrower acknowledges and agrees that a common enterprise exists
with Elmer's and the Subsidiaries and that each such entity will receive
consideration for its execution and delivery of the Loan Documents, as
applicable.
4. COVENANTS. Borrower covenants to Lender from and after the Closing
Date and until all of the Obligations are satisfied in full, as follows:
A. Payment of the Notes. Borrower shall punctually pay, or cause to be
paid, the principal, interest and all other sums to become due in respect of the
Notes and the other Loan Documents in accordance with the Notes and the other
Loan Documents. Borrower shall authorize Lender to establish arrangements
whereby all scheduled payments made in respect of the Obligations are
transferred by Automated Clearing House Debit initiated by Lender directly from
an account at a U.S. Bank in the name of Borrower to such account as Lender may
designate or as Lender may otherwise designate.
B. Title; Additional Encumbrances. Borrower shall cause (i) Elmer's to
maintain a valid leasehold interest in each of the Leased Premises pursuant to
the Leases and title to the Equipment, Liquor Licenses, Receivables and
Intellectual Property, free and clear of all liens, encumbrances, charges and
other exceptions to title other than liens created by the Loan Documents, the
Existing GE Loan Documents and the Xxxxx Fargo Loan Documents, and (ii)
Franchisor to maintain all right, title and interest in and to the Franchise
Agreements, the Royalties and the Franchise Notes, free and clear of all liens,
encumbrances, charges and exceptions to title other than the liens created by
the Loan Documents. From and after the Closing until the consummation of the
Merger, the Individual Guarantors shall own all of the capital stock of ERI and
Borrower shall own all of the Tendered Stock, free and clear of all liens and
encumbrances and Lender shall have a valid first lien upon and security interest
in all of the capital stock of ERI and the Tendered Stock; and from and after
the Closing until the conditions to the release of the lien on the Additional
Collateral as set forth in Section 2(e) above are satisfied, ERI and Borrower
shall own the Additional Collateral, free and clear of all liens and
encumbrances other than the Control Agreement. From and after the Final
Disbursement, Lender shall have valid (X) first liens upon and security
interests pursuant to the Loan Documents in (1) the Equipment located at the
Premises located at [] and the Receivables derived from such Premises, (2) the
Intellectual Property, (3) the Liquor Licenses, (4) Franchisor's right, title
and interest in and to the Franchise Agreements and the Royalties, (5) the
Stock, and (6) the Additional Collateral (subject to Section 2(e) above), and
(Y) second lien upon and security interest in the other Collateral. Borrower
shall defend the Collateral against all claims and demands of all persons.
Borrower shall not permit any action to be taken which would adversely affect
the value of the Collateral or which would encumber, cloud or adversely effect
in any manner Borrower's title or interest therein.
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C. Organization and Status; Preservation of Existence. Each of the
Borrower Parties (other than individuals), as applicable, shall be validly
existing and in good standing under the laws of its state of incorporation or
formation and qualified as a foreign corporation, partnership or limited
liability company to do business in the state(s) where the Collateral is located
and any other jurisdiction where the failure to be qualified could reasonably be
expected to result in a Material Adverse Effect. Except for the Merger, and
without limiting any of the provisions of Section 5 below, each of Borrower,
Elmer's and the Subsidiaries shall preserve its current form of organization and
shall not change its legal name, its state of formation, nor, in one transaction
or a series of related transactions, merge with or into, or consolidate with,
any other entity without providing, in each case, Lender with 30 days' prior
written notice and obtaining Lender's prior written consent. In addition,
Borrower shall require, and shall take reasonable measures to comply with the
requirement, that no individual or entity owning directly or indirectly any
interest in any of the Borrower Parties is an individual or entity whose
property or interests are subject to being blocked under any of the OFAC Laws
and Regulations or is otherwise in violation of any of the OFAC Laws and
Regulations; provided, however, the covenant contained in this sentence shall
not apply to any Person to the extent that such Person's interest is in or
through a U.S. Publicly-Traded Entity.
D. Licenses and Permits. All required licenses and permits, both
governmental and private, to use and operate the Collateral and to use and
operate the Premises as Permitted Concepts shall be maintained in full force and
effect, including, without limitation, the Liquor Licenses.
E. Financial Statements. Within 45 days after the end of each fiscal
quarter and within 120 days after the end of each fiscal year of Borrower,
Borrower shall deliver to Lender (a) complete financial statements of Borrower,
Elmer's and the Subsidiaries, including a balance sheet, profit and loss
statement, statement of cash flows and all other related schedules for the
fiscal period then ended; (b) income statements for the business at the
Premises; and (c) such other financial information as Lender may reasonably
request in order to establish compliance with the financial covenants in the
Loan Documents. All such financial statements and information shall be prepared
in accordance with GAAP from period to period, and shall be certified to be
accurate and complete by Borrower (or the Treasurer or other appropriate officer
of Borrower). Borrower understands that Lender is relying upon such financial
statements and Borrower represents that such reliance is reasonable. The
financial statements delivered to Lender need not be audited, but Borrower shall
deliver to Lender copies of any audited financial statements of Borrower which
may be prepared, as soon as they are available.
F. Inspections. Borrower shall, during normal business hours (or at any
time in the event of an emergency), (1) provide Lender and Lender's officers,
employees, agents and advisors with access to the Collateral and all files,
correspondence and documents relating to the Collateral (including, without
limitation, any of the foregoing information stored in any computer files), and
(2) allow such persons to make such inspections, tests, copies, and
verifications as Lender considers necessary.
G. Actions by Lender. (1) Borrower agrees that Lender may, at its
option, and without any obligation to do so, pay, perform, and discharge any and
all amounts, costs, expenses and liabilities that are the responsibility of
Borrower under the Loan Documents if Borrower fails to timely pay, perform or
discharge the same, and all amounts expended by Lender in so doing or in respect
of or in connection with the Collateral shall become part of the obligations
secured by the Loan Documents and shall be immediately due and payable by
Borrower to Lender upon demand therefore and shall bear interest at the Default
Rate.
(2) Borrower agrees that the Loan Documents shall remain in full
effect, without waiver or surrender of any of Lender's rights thereunder,
notwithstanding the occurrence of any one or more of the following: (a)
extension of the time of payment of the whole or any part of the Notes; (b) any
change in the terms and conditions of the Notes; (c) substitution of any other
evidence of indebtedness for the Notes; (d) acceptance by Lender of any
collateral or security of any kind for the payment of the Notes; (e) surrender,
release, exchange or alteration of any Collateral, collateral or other security,
either in whole or in part; or (f) release, settlement, discharge, compromise,
change or amendment, in whole or in part, of any claim of Lender against
Borrower or of any claim against any guarantor or other party secondarily or
additionally liable for the payment of the Notes.
H. Lost Note. Borrower shall, if the Notes is mutilated, destroyed,
lost or stolen (a "Lost Note"), promptly deliver to Lender, upon receipt from
Lender of an affidavit and indemnity in a form reasonably acceptable to Lender
and Borrower stipulating that the Notes has been mutilated, destroyed, lost or
stolen, in substitution
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therefore, a new promissory note containing the same terms and conditions as the
Lost Note with a notation thereon of the unpaid principal and accrued and unpaid
interest. Borrower shall provide fifteen (15) days' prior notice to Lender
before making any payments to third parties in connection with a Lost Note.
I. Affiliate Transactions. Unless otherwise approved by Lender, all
transactions between Borrower and any of its Affiliates shall be on terms
substantially as advantageous to Borrower as those which could be obtained by
Borrower in a comparable arm's length transaction with a non-Affiliate of
Borrower.
J. OFAC Laws and Regulations. Borrower shall immediately notify Lender
in writing if any individual or entity owning directly or indirectly any
interest in any of the Borrower Parties or any director, officer, member,
manager or partner of any of such holders is an individual or entity whose
property or interests are subject to being blocked under any of the OFAC Laws
and Regulations or is otherwise in violation of any of the OFAC Laws and
Regulations, or is under investigation by any governmental entity for, or has
been charged with, or convicted of, drug trafficking, terrorist-related
activities or any violation of Anti-Money Laundering Laws, has been assessed
civil penalties under these or related laws, or has had funds seized or
forfeited in an action under these or related laws; provided, however, the
covenant contained in this sentence shall not apply to any Person to the extent
that such Person's interest is in or through a U.S. Publicly-Traded Entity.
K. Leases. Borrower shall, or shall cause Elmer's to, (i) fulfill,
perform and observe in all respects each and every condition and covenant of
Elmer's contained in the Leases; (ii) give prompt notice to Lender of any claim
or event of default under any of the Leases given to Elmer's by any Lessor or
given by Elmer's to any Lessor, together with a complete copy or statement of
any information submitted or referenced in support of such claim or event of
default; (iii) at the sole cost and expense of Borrower and Elmer's, enforce the
performance and observance of each and every covenant and condition of the
Leases to be performed or observed by any other party to the Leases unless such
enforcement is waived in writing by Lender; and (iv) appear in and defend any
action challenging the validity or enforceability of the Leases. Except as
otherwise contemplated by Section 5(b) below, the Leases shall not be cancelled
or surrendered by Elmer's without Lender's prior written consent. The Leases
shall not be modified or amended without Lender's prior written consent if such
modification or amendment would reduce the remaining term of any of the Leases
or otherwise materially and adversely affect the Equipment or the other
Collateral at any of the Premises or the security interests of Lender in such
Equipment or other Collateral. Elmer's shall not assign, transfer, mortgage,
pledge or hypothecate any of the Leases or any interest therein without Lender's
prior written consent.
L. Compliance Certificates. Within 60 days after the end of each fiscal
year of Borrower, Borrower shall deliver, upon Lender's request, a compliance
certificate to Lender in a form to be provided by Lender in order to establish
that Borrower is in compliance in all material respects with all of its
obligations, duties and covenants under the Loan Documents.
M. Corporate Fixed Charge Coverage Ratio. Borrower shall maintain a
Corporate Fixed Charge Coverage Ratio of at least 1.25:1, determined as of the
last day of each fiscal year of Borrower. For purposes of this Section, the term
"Corporate Fixed Charge Coverage Ratio" shall mean with respect to the twelve
month period of time immediately preceding the date of determination, the ratio
calculated for such period of time, each as determined in accordance with GAAP,
of (a) the sum of Net Income, Depreciation and Amortization, Interest Expense,
Income Taxes and Operating Lease Expense, plus or minus other non-cash
adjustments or non-recurring items (as allowed by Lender), minus increases in
officer or shareholders loan receivables, and minus dividends or distributions
in excess of shareholder's estimated pass-through tax liabilities (in the event
Borrower is treated as an S-Corp for federal income tax purposes) not otherwise
expensed on the applicable income statement(s), to (b) the sum of Operating
Lease Expense, scheduled principal payments of long term Debt, scheduled
maturities of all Capital Leases and Interest Expense (excluding non-cash
interest expense and amortization of non-cash financing expenses).
For purposes of this Agreement, the following terms shall be defined as
set forth below:
"Capital Lease" shall mean all leases of any property, whether
real, personal or mixed, by Borrower or any of the other Borrower
Parties, as applicable, which lease would, in conformity with
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GAAP, be required to be accounted for as a capital lease on the balance
sheet of Borrower. The term "Capital Lease" shall not include any
operating lease.
"Debt" shall mean with respect to Borrower and the other
Borrower Parties, collectively, and for the period of determination (i)
indebtedness for borrowed money, (ii) obligations evidenced by bonds,
indentures, notes or similar instruments, (iii) obligations to pay the
deferred purchase price of property or services, (iv) obligations under
leases which should be, in accordance with GAAP, recorded as Capital
Leases, and (v) obligations under direct or indirect guarantees in
respect of, and obligations (contingent or otherwise) to purchase or
otherwise acquire, or otherwise to assure a creditor against loss in
respect of, indebtedness or obligations of others of the kinds referred
to in clauses (i) through (iv) above.
"Depreciation and Amortization" shall mean the depreciation
and amortization accruing during any period of determination with
respect to Borrower and the other Borrower Parties, collectively, as
determined in accordance with GAAP.
"Income Taxes" means, if Borrower is treated as an S-Corp for
federal income tax purposes during the applicable period of
determination, such incomes taxes paid by the shareholders of Borrower
on the income of Borrower during such period of determination in an
amount equal to the pass-through tax liability of Borrower for such
period, subject to documentation prepared by Borrower's certified
public accountant in form and substance reasonably acceptable to
Lender.
"Interest Expense" shall mean for any period of determination,
the sum of all interest accrued or which should be accrued in respect
of all Debt of Borrower and the other Borrower Parties, collectively,
as determined in accordance with GAAP.
"Net Income" shall mean with respect to the period of
determination, the net income or net loss of Borrower and the other
Borrower Parties, collectively. In determining the amount of Net
Income, (i) adjustments shall be made for nonrecurring gains and losses
or non-cash items allocable to the period of determination, (ii)
deductions shall be made for, among other things, Depreciation and
Amortization, Interest Expense, Operating Lease Expense and actual
corporate overhead expense allocable to the period of determination,
and (iii) no deductions shall be made for income taxes or charges
equivalent to income taxes allocable to the period of determination, as
determined in accordance with GAAP.
"Operating Lease Expense" shall mean the sum of all payments
and expenses incurred by Borrower and the other Borrower Parties,
collectively, under any operating leases during the period of
determination, as determined in accordance with GAAP.
N. Limitation on Indebtedness. None of Borrower, Elmer's or the
Subsidiaries shall incur any indebtedness, secured or unsecured, direct or
indirect, absolute or contingent (including guaranteeing any obligation or
assuming liability for the debts of any other Person and Borrower, Elmer's and
the Subsidiaries will not hold themselves out as being liable for the debts of
any other Person), other than the Loan, the Xxxxx Fargo Loan, the Existing GE
Loans and trade and operational debt incurred in the ordinary course of business
with trade creditors and in amounts as are normal and reasonable under the
circumstances (the "Permitted Indebtedness"); provided, however:
(i) Borrower, Elmer's and the Subsidiaries shall be permitted
to incur indebtedness in addition to the Permitted Indebtedness in
connection with financing the acquisition of restaurant properties
other than the Premises provided that no Event of Default shall have
occurred and be continuing at the time such indebtedness is incurred
and provided such indebtedness shall not cause Borrower to breach any
of the financial covenants set forth in Sections 4.M or 4.Q of this
Agreement nor exceed a Funded Debt to EBTIDA (as such terms are defined
in Section 4.Q below) ratio of 4.00 to 1.0; and
(ii) from and after the third anniversary of the Final
Disbursement Date, Borrower, Elmer's and the Subsidiaries shall be
permitted to incur unsecured indebtedness in addition to the Permitted
Indebtedness and the indebtedness contemplated by the preceding subitem
(i) provided that no Event of
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Default shall have occurred and be continuing at the time such
unsecured indebtedness is incurred and provided such unsecured
indebtedness shall not cause Borrower to breach any of the financial
covenants set forth in Section 4.M or 4.Q of this Agreement nor exceed
a Funded Debt to EBTIDA ratio of 4.00 to 1.0.
O. Limitations on Pledges. Except for the liens created by the Loan
Documents and the documents evidencing the Xxxxx Fargo Loan and the Existing GE
Loans, none of Borrower and except as otherwise permitted by Section 5(b)(ii)(X)
below, Elmer's or the Subsidiaries shall pledge, grant any security interest in,
hypothecate or otherwise encumber its assets for the benefit of any other
Persons.
P. Franchise Agreements. The Franchise Agreements shall be maintained
in full force and effect. No event shall occur nor shall any condition exist
which, with the giving of notice or the lapse of time or both, would constitute
a breach or default by Franchisor under any of the Franchise Agreements except
to the extent any such breach or default would not reasonably be expected to
have a Material Adverse Effect. Borrower shall cause Franchisor to give prompt
notice to Lender of any claim of default by or to any franchisee under the
Franchise Agreements and shall provide Lender with a copy of any default notice
given or received by any franchisee under the Franchise Agreements and any
information submitted or referenced in support of such claim of default.
Borrower shall cause Franchisor to also give prompt notice to Lender of any
extensions or renewals of the Franchise Agreements, the expiration or
termination of the Franchise Agreements and the execution and delivery of any
additional Franchise Agreements. Borrower shall also cause Franchisor to give
prompt notice to Lender of the expiration or termination of any of the Franchise
Agreement. Borrower shall cause Franchisor to execute such documents and to take
such actions as may be reasonably required by Lender to cause any Franchise
Agreements executed after the Final Disbursement Date to be included within the
Security Agreement and to include the Royalties with respect to such additional
Franchise Agreements to be subject to the liens granted by Franchisor to Lender
pursuant to this Agreement.
Q. Funded Debt Covenant. Borrower and/or Elmer's shall maintain a
Funded Debt to EBITDA ratio not to exceed 4.75 to 1.0, determined as of the last
day of each fiscal year of Borrower and/or Elmer's. "Funded Debt" shall mean all
term debt of Borrower and/or Elmer's. "EBITDA" shall mean the sum of Net Income,
Interest Expense, Operating Lease Expense and Depreciation and Amortization (all
as defined in subsection M above), plus or minus other non-cash adjustments or
non-recurring items (as allowed by Lender), less increases in officer or
shareholder loans receivable, less dividends or distributions in excess of
Income Taxes, all of which shall be determined in accordance with GAAP.
R. Intellectual Property. Borrower shall, or shall cause Elmer's and/or
the Subsidiaries, for each trademark, trade name, service xxxx, trade dress,
logo, slogan and corporate name (including, but not limited to, the names listed
on the attached Exhibit H) material to the conduct of Borrower's Business (each,
a "Trademark"), (i) maintain such Trademark in full force free from any claim of
abandonment or invalidity for non-use, (ii) maintain the quality of products and
services offered under such Trademark consistent with the past practice of
Borrower's Business, (iii) display such Trademark with notice of Federal or
foreign registration to the extent necessary and sufficient to establish and
preserve its maximum rights under applicable law, and (iv) not knowingly use or
knowingly permit the use of such Trademark in violation of any third party
rights.
Borrower shall notify Lender promptly if it knows or has reason to know
that any Intellectual Property material to the conduct of Borrower's Business
may become abandoned, lost or dedicated to the public, or of any adverse
determination or development (including the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, United States Copyright Office or any court or similar office
of any country) regarding the ownership by Borrower, Elmer's or any of the
Subsidiaries of any Intellectual Property, its right to register the same, or to
keep and maintain the same.
In no event shall Borrower, Elmer's or any of the Subsidiaries, either
itself or through any agent, employee, licensee or designee, file an application
for any Intellectual Property (or for the registration of any Intellectual
Property) with the United States Patent and Trademark Office, United States
Copyright Office or any office or agency in any political subdivision of the
United States, unless it promptly informs Lender, and, upon request of Lender,
executes and delivers any and all agreements, instruments, documents and papers
as Lender may reasonably request to evidence Lender's security interest in such
Intellectual Property, and Borrower, on behalf of itself and
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Elmer's and each of the Subsidiaries, hereby appoints Lender as its
attorney-in-fact to execute and file such writings for the foregoing purposes,
which appointment is coupled with an interest and irrevocable.
Borrower shall take, and shall cause Elmer's and each of the
Subsidiaries to take, all necessary steps that are consistent with the practice
in any proceeding before the United States Patent and Trademark Office, United
States Copyright Office or any office or agency in any political subdivision of
the United States or in any other country or any political subdivision thereof,
to maintain and pursue each material application relating to the Intellectual
Property (and to obtain the relevant grant or registration) and to maintain any
issued or registered Intellectual Property that is material to the conduct of
Borrower's Business, including timely filings of applications for renewal,
affidavits of use, affidavits of incontestability and payment of maintenance
fees, and to initiate opposition, interference and cancellation proceedings
against third parties.
In the event that Borrower, Elmer's or any of the Subsidiaries has
reason to believe that any Intellectual Property material to the conduct of
Borrower's Business has been or is about to be infringed, misappropriated or
diluted by a third party, Borrower shall promptly notify Lender and shall
promptly xxx for infringement, misappropriation or dilution and to recover any
and all damages for such infringement, misappropriation or dilution, and take
such other actions as are appropriate under the circumstances to protect such
Intellectual Property.
5. PROHIBITION ON CHANGE OF CONTROL, PLEDGE AND PROHIBITED TRANSACTION.
(a) Borrower agrees that, from and after the Closing Date and until all of the
Obligations are satisfied in full, without the prior written consent of Lender:
(1) no Change of Control shall occur; (2) no interest in any of the Borrower
Parties shall be pledged, encumbered, hypothecated or assigned as collateral for
any obligation of any of the Borrower Parties (each, a "Pledge"); and (3) no
Prohibited Transaction (as defined below) shall occur. In addition, no interest
in any of the Borrower Parties, or in any individual or person owning directly
or indirectly any interest in any of the Borrower Parties, shall be transferred,
assigned or conveyed to any individual or person whose property or interests are
subject to being blocked under any of the OFAC Laws and Regulations and/or who
is in violation of any of the OFAC Laws and Regulations, and any such transfer,
assignment or conveyance shall not be effective until the transferee has
provided written certification to Borrower and Lender that (A) the transferee or
any person who owns directly or indirectly any interest in transferee, is not an
individual or entity whose property or interests are subject to being blocked
under any of the OFAC Laws and Regulations or is otherwise in violation of the
OFAC Laws and Regulations, and (B) the transferee has taken reasonable measures
to assure than any individual or entity who owns directly or indirectly any
interest in transferee, is not an individual or entity whose property or
interests are subject to being blocked under any of the OFAC Laws and
Regulations or is otherwise in violation of the OFAC Laws and Regulations;
provided, however, the covenant contained in this sentence shall not apply to
any Person to the extent that such Person's interest is in or through a U.S.
Publicly-Traded Entity. Lender's consent to a Change of Control, Pledge and/or
Prohibited Transaction shall be subject to the satisfaction of such conditions
as Lender shall determine in its sole discretion. In addition, any such consent
shall be conditioned upon payment by Borrower to Lender of (x) a fee equal to
one percent (1%) of the then outstanding principal balance of the Notes and (y)
all out-of-pocket costs and expenses incurred by Lender in connection with such
consent, including, without limitation, reasonable attorneys' fees. Lender shall
not be required to demonstrate any actual impairment of its security or any
increased risk of default hereunder in order to declare the Obligations
immediately due and payable upon a Change of Control, Pledge or Prohibited
Transaction in violation of this Section. The provisions of this Section shall
apply to every Change of Control, Pledge or Prohibited Transaction regardless of
whether voluntary or not, or whether or not Lender has consented to any previous
Change of Control, Pledge or Prohibited Transaction. For purposes of this
Section 5, a "Prohibited Transaction" shall mean any sale, conveyance, mortgage,
grant, bargain, encumbrance, pledge, assignment or other transfer of all or any
of the Equipment or any part thereof, other than replacements of Equipment as
expressly permitted by this Agreement. A sale, conveyance, mortgage, grant,
bargain, encumbrance, pledge, assignment, or transfer within the meaning of this
Section shall be deemed to include, but not be limited to, (1) an installment
sale agreement wherein Borrower agrees to sell the Collateral or any part
thereof for a price to be paid in installments; and (2) an agreement by Borrower
leasing all or any part of the Collateral.
(b) Notwithstanding the foregoing:
(i) the provisions of this Section shall not apply to the
consummation of the Merger; and
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(ii) provided no Event of Default shall have occurred and be
continuing and, to the extent applicable with respect to the following
subitems (Y) and (Z), Borrower is permitted pursuant to the terms and
conditions of the Variable Rate Promissory Note to make the partial
prepayments in the amounts described in subitems (Y) and (Z) below,
this Section 5 shall not limit Borrower, Elmer's and/or any of the
Subsidiaries from:
(X) acquiring new restaurant properties and granting
liens on such properties to third-party lenders providing
purchase money financing in connection with such acquisitions.
Lender agrees to waive any security interest in such new
restaurant properties;
(Y) terminating or surrendering up to two of the
Leases provided there is no material adverse effect on the
financial covenants set forth in Sections 4.M and 4.Q of this
Agreement as a result of such termination and Borrower prepays
to Lender in accordance with the terms and conditions of the
Variable Rate Promissory Note in immediately available funds
the greater of $20,000.00 and 125% of the Net Sale Proceeds
from the disposition of any Collateral at the Premise subject
to such terminated or surrendered Lease. Borrower shall only
be permitted to exercise its rights under this subsection (Y)
if the Variable Rate Promissory Note is still outstanding,
Borrower has not exercised its option to convert the rate of
interest payable under the Variable Rate Promissory Note to a
fixed-rate of interest and the terms and conditions of the
Variable Rate Promissory Note permit Borrower to make the
partial prepayment in such amount and without payment of any
prepayment premium; and
(Z) selling up to two of the Premises to a
third-party in connection with a bona-fide sale of such a
Premises provided that Lender receives the greater of (aa)
100% of the Net Sale Proceeds from such sale and (bb) an
amount equal to the then outstanding principal balance of the
Variable Rate Promissory Note multiplied by a percentage
determined by dividing the gross sales from such Premises for
the most recent 12 month period by the gross sales for all of
the Premises for such 12 month period. Lender shall not
unreasonably withhold its consent to the sale of additional
Premises provided Lender is paid the amount contemplated by
the application of the preceding sentence to such sales.
Lender shall not charge a consent fee in connection with the matters
contemplated by the preceding subitems (X), (Y) and (Z) provided that Borrower
shall be responsible for the prompt payment or reimbursement of all reasonable
out-of-pocket costs and expenses incurred by Lender in connection with such
matters, including, without limitation, reasonable attorneys' fees and expenses.
6. DEFAULT AND REMEDIES; PROCEEDS. A. Each of the following shall be
deemed an event of default by Borrower (each, an "Event of Default"):
(1) If any representation or warranty of any of the Borrower Parties
set forth in any of the Loan Documents is false in any material respect or if
any of the Borrower Parties renders any statement or account which is false in
any material respect.
(2) If any principal, interest or other monetary sum due under the
Notes or any other Loan Document is not paid within five days after the date
when due; provided, however, notwithstanding the occurrence of such an Event of
Default, Lender shall not be entitled to exercise its rights and remedies set
forth below unless and until Lender shall have given Borrower notice thereof and
a period of five days from the delivery of such notice shall have elapsed
without such Event of Default being cured.
(3) If Borrower fails to observe or perform any of the other covenants,
conditions, or obligations of this Agreement; provided, however, if any such
failure does not involve the payment of any monetary sum, is not willful or
intentional, does not place any rights or interest in collateral of Lender in
immediate jeopardy, and is within the reasonable power of Borrower to promptly
cure after receipt of notice thereof, all as determined by Lender in its
reasonable discretion, then such failure shall not constitute an Event of
Default hereunder, unless otherwise expressly provided herein, unless and until
Lender shall have given Borrower notice thereof and a period of 30 days shall
have elapsed, during which period Borrower may correct or cure such failure,
upon failure of which
21
an Event of Default shall be deemed to have occurred hereunder without further
notice or demand of any kind being required. If such failure cannot reasonably
be cured within such 30-day period, as determined by Lender in its reasonable
discretion, and Borrower is diligently pursuing a cure of such failure, then
Borrower shall have a reasonable period to cure such failure beyond such 30-day
period, which shall not exceed 90 days after receiving notice of the failure
from Lender. If Borrower shall fail to correct or cure such failure within such
90-day period, an Event of Default shall be deemed to have occurred hereunder
without further notice or demand of any kind being required.
(4) If any of the Borrower Parties becomes insolvent within the meaning
of the Code, files or notifies Lender that it intends to file a petition under
the Code, initiates a proceeding under any similar law or statute relating to
bankruptcy, insolvency, reorganization, winding up or adjustment of debts
(collectively, an "Action"), becomes the subject of either a petition under the
Code or an Action, or is not generally paying its debts as the same become due.
(5) If there is an "Event of Default" or a breach or default, after the
passage of all applicable notice and cure or grace periods, under any other Loan
Document, any Lease or any of the Other Agreements.
(6) If a final, nonappealable judgment is rendered by a court against
any of the Borrower Parties which (i) has a material adverse effect on the
operation of any of the Premises as a Permitted Concept, or (ii) is in an amount
greater than $250,000.00 and not covered by insurance, and, in either case, is
not bonder over, discharged or provision made for such discharge within 60 days
from the date of entry of such judgment.
(7) If there is a breach or default by Franchisor, after the passage of
all applicable notice and cure or grace periods, under any of the Franchise
Agreements, or if any of the Franchise Agreements terminates or expires prior to
the payment in full of the Notes in accordance with its terms and a substitute
agreement for the terminated or expired agreement is not entered into with
Franchisor prior to such expiration or termination, which substitute agreement
shall be in form and substance reasonably satisfactory to Lender and shall
expire after the scheduled maturity date of the Notes.
(8) If there is a breach or default, after the passage of all
applicable notice and cure or grace periods, under the Xxxxx Fargo Loan
Documents.
B. Upon the occurrence and during the continuance of an Event of
Default, subject to the limitations set forth in subsection A, Lender shall have
all rights and remedies of a secured party in, to and against the Collateral
granted by the UCC and otherwise available at law or in equity, including,
without limitation: (1) the right to declare any or all payments due under the
Notes, the other Loan Documents, the Other Agreements and all other documents
evidencing the Obligations immediately due and payable without any presentment,
demand, protest or notice of any kind, except as otherwise expressly provided
herein, and Borrower hereby waives notice of intent to accelerate the
Obligations and notice of acceleration; (2) the right to recover all fees and
expenses (including reasonable attorney fees) in connection with the collection
or enforcement of the Obligations, which fees and expenses shall constitute
additional Obligations of Borrower hereunder; (3) the right to act as, and
Borrower hereby constitutes and appoints Lender, Borrower's true, lawful and
irrevocable attorney-in-fact (which appointment shall be deemed coupled with an
interest) to demand, receive and enforce payments and to give receipts,
releases, satisfaction for and to xxx for moneys payable to Borrower under or
with respect to any of the Collateral, and actions taken pursuant to this
appointment may be taken either in the name of Borrower or in the name of Lender
with the same force and effect as if this appointment had not been made; (4) the
right to take immediate and exclusive possession of the Collateral, or any part
thereof, and for that purpose, with or without judicial process and notice to
the Borrower, enter (if this can be done without breach of the peace) upon any
premises on which the Collateral or any part thereof may be situated and remove
the same therefrom (provided that if the Collateral is affixed to real estate,
such removal shall be subject to the conditions stated in the UCC); (5) the
right to hold, maintain, preserve and prepare the Collateral for sale, until
disposed of; (6) the right to render the Collateral unusable and dispose of the
Collateral; (7) the right to require Borrower to assemble and package the
Collateral and make it available to Lender for its possession at a place to be
designated by Lender which is reasonably convenient to Lender; (8) the right to
sell, lease, hold or otherwise dispose of all or any part of the Collateral; (9)
the right to xxx for specific performance of any Obligations or to recover
damages for breach thereof; and (10) the rights granted by Section 2(e) of this
Agreement.
22
Lender shall be entitled to receive on demand, as additional
Obligations hereunder, interest accruing at the Default Rate on all amounts not
paid when due under the Notes or this Agreement until the date of actual
payment. Lender shall have no duty to mitigate any loss to Borrower occasioned
by enforcement of any remedy hereunder and shall have no duty of any kind to any
subordinated creditor of Borrower. Neither the acceptance of this Agreement nor
its enforcement shall prejudice or in any manner affect Lender's right to
realize upon or enforce any other security now or hereafter held by Lender, it
being agreed that Lender shall be entitled to enforce this Agreement and any
other security now or hereafter held by Lender in such order and manner as it
may in its absolute discretion determine. No remedy herein conferred upon or
reserved to Lender is intended to be exclusive of any other remedy given
hereunder or now or hereafter existing at law or in equity or by statute. Every
power or remedy given by any of the Loan Documents to Lender, or to which Lender
may be otherwise entitled, may be exercised, concurrently or independently, from
time to time and as often as may be deemed expedient by Lender.
C. Should Lender exercise the rights and remedies specified in the
preceding subsection B, any proceeds received thereby shall be first applied to
pay the costs and expenses, including reasonable attorneys' fees, incurred by
Lender as a result of the Event of Default. The remainder of any proceeds, net
of Lender's costs and expenses, shall be applied to the satisfaction of the
Obligations and any excess paid over to Borrower.
D. Until an Event of Default shall occur, the Borrower Parties, as
applicable, may retain possession of the Collateral other than the stock pledged
to Lender as contemplated by this Agreement and the Additional Collateral, and
may use it in any lawful manner not inconsistent with this Agreement, with the
provisions of any policies of insurance thereon or the other Loan Documents.
7. INDEMNITY. Borrower shall, at its sole cost and expense, protect,
defend, indemnify, release and hold harmless each of the Indemnified Parties
for, from and against any and all claims, suits, liabilities (including, without
limitation, strict liabilities), actions, proceedings, obligations, debts,
damages, losses, costs, expenses, diminutions in value, fines, penalties,
charges, fees, expenses, judgments, awards, amounts paid in settlement and
damages of whatever kind or nature (including, without limitation, attorneys'
fees, court costs and other costs of defense) (collectively, "Losses")
(excluding Losses suffered by an Indemnified Party directly arising out of such
Indemnified Party's gross negligence or willful misconduct; provided, however,
that the term "gross negligence" shall not include gross negligence imputed as a
matter of law to any of the Indemnified Parties solely by reason of Borrower's
interest in the Collateral or Borrower's failure to act in respect of matters
which are or were the obligation of Borrower under the Loan Documents),
engineers' fees, governmental inspection fees, and costs of investigation
imposed upon or incurred by or asserted against any Indemnified Parties, and
directly or indirectly arising out of or in any way relating to any one or more
of the following: (a) any administrative processes or proceedings or judicial
proceedings in any way connected with any matter addressed in this Agreement;
(b) any past, present or threatened injury to, or destruction of, the
Collateral, including but not limited to costs to investigate and assess such
injury or destruction; (c) any personal injury, wrongful death, or property
damage arising under any statutory or common law or tort law theory, including
but not limited to damages assessed for the maintenance of a private or public
nuisance or for the conducting of an abnormally dangerous activity on or near
the Collateral; (d) any misrepresentation or inaccuracy in any representation or
warranty or material breach or failure to perform any covenants or other
obligations pursuant to this Agreement; (e) any failure by Borrower or any of
the Borrower Parties to comply with any of the terms and conditions of any of
the Leases, including, without limitation, any costs and expenses incurred by
any of the Indemnified Parties to cure any such failure; (f) any securities laws
violation resulting from the Tender Offer and/or the Merger; and/or (g) any
disclosures of information, financial or otherwise, (X) made by Lender and/or
Lender's employees, officers, agents and designees to any third-party as
contemplated by Section 8.Q below, or (Y) obtained from any credit reporting
agency with respect to Borrower, any Affiliate of Borrower or any of the other
Borrower Parties.
8. MISCELLANEOUS PROVISIONS.
A. Notices. All notices, consents, approvals or other instruments
required or permitted to be given by either party pursuant to this Agreement or
the other Loan Documents shall be in writing and given by (i) hand delivery,
(ii) facsimile, (iii) express overnight delivery service or (iv) certified or
registered mail, return receipt requested, and shall be deemed to have been
delivered upon (a) receipt, if hand delivered, (b) transmission, if delivered by
facsimile, (c) the next Business Day, if delivered by express overnight delivery
service, or (d) the third Business Day following the day of deposit of such
notice with the United States Postal Service, if sent by certified or
23
registered mail, return receipt requested. Notices shall be provided to the
parties and addresses (or facsimile numbers, as applicable) specified below:
If to Borrower: 00000 X.X. Xxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
And to: 000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxx Xxxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Lender: GE Capital Franchise Finance Corporation
00000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Collateral Management
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
B. Brokerage Commission. Lender and Borrower represent and warrant to
each other that they have dealt with no broker, agent, finder or other
intermediary in connection with the transactions contemplated by this Agreement
or the other Loan Documents. Lender and Borrower shall indemnify and hold each
other harmless for, from and against any costs, claims or expenses, including
attorneys' fees, arising out of the breach of their respective representations
and warranties contained within this Section.
C. Waiver and Amendment; Document Review. (1) No provisions of this
Agreement or the other Loan Documents shall be deemed waived or amended except
by a written instrument unambiguously setting forth the matter waived or amended
and signed by the party against which enforcement of such waiver or amendment is
sought. Waiver of any matter shall not be deemed a waiver of the same or any
other matter on any future occasion.
(2) In the event Borrower makes any request upon Lender requiring
Lender or Lender's attorneys to review and/or prepare (or cause to be reviewed
and/or prepared) any documents or other submissions in connection with or
arising out of this Agreement or any of the other Loan Documents, then Borrower
shall (x) reimburse Lender promptly upon Lender's demand for all out-of-pocket
costs and expenses incurred by Lender in connection with such review and/or
preparation, including, without limitation, reasonable attorneys' fees, and (y)
pay Lender a reasonable processing and review fee.
D. Captions. Captions are used throughout this Agreement and the other
Loan Documents for convenience of reference only and shall not be considered in
any manner in the construction or interpretation hereof.
E. Lender's Liability. Notwithstanding anything to the contrary
provided in this Agreement or the other Loan Documents, it is specifically
understood and agreed, such agreement being a primary consideration for the
execution of this Agreement and the other Loan Documents by Lender, that (1)
there shall be absolutely no personal liability on the part of any shareholder,
director, officer or employee of Lender, with respect to any of the terms,
covenants and conditions of this Agreement or the other Loan Documents, (2)
Borrower waives all claims, demands and causes of action against Lender's
officers, directors, employees and agents in the event of any breach by Lender
of any of the terms, covenants and conditions of this Agreement or the other
Loan Documents to be performed by Lender and (3) Borrower shall look solely to
the assets of Lender for the satisfaction of each and every remedy of Borrower
in the event of any breach by Lender of any of the terms, covenants and
conditions of this Agreement or the other Loan Documents to be performed by
Lender, such exculpation of liability to be absolute and without any exception
whatsoever.
24
F. Severability. The provisions of this Agreement and the other Loan
Documents shall be deemed severable. If any part of this Agreement or the other
Loan Documents shall be held invalid, illegal or unenforceable, the remainder
shall remain in full force and effect, and such invalid, illegal or
unenforceable provision shall be reformed by such court so as to give maximum
legal effect to the intention of the parties as expressed therein.
G. Construction Generally. This Agreement and the other Loan Documents
have been entered into by both parties in reliance upon the economic and legal
bargains contained therein and shall be interpreted and construed in a fair and
impartial manner without regard to such factors as the party which prepared the
instrument, the relative bargaining powers of the parties or the domicile of any
party. Borrower and Lender were each represented by legal counsel competent in
advising them of their obligations and liabilities hereunder.
H. Further Assurances. Borrower will, at its sole cost and expense, do,
execute, acknowledge and deliver or cause to be done, executed, acknowledged and
delivered all such further acts, documents, conveyances, notes, assignments,
security agreements, financing statements and assurances as Lender shall from
time to time reasonably require or deem advisable to carry into effect the
purposes of this Agreement and the other Loan Documents, to perfect any lien or
security interest granted in any of the Loan Documents and for the better
assuring and confirming of all of Lender's rights, powers and remedies under the
Loan Documents.
I. Attorneys' Fees. In the event of any judicial or other adversarial
proceeding between the parties concerning this Agreement or the other Loan
Documents, the prevailing party shall be entitled to recover its attorneys' fees
and other costs in addition to any other relief to which it may be entitled.
J. Entire Agreement. This Agreement and the other Loan Documents,
together with any other certificates, instruments or agreements to be delivered
in connection therewith, constitute the entire agreement between the parties
with respect to the subject matter hereof, and there are no other
representations, warranties or agreements, written or oral, between Borrower and
Lender with respect to the subject matter of this Agreement and other Loan
Documents. Notwithstanding anything in this Agreement and the other Loan
Documents to the contrary, upon the execution and delivery of this Agreement by
Borrower and Lender, and except with respect to the provisions of Section 2(d)
with respect to the deposit described in the Commitment, the Commitment and any
other bid proposals or loan commitments with respect to the transactions
contemplated by this Agreement shall be deemed null and void and of no further
force and effect and the terms and conditions of this Agreement shall control
notwithstanding that such terms and conditions may be inconsistent with or vary
from those set forth in such bid proposals or loan commitments.
K. Forum Selection; Jurisdiction; Venue; Choice of Law. Borrower
acknowledges that this Agreement and the other Loan Documents were substantially
negotiated in the State of Arizona, this Agreement and the other Loan Documents
were executed by Lender in the State of Arizona and delivered by Borrower in the
State of Arizona, all payments under the Notes will be delivered in the State of
Arizona and there are substantial contacts between the parties and the
transactions contemplated herein and the State of Arizona. For purposes of any
action or proceeding arising out of this Agreement or any of the other Loan
Documents, the parties hereto hereby expressly submit to the jurisdiction of all
federal and state courts located in the State of Arizona and Borrower consents
that it may be served with any process or paper by registered mail or by
personal service within or without the State of Arizona in accordance with
applicable law. Furthermore, Borrower waives and agrees not to assert in any
such action, suit or proceeding that it is not personally subject to the
jurisdiction of such courts, that the action, suit or proceeding is brought in
an inconvenient forum or that venue of the action, suit or proceeding is
improper. It is the intent of the parties hereto that all provisions of this
Agreement and the Notes shall be governed by and construed under the laws of the
State of Arizona, without giving effect to its principles of conflicts of law.
To the extent that a court of competent jurisdiction finds Arizona law
inapplicable with respect to any provisions of this Agreement or the Notes,
then, as to those provisions only, the laws of the state(s) where the Collateral
is located shall be deemed to apply. Nothing in this Section shall limit or
restrict the right of Lender to commence any proceeding in the federal or state
courts located in the state(s) in which the Collateral is located to the extent
Lender deems such proceeding necessary or advisable to exercise remedies
available under this Agreement or the other Loan Documents.
L. Counterparts. This Agreement and the other Loan Documents may be
executed in one or more counterparts, each of which shall be deemed an original.
25
M. Assignment by Lender; Binding Effect. Lender may assign in whole or
in part its rights under this Agreement. Upon any unconditional assignment of
Lender's entire right and interest hereunder, Lender shall automatically be
relieved, from and after the date of such assignment, of liability for the
performance of any obligation of Lender contained herein. This Agreement and the
other Loan Documents shall be binding upon and inure to the benefit of Borrower
and Lender and their respective successors and permitted assigns, including,
without limitation, any United States trustee, any debtor in possession or any
trustee appointed from a private panel.
N. Survival. Except for the conditions set forth in Sections 2(b) and
(c), which shall be satisfied or waived as of the Closing Date and the Final
Disbursement Date, as applicable, all representations, warranties, agreements,
obligations and indemnities of Borrower and Lender set forth in this Agreement
and the other Loan Documents shall survive the Closing and the Final
Disbursement.
O. Waiver of Jury Trial and Punitive, Consequential, Special and
Indirect Damages. BORROWER AND LENDER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO
ANY AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM
BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER OR ITS SUCCESSORS WITH
RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, ANY
OF THE OTHER LOAN DOCUMENTS OR ANY DOCUMENT CONTEMPLATED HEREIN OR RELATED
HERETO. THIS WAIVER BY THE PARTIES HERETO OF ANY RIGHT EITHER MAY HAVE TO A
TRIAL BY JURY HAS BEEN NEGOTIATED AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.
FURTHERMORE, BORROWER AND LENDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE THE RIGHT EITHER MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND
INDIRECT DAMAGES FROM THE OTHER AND ANY OF THE OTHER'S AFFILIATES, OFFICERS,
DIRECTORS OR EMPLOYEES OR ANY OF THEIR SUCCESSORS WITH RESPECT TO ANY AND ALL
ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY
EITHER PARTY AGAINST THE OTHER OR ANY OF THE OTHER'S AFFILIATES, OFFICERS,
DIRECTORS OR EMPLOYEES OR ANY OF THEIR SUCCESSORS WITH RESPECT TO ANY MATTER
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, ANY OF THE OTHER LOAN
DOCUMENTS OR ANY DOCUMENT CONTEMPLATED HEREIN OR RELATED HERETO. THE WAIVER BY
BORROWER AND LENDER OF ANY RIGHT THEY MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL,
SPECIAL AND INDIRECT DAMAGES HAS BEEN NEGOTIATED BY THE PARTIES HERETO AND IS AN
ESSENTIAL ASPECT OF THEIR BARGAIN.
P. Estoppel Certificate. At any time, and from time to time, each party
agrees, promptly and in no event later than fifteen (15) days after a request
from the other party, to execute, acknowledge and deliver to the other party a
certificate in the form supplied by the other party, certifying as to such
information reasonably requested by the other party in connection with this
Agreement and the other Loan Documents.
Q. Disclosures. Borrower authorizes Lender and its employees, officers,
agents, representatives and designees to: (i) discuss the affairs, finances and
accounts of Borrower, any Affiliate of Borrower, the other Borrower Parties and
any operator or lessee of any of the Premises with any Franchisor and the
employees, officers, agents and representatives of any Franchisor; (ii) obtain
from, and disclose to, any Franchisor any information regarding the status of
the Franchise Agreements, Borrower, any Affiliate of Borrower, the other
Borrower Parties, any operator or lessee of the Premises and/or the business
operations at any of the Premises, including, without limitation, financial
information about Borrower, any Affiliate of Borrower, the other Borrower
Parties, any operator or lessee of the Premises and/or the business operations
at any of the Premises; (iii) distribute to, or publish for the use by, any
third-parties for statistical analysis purposes the unit-level and/or corporate
level operating results for any of the Premises, Borrower, any Affiliate of
Borrower, any of the other Borrower Parties and/or any operator or lessee of the
Premises prepared by Lender from financial statements obtained from Borrower;
and (iv) obtain personal credit reports, business credit reports and/or asset
reports, as applicable, with respect to Borrower, any Affiliate of Borrower, any
of the other Borrower Parties and/or any operator or lessee of any of the
Premises.
R. Transfers, Participations and Securitizations. (1) A material
inducement to Lender's willingness to complete the transactions contemplated by
the Loan Documents is Borrower's agreement that Lender may, at any time,
complete a Transfer, Participation or Securitization with respect to the Notes,
this Agreement and/or any of the other Loan Documents or any or all servicing
rights with respect thereto.
26
(2) Borrower agrees to cooperate in good faith with Lender in
connection with any such Transfer, Participation and/or Securitization of the
Notes, this Agreement and/or any of the other Loan Documents, or any or all
servicing rights with respect thereto, including, without limitation (i)
providing such documents, financial and other data, and other information and
materials (the "Disclosures") which would typically be required with respect to
the Borrower Parties by a purchaser, transferee, assignee, servicer,
participant, investor or rating agency involved with respect to such Transfer,
Participation or Securitization, as applicable; provided, however, the Borrower
Parties shall not be required to make Disclosures of any confidential
information or any information which has not previously been made public unless
required by applicable federal or state securities laws; and (ii) amending the
terms of the transactions evidenced by the Loan Documents to the extent
necessary so as to satisfy the requirements of purchasers, transferees,
assignees, servicers, participants, investors or selected rating agencies
involved in any such Transfer, Participation or Securitization, so long as such
amendments would not have a material adverse effect upon the Borrower Parties or
the transactions contemplated hereunder. Lender shall be responsible for
preparing at its expense any documents evidencing the amendments referred to in
the preceding subitem (ii).
(3) Borrower consents to Lender providing the Disclosures, as well as
any other information which Lender may now have or hereafter acquire with
respect to the Premises, the Collateral or the financial condition of the
Borrower Parties to each purchaser, transferee, assignee, servicer, participant,
investor or rating agency involved with respect to each Transfer, Participation
and/or Securitization, as applicable. Lender and Borrower (and their respective
Affiliates) shall each pay their own attorneys fees and other out-of-pocket
expenses incurred in connection with the performance of their respective
obligations under this Section.
(4) Notwithstanding anything to the contrary contained in this
Agreement or the other Loan Documents: (a) an Event of Default or a breach or
default, after the passage of all applicable notice and cure or grace periods,
under any Loan Document or Other Agreement which relates to a loan or
sale/leaseback transaction which has not been the subject of a Securitization,
Participation or Transfer shall not constitute an Event of Default or a breach
or default, as applicable, under any Loan Document or Other Agreement which
relates to a loan which has been the subject of a Securitization, Participation
or Transfer; (b) an Event of Default or a breach or default, after the passage
of all applicable notice and cure or grace periods, under any Loan Document or
Other Agreement which relates to a loan which is included in any Loan Pool shall
not constitute an Event of Default or a breach or default, as applicable, under
any Loan Document or Other Agreement which relates to a loan which is included
in any other Loan Pool; (c) the Loan Documents and Other Agreements
corresponding to the loans in any Loan Pool shall not secure the obligations of
any of the Borrower Parties and/or any Affiliate of any of the Borrower Parties
contained in any Loan Document or Other Agreement which does not correspond to a
loan in such Loan Pool; and (d) the Loan Documents and Other Agreements which do
not correspond to a loan in any Loan Pool shall not secure the obligations of
any of the Borrower Parties and/or any Affiliate of any of the Borrower Parties
contained in any Loan Document or Other Agreement which does correspond to a
loan in such Loan Pool.
27
IN WITNESS WHEREOF, Borrower and Lender have entered into this
Agreement as of the Closing Date.
LENDER:
GE CAPITAL FRANCHISE FINANCE
CORPORATION, a Delaware corporation
By
-----------------------------------------------
Printed Name
-------------------------------------
Its
----------------------------------------------
BORROWER:
ERI ACQUISITION CORP., an Oregon corporation
By
-----------------------------------------------
Printed Name
-------------------------------------
Its
----------------------------------------------
STATE OF ARIZONA )
) SS.
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me on ________, 2005
by ________________________________, _________________________________ of GE
Capital Franchise Finance Corporation, a Delaware corporation, on behalf of the
corporation.
_________________________________________
Notary Public
My Commission Expires:
______________________________________
STATE OF _________________ )
) SS.
COUNTY OF _______________ )
The foregoing instrument was acknowledged before me on ___________,
2005 by ______________________________, ______________________________ of ERI
Acquisition Corp. an Oregon corporation, on behalf of the corporation.
_________________________________________
Notary Public
My Commission Expires:
______________________________________
EXHIBIT A
PREMISES/PERMITTED CONCEPT
EXHIBIT A-1
LEASED PREMISES
EXHIBIT B
FRANCHISE AGREEMENTS AND PENDING FRANCHISEE DEFAULTS
A. List of Franchise Agreements is attached after this page.
B. Pending Franchisee Default:
*Nampa, Idaho Site: Franchisee has been in default in its
payment obligations to Elmer's since mid-2003.
*Boise-Fairview Site: Franchisee is $8,200 in arrears in its
payment obligations to Elmer's.
*Palm Springs Site: Franchisee is $5,300 in arrears in its
payment obligations to Elmer's.
EXHIBIT C
INDEMNITORS
XXXXX X. XXXXX, XXXXXXX X. SERVICE, XXXXXX X. XXXXXX, XXXXXXXXX X.
XXXXXX, XXXXXX X. XXXXXXX, XXXXX X. XXXXXXX, XXXXXXX X. XXX, XXXXX X.
XXXXXXX-XXX, XXXXX X. XXXXXXX, XXXXX X. XXXXXX, XXXXX X. XXXX, XXXXXXX X.
XXXXXX, XXXXXX X. XXXXXXX, XXXXXX X. XXXXX, XXXXX XXXXXX, XXXXX XXXXX-XXXXXX,
XXXXXX XXXXXXXX, XXXXXXX X. XXXXXXX, XXXX X. WEEKS AND XXXXXXX XXXXXXXX
EXHIBIT C-1
INDIVIDUAL GUARANTORS
XXXXX X. XXXXX, XXXXXXX X. SERVICE, XXXXXX X. XXXXXX, XXXXXXXXX X.
XXXXXX, XXXXXX X. XXXXXXX, XXXXX X. XXXXXXX, XXXXXXX X. XXX, XXXXX X.
XXXXXXX-XXX, XXXXX X. XXXXXXX, XXXXX X. XXXXXX, XXXXX X. XXXX, XXXXXXX X.
XXXXXX, XXXXXX X. XXXXXXX, XXXXXX X. XXXXX, XXXXX XXXXXX, XXXXX XXXXX-XXXXXX,
XXXXXX XXXXXXXX, XXXXXXX X. XXXXXXX, XXXX X. WEEKS AND XXXXXXX XXXXXXXX
EXHIBIT D
WELLS FARGO MORTGAGE LOAN PROPERTIES
0000 Xxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxx
0000 000xx Xxxxxx XX, Xxxxxxx, Xxxxxxxxxx
0000 Xxxxxxx Xxxx., Xxxxx, Xxxxx
EXHIBIT E
FIXED RATE PROMISSORY NOTE--LESS THAN $[3,5000,000]
Not applicable because the initial Fixed Rate Promissory Note is in the
amount of $3,500,000.00.
EXHIBIT F
FIXED RATE PROMISSORY NOTE--$[3,500,000]
PROMISSORY NOTE
$3,500,000.00 Dated as of March ______, 2005
Scottsdale, Arizona
ERI ACQUISITION CORP., an Oregon corporation ("Debtor"), for value
received, hereby promises to pay to GE CAPITAL FRANCHISE FINANCE CORPORATION, a
Delaware corporation ("GE"), whose address is 00000 Xxxxx Xxxxxxxxx Xxxxx,
Xxxxxxxxxx, Xxxxxxx 00000, or order, on or before April 1, 2015 (the "Maturity
Date"), the principal sum of $3,500,000.00, as herein provided, and to pay
interest on the unpaid principal amount of this Note from the date hereof to the
Maturity Date at the rate of [ten year U.S Dollar Swaps rate plus 2.99%]% on the
basis of a 360-day year consisting of twelve consecutive 30-day months, such
principal and interest to be paid in immediately available funds and in lawful
money of the United States. Initially capitalized terms which are not otherwise
defined in this Note shall have the meanings set forth in that certain Loan
Agreement dated as of the date of this Note between Debtor and GE, as such
agreement may be amended, restated and/or supplemented from time to time (the
"Loan Agreement").
Interest on the principal amount of this Note for the period commencing
with the date of this Note through the last day in the month in which this Note
is dated shall be due and payable upon delivery of this Note. Thereafter,
principal and interest shall be payable in consecutive monthly installments of
$_____________ commencing on May 1, 2005, and continuing on the first day of
each month thereafter until the Maturity Date, at which time the outstanding
principal and unpaid accrued interest shall be due and payable.
Upon execution of this Note, Debtor shall authorize Lender to establish
arrangements whereby all payments of principal and interest hereunder are
transferred by Automated Clearing House Debit initiated by Lender directly from
an account at a U.S. bank in the name of Debtor to such account as Lender may
designate or as Lender may otherwise designate. Each payment of principal and
interest hereunder shall be applied first toward any past due payments under
this Note (including payment of all Costs (as herein defined)), then to accrued
interest, and the balance, after the payment of such accrued interest, if any,
shall be applied to the unpaid principal balance of this Note; provided,
however, each payment hereunder after an Event of Default has occurred shall be
applied as Lender in its sole discretion may determine.
Debtor may prepay this Note in full, but not in part (except as
otherwise set forth below), including all accrued but unpaid interest hereunder
and all sums advanced by GE pursuant to the Loan Documents and any Other
Agreements, provided that (i) no Event of Default has occurred under any of the
Loan Documents or any Other Agreements, (ii) any such prepayment shall only be
made on a regularly scheduled payment date upon not less than 30 days prior
written notice from Debtor to GE, and (iii) except as otherwise set forth
herein, any such prepayment shall be made together with payment of an amount
equal to the sum of:
(a) prior to the fourth anniversary of the Final Disbursement
Date, a prepayment fee equal to 1% of the amount prepaid; and
(b) a prepayment premium equal to the positive difference (if
any) between (i) the present value of the stream of monthly principal
and interest payments due under this Note from the date of such
prepayment through the scheduled Maturity Date (the "Remaining
Scheduled Term"), calculated using the interpolated yield, at the time
of such prepayment, of the two U.S. Dollar Interest Rate Swaps (as
published in Federal Reserve Statistical Release H.15[519]) whose terms
most closely match the Remaining Scheduled Term, and (ii) the present
value of the stream of monthly principal and interest payments due
under this Note from the date of such prepayment through the scheduled
Maturity Date, calculated using the interpolated yield of the two U.S.
Dollar Interest Rate Swaps whose terms most closely match the
originally scheduled term of this Note.
The foregoing prepayment fee and prepayment premium, as applicable,
shall be due and payable regardless of whether such prepayment is the result of
a voluntary prepayment by Debtor or as a result of GE declaring the
unpaid principal balance of this Note, accrued interest and all other sums due
under this Note, the other Loan Documents and any Other Agreements, due and
payable as contemplated below.
This Note is secured by the Loan Agreement and the other Loan
Documents. Upon the occurrence of an Event of Default, GE may declare the entire
unpaid principal balance of this Note, accrued interest, if any, and all other
sums due under this Note and any Loan Documents or Other Agreements due and
payable at once without notice to Debtor. All past-due principal and/or interest
shall bear interest from the due date to the date of actual payment at a rate
(the "Default Rate") equal to at the lesser of (i) the highest rate for which
the undersigned may legally contract or (ii) 14% per annum, and such Default
Rate shall continue to apply following a judgment in favor of GE under this
Note. If Debtor fails to make any payment or installment due under this Note
within five days of its due date, Debtor shall pay to GE, in addition to any
other sum due GE under this Note or any other Loan Document, a late charge equal
to 5% of such past-due payment or installment (the "Late Charge"), which Late
Charge is a reasonable estimate of the loss that may be sustained by GE due to
the failure of Debtor to make timely payments. All payments of principal and
interest due hereunder shall be made (i) without deduction of any present and
future taxes, levies, imposts, deductions, charges or withholdings, which
amounts shall be paid by Debtor, and (ii) without any other right of abatement,
reduction, setoff, defense, counterclaim, interruption, deferment or recoupment
for any reason whatsoever. Debtor will pay the amounts necessary such that the
gross amount of the principal and interest received by GE is not less than that
required by this Note.
No delay or omission on the part of GE in exercising any remedy, right
or option under this Note shall operate as a waiver of such remedy, right or
option. In any event, a waiver on any one occasion shall not be construed as a
waiver or bar to any such remedy, right or option on a future occasion. Debtor
hereby waives presentment, demand for payment, notice of dishonor, notice of
protest, and protest, notice of intent to accelerate, notice of acceleration and
all other notices or demands in connection with delivery, acceptance,
performance, default or endorsement of this Note. All notices, consents,
approvals or other instruments required or permitted to be given by either party
pursuant to this Note shall be given in accordance with the notice provisions in
the Loan Agreement. Should any indebtedness represented by this Note be
collected at law or in equity, or in bankruptcy or other proceedings, or should
this Note be placed in the hands of attorneys for collection after default,
Debtor shall pay, in addition to the principal and interest due and payable
hereon, all costs of collecting or attempting to collect this Note (the
"Costs"), including reasonable attorneys' fees and expenses of GE (including
those fees and expenses incurred in connection with any appeal) and court costs
whether or not a judicial action is commenced by GE. This Note may not be
amended or modified except by a written agreement duly executed by the party
against whom enforcement of this Note is sought. In the event that any one or
more of the provisions contained in this Note shall be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Note, and this
Note shall be construed as if such provision had never been contained herein or
therein. Time is of the essence in the performance of each and every obligation
under this Note.
Notwithstanding anything to the contrary contained in any of the Loan
Documents, the obligations of Debtor to GE under this Note and any other Loan
Documents are subject to the limitation that payments of interest and late
charges to GE shall not be required to the extent that receipt of any such
payment by GE would be contrary to provisions of applicable law limiting the
maximum rate of interest that may be charged or collected by GE. The portion of
any such payment received by GE that is in excess of the maximum interest
permitted by such provisions of law shall be credited to the principal balance
of this Note or if such excess portion exceeds the outstanding principal balance
of this Note, then such excess portion shall be refunded to Debtor. All interest
paid or agreed to be paid to GE shall, to the extent permitted by applicable
law, be amortized, prorated, allocated and/or spread throughout the full term of
this Note (including, without limitation, the period of any renewal or extension
thereof) so that interest for such full term shall not exceed the maximum amount
permitted by applicable law.
This obligation shall bind Debtor and its successors and assigns, and
the benefits hereof shall inure to GE and its successors and assigns.
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IN WITNESS WHEREOF, Debtor has executed and delivered this Note
effective as of the date first set forth above.
DEBTOR:
ERI ACQUISITION CORP., an Oregon corporation
By ____________________________________________
Printed Name __________________________________
Its ___________________________________________
EXHIBIT G
INITIAL STOCK PLEDGE AGREEMENT
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Agreement") is made as of March
_______, 2005 by and between ERI ACQUISITION CORP., an Oregon corporation
("Borrower"), and GE CAPITAL FRANCHISE FINANCE CORPORATION, a Delaware
corporation ("Lender").
PRELIMINARY STATEMENT:
Lender and Borrower are parties to that certain Loan Agreement dated as
of March ___, 2005 (the "Loan Agreement") pursuant to which Lender agreed to
make a loan to Borrower in the aggregate amount of $6,500,000.000 (the "Loan").
Capitalized terms not defined herein shall have the meanings set forth in the
Loan Agreement. Borrower is the holder of ________ percent (___%) of the issued
and outstanding common stock of Elmer's Restaurants, Inc., an Oregon corporation
("Elmer's") (the "Subject Common Stock"). Borrower is entitled to exercise all
of the voting rights of the Subject Common Stock and receive all of the
distributions and dividends payable by Elmer's on account of the Subject Common
Stock.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:
ARTICLE I
SECURITY INTEREST AND PLEDGE
Section 1.1. SECURITY INTEREST AND PLEDGE. (a) Subject to the terms of
this Agreement, Borrower hereby pledges and grants to Lender a first priority
lien upon and security interest in the following property now owned or hereafter
acquired, created or arising (collectively, the "Collateral"):
(i) The issued and outstanding shares the Subject Common Stock
which are represented by the stock certificate(s) described on the
attached Schedule I; and
(ii) all products and proceeds of the Subject Common Stock,
including, without limitation, all revenues, distributions, dividends,
stock dividends, securities, and other property, rights and interests
that Borrower is entitled to receive at any time on account of the
same.
(b) Borrower represents and warrants to Lender that as of the date of
this Agreement 155,812 shares of the Subject Common Stock (the "DTC Shares") are
held in that certain Securities Account Control Agreement dated as of the date
of this Agreement among Xxxxx Fargo Brokerage Services, LLC, Borrower and Lender
(the "Account Agreement") and pledged to Lender pursuant to the Account
Agreement. Borrower covenants to promptly cause certificates with respect to the
DTC Shares to be issued in the name of Borrower and delivered to Lender along
with stock powers endorsed in blank by Borrower.
Section 1.2. OBLIGATIONS. The Collateral shall secure the following
indebtedness and obligations of Borrower and Elmer's (collectively, the
"Obligations"):
(a) Payment of indebtedness evidenced by the Notes together
with all extensions, renewals, amendments and modifications thereof;
and
(b) Payment of all other indebtedness and other sums, with
interest thereon, which may be owed under, and performance of all other
obligations and covenants contained in the other Loan Documents,
together with any other instrument given to evidence or further secure
the payment and performance of any obligation secured hereby or thereby
(all of the documents, instruments and other agreements described in
this Section 1.2 are referred to collectively as, the "Documents").
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF BORROWER
Borrower represents and warrants to Lender as of the date of this
Agreement and the Closing Date that:
Section 2.1. TITLE. Borrower owns, and with respect to Collateral
acquired by Borrower after the date hereof, will own, legally and beneficially,
the Collateral, free and clear of any lien, security interest, pledge,
hypothecation, claim or other encumbrance, or any right or option on the part of
any third person to purchase or otherwise acquire or obtain any lien or security
interest in the Collateral or any part thereof, except for the lien and security
interest granted hereunder in favor of Lender. The Collateral is genuine, free
from any restriction on transfer, duly and validly authorized and issued and
fully paid and non-assessable.
Section 2.2. AUTHORITY AND ENFORCEABILITY. Borrower has the authority
to execute, deliver and perform this Agreement. This Agreement is the legal,
valid and binding obligation of Borrower, enforceable against it in accordance
with its terms, and the execution, delivery and performance of this Agreement by
Borrower does not and will not conflict with, result in a breach of, or
constitute a default under, the provisions of any indenture, mortgage, deed of
trust, security agreement, or other instrument or agreement or any judgment,
decree, order, law, statute, or other governmental rule or regulation applicable
to Borrower, the Collateral or any other property of Borrower.
Section 2.3. FIRST PRIORITY SECURITY INTEREST. Upon the execution of
this Agreement by the parties hereto and the delivery to Lender of the stock
certificate(s) referred to in Section 1.1(a) and further described in Schedule I
hereof (together with irrevocable stock powers executed by Borrower in blank
with respect to such stock certificate(s)), Lender shall have a valid first
priority lien upon and security interest in the Collateral.
Section 2.4. COLLATERAL GENUINE. The Collateral is genuine, free from
any restriction on transfer other than those imposed under applicable federal
and state securities laws, duly and validly authorized and issued, fully paid
and non-assessable, and is hereby duly and validly pledged and hypothecated to
Lender in accordance with law. The stock certificate(s) referred to in Section
1.1(a) and further described in Schedule I hereof represent _________ (___%)
percent of the issued and outstanding shares the common stock of Elmer's and
there are no other classes of stock in Elmer's, including, without limitation,
preferred stock; provided, however, stock options to acquire 291,064 shares of
capital stock in Elmer's have been issued to one or more of the Indemnitors (the
"Continuing Options"); provided, however, pursuant to the other Initial Stock
Pledge Agreement and the Subsequent Stock Pledge Agreement, the Indemnitors are
obligated to pledge to Lender all shares of common stock in Elmer's acquired
pursuant to the exercise of the Continuing Options.
Section 2.5. NO ACTIONS. No action has been brought or, to Borrower's
actual knowledge, is threatened which would in any way prohibit or restrict the
execution and delivery of this Agreement by Borrower or the performance in all
respects of Borrower hereunder.
Section 2.6. ELMER'S. Borrower has delivered to Lender true, correct
and complete copies of Elmer's articles of incorporation and bylaws as presently
in effect (collectively, the "Governing Documents"). The Governing Documents are
in full force and effect as of the date hereof.
Section 2.7. REASONABLY EQUIVALENT VALUE; SOLVENCY. (a) Borrower is
entitled to exercise all of the voting rights of the Subject Common Stock
referred to in Section 1.1(a) hereof, and to receive all of the distributions
and dividends payable by Elmer's to the holder of the Subject Common Stock;
(b) Borrower has received reasonably equivalent value in exchange for
Borrower's execution and delivery of this Agreement;
(c) Borrower is not insolvent and will not be rendered insolvent by the
execution, delivery and performance of this Agreement;
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(d) Borrower has sufficient capital to engage in all present and
planned businesses and transactions; and
(e) Borrower has not incurred, and does not intend to incur, debts that
would be beyond Borrower's ability to pay such debts as they mature.
ARTICLE III
AFFIRMATIVE AND NEGATIVE COVENANTS OF BORROWER
Borrower covenants and agrees with Lender for so long as the
Obligations are outstanding that:
Section 3.1. ENCUMBRANCES. Borrower shall not create, permit or suffer
to exist, and shall defend the Collateral against, any lien, security interest
or other encumbrance on the Collateral, except the pledge and security interest
in favor of Lender set forth in this Agreement, and shall defend Borrower's
rights in the Collateral and Lender's security interest in the Collateral
against the claims of all other persons and entities.
Section 3.2. SALE OF COLLATERAL. Borrower shall not sell, assign,
transfer or otherwise dispose of the Collateral or permit the foregoing to occur
without the prior written consent of Lender.
Section 3.3. DISTRIBUTIONS. If Borrower shall become entitled to
receive or shall receive any stock certificate representing any shares of the
Subject Common Stock (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any
recapitalization, reclassification, increase, or reduction of capital or issued
in connection with any reorganization or any stock split), or any option or
right in the Subject Common Stock, whether as an addition to, in substitution
of, or in exchange for any Collateral, Borrower agrees to accept the same as
Lender's agent and to hold the same in trust for Lender, and to deliver the same
forthwith to Lender in the exact form received, with the appropriate endorsement
of Borrower or with undated irrevocable stock powers duly executed in blank, to
be held by Lender as additional Collateral for the Obligations, subject to the
terms hereof. Any sums paid upon or in respect of the Collateral upon
liquidation or dissolution shall be paid over to Lender to be held by Lender as
Collateral subject to the terms hereof; and in case any distribution of capital
shall be made on or in respect of the Collateral or any property shall be
distributed upon or with respect to the Collateral pursuant to any
recapitalization or reclassification of capital stock or pursuant to any
reorganization, the property so distributed shall be delivered to Lender to be
held by Lender, as Collateral, subject to the terms hereof. All sums of money
and property so paid or distributed in respect of the Collateral that are
received by Borrower shall, until paid or delivered to Lender, be held by
Borrower in trust as additional security for Borrower's obligations under the
Documents.
Section 3.4. FURTHER ASSURANCES. From time to time, upon a reasonable
request by Lender, Borrower shall execute and deliver such other and further
instruments, documents or assurances, to (a) more effectively subject the
Collateral to the performance of the terms and provisions of this Agreement and
the other Documents, (b) give Lender possession of the Collateral, or (c)
effectuate any sale of any Collateral as herein provided.
Section 3.5. PAYMENT OF ASSESSMENTS. Borrower will cause to be paid
before delinquency all taxes, charges, liens and assessments heretofore or
hereafter levied or assessed against the Collateral, or any part thereof, or
against Lender for or on account of the interest created by this Agreement and
the Documents, and, upon Lender's request, will furnish Lender with receipts
showing payment of such taxes and assessments at least ten (10) calendar days
before the applicable delinquency date therefor.
Section 3.6. DEFENDING THE COLLATERAL. Upon obtaining any knowledge
that the validity of this Agreement, the Documents or any rights, titles,
security interests or other interests created or evidenced hereby and thereby
shall be attacked, endangered or questioned, or if any legal proceedings are
instituted with respect thereto, Borrower shall give prompt written notice
thereof to Lender and at Borrower's own cost and expense, shall diligently
endeavor to cure any defect that may be developed or claimed, and will take all
necessary and proper steps for the defense of such legal proceedings. Lender
(whether or not named as a party to legal proceedings with respect thereto) is
hereby authorized and empowered to take such additional steps as it determines
in its reasonable
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judgment and discretion may be necessary or proper for the defense of any such
legal proceedings or the protection of the validity or priority of this
Agreement and the rights, titles, security interests and other interests created
or evidenced hereby, and all reasonable expenses so incurred of every kind and
character shall constitute sums advanced pursuant to this Agreement. Borrower
will not do or suffer to be done any act whereby the value of any part of the
Collateral may be decreased.
Section 3.7. COSTS AND EXPENSES. If Borrower should fail to comply with
any of Borrower's agreements, covenants or obligations under this Agreement,
within the applicable periods set forth in this Agreement, then Lender (in
Borrower's name or in Lender's own name) may perform them or cause them to be
performed for Borrower's account and at Borrower's expense, but shall have no
obligation to perform any of them or cause them to be performed. Any and all
expenses incurred or paid by Lender pursuant to this Section 3.7 shall become
the additional obligations of Borrower to Lender, due and payable on demand, and
each shall bear interest from the date Lender incurs or pays such expenses to
the date of actual payment by Borrower or Elmer's at the lesser of the highest
rate not prohibited by applicable law or the rate of 14% per annum. Upon making
any such payment or incurring any such expense, Lender shall be fully and
automatically subrogated to all of the rights of the person, corporation or body
politic receiving such payment. Any amounts owing by Borrower to Lender pursuant
to this or any other provision of this Agreement shall automatically and without
notice be secured by this Agreement. Borrower and Lender each agree and consent
that the amount and nature of any such expense and the time when it was paid
shall be conclusively established by the affidavit of Lender or any of Lender's
officers or agents. The exercise of the privileges granted to Lender in this
Section is cumulative of all other rights given by this Agreement, and of all
rights given Lender by law.
Section 3.8. NO ADDITIONAL STOCK. Without the prior written consent of
Lender, the Borrower shall not permit Elmer's to issue any additional shares of
stock in Elmer's (other than the shares of common stock referred to in Section
1.1(a) and further described in Schedule I hereof), including, without
limitation, any shares of preferred stock or any shares of stock representing a
stock dividend or stock split; provided, however, simultaneously with the
Closing, Borrower shall be permitted to issue 266,667.00 shares of common stock
to the Indemnitors in consideration for the contribution of capital to Elmer's
in the amount of $2,000,000.00 in immediately available funds; provided,
however, as a condition precedent to the issuance of such shares, the
Indemnitors shall pledge such shares to Lender pursuant to this Agreement.
Section 3.9. NO INTERFERENCE. Borrower shall cause Elmer's to recognize
Lender's lien upon and security interest in the Collateral and shall not permit
Elmer's to take any actions that would interfere with such lien and security
interest, Lender's rights under this Agreement or Borrower's obligations under
this Agreement.
Section 3.10. ELMER'S. Borrower shall not permit Elmer's to amend or
otherwise alter or rescind the Governing Documents without Lender's prior
written consent. The Governing Documents shall remain in full force and effect.
ARTICLE IV
RIGHTS OF LENDER AND BORROWER
Section 4.1. VOTING RIGHTS. So long as no Event of Default (as defined
in Section 5.1 hereof) shall have occurred, Borrower shall be entitled to
exercise any and all voting rights relating or pertaining to the Collateral or
any part thereof.
Section 4.2. DIVIDEND. Unless an Event of Default shall have occurred
and be continuing, Borrower shall be entitled to receive all cash dividends paid
in respect of the Collateral; provided, that, the amount of any dividend
declared or paid prior to an Event of Default shall be reasonable and in no
event shall it exceed Elmer's net income for the Dividend Period. As used
herein, the term "Dividend Period" shall mean the period of time commencing on
the date of declaration of the dividend immediately preceding the dividend at
issue and ending on the day immediately preceding the date of declaration of the
dividend at issue.
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Section 4.3. LENDER'S DUTY OF CARE. Other than the exercise of
reasonable care in the physical custody of the Collateral while held by Lender
hereunder, Lender shall have no responsibility for or obligation or duty with
respect to all or any part of the Collateral or any matter or proceeding arising
out of or relating thereto. Lender shall not be responsible in any way for any
depreciation in the value of the Collateral. Lender shall have no duty or
responsibility to take any steps to preserve rights against prior parties or to
enforce collection of the Collateral by legal proceedings or otherwise, the sole
duty of Lender, their successors and assigns, being to receive collections,
remittances and payments on such Collateral as and when made and received by
Lender and, at Lender's option, to apply the amount or amounts so received,
after deduction of any collection costs incurred, as payment upon any of the
Obligations or to hold the same for the account and order of Borrower.
Section 4.4. RELEASE OF COLLATERAL. Notwithstanding the foregoing,
Lender shall be obligated to return the Collateral to Borrower (including the
execution of any required written assignment of the same) within ten (10) days
after Borrower's request if the Obligations have been satisfied in full.
Section 4.5. ADDITIONAL RIGHTS OF LENDER. Lender may, from time to
time, without notice to Borrower, do any acts which it deems necessary or
desirable to preserve the value or marketability of the Collateral, or any part
thereof or interest therein, increase the income therefrom or protect the
security hereof including, without limitation, any of the following: (a) retain
or obtain a security interest in any property, in addition to the Collateral, to
secure any of the Obligations, (b) retain or obtain the primary or secondary
liability of any party or parties with respect to any of the Obligations, (c)
extend or renew for any period, regardless of whether such extension or renewal
period be longer than the original period, or exchange, any of the Obligations
or release or compromise any Obligations of any party or parties primarily or
secondarily liable thereon, (d) release its security interest in all or any
property, in addition to the Collateral, securing any of the Obligations, and
permit any substitution or exchange for any such property, (e) delay or omit to
exercise any right or power with respect to any Obligations, (f) delay in
enforcement of payment of indebtedness relating to the Obligations, (g) resort
to the Collateral for payment of any of the Obligations, regardless of whether
Lender has resorted to any other property, or has proceeded against any party
primarily or secondarily liable on any of the Obligations, and (h) make any
amendments to any of the Documents.
ARTICLE V
DEFAULTS AND REMEDIES
Section 5.1. EVENTS OF DEFAULT. For purposes of this Agreement, each of
the following shall be deemed an "Event of Default":
(a) If any representation or warranty of Borrower set forth in
this Agreement is false in any respect or if Borrower renders any false
statement or account;
(b) If Borrower fails to observe or perform any of its
covenants, obligations or conditions in this Agreement other than those
set forth in Sections 3.4, 3.5, 3.6 and 3.7;
(c) If Borrower fails to observe or perform any of its
covenants set forth in Sections 3.4, 3.5, 3.6 and 3.7 of this
Agreement; provided, however, if any such event does not involve the
payment of any monetary sum, does not place any rights or property of
Lender in immediate jeopardy, and is within the reasonable power of
Borrower to promptly cure after receipt of notice thereof, all as
determined by Lender in its reasonable discretion, then such event
shall not constitute an Event of Default hereunder, unless otherwise
expressly provided herein, unless and until Lender shall have given
Borrower notice thereof and a period of 15 days shall have elapsed
following receipt of such notice, an Event of Default shall be deemed
to have occurred hereunder without further notice or demand of any kind
being required. Notwithstanding the foregoing, Lender may, if it
determines in its sole and absolute discretion that (1) such failure
cannot reasonably be cured within such 15-day period, (2) Borrower is
diligently pursuing a cure of such failure, and (3) that such failure
does not place the Collateral in immediate jeopardy or otherwise
adversely affect the Collateral or Lender's lien on such Collateral,
grant Borrower up to an additional 15 days following the initial 15-day
period to cure such failure. If Borrower fails to correct or cure such
5
failure within such additional 15-day period, an Event of Default shall
be deemed to have occurred hereunder without further notice or demand
of any kind being required;
(d) If Borrower or Elmer's becomes insolvent within the
meaning of the Code, files or notifies Lender that it intends to file a
petition under the Code, initiates a proceeding under any similar law
or statute relating to bankruptcy, insolvency, reorganization, winding
up or adjustment of debts (collectively, an "Action"), becomes the
subject of either an involuntary Action or petition under the Code, or
is generally not paying its debts as the same become due; and
(e) If there is an "Event of Default" under the Loan Agreement
or the Documents.
Section 5.2. RIGHTS AND REMEDIES. Upon the occurrence of an Event of
Default, Lender shall have the following rights and remedies:
(a) In addition to all other rights and remedies granted to
Lender in this Agreement, the Documents and the Loan Agreement, Lender
shall have all of the rights and remedies of a secured party under the
Uniform Commercial Code as adopted by the State of Arizona and all
rights and remedies otherwise available at law or in equity. Without
limiting the generality of the foregoing, Lender may:
(i) Sell or otherwise dispose of the Collateral, or
any part thereof, in one or more portions at public or private
sale or sales, at the offices of Lender or elsewhere, for
cash, on credit or for future delivery; or
(ii) Bid and become a purchaser at any sale free of
any right or equity of redemption in Borrower, which right or
equity is hereby expressly waived and released by Borrower.
Lender shall give not less than ten (10) days' prior written
notice of the time and place of any public sale or of the time after
which any private sale may take place and that such notice shall
constitute reasonable notice of such matters. Borrower shall be liable
for all reasonable attorneys' fees and other expenses incurred by
Lender in connection with the enforcement of Lender's rights under this
Agreement and the Documents. Borrower waives all rights of marshaling
in respect of the Collateral. Any public sale shall be held at such
time or times, within ordinary business hours and at such place or
places, as Lender may fix in the notice of sale. Lender may sell the
Collateral in one lot, as an entirety, or in separate portions as
Lender may determine in its absolute discretion. Lender shall not be
obligated to make any sale pursuant to any such notice. Lender may,
without notice or publication, adjourn any public or private sale or
cause the same to be adjourned from time to time by announcement at any
time and place fixed for the sale, and such sale may be made at any
time or place to which the same may be so adjourned. In case of any
sale of all or any part of the Collateral on credit or for future
delivery, the Collateral so sold may be retained by Lender until the
sales price is paid by the purchaser thereof, but Lender shall incur no
liability in case of the failure of such purchaser to take up and pay
for the Collateral so sold, and in case of any such failure, such
Collateral may again be sold upon like notice. Borrower and Lender
hereby agree that each and every method of disposition described in
this Section shall constitute disposition in a commercially reasonable
manner. On any sale of the Collateral, Lender is hereby authorized to
comply with any limitation or restriction with which compliance is
necessary, in the view of Lender's counsel, in order to avoid any
violation of applicable law or in order to obtain any required approval
of the purchaser or purchasers by any applicable governmental
authority.
(b) Lender shall have the right to declare any and all
payments due under the Documents immediately due and payable and the
right to recover all fees and expenses in connection with the
collection or enforcement of the Obligations.
(c) Lender shall have the right to xxx for specific
performance of any Obligations or to recover damages for breach
thereof.
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(d) Lender may cause any or all of the Collateral held by it
to be transferred into the name of Lender or the name or names of
Lender's nominee or nominees.
(e) Lender shall be entitled to receive all cash dividends
payable in respect of the Collateral.
(f) Lender shall have the right, but shall not be obligated
to, exercise or cause to be exercised all voting rights and corporate
powers in respect of the Collateral, and Borrower shall deliver to
Lender upon request, irrevocable proxies with respect to the Collateral
in form satisfactory to Lender.
Borrower agrees that, in connection with the exercise of the foregoing
rights and remedies, Lender may be unable to effect a public sale of all or any
part of the Collateral by reason of certain prohibitions contained in applicable
federal and state securities laws, including, without limitation, applicable
"Blue Sky" laws, as now or hereafter in effect. As a result, Lender may be
required to resort to one or more private sales to a restricted group of
purchasers who will be obligated to agree, among other things, to acquire the
Collateral for their own account, for investment and not with a view to the
distribution or resale thereof. Borrower recognizes that such private sales may
be made at prices and on other terms less favorable to the seller than if the
Collateral were sold at public sales, and that Lender has no obligation to delay
the sale of the Collateral for the period of time necessary to permit the issuer
of the Collateral, even if such issuer would agree, to register the Collateral
for public sale under such applicable securities laws. Borrower and Lender
hereby agree that any private sale or sales made under such circumstances shall
be deemed to have been made in a commercially reasonable manner. Borrower
further agrees to use its reasonable best efforts to do or cause to be done all
such other acts as may be necessary to make such sale or sales of all or any
portion of the Collateral pursuant to this Agreement valid and binding and in
compliance with any and all other requirements of applicable law.
Section 5.3. POWER OF ATTORNEY. Borrower hereby constitutes and
appoints Lender as Borrower's true, lawful and irrevocable attorney-in-fact
(which appointment shall be deemed coupled with an interest), with full
authority in the place and stead of Borrower and in the name of Borrower, or
otherwise, from time to time after the occurrence and during the continuance of
an Event of Default, in Lender's discretion, to take any action and execute any
instrument which Lender may deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation, to demand, receive,
and enforce payments and to give receipts, releases and satisfactions and to xxx
for moneys payable to Borrower with respect to any of the Collateral.
Section 5.4. SELECTION OF SECURITY. Lender may resort to any security
given by this Agreement or to any other security now existing or hereafter given
to secure the Obligations, in whole or in part, and in such portions and in such
order as may seem best to Lender in its sole and absolute discretion, and any
such action shall not in any way be considered as a waiver of any of the rights,
benefits or security interests evidenced by this Agreement.
Section 5.5. WAIVER OF APPRAISEMENT LAWS. To the fullest extent
Borrower may do so by applicable law, Borrower agrees that Borrower will not at
any time insist upon, plead, claim or take the benefit or advantage of any law
now or hereafter in force providing for any appraisement, valuation, stay,
extension or redemption. Borrower, for Borrower's, successors, receivers,
trustees and assigns, and for any and all other persons ever claiming any
interest in the Collateral, to the fullest extent permitted by law, hereby
waives and releases all rights of redemption arising with respect to the sale of
the Collateral, valuation, appraisement, stay of execution, and all rights to a
marshaling of the assets of Borrower, including the Collateral, or to a sale in
inverse order of alienation in the event of foreclosure of the security interest
hereby created.
Section 5.6. APPLICATION OF PROCEEDS. Lender shall apply any proceeds
received by it from the exercise of remedies under Section 5.2 as follows:
(a) First, to the payment of all costs and expenses of any
sale or collection hereunder and all proceedings in connection
therewith, including reasonable attorneys' fees;
(b) Second, to the reimbursement of Lender of any reasonable
disbursements made by Lender in accordance with the terms hereof or
which Lender deems expedient to pay with respect to the Collateral;
7
(c) Third, to the payment of the Obligations due Lender in
such order as Lender shall elect in its sole and absolute discretion;
and
(d) The remainder of such proceeds, if any, to Borrower.
ARTICLE VI
MISCELLANEOUS
Section 6.1. NO WAIVER; CUMULATIVE REMEDIES. No failure on the part of
Lender to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power or privilege under this Agreement shall operate as
a waiver thereof, nor shall any single or partial exercise of any right, power
or privilege under this Agreement preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. The rights and remedies
provided for in this Agreement are cumulative and not exclusive of any rights
and remedies provided by law.
Section 6.2. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of Borrower and Lender and their respective
successors and assigns, except that Borrower may not assign any of its rights or
obligations under this Agreement except as contemplated by Section 6.12.
Section 6.3. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the
Documents, together with any other certificates, instruments or agreements to be
delivered in connection therewith, represent the final agreement among the
parties and may not be contradicted by evidence of prior, contemporaneous, or
subsequent oral agreements of the parties. There are no oral agreements between
the parties. The provisions of this Agreement may be amended or waived only by
an instrument in writing signed by the parties hereto.
Section 6.4. COPIES OF RECORDS. Lender may call at Borrower's place or
places of business at reasonable times and upon reasonable notice, and, without
unreasonable hindrance or delay, inspect, audit, check and make extracts from
and copies of the books, records, journals, orders, receipts, correspondence and
other data relating to the Collateral or to any transaction between or among
Lender and Borrower, and Borrower shall assist Lender in such actions.
Section 6.5. SUBROGATION. To the extent that proceeds of the
Obligations are used to pay indebtedness secured by any outstanding lien,
security interest, charge or prior encumbrance against the Collateral, such
proceeds have been advanced by Lender at Borrower's request, and Lender shall be
subrogated to any and all rights, security interests and liens owned by any
owner or holder of such outstanding liens, security interests, charges or
encumbrances, irrespective of whether said liens, security interests, charges or
encumbrances are released.
Section 6.6. NOTICES. All notices, demands, designations, certificates,
requests, offers, consents, approvals, appointments and other instruments given
pursuant to this Agreement (collectively called "Notices") shall be in writing
and given by (i) hand delivery, (ii) facsimile, (iii) express overnight delivery
service or (iv) certified or registered mail, return receipt requested, and
shall be deemed to have been delivered upon (a) receipt, if hand delivered, (b)
transmission, if delivered by facsimile, (c) the next business day, if delivered
by express overnight delivery service, or (d) the third business day following
the day of deposit of such notice with the United States Postal Service, if sent
by certified or registered mail, return receipt requested. Notices shall be
provided to the parties and addresses (or facsimile numbers, as applicable)
specified below:
If to Borrower: 00000 X.X. Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
And to: 000 Xxxx Xxxxxx
Xxxxxx, XX 00000
8
Attention: Xxxx Xxxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Lender: GE Capital Franchise Finance Corporation
00000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Collateral Management
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
or to such other address or such other person as either party may from time to
time hereafter specify to the other party in a notice delivered in the manner
provided above. Whenever in this Agreement the giving of Notice is required, the
giving thereof may be waived in writing at any time by the person or persons
entitled to receive such Notice.
Section 6.7. APPLICABLE LAW. Borrower acknowledges that this Agreement
was substantially negotiated in the State of Arizona, the Agreement was executed
and delivered by Borrower in the State of Arizona, all payments under the
Documents will be delivered in the State of Arizona and there are substantial
contacts between the parties and the transactions contemplated herein and the
State of Arizona. For purposes of any action or proceeding arising out of this
Agreement, the parties hereto hereby expressly submit to the jurisdiction of all
federal and state courts located in the State of Arizona. Borrower consents to
service with any process or paper by registered mail or by personal service
within or without the State of Arizona in accordance with applicable law.
Furthermore, Borrower waives and agrees not to assert in any such action, suit
or proceeding that it is not personally subject to the jurisdiction of such
courts, that the action, suit or proceeding is brought in an inconvenient forum
or that venue of the action, suit or proceeding is improper. It is the intent of
the parties hereto that all provisions of this Agreement shall be governed by
and construed under the laws of the State of Arizona, without giving effect to
its conflict of laws principles. Nothing in this Section shall limit or restrict
the right of Lender to commence any proceeding in the federal or state courts
located in the state in which Borrower maintains its chief executive office to
the extent Lender deems such proceeding necessary or advisable to exercise
remedies available under this Agreement or the Documents.
Section 6.8. HEADINGS. The headings appearing in this Agreement have
been inserted for convenient reference only and shall not modify, define, limit
or expand the express provisions of this Agreement.
Section 6.9. SEVERABILITY. In case any one or more of the provisions
contained in this Agreement shall be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision hereof, and this Agreement shall be
construed as if such provision had never been contained herein.
Section 6.10. CONSTRUCTION. Borrower and Lender acknowledge and warrant
to one another that each has been represented by independent counsel and has
executed this Agreement after being fully advised by said counsel as to its
effect and significance. This Agreement shall be interpreted and construed in a
fair and impartial manner without regard to such factors as the party which
prepared the instrument, the relative bargaining powers of the parties or the
domicile of any party.
Section 6.11. OBLIGATIONS ABSOLUTE. The obligations of Borrower under
this Agreement shall be absolute and unconditional and shall not be released,
discharged, reduced or in any way impaired by any circumstance whatsoever,
including, without limitation, any amendment, modification, extension or renewal
of this Agreement, or any release, subordination, or impairment of collateral,
or any waiver, consent, extension, indulgence, compromise, settlement, or other
action or inaction in respect of this Agreement or any of the Documents, or any
exercise or failure to exercise any right, remedy, power or privilege in respect
of this Agreement or any of the Documents.
Section 6.12. ASSIGNMENT. Lender may assign, in whole or in part, its
rights under this Agreement at any time, including, without limitation, to an
affiliate of Lender for the purpose of exercising Lender's rights and
9
remedies under this Agreement. Upon any unconditional assignment of Lender's
entire right and interest hereunder, Lender shall automatically be relieved,
from and after the date of such assignment, of liability for the performance of
any obligation of Lender contained herein. Borrower may not assign any of its
rights under this Agreement without the prior written consent of Lender, which
consent may be withheld in the sole and absolute discretion of Lender.
Section 6.13. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, and all such
counterparts shall constitute but one and the same instrument.
Section 6.14. TIME OF THE ESSENCE. Time is of the essence in the
performance of each and every obligation under this Agreement.
Section 6.15. WAIVER OF JURY TRIAL AND PUNITIVE, CONSEQUENTIAL, SPECIAL
AND INDIRECT DAMAGES. BORROWER AND LENDER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO
ANY AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM
BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER OR ITS SUCCESSORS WITH
RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, ANY
OF THE OTHER LOAN DOCUMENTS OR ANY DOCUMENT CONTEMPLATED HEREIN OR RELATED
HERETO. THIS WAIVER BY THE PARTIES HERETO OF ANY RIGHT EITHER MAY HAVE TO A
TRIAL BY JURY HAS BEEN NEGOTIATED AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.
FURTHERMORE, BORROWER AND LENDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE THE RIGHT EITHER MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND
INDIRECT DAMAGES FROM THE OTHER AND ANY OF THE OTHER'S AFFILIATES, OFFICERS,
DIRECTORS OR EMPLOYEES OR ANY OF THEIR SUCCESSORS WITH RESPECT TO ANY AND ALL
ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY
EITHER PARTY AGAINST THE OTHER OR ANY OF THE OTHER'S AFFILIATES, OFFICERS,
DIRECTORS OR EMPLOYEES OR ANY OF THEIR SUCCESSORS WITH RESPECT TO ANY MATTER
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, ANY OF THE OTHER LOAN
DOCUMENTS OR ANY DOCUMENT CONTEMPLATED HEREIN OR RELATED HERETO. THE WAIVER BY
BORROWER AND LENDER OF ANY RIGHT THEY MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL,
SPECIAL AND INDIRECT DAMAGES HAS BEEN NEGOTIATED BY THE PARTIES HERETO AND IS AN
ESSENTIAL ASPECT OF THEIR BARGAIN.
10
IN WITNESS WHEREOF, Borrower and Lender have duly executed and
delivered this Agreement as of the date first above written.
Borrower:
ERI ACQUISITION CORP., an Oregon corporation
By ______________________________________________________
Printed Name ____________________________________________
Its _____________________________________________________
Lender:
GE CAPITAL FRANCHISE FINANCE CORPORATION, a Delaware
corporation
By ______________________________________________________
Printed Name ____________________________________________
Its _____________________________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me on __________, 2005
by _____________________, ______________________ of ERI Acquisition Corp., an
Oregon corporation, on behalf of the corporation.
__________________________________
Notary Public
My Commission Expires:
__________________________________________
STATE OF ARIZONA )
) SS.
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me on _____________,
2005 by ________________________, ____________________ of GE Capital Franchise
Finance Corporation, a Delaware corporation, by the corporation.
__________________________________
Notary Public
My Commission Expires:
__________________________________________
SCHEDULE I
COMMON STOCK
-------------------- ------------------ ------------------ -------------------------------------
CERTIFICATE NUMBER NUMBER OF SHARES REGISTERED OWNER ADDRESS OF OWNER ON STOCK REGISTRAR
-------------------- ------------------ ------------------ -------------------------------------
-------------------- ------------------ ------------------ -------------------------------------
The foregoing stock certificate(s) shall be delivered to Lender
concurrently with the execution and delivery of this Agreement.
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Agreement") is made as of March ___,
2005 by and between the XXXXX X. XXXXX, XXXXXXX X. SERVICE, XXXX X. XXXXX,
XXXXXX X. XXXXXX, XXXXXXXXX X. XXXXXX, XXXXXX X. XXXXXXX, XXXXX X. XXXXXXX,
XXXXXXX X. XXX, XXXXX X. XXXXXXX-XXX, XXXXX X. XXXXXXX, XXXXX X. XXXXXX, XXXXX
X. XXXX, XXXXXXX X. XXXXXX, XXXXXX X. XXXXXXX, XXXXXX X. XXXXX, XXXXX XXXXXX,
XXXXX XXXXX-XXXXXX, XXXXXX XXXXXXXX, XXXXXXX X. XXXXXXX, XXXX X. WEEKS AND
XXXXXXX XXXXXXXX (collectively, "Shareholders"), and GE CAPITAL FRANCHISE
FINANCE CORPORATION, a Delaware corporation ("Lender").
PRELIMINARY STATEMENT:
Lender and ERI Acquisition Corp., an Oregon corporation ("Borrower"),
are parties to that certain Loan Agreement dated as of March ____, 2005 (the
"Loan Agreement") pursuant to which Lender agreed to make a loan to Borrower in
the aggregate amount of $6,500,000.000 (the "Loan"). Capitalized terms not
defined herein shall have the meanings set forth in the Loan Agreement.
Shareholders are the holders of one hundred percent (100%) of the issued and
outstanding common stock of Borrower (the "Subject Common Stock"). Shareholders
are entitled to exercise all of the voting rights of the Subject Common Stock
and receive all of the distributions and dividends payable by Borrower on
account of the Subject Common Stock.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:
ARTICLE I
SECURITY INTEREST AND PLEDGE
Section 1.1. SECURITY INTEREST AND PLEDGE. Subject to the terms of this
Agreement, Shareholders hereby pledge and grant to Lender a first priority lien
upon and security interest in the following property now owned or hereafter
acquired, created or arising (collectively, the "Collateral"):
(a) The issued and outstanding shares the Subject Common Stock
which are represented by the stock certificate(s) described on the
attached Schedule I; and
(b) all products and proceeds of the Subject Common Stock,
including, without limitation, all revenues, distributions, dividends,
stock dividends, securities, and other property, rights and interests
that Shareholders are entitled to receive at any time on account of the
same.
Section 1.2. OBLIGATIONS. The Collateral shall secure the following
indebtedness and obligations of Shareholders and Borrower, as applicable
(collectively, the "Obligations"):
(a) Payment of indebtedness evidenced by the Notes together
with all extensions, renewals, amendments and modifications thereof;
and
(b) Payment of all other indebtedness and other sums, with
interest thereon, which may be owed under, and performance of all other
obligations and covenants contained in the other Loan Documents,
together with any other instrument given to evidence or further secure
the payment and performance of any obligation secured hereby or thereby
(all of the documents, instruments and other agreements described in
this Section 1.2 are referred to collectively as, the "Documents").
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Shareholders represent and warrant to Lender as of the date of this
Agreement and the Closing Date that:
Section 2.1. TITLE. Shareholders own, and with respect to Collateral
acquired by Shareholders after the date hereof, will own, legally and
beneficially, the Collateral, free and clear of any lien, security interest,
pledge, hypothecation, claim or other encumbrance, or any right or option on the
part of any third person to purchase or otherwise acquire or obtain any lien or
security interest in the Collateral or any part thereof, except for the lien and
security interest granted hereunder in favor of Lender. The Collateral is
genuine, free from any restriction on transfer, duly and validly authorized and
issued and fully paid and non-assessable.
Section 2.2. AUTHORITY AND ENFORCEABILITY. Shareholders have the
authority to execute, deliver and perform this Agreement. This Agreement is the
legal, valid and binding obligation of Shareholders, enforceable against them in
accordance with its terms, and the execution, delivery and performance of this
Agreement by Shareholders does not and will not conflict with, result in a
breach of, or constitute a default under, the provisions of any indenture,
mortgage, deed of trust, security agreement, or other instrument or agreement or
any judgment, decree, order, law, statute, or other governmental rule or
regulation applicable to Shareholders, the Collateral or any other property of
Shareholders.
Section 2.3. FIRST PRIORITY SECURITY INTEREST. Upon the execution of
this Agreement by the parties hereto and the delivery to Lender of the stock
certificate(s) referred to in Section 1.1(a) and further described in Schedule I
hereof (together with irrevocable stock powers executed by Shareholders in blank
with respect to such stock certificate(s)), Lender shall have a valid first
priority lien upon and security interest in the Collateral.
Section 2.4. COLLATERAL GENUINE. The Collateral is genuine, free from
any restriction on transfer other than those imposed under applicable federal
and state securities laws, duly and validly authorized and issued, fully paid
and non-assessable, and is hereby duly and validly pledged and hypothecated to
Lender in accordance with law. The stock certificate(s) referred to in Section
1.1(a) and further described in Schedule I hereof represent 100% of the issued
and outstanding shares the common stock of Borrower and there are no other
classes of stock in Borrower.
Section 2.5. NO ACTIONS. No action has been brought or, to the actual
knowledge of Shareholders, is threatened which would in any way prohibit or
restrict the execution and delivery of this Agreement by Shareholders or the
performance in all respects of Shareholders hereunder.
Section 2.6. GOVERNING DOCUMENTS. Shareholders have delivered to Lender
true, correct and complete copies of Borrower's articles of incorporation and
bylaws as presently in effect (collectively, the "Governing Documents"). The
Governing Documents are in full force and effect as of the date hereof.
Section 2.7. REASONABLY EQUIVALENT VALUE; SOLVENCY. (a) Shareholders
are entitled to exercise all of the voting rights of the Subject Common Stock
referred to in Section 1.1(a) hereof, and to receive all of the distributions
and dividends payable by Borrower to the holder of the Subject Common Stock;
(b) Shareholders have received reasonably equivalent value in exchange
for their execution and delivery of this Agreement;
(c) Shareholders are not insolvent and will not be rendered insolvent
by the execution, delivery and performance of this Agreement;
(d) Shareholders have sufficient capital to engage in all present and
planned businesses and transactions; and
(e) Shareholders have not incurred, and does not intend to incur, debts
that would be beyond their ability to pay such debts as they mature.
ARTICLE III
AFFIRMATIVE AND NEGATIVE COVENANTS OF SHAREHOLDERS
2
Shareholders covenant and agree with Lender for so long as the
Obligations are outstanding that:
Section 3.1. ENCUMBRANCES. Shareholders shall not create, permit or
suffer to exist, and shall defend the Collateral against, any lien, security
interest or other encumbrance on the Collateral, except the pledge and security
interest in favor of Lender set forth in this Agreement, and shall defend
Shareholders' rights in the Collateral and Lender's security interest in the
Collateral against the claims of all other persons and entities.
Section 3.2. SALE OF COLLATERAL. Shareholders shall not sell, assign,
transfer or otherwise dispose of the Collateral or permit the foregoing to occur
without the prior written consent of Lender.
Section 3.3. DISTRIBUTIONS. If Shareholders shall become entitled to
receive or shall receive any stock certificate representing any shares of the
Subject Common Stock (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any
recapitalization, reclassification, increase, or reduction of capital or issued
in connection with any reorganization or any stock split), or any option or
right in the Subject Common Stock, whether as an addition to, in substitution
of, or in exchange for any Collateral, Shareholders agree to accept the same as
Lender's agent and to hold the same in trust for Lender, and to deliver the same
forthwith to Lender in the exact form received, with the appropriate endorsement
of Shareholders or with undated irrevocable stock powers duly executed in blank,
to be held by Lender as additional Collateral for the Obligations, subject to
the terms hereof. Any sums paid upon or in respect of the Collateral upon
liquidation or dissolution shall be paid over to Lender to be held by Lender as
Collateral subject to the terms hereof; and in case any distribution of capital
shall be made on or in respect of the Collateral or any property shall be
distributed upon or with respect to the Collateral pursuant to any
recapitalization or reclassification of capital stock or pursuant to any
reorganization, the property so distributed shall be delivered to Lender to be
held by Lender, as Collateral, subject to the terms hereof. All sums of money
and property so paid or distributed in respect of the Collateral that are
received by Shareholders shall, until paid or delivered to Lender, be held by
Shareholders in trust as additional security for the obligations of Borrower and
Shareholders under the Documents.
Section 3.4. FURTHER ASSURANCES. From time to time, upon a reasonable
request by Lender, Shareholders shall execute and deliver such other and further
instruments, documents or assurances, to (a) more effectively subject the
Collateral to the performance of the terms and provisions of this Agreement and
the other Documents, (b) give Lender possession of the Collateral, or (c)
effectuate any sale of any Collateral as herein provided.
Section 3.5. PAYMENT OF ASSESSMENTS. Shareholders will cause to be paid
before delinquency all taxes, charges, liens and assessments heretofore or
hereafter levied or assessed against the Collateral, or any part thereof, or
against Lender for or on account of the interest created by this Agreement and
the Documents, and, upon Lender's request, will furnish Lender with receipts
showing payment of such taxes and assessments at least ten (10) calendar days
before the applicable delinquency date therefor.
Section 3.6. DEFENDING THE COLLATERAL. Upon obtaining any knowledge
that the validity of this Agreement, the Documents or any rights, titles,
security interests or other interests created or evidenced hereby and thereby
shall be attacked, endangered or questioned, or if any legal proceedings are
instituted with respect thereto, Shareholders shall give prompt written notice
thereof to Lender and at Shareholders' own cost and expense, shall diligently
endeavor to cure any defect that may be developed or claimed, and will take all
necessary and proper steps for the defense of such legal proceedings. Lender
(whether or not named as a party to legal proceedings with respect thereto) is
hereby authorized and empowered to take such additional steps as it determines
in its reasonable judgment and discretion may be necessary or proper for the
defense of any such legal proceedings or the protection of the validity or
priority of this Agreement and the rights, titles, security interests and other
interests created or evidenced hereby, and all reasonable expenses so incurred
of every kind and character shall constitute sums advanced pursuant to this
Agreement. Shareholders will not do or suffer to be done any act whereby the
value of any part of the Collateral may be decreased.
Section 3.7. COSTS AND EXPENSES. If Shareholders should fail to comply
with any of Shareholders' agreements, covenants or obligations under this
Agreement, within the applicable periods set forth in this Agreement, then
Lender (in Shareholders' name or in Lender's own name) may perform them or cause
them to be performed for Shareholders' account and at Shareholders' expense, but
shall have no obligation to perform any of
3
them or cause them to be performed. Any and all expenses incurred or paid by
Lender pursuant to this Section 3.7 shall become the additional obligations of
Shareholders to Lender, due and payable on demand, and each shall bear interest
from the date Lender incurs or pays such expenses to the date of actual payment
by Shareholders or Borrower at the lesser of the highest rate not prohibited by
applicable law or the rate of 14% per annum. Upon making any such payment or
incurring any such expense, Lender shall be fully and automatically subrogated
to all of the rights of the person, corporation or body politic receiving such
payment. Any amounts owing by Shareholders to Lender pursuant to this or any
other provision of this Agreement shall automatically and without notice be
secured by this Agreement. Shareholders and Lender each agree and consent that
the amount and nature of any such expense and the time when it was paid shall be
conclusively established by the affidavit of Lender or any of Lender's officers
or agents. The exercise of the privileges granted to Lender in this Section is
cumulative of all other rights given by this Agreement, and of all rights given
Lender by law.
Section 3.8. NO ADDITIONAL STOCK. Without the prior written consent of
Lender, the Shareholders shall not permit Borrower to issue any additional
shares of stock in Borrower (other than the shares of common stock referred to
in Section 1.1(a) and further described in Schedule I hereof), including,
without limitation, any shares of preferred stock or any shares of stock
representing a stock dividend or stock split.
Section 3.9. NO INTERFERENCE. Shareholders shall cause Borrower to
recognize Lender's lien upon and security interest in the Collateral and shall
not permit Borrower to take any actions that would interfere with such lien and
security interest, Lender's rights under this Agreement or Shareholders'
obligations under this Agreement.
Section 3.10. BORROWER. Shareholders shall not permit Borrower to amend
or otherwise alter or rescind the Governing Documents without Lender's prior
written consent. The Governing Documents shall remain in full force and effect.
ARTICLE IV
RIGHTS OF LENDER AND SHAREHOLDERS
Section 4.1. VOTING RIGHTS. So long as no Event of Default (as defined
in Section 5.1 hereof) shall have occurred, Shareholders shall be entitled to
exercise any and all voting rights relating or pertaining to the Collateral or
any part thereof.
Section 4.2. DIVIDEND. Unless an Event of Default shall have occurred
and be continuing, Shareholders shall be entitled to receive all cash dividends
paid in respect of the Collateral; provided, that, the amount of any dividend
declared or paid prior to an Event of Default shall be reasonable and in no
event shall it exceed Borrower's net income for the Dividend Period. As used
herein, the term "Dividend Period" shall mean the period of time commencing on
the date of declaration of the dividend immediately preceding the dividend at
issue and ending on the day immediately preceding the date of declaration of the
dividend at issue.
Section 4.3. LENDER'S DUTY OF CARE. Other than the exercise of
reasonable care in the physical custody of the Collateral while held by Lender
hereunder, Lender shall have no responsibility for or obligation or duty with
respect to all or any part of the Collateral or any matter or proceeding arising
out of or relating thereto. Lender shall not be responsible in any way for any
depreciation in the value of the Collateral. Lender shall have no duty or
responsibility to take any steps to preserve rights against prior parties or to
enforce collection of the Collateral by legal proceedings or otherwise, the sole
duty of Lender, their successors and assigns, being to receive collections,
remittances and payments on such Collateral as and when made and received by
Lender and, at Lender's option, to apply the amount or amounts so received,
after deduction of any collection costs incurred, as payment upon any of the
Obligations or to hold the same for the account and order of Shareholders.
Section 4.4. RELEASE OF COLLATERAL. Notwithstanding the foregoing,
Lender shall be obligated to return the Collateral to Shareholders (including
the execution of any required written assignment of the same) within ten (10)
days after Shareholders' request if the Obligations have been satisfied in full.
4
Section 4.5. ADDITIONAL RIGHTS OF LENDER. Lender may, from time to
time, without notice to Shareholders, do any acts which it deems necessary or
desirable to preserve the value or marketability of the Collateral, or any part
thereof or interest therein, increase the income therefrom or protect the
security hereof including, without limitation, any of the following: (a) retain
or obtain a security interest in any property, in addition to the Collateral, to
secure any of the Obligations, (b) retain or obtain the primary or secondary
liability of any party or parties with respect to any of the Obligations, (c)
extend or renew for any period, regardless of whether such extension or renewal
period be longer than the original period, or exchange, any of the Obligations
or release or compromise any Obligations of any party or parties primarily or
secondarily liable thereon, (d) release its security interest in all or any
property, in addition to the Collateral, securing any of the Obligations, and
permit any substitution or exchange for any such property, (e) delay or omit to
exercise any right or power with respect to any Obligations, (f) delay in
enforcement of payment of indebtedness relating to the Obligations, (g) resort
to the Collateral for payment of any of the Obligations, regardless of whether
Lender has resorted to any other property, or has proceeded against any party
primarily or secondarily liable on any of the Obligations, and (h) make any
amendments to any of the Documents.
ARTICLE V
DEFAULTS AND REMEDIES
Section 5.1. EVENTS OF DEFAULT. For purposes of this Agreement, each of
the following shall be deemed an "Event of Default":
(a) If any representation or warranty of Shareholders set
forth in this Agreement is false in any respect or if Shareholders
renders any false statement or account;
(b) If Shareholders fails to observe or perform any of its
covenants, obligations or conditions in this Agreement other than those
set forth in Sections 3.4, 3.5, 3.6 and 3.7;
(c) If Shareholders fails to observe or perform any of its
covenants set forth in Sections 3.4, 3.5, 3.6 and 3.7 of this
Agreement; provided, however, if any such event does not involve the
payment of any monetary sum, does not place any rights or property of
Lender in immediate jeopardy, and is within the reasonable power of
Shareholders to promptly cure after receipt of notice thereof, all as
determined by Lender in its reasonable discretion, then such event
shall not constitute an Event of Default hereunder, unless otherwise
expressly provided herein, unless and until Lender shall have given
Shareholders notice thereof and a period of 15 days shall have elapsed
following receipt of such notice, an Event of Default shall be deemed
to have occurred hereunder without further notice or demand of any kind
being required. Notwithstanding the foregoing, Lender may, if it
determines in its sole and absolute discretion that (1) such failure
cannot reasonably be cured within such 15-day period, (2) Shareholders
are diligently pursuing a cure of such failure, and (3) that such
failure does not place the Collateral in immediate jeopardy or
otherwise adversely affect the Collateral or Lender's lien on such
Collateral, grant Shareholders up to an additional 15 days following
the initial 15-day period to cure such failure. If Shareholders fail to
correct or cure such failure within such additional 15-day period, an
Event of Default shall be deemed to have occurred hereunder without
further notice or demand of any kind being required;
(d) If any Shareholder or Borrower becomes insolvent within
the meaning of the Code, files or notifies Lender that it intends to
file a petition under the Code, initiates a proceeding under any
similar law or statute relating to bankruptcy, insolvency,
reorganization, winding up or adjustment of debts (collectively, an
"Action"), becomes the subject of either an involuntary Action or
petition under the Code, or is generally not paying its debts as the
same become due; and
(e) If there is an "Event of Default" under the Loan Agreement
or the Documents.
Section 5.2. RIGHTS AND REMEDIES. Upon the occurrence of an Event of
Default, Lender shall have the following rights and remedies:
5
(a) In addition to all other rights and remedies granted to
Lender in this Agreement, the Documents and the Loan Agreement, Lender
shall have all of the rights and remedies of a secured party under the
Uniform Commercial Code as adopted by the State of Arizona and all
rights and remedies otherwise available at law or in equity. Without
limiting the generality of the foregoing, Lender may:
(i) Sell or otherwise dispose of the Collateral, or
any part thereof, in one or more portions at public or private
sale or sales, at the offices of Lender or elsewhere, for
cash, on credit or for future delivery; or
(ii) Bid and become a purchaser at any sale free of
any right or equity of redemption in Shareholders, which right
or equity is hereby expressly waived and released by
Shareholders.
Lender shall give not less than ten (10) days' prior written
notice of the time and place of any public sale or of the time after
which any private sale may take place and that such notice shall
constitute reasonable notice of such matters. Shareholders shall be
liable for all reasonable attorneys' fees and other expenses incurred
by Lender in connection with the enforcement of Lender's rights under
this Agreement and the Documents. Shareholders waives all rights of
marshaling in respect of the Collateral. Any public sale shall be held
at such time or times, within ordinary business hours and at such place
or places, as Lender may fix in the notice of sale. Lender may sell the
Collateral in one lot, as an entirety, or in separate portions as
Lender may determine in its absolute discretion. Lender shall not be
obligated to make any sale pursuant to any such notice. Lender may,
without notice or publication, adjourn any public or private sale or
cause the same to be adjourned from time to time by announcement at any
time and place fixed for the sale, and such sale may be made at any
time or place to which the same may be so adjourned. In case of any
sale of all or any part of the Collateral on credit or for future
delivery, the Collateral so sold may be retained by Lender until the
sales price is paid by the purchaser thereof, but Lender shall incur no
liability in case of the failure of such purchaser to take up and pay
for the Collateral so sold, and in case of any such failure, such
Collateral may again be sold upon like notice. Shareholders and Lender
hereby agree that each and every method of disposition described in
this Section shall constitute disposition in a commercially reasonable
manner. On any sale of the Collateral, Lender is hereby authorized to
comply with any limitation or restriction with which compliance is
necessary, in the view of Lender's counsel, in order to avoid any
violation of applicable law or in order to obtain any required approval
of the purchaser or purchasers by any applicable governmental
authority.
(b) Lender shall have the right to declare any and all
payments due under the Documents immediately due and payable and the
right to recover all fees and expenses in connection with the
collection or enforcement of the Obligations.
(c) Lender shall have the right to xxx for specific
performance of any Obligations or to recover damages for breach
thereof.
(d) Lender may cause any or all of the Collateral held by it
to be transferred into the name of Lender or the name or names of
Lender's nominee or nominees.
(e) Lender shall be entitled to receive all cash dividends
payable in respect of the Collateral.
(f) Lender shall have the right, but shall not be obligated
to, exercise or cause to be exercised all voting rights and corporate
powers in respect of the Collateral, and Shareholders shall deliver to
Lender upon request, irrevocable proxies with respect to the Collateral
in form satisfactory to Lender.
Shareholders agree that, in connection with the exercise of the
foregoing rights and remedies, Lender may be unable to effect a public sale of
all or any part of the Collateral by reason of certain prohibitions contained in
applicable federal and state securities laws, including, without limitation,
applicable "Blue Sky" laws, as now or hereafter in effect. As a result, Lender
may be required to resort to one or more private sales to a restricted group of
purchasers who will be obligated to agree, among other things, to acquire the
Collateral for their own account, for investment and not with a view to the
distribution or resale thereof. Shareholders recognize that such private sales
6
may be made at prices and on other terms less favorable to the seller than if
the Collateral were sold at public sales, and that Lender has no obligation to
delay the sale of the Collateral for the period of time necessary to permit the
issuer of the Collateral, even if such issuer would agree, to register the
Collateral for public sale under such applicable securities laws. Shareholders
and Lender hereby agree that any private sale or sales made under such
circumstances shall be deemed to have been made in a commercially reasonable
manner. Shareholders further agrees to use their reasonable best efforts to do
or cause to be done all such other acts as may be necessary to make such sale or
sales of all or any portion of the Collateral pursuant to this Agreement valid
and binding and in compliance with any and all other requirements of applicable
law.
Section 5.3. POWER OF ATTORNEY. Shareholders hereby constitute and
appoint Lender as Shareholders' true, lawful and irrevocable attorney-in-fact
(which appointment shall be deemed coupled with an interest), with full
authority in the place and stead of Shareholders and in the name of
Shareholders, or otherwise, from time to time after the occurrence and during
the continuance of an Event of Default, in Lender's discretion, to take any
action and execute any instrument which Lender may deem necessary or advisable
to accomplish the purposes of this Agreement, including, without limitation, to
demand, receive, and enforce payments and to give receipts, releases and
satisfactions and to xxx for moneys payable to Shareholders with respect to any
of the Collateral.
Section 5.4. SELECTION OF SECURITY. Lender may resort to any security
given by this Agreement or to any other security now existing or hereafter given
to secure the Obligations, in whole or in part, and in such portions and in such
order as may seem best to Lender in its sole and absolute discretion, and any
such action shall not in any way be considered as a waiver of any of the rights,
benefits or security interests evidenced by this Agreement.
Section 5.5. WAIVER OF APPRAISEMENT LAWS. To the fullest extent
Shareholders may do so by applicable law, Shareholders agree that Shareholders
will not at any time insist upon, plead, claim or take the benefit or advantage
of any law now or hereafter in force providing for any appraisement, valuation,
stay, extension or redemption. Shareholders, for Shareholders', successors,
receivers, trustees and assigns, and for any and all other persons ever claiming
any interest in the Collateral, to the fullest extent permitted by law, hereby
waives and releases all rights of redemption arising with respect to the sale of
the Collateral, valuation, appraisement, stay of execution, and all rights to a
marshaling of the assets of Shareholders, including the Collateral, or to a sale
in inverse order of alienation in the event of foreclosure of the security
interest hereby created.
Section 5.6. APPLICATION OF PROCEEDS. Lender shall apply any proceeds
received by it from the exercise of remedies under Section 5.2 as follows:
(a) First, to the payment of all costs and expenses of any
sale or collection hereunder and all proceedings in connection
therewith, including reasonable attorneys' fees;
(b) Second, to the reimbursement of Lender of any reasonable
disbursements made by Lender in accordance with the terms hereof or
which Lender deems expedient to pay with respect to the Collateral;
(c) Third, to the payment of the Obligations due Lender in
such order as Lender shall elect in its sole and absolute discretion;
and
(d) The remainder of such proceeds, if any, to Shareholders.
ARTICLE VI
MISCELLANEOUS
Section 6.1. NO WAIVER; CUMULATIVE REMEDIES. No failure on the part of
Lender to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power or privilege under this Agreement shall operate as
a waiver thereof, nor shall any single or partial exercise of any right, power
or privilege under this Agreement preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. The
7
rights and remedies provided for in this Agreement are cumulative and not
exclusive of any rights and remedies provided by law.
Section 6.2. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of Shareholders and Lender and their respective
successors and assigns, except that Shareholders may not assign any of their
rights or obligations under this Agreement except as contemplated by Section
6.12.
Section 6.3. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the
Documents, together with any other certificates, instruments or agreements to be
delivered in connection therewith, represent the final agreement among the
parties and may not be contradicted by evidence of prior, contemporaneous, or
subsequent oral agreements of the parties. There are no oral agreements between
the parties. The provisions of this Agreement may be amended or waived only by
an instrument in writing signed by the parties hereto.
Section 6.4. COPIES OF RECORDS. Lender may call at Shareholders' place
or places of business at reasonable times and upon reasonable notice, and,
without unreasonable hindrance or delay, inspect, audit, check and make extracts
from and copies of the books, records, journals, orders, receipts,
correspondence and other data relating to the Collateral or to any transaction
between or among Lender and Shareholders, and Shareholders shall assist Lender
in such actions.
Section 6.5. SUBROGATION. To the extent that proceeds of the
Obligations are used to pay indebtedness secured by any outstanding lien,
security interest, charge or prior encumbrance against the Collateral, such
proceeds have been advanced by Lender at Shareholders' request, and Lender shall
be subrogated to any and all rights, security interests and liens owned by any
owner or holder of such outstanding liens, security interests, charges or
encumbrances, irrespective of whether said liens, security interests, charges or
encumbrances are released.
Section 6.6. NOTICES. All notices, demands, designations, certificates,
requests, offers, consents, approvals, appointments and other instruments given
pursuant to this Agreement (collectively called "Notices") shall be in writing
and given by (i) hand delivery, (ii) facsimile, (iii) express overnight delivery
service or (iv) certified or registered mail, return receipt requested, and
shall be deemed to have been delivered upon (a) receipt, if hand delivered, (b)
transmission, if delivered by facsimile, (c) the next business day, if delivered
by express overnight delivery service, or (d) the third business day following
the day of deposit of such notice with the United States Postal Service, if sent
by certified or registered mail, return receipt requested. Notices shall be
provided to the parties and addresses (or facsimile numbers, as applicable)
specified below:
If to Shareholders: 00000 X.X. Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
And to: 000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxx Xxxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Lender: GE Capital Franchise Finance Corporation
00000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Collateral Management
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
or to such other address or such other person as either party may from time to
time hereafter specify to the other party in a notice delivered in the manner
provided above. Whenever in this Agreement the giving of Notice is
8
required, the giving thereof may be waived in writing at any time by the person
or persons entitled to receive such Notice.
Section 6.7. APPLICABLE LAW. Shareholders acknowledges that this
Agreement was substantially negotiated in the State of Arizona, the Agreement
was executed and delivered by Shareholders in the State of Arizona, all payments
under the Documents will be delivered in the State of Arizona and there are
substantial contacts between the parties and the transactions contemplated
herein and the State of Arizona. For purposes of any action or proceeding
arising out of this Agreement, the parties hereto hereby expressly submit to the
jurisdiction of all federal and state courts located in the State of Arizona.
Shareholders consent to service with any process or paper by registered mail or
by personal service within or without the State of Arizona in accordance with
applicable law. Furthermore, Shareholders waive and agree not to assert in any
such action, suit or proceeding that it is not personally subject to the
jurisdiction of such courts, that the action, suit or proceeding is brought in
an inconvenient forum or that venue of the action, suit or proceeding is
improper. It is the intent of the parties hereto that all provisions of this
Agreement shall be governed by and construed under the laws of the State of
Arizona, without giving effect to its conflict of laws principles. Nothing in
this Section shall limit or restrict the right of Lender to commence any
proceeding in the federal or state courts located in the state in which
Shareholders maintains their residences or chief executive offices, as
applicable, to the extent Lender deems such proceeding necessary or advisable to
exercise remedies available under this Agreement or the Documents.
Section 6.8. HEADINGS. The headings appearing in this Agreement have
been inserted for convenient reference only and shall not modify, define, limit
or expand the express provisions of this Agreement.
Section 6.9. SEVERABILITY. In case any one or more of the provisions
contained in this Agreement shall be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision hereof, and this Agreement shall be
construed as if such provision had never been contained herein.
Section 6.10. CONSTRUCTION. Shareholders and Lender acknowledge and
warrant to one another that each has been represented by independent counsel and
has executed this Agreement after being fully advised by said counsel as to its
effect and significance. This Agreement shall be interpreted and construed in a
fair and impartial manner without regard to such factors as the party which
prepared the instrument, the relative bargaining powers of the parties or the
domicile of any party.
Section 6.11. OBLIGATIONS ABSOLUTE. The obligations of Shareholders
under this Agreement shall be absolute and unconditional and shall not be
released, discharged, reduced or in any way impaired by any circumstance
whatsoever, including, without limitation, any amendment, modification,
extension or renewal of this Agreement, or any release, subordination, or
impairment of collateral, or any waiver, consent, extension, indulgence,
compromise, settlement, or other action or inaction in respect of this Agreement
or any of the Documents, or any exercise or failure to exercise any right,
remedy, power or privilege in respect of this Agreement or any of the Documents.
Section 6.12. ASSIGNMENT. Lender may assign, in whole or in part, its
rights under this Agreement at any time, including, without limitation, to an
affiliate of Lender for the purpose of exercising Lender's rights and remedies
under this Agreement. Upon any unconditional assignment of Lender's entire right
and interest hereunder, Lender shall automatically be relieved, from and after
the date of such assignment, of liability for the performance of any obligation
of Lender contained herein. Shareholders may not assign any of their rights
under this Agreement without the prior written consent of Lender, which consent
may be withheld in the sole and absolute discretion of Lender.
Section 6.13. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, and all such
counterparts shall constitute but one and the same instrument.
Section 6.14. TIME OF THE ESSENCE. Time is of the essence in the
performance of each and every obligation under this Agreement.
9
Section 6.15. WAIVER OF JURY TRIAL AND PUNITIVE, CONSEQUENTIAL, SPECIAL
AND INDIRECT DAMAGES. SHAREHOLDERS AND LENDER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO
ANY AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM
BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER OR ITS SUCCESSORS WITH
RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, ANY
OF THE OTHER LOAN DOCUMENTS OR ANY DOCUMENT CONTEMPLATED HEREIN OR RELATED
HERETO. THIS WAIVER BY THE PARTIES HERETO OF ANY RIGHT EITHER MAY HAVE TO A
TRIAL BY JURY HAS BEEN NEGOTIATED AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.
FURTHERMORE, SHAREHOLDERS AND LENDER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL,
SPECIAL AND INDIRECT DAMAGES FROM THE OTHER AND ANY OF THE OTHER'S AFFILIATES,
OFFICERS, DIRECTORS OR EMPLOYEES OR ANY OF THEIR SUCCESSORS WITH RESPECT TO ANY
AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM
BROUGHT BY EITHER PARTY AGAINST THE OTHER OR ANY OF THE OTHER'S AFFILIATES,
OFFICERS, DIRECTORS OR EMPLOYEES OR ANY OF THEIR SUCCESSORS WITH RESPECT TO ANY
MATTER ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, ANY OF THE OTHER
LOAN DOCUMENTS OR ANY DOCUMENT CONTEMPLATED HEREIN OR RELATED HERETO. THE WAIVER
BY SHAREHOLDERS AND LENDER OF ANY RIGHT THEY MAY HAVE TO SEEK PUNITIVE,
CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES HAS BEEN NEGOTIATED BY THE PARTIES
HERETO AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.
10
IN WITNESS WHEREOF, Shareholders and Lender have duly executed and
delivered this Agreement as of the date first above written.
Shareholders:
______________________________________________________
XXXXX X. XXXXX
______________________________________________________
XXXXXXX X. SERVICE
______________________________________________________
XXXX X. XXXXX
______________________________________________________
XXXXXX X. XXXXXX
______________________________________________________
XXXXXXXXX X. XXXXXX
______________________________________________________
XXXXXX X. XXXXXXX
______________________________________________________
XXXXX X. XXXXXXX
______________________________________________________
XXXXXXX X. XXX
______________________________________________________
XXXXX X. XXXXXXX-XXX
______________________________________________________
XXXXX X. XXXXXXX
______________________________________________________
XXXXX X. XXXXXX
______________________________________________________
XXXXX X. XXXX
______________________________________________________
XXXXXXX X. XXXXXX
______________________________________________________
XXXXXX X. XXXXXXX
______________________________________________________
XXXXXX X. XXXXX
______________________________________________________
XXXXX XXXXXX
______________________________________________________
XXXXX XXXXX-XXXXXX
______________________________________________________
XXXXXX XXXXXXXX
______________________________________________________
XXXXXXX X. XXXXXXX
______________________________________________________
XXXX X. WEEKS
______________________________________________________
XXXXXXX XXXXXXXX
Lender:
GE CAPITAL FRANCHISE FINANCE CORPORATION, a Delaware
corporation
By ______________________________________________________
Printed Name ____________________________________________
Its _____________________________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxx X. Xxxxx.
_____________________________________
Notary Public
My Commission Expires:
___________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxxx X. Service.
_____________________________________
Notary Public
My Commission Expires:
___________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxx X. Xxxxx.
_____________________________________
Notary Public
My Commission Expires:
___________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxx X. Xxxxxx.
_____________________________________
Notary Public
My Commission Expires:
___________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxxxxx X. Xxxxxx.
_____________________________________
Notary Public
My Commission Expires:
___________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxx X. Xxxxxxx.
_____________________________________
Notary Public
My Commission Expires:
___________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxx X. Xxxxxxx.
_____________________________________
Notary Public
My Commission Expires:
___________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxxx X. Xxx.
_____________________________________
Notary Public
My Commission Expires:
___________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxx X. Xxxxxxx-Xxx.
_____________________________________
Notary Public
My Commission Expires:
___________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxx X. Xxxxxxx.
_____________________________________
Notary Public
My Commission Expires:
___________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxx X. Xxxxxx.
_____________________________________
Notary Public
My Commission Expires:
___________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxx X. Xxxx.
_____________________________________
Notary Public
My Commission Expires:
___________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxxx X. Xxxxxx.
_____________________________________
Notary Public
My Commission Expires:
___________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by. Xxxxxx X. Xxxxxxx.
_____________________________________
Notary Public
My Commission Expires:
___________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxx X. Xxxxx.
_____________________________________
Notary Public
My Commission Expires:
___________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxx Xxxxxx.
_____________________________________
Notary Public
My Commission Expires:
___________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxx Xxxxx-Xxxxxx.
_____________________________________
Notary Public
My Commission Expires:
___________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxx Xxxxxxxx.
_____________________________________
Notary Public
My Commission Expires:
___________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxxx X. Xxxxxxx.
_____________________________________
Notary Public
My Commission Expires:
___________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxx X. Weeks.
_____________________________________
Notary Public
My Commission Expires:
___________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxxx Xxxxxxxx.
_____________________________________
Notary Public
My Commission Expires:
___________________________________
STATE OF ARIZONA )
) SS.
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me on _____________,
2005 by ________________________, ____________________ of GE Capital Franchise
Finance Corporation, a Delaware corporation, by the corporation.
_____________________________________
Notary Public
My Commission Expires:
___________________________________
SCHEDULE I
COMMON STOCK
-------------------- ------------------ ------------------ -------------------------------------
CERTIFICATE NUMBER NUMBER OF SHARES REGISTERED OWNER ADDRESS OF OWNER ON STOCK REGISTRAR
-------------------- ------------------ ------------------ -------------------------------------
-------------------- ------------------ ------------------ -------------------------------------
The foregoing stock certificates shall be delivered to Lender
concurrently with the execution and delivery of this Agreement.
EXHIBIT H
SPECIFIC NAMES
EXHIBIT I
IP SECURITY AGREEMENT
INTELLECTUAL PROPERTY SECURITY AGREEMENT
THIS INTELLECTUAL PROPERTY SECURITY AGREEMENT (this "Agreement") is
made and entered into as of March ____, 2005 (the "Effective Date") by [DISCUSS
HOLDER OF INTELLECTUAL PROPERTY RIGHTS--REVISE AS APPLICABLE TO PICK UP ALL
ENTITIES HOLDING INTELLECTUAL PROPERTY], an Oregon corporation ("Obligor"),
whose principal place of business is [ ], in favor of GE CAPITAL FRANCHISE
FINANCE CORPORATION, a Delaware corporation ("Lender"), whose address is 00000
Xxxxx Xxxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxx 00000.
PRELIMINARY STATEMENT:
Lender and ERI Acquisition Corp., an Oregon corporation, are parties to
a Loan Agreement dated as of even date herewith (the "Loan Agreement"). The
capitalized terms used in this Agreement, if not elsewhere defined herein, are
defined as indicated in the Loan Agreement.
One of the conditions to Lender entering into the Loan Agreement is
that Obligor enter into this Agreement to xxxxx x xxxx on the Intellectual
Property (as defined below).
AGREEMENT:
In consideration of the mutual covenants and promises hereinafter set
forth, Lender and Obligor agree as follows:
1. SECURITY INTEREST CREATED; OBLIGATIONS SECURED. (a) To secure the
payment of the Obligations (as defined below), Obligor hereby grants to Lender a
security interest in the Intellectual Property, and all income therefrom and all
proceeds thereof (collectively, the "Collateral"). As used herein, the term
"Intellectual Property" shall mean, with respect to Obligor and/or Obligor's
Business, (i) all patents and patent applications in the United States and all
equivalents of the foregoing in any other jurisdiction and all reissues,
divisions, continuations and extensions of the foregoing, including, without
limitation, any patent and patent applications listed on Exhibit A attached
hereto; (ii) all registered and unregistered trademarks, trade names, service
marks, trade dress, logos, slogans and corporate names (including, but not
limited to, the names set forth on Exhibit H to the Loan Agreement), together
with all translations, adaptations, derivations and combinations thereof and
including all goodwill associated therewith, and all applications, registrations
and renewals in connection therewith, including, without limitation, any
registrations and applications listed on Exhibit A attached hereto; (iii) all
works of authorship, including, but not limited to, all copyrightable works and
all copyrights (including, but not limited to, distinctive menus and manuals)
and all applications, registrations and renewals in connection therewith in the
United States and all equivalents of the foregoing in any other jurisdiction,
including, without limitation, any copyrights listed on Exhibit A attached
hereto, and all moral rights; (iv) all trade secrets and other confidential
information (including, but not limited to, recipes, cuisine, culinary style,
inventions, ideas, assets under research and development, know-how, methods,
techniques, diagnostic tools, technology, specifications, customer and supplier
lists, pricing and cost information, and business, technical and marketing plans
and proposals); (v) all domain names, web addresses and websites; (vi) all
computer software, in source code and object code form, and all related data and
documentation; (vii) all other intellectual property and proprietary rights,
whether or not subject to statutory registration; and (viii) all copies and
tangible embodiments of all of the foregoing (i) through (vii) in any form or
medium.
(b) This Agreement secures the following indebtedness and obligations
(the "Obligations"):
(i) Payment of indebtedness evidenced by the Notes together
with all extensions, renewals, amendments and modifications of any
thereof (collectively, the "Notes"); and
(ii) Payment of all other indebtedness and other sums, with
interest thereon, which may be owed under, and performance of all other
obligations and covenants contained in, any other Loan
Document or Other Agreement, together with any other instrument given
to evidence or further secure the payment and performance of any
obligation secured hereby or thereby.
(c) Obligor authorizes Lender to file such documents with the United
States Patent and Trademark Office as may be necessary or appropriate to give
notice of this Agreement and perfect the security interest created hereunder
(including, without limitation, filing a copy of this Agreement). Obligor also
authorizes Lender to file financing statements with respect to the security
interest of Lender, continuation statements with respect thereto, and any
amendments to such financing statements which may be necessitated by reason of
any of the changes described in Section 6.C of the Loan Agreement. Obligor
agrees that, notwithstanding any provision in the UCC (as hereinafter defined)
to the contrary, Obligor shall not file a termination statement of any financing
statement filed by Lender in connection with any security interest granted under
this Agreement if Lender reasonably objects to the filing of such termination
statement.
(d) Lender shall at all times have a perfected security interest in the
Collateral that shall be prior to any other interests therein. Obligor shall do
all acts and things, shall execute and file all instruments (including security
agreements, UCC financing statements, continuation statements, etc.) requested
by Lender to establish, maintain and continue the perfected security interest of
Lender in the Collateral, and shall promptly on demand pay all costs and
expenses of (1) filing and recording, including the costs of any searches deemed
necessary by Lender from time to time to establish and determine the validity
and the continuing priority of the security interest of Lender, and (2) all
other claims and charges that in the reasonable opinion of Lender might
prejudice, imperil or otherwise affect the Collateral or security interest
therein of Lender. Obligor agrees that a carbon, photographic or other
reproduction of a security agreement or financing statement shall be sufficient
as a financing statement. Lender is hereby irrevocably appointed Obligor's
attorney-in-fact to take any of the foregoing actions requested of Obligor by
Lender if Obligor should fail to take such actions, which appointment shall be
deemed coupled with an interest.
(e) Obligor shall promptly pay all taxes and other governmental charges
levied or assessed upon or against the Collateral or upon or against the
creation, perfection or continuance of the security interest created under this
Agreement.
2. EVENTS OF DEFAULT. Each of the following shall be deemed an event of
default by Obligor (each, an "Event of Default"):
(i) If Obligor fails to observe or perform any of the covenants,
conditions, or obligations of this Agreement, provided, however, if any such
failure does not involve the payment of any principal, interest or other
monetary sum due under the Notes, is not willful or intentional, does not place
any rights or interest in collateral of Lender in immediate jeopardy, and is
within the reasonable power of Obligor to promptly cure after receipt of notice
thereof, all as determined by Lender in its reasonable discretion, then such
failure shall not constitute an Event of Default hereunder, unless otherwise
expressly provided herein, unless and until Lender shall have given Obligor
notice thereof and a period of 30 days shall have elapsed, during which period
Obligor may correct or cure such failure, upon failure of which an Event of
Default shall be deemed to have occurred hereunder without further notice or
demand of any kind being required. If such failure cannot reasonably be cured
within such 30-day period, as determined by Lender in its reasonable discretion,
and Obligor is diligently pursuing a cure of such failure, then Obligor shall
have a reasonable period to cure such failure beyond such 30-day period, which
shall in no event exceed 90 days after receiving notice of the failure from
Lender. If Obligor shall fail to correct or cure such failure within such 90-day
period, an Event of Default shall be deemed to have occurred hereunder without
further notice or demand of any kind being required.
(ii) If there is an "Event of Default" or a breach or default, after
the passage of all applicable notice and cure or grace periods, under any of the
Loan Documents.
3. REMEDIES FOR DEFAULT. (a) Upon the occurrence and during the
continuance of an Event of Default, Lender shall have all rights and remedies of
a secured party in, to and against the Collateral granted by the Uniform
Commercial Code in the State of Arizona (the "UCC") and otherwise available at
law or in equity, including, without limitation: (1) the right to declare any or
all payments due under the Notes and the other Loan Documents immediately due
and payable without any presentment, demand, protest or notice of any kind,
except as
2
otherwise expressly provided herein, and Obligor hereby waives notice of intent
to accelerate the Obligations and notice of acceleration; (2) the right to
recover all fees and expenses (including reasonable attorney fees) in connection
with the collection or enforcement of the Obligations, which fees and expenses
shall constitute additional Obligations of Obligor hereunder; (3) the right to
act as, and Obligor hereby constitutes and appoints Lender, Obligor's true,
lawful and irrevocable attorney-in-fact (which appointment shall be deemed
coupled with an interest) to demand, receive and enforce payments and to give
receipts, releases, satisfaction for and to xxx for moneys payable to Obligor
under or with respect to any of the Collateral, and actions taken pursuant to
this appointment may be taken either in the name of Obligor or in the name of
Lender with the same force and effect as if this appointment had not been made;
(4) the right to take immediate and exclusive possession of the Collateral, or
any part thereof, and for that purpose, with or without judicial process and
notice to the Obligor, enter (if this can be done without breach of the peace)
upon any premises on which the Collateral or any part thereof may be situated
and remove the same therefrom (provided that if the Collateral is affixed to
real estate, such removal shall be subject to the conditions stated in the UCC);
(5) the right to hold, maintain, preserve and prepare the Collateral for sale,
until disposed of; (6) the right to render the Collateral unusable and dispose
of the Collateral; (7) the right to require Obligor to assemble and package the
Collateral and make it available to Lender for its possession at a place to be
designated by Lender which is reasonably convenient to Lender; (8) the right to
sell, lease, hold or otherwise dispose of all or any part of the Collateral; and
(9) the right to xxx for specific performance of any Obligations or to recover
damages for breach thereof.
(b) Lender shall be entitled to receive on demand, as additional
Obligations hereunder, interest accruing at the Default Rate on all amounts not
paid when due under the Notes or this Agreement until the date of actual
payment. Lender shall have no duty to mitigate any loss to Obligor occasioned by
enforcement of any remedy hereunder and shall have no duty of any kind to any
subordinated creditor of Obligor. Neither the acceptance of this Agreement nor
its enforcement shall prejudice or in any manner affect Lender's right to
realize upon or enforce any other security now or hereafter held by Lender, it
being agreed that Lender shall be entitled to enforce this Agreement and any
other security now or hereafter held by Lender in such order and manner as it
may in its absolute discretion determine. No remedy herein conferred upon or
reserved to Lender is intended to be exclusive of any other remedy given
hereunder or now or hereafter existing at law or in equity or by statute. Every
power or remedy given by any of the Loan Documents to Lender, or to which Lender
may be otherwise entitled, may be exercised, concurrently or independently, from
time to time and as often as may be deemed expedient by Lender.
(c) Should Lender exercise the rights and remedies specified in
subsection (a) above, any proceeds received thereby shall be first applied to
pay the costs and expenses, including reasonable attorneys' fees, incurred by
Lender as a result of the Event of Default. The remainder of any proceeds, net
of Lender's costs and expenses, shall be applied to the satisfaction of the
Obligations and any excess paid over to Obligor.
(d) Until an Event of Default shall occur, Obligor may retain
possession of the Collateral and may use it in any lawful manner not
inconsistent with this Agreement, with the provisions of any policies of
insurance thereon or the other Loan Documents.
4. APPLICABLE LAW. Obligor acknowledges that this Agreement was
substantially negotiated in the State of Arizona, the Agreement was delivered in
the State of Arizona, all payments under the Notes will be delivered in the
State of Arizona and there are substantial contacts between the parties and the
transactions contemplated herein and the State of Arizona. For purposes of any
action or proceeding arising out of this Agreement, the parties hereto hereby
expressly submit to the jurisdiction of all federal and state courts located in
the State of Arizona. Obligor consents that it may be served with any process or
paper by registered mail or by personal service within or without the State of
Arizona in accordance with applicable law. Furthermore, Obligor waives and
agrees not to assert in any such action, suit or proceeding that it is not
personally subject to the jurisdiction of such courts, that the action, suit or
proceeding is brought in an inconvenient forum or that venue of the action, suit
or proceeding is improper. It is the intent of the parties hereto that all
provisions of this Agreement shall be governed by and construed under the laws
of the State of Arizona, without giving effect to its principles of conflicts of
law. To the extent that a court of competent jurisdiction finds Arizona law
inapplicable with respect to any provisions hereof, then, as to those provisions
only, the laws of the state where the Collateral is located shall be deemed to
apply. Nothing in this Section shall limit or restrict the right of Lender to
commence any proceeding in the federal
3
or state courts located in the state in which the Collateral is located to the
extent Lender deems such proceeding necessary or advisable to exercise remedies
available under this Agreement, the other Loan Documents.
5. ASSIGNMENT. Lender may assign in whole or in part its rights under
this Agreement. Upon any unconditional assignment of Lender's entire right and
interest hereunder, Lender shall automatically be relieved, from and after the
date of such assignment, of liability for the performance of any obligation of
Lender contained herein.
6. INDEMNITY. Obligor shall, at its sole cost and expense, protect,
defend, indemnify, release and hold harmless each of the Indemnified Parties
for, from and against any and all claims, suits, liabilities (including, without
limitation, strict liabilities), actions, proceedings, obligations, debts,
damages, losses, costs, expenses, diminutions in value, fines, penalties,
charges, fees, expenses, judgments, awards, amounts paid in settlement and
damages of whatever kind or nature (including, without limitation, attorneys'
fees, court costs and other costs of defense) (collectively, "Losses")
(excluding Losses suffered by an Indemnified Party directly arising out of such
Indemnified Party's gross negligence or willful misconduct or any breach of the
Loan Documents by such Indemnified Party; provided, however, that the term
"gross negligence" shall not include gross negligence imputed as a matter of law
to any of the Indemnified Parties solely by reason of Obligor's interest in the
Collateral or Obligor's failure to act in respect of matters which are or were
the obligation of Obligor under the Loan Documents), engineers' fees,
governmental inspection fees, and costs of investigation imposed upon or
incurred by or asserted against any Indemnified Parties, and directly or
indirectly arising out of or in any way relating to any one or more of the
following: (a) any administrative processes or proceedings or judicial
proceedings in any way connected with any matter addressed in this Agreement;
(b) any past, present or threatened injury to, or destruction of, the
Collateral, including but not limited to costs to investigate and assess such
injury or destruction; or (c) any misrepresentation or inaccuracy in any
representation or warranty or material breach or failure to perform any
covenants or other obligations pursuant to this Agreement.
7. WAIVER. No Event of Default hereunder by Obligor shall be deemed to
have been waived by Lender except by a writing to that effect signed by Lender
and no waiver of any Event of Default shall operate as a waiver of any other
Event of Default on a future occasion. No modification, rescission, waiver,
release or amendment of any provision of this Agreement shall be made except by
a written agreement signed by Obligor and Lender.
8. SEVERABILITY. In case any one or more of the provisions contained
herein or in the Notes shall be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision hereof, and this Agreement shall be construed as if such
provision had never been contained herein or therein.
9. NOTICES. All notices, demands, designations, certificates, requests,
offers, consents, approvals, appointments and other instruments given pursuant
to this Agreement shall be in writing and given in accordance with the notice
provisions in the Loan Agreement.
10. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each thereof shall be deemed to be an original, and all such
counterparts shall constitute but one and the same instrument.
11. HEADINGS. The headings appearing in this Agreement have been
inserted for convenient reference only and shall not modify, define, limit or
expand the express provisions of this Agreement.
12. CHARACTERIZATION; INTERPRETATION. It is the intent of the parties
hereto that the business relationship created by the Notes, this Agreement, the
other Loan Documents is solely that of creditor and debtor and has been entered
into by both parties in reliance upon the economic and legal bargains contained
in the Loan Documents. None of the agreements contained in the Loan Documents is
intended, nor shall the same be deemed or construed, to create a partnership
between Lender and Obligor, to make them joint venturers, to make Obligor an
agent, legal representative, partner, subsidiary or employee of Lender, nor to
make Lender in any way responsible for the debts, obligations or losses of
Obligor.
4
Lender and Obligor acknowledge and warrant to each other that each has
been represented by independent counsel and has executed this Agreement after
being fully advised by said counsel as to its effect and significance. This
Agreement shall be interpreted and construed in a fair and impartial manner
without regard to such factors as the party which prepared the instrument, the
relative bargaining powers of the parties or the domicile of any party.
13. TIME OF THE ESSENCE. Time is of the essence in the performance of
each and every obligation under this Agreement.
14. WAIVER OF JURY TRIAL AND PUNITIVE, CONSEQUENTIAL, SPECIAL AND
INDIRECT DAMAGES. LENDER, BY ACCEPTING THIS AGREEMENT, AND OBLIGOR HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A
TRIAL BY JURY WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION,
PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO
AGAINST THE OTHER OR ITS SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF OR
IN CONNECTION WITH THIS AGREEMENT, THE RELATIONSHIP OF LENDER AND OBLIGOR,
OBLIGOR'S USE OF THE COLLATERAL, AND/OR ANY CLAIM FOR INJURY OR DAMAGE, OR ANY
EMERGENCY OR STATUTORY REMEDY. THIS WAIVER BY THE PARTIES HERETO OF ANY RIGHT
EITHER MAY HAVE TO A TRIAL BY JURY HAS BEEN NEGOTIATED AND IS AN ESSENTIAL
ASPECT OF THEIR BARGAIN. FURTHERMORE, OBLIGOR AND LENDER, BY ACCEPTING THIS
AGREEMENT, HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT
EITHER MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES
FROM THE OTHER AND ANY OF THE OTHER'S AFFILIATES, OFFICERS, DIRECTORS OR
EMPLOYEES OR ANY OF THEIR SUCCESSORS WITH RESPECT TO ANY AND ALL ISSUES
PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY EITHER
PARTY AGAINST THE OTHER OR ANY OF THE OTHER'S AFFILIATES, OFFICERS, DIRECTORS OR
EMPLOYEES OR ANY OF THEIR SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF
OR IN CONNECTION WITH THIS AGREEMENT OR ANY DOCUMENT CONTEMPLATED HEREIN OR
RELATED HERETO. THE WAIVER BY OBLIGOR AND LENDER OF ANY RIGHT IT MAY HAVE TO
SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES HAS BEEN NEGOTIATED
BY THE PARTIES HERETO AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.
5
IN WITNESS WHEREOF, Obligor has executed this Agreement effective as of
the day and year first above written.
OBLIGOR:
, an Oregon corporation
By ______________________________________________________
Printed Name ____________________________________________
Its _____________________________________________________
Organization Identification Number:
_______________________________________
Principal Place of Business:
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me on
____________________, 2005 by _________________________________,
_______________________________ of , an Oregon corporation, on behalf of the
corporation.
________________________________
Notary Public
My Commission Expires:
____________________________________
EXHIBIT A TO THE IP SECURITY AGREEMENT
PATENTS, TRADEMARKS AND COPYRIGHTS
EXHIBIT J
LEASE TERMS
EXHIBIT K
TO SECURITY AGREEMENT
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") is made and entered into as
of March _____, 2005 by ELMER'S RESTAURANTS, INC. an Oregon corporation,
successor by merger to ERI Acquisition Corp. ("Borrower"), ELMER'S PANCAKES &
STEAKHOUSE, INC., an Oregon corporation, GRASS VALLEY LTD., INC., an Oregon
corporation, and CBW FOOD COMPANY, LLC, an Oregon limited liability company
(collectively, the "Elmer's Entities"), in favor of GE CAPITAL FRANCHISE FINANCE
CORPORATION, a Delaware corporation ("Lender").
PRELIMINARY STATEMENTS:
Lender and ERI Acquisition Corp., an Oregon corporation ("ERI"),
entered into that certain Loan Agreement dated as of March ______, 2005 (the
"Loan Agreement") pursuant to which Lender agreed to make a loan to ERI and
Borrower in the aggregate amount of $6,500,000.000 (the "Loan"). Capitalized
terms not defined herein shall have the meanings set forth in the Loan
Agreement. Borrower is the successor by merger to ERI. Lender and the Elmer's
Entities are entering into this Agreement pursuant to the Loan Agreement.
AGREEMENT:
In consideration of the mutual covenants and promises hereinafter set
forth, Lender and the Elmer's Entities agree as follows:
1. SECURITY INTEREST CREATED; OBLIGATIONS SECURED. (a) To secure the
payment of the Obligations (as defined below), each of the Elmer's Entities
hereby grants to Lender a security interest in all of its right, title and
interest in the following personal property, whether now owned or hereafter
acquired (collectively, the "Collateral"):
(i) all furniture, equipment, trade fixtures, seating, decor,
appliances and other tangible personal property now or hereafter owned
by any of the Elmer's Entities wherever located (the "Equipment"),
including, without limitation, at the restaurant properties described
by address on Exhibit A attached hereto (the "Premises");
(ii) all accounts receivables now or hereafter payable to any
of the Elmer's Entities, except the Royalties;
(iii) all licenses, certificates, authorizations or permits
issued by applicable Governmental Authorities to any of the Elmer's
Entities for the sale of alcoholic beverages for on-site consumption,
including, without limitation, the licenses, certificates,
authorizations or permits described on the attached Exhibit B;
(iv) (1) the documents and agreements listed on Exhibit C
attached hereto, together with all amendments, modifications and
supplements thereto, (2) any franchise or royalty agreements entered
into by the Elmer's Entities with respect to the development or
franchising of the Permitted Concept franchises, together with all
amendments, modifications and supplements thereto, and (3) any area
development, area franchise, area subcontract, master license or
similar provisions or arrangements with respect to the development or
franchising of the Permitted Concept franchises within any area or the
delegation of duties by the Elmer's Entities with respect to their
obligations as a franchisor or otherwise and any franchise agreements
containing any provisions described in this clause (3), together with
all amendments, modifications and supplements thereto (items (1)
through (3) being collectively referred to herein as the "Franchise and
Royalty Agreements");
(v) the promissory notes described on the attached Exhibit D
payable by the applicable franchisees under the Franchise and Royalties
Agreements to the applicable Elmer's Entities; and
(vii) all income therefrom and all proceeds thereof.
(b) This Agreement secures the following indebtedness and obligations
(the "Obligations"):
(i) Payment of indebtedness evidenced by the Notes; and
(ii) Payment of all other indebtedness and other sums, with
interest thereon, which may be owed under, and performance of all other
obligations and covenants contained in, any other Loan Document or any
Other Agreement, together with any other instrument given to evidence
or further secure the payment and performance of any obligation secured
hereby or thereby.
Notwithstanding the foregoing or any other provisions of this Agreement
to the contrary:
(v) in the event that the Loan becomes the subject of a
Securitization, this Agreement shall only secure indebtedness and
obligations relating to the Loan and any other loans between any of the
Elmer's Entities on the one hand and any of the Lender Entities on the
other hand which are part of the same Securitized Loan Pool as the
Loan;
(w) in the event that any loans between any of the Elmer's
Entities on the one hand and any of the Lender Entities on the other
hand (other than the Loan) become the subject of a Securitization, this
Agreement shall not secure any indebtedness and obligations relating to
such loans unless the Loan is part of the same Securitized Loan Pool as
such loans;
(x) if Borrower exercises its right to acquire new restaurant
properties pursuant to and in accordance with the terms and conditions
of Section 5.B(ii) of the Loan Agreement and grants third-party
purchase money security interests in connection with such acquisitions,
Lender will waive its security interest in such new restaurant
property; and
(y) if Borrower exercises its right to terminate or surrender
a Lease or consummate the sale of a "Premises" as contemplated by and
in accordance with the terms and conditions of Section 5.B(ii) of the
Loan Agreement, upon receipt by Lender in immediately available funds
of the sums payable to Lender as a result of such termination,
surrender or sale, as applicable, Lender will release its security
interest in the Collateral located at such terminated, surrendered or
sold property.
2. EVENTS OF DEFAULT. Each of the following shall be deemed an event of
default by the Elmer's Entities (each, an "Event of Default"):
(a) If any representation or warranty of any of the Elmer's
Entities set forth in any of the Loan Documents is false in any
material respect, or if any of the Elmer's Entities renders any
statement or account which is false in any material respect.
(b) If any principal, interest or other monetary sum due under
any of the Notes or any other Loan Document is not paid within five
days after the date when due; provided, however, notwithstanding the
occurrence of such an Event of Default, Lender shall not be entitled to
exercise its rights and remedies set forth below unless and until
Lender shall have given Borrower notice thereof and a period of five
days from the delivery of such notice shall have elapsed without such
Event of Default being cured.
(c) If the Elmer's Entities fail to observe or perform any of
the other covenants, conditions, or obligations of this Agreement;
provided, however, if any such failure does not involve the payment of
any monetary sum, is not willful or intentional, does not place any
rights or property of Lender in immediate jeopardy, and is within the
reasonable power of the Elmer's Entities to promptly cure after receipt
of notice thereof, all as determined by Lender in its reasonable
discretion, then such failure shall not constitute an Event of Default
hereunder, unless otherwise expressly provided herein, unless and until
Lender shall have given the Elmer's Entities notice thereof and a
period of 30 days shall have elapsed, during which period the Elmer's
Entities may correct or cure such failure, upon failure of which an
Event of Default shall be deemed to have occurred hereunder without
further notice or demand of any kind being required. If such failure
cannot reasonably be cured within such 30-day period, as determined by
Lender in
2
its reasonable discretion, and the Elmer's Entities are diligently
pursuing a cure of such failure, then the Elmer's Entities shall have a
reasonable period to cure such failure beyond such 30-day period, which
shall not exceed 90 days after receiving notice of the failure from
Lender. If the Elmer's Entities shall fail to correct or cure such
failure within such 90-day period, an Event of Default shall be deemed
to have occurred hereunder without further notice or demand of any kind
being required.
(d) If any Elmer's Entity becomes insolvent within the meaning
of the Code, files or notifies Lender that it intends to file a
petition under the Code, initiates a proceeding under any similar law
or statute relating to bankruptcy, insolvency, reorganization, winding
up or adjustment of debts (collectively, an "Action"), becomes the
subject of either a petition under the Code or an Action, or is not
generally paying its debts as the same become due.
(e) If there is an "Event of Default" or a breach or default,
after the passage of all applicable notice and cure or grace periods,
under any other Loan Document or any of the Other Agreements.
3. REMEDIES FOR DEFAULT. Upon the occurrence of an Event of Default,
Lender shall have all rights and remedies of a secured party in, to and against
the Collateral granted by the Uniform Commercial Code in the State of Arizona
(the "Uniform Commercial Code") and otherwise available at law or in equity,
including, without limitation:
(a) the right to declare any or all payments due under the
Notes, the other Loan Documents, the Other Agreements and all other
documents evidencing the Obligations immediately due and payable and
the right to recover all fees and expenses (including reasonable
attorney fees) in connection with the collection or enforcement
thereof, which fees and expenses shall constitute additional
Obligations of the Elmer's Entities hereunder;
(b) the right to act as, and each of the Elmer's Entities
hereby constitutes and appoints Lender, their true, lawful and
irrevocable attorney-in-fact (which appointment shall be deemed coupled
with an interest) to demand, receive and enforce payments and to give
receipts, releases, satisfaction for and to xxx for moneys payable to
the Elmer's Entities under or with respect to any of the Collateral
under this Agreement, and actions taken pursuant to this appointment
may be taken either in the name of Borrower or in the name of Lender
with the same force and effect as if this appointment had not been
made;
(c) the right to take immediate and exclusive possession of
the Collateral, or any part thereof, and for that purpose, with or
without judicial process and notice to the Elmer's Entities, enter (if
this can be done without breach of the peace) upon any premises on
which the Collateral or any part thereof may be situated and remove the
same therefrom (provided that if the Collateral is affixed to real
estate, such removal shall be subject to the conditions stated in the
Uniform Commercial Code);
(d) the right to hold, maintain, preserve and prepare the
Collateral for sale, until disposed of;
(e) the right to render the Collateral unusable and dispose of
the Collateral;
(f) the right to require the Elmer's Entities to assemble and
package the Collateral and make it available to Lender for its
possession at a place to be designated by Lender which is reasonably
convenient to the Lender;
(g) the right to sell, lease, hold or otherwise dispose of all
or any part of the Collateral; and
(h) the right to xxx for specific performance of any
obligation under the Loan Documents or to recover damages for breach
thereof.
The remedies of Lender hereunder are cumulative and the exercise of any
one or more of the remedies provided for herein or under the Uniform Commercial
Code or other applicable law shall not be construed as a
3
waiver of any of the other remedies of Lender so long as any part of the
Obligations secured hereby remains unsatisfied. Lender shall be entitled to
receive on demand, as additional Obligations hereunder, interest accruing at the
lower of 14% per annum or the highest rate permitted by applicable law on all
amounts not paid when due under the Note or this Agreement until the date of
actual payment. Lender shall have no duty to mitigate any loss to the Elmer's
Entities occasioned by enforcement of any remedy hereunder and shall have no
duty of any kind to any subordinated creditor of the Elmer's Entities.
4. APPLICATION OF PROCEEDS. Should Lender exercise the rights and
remedies specified in Section 3 hereof, any proceeds received thereby shall be
first applied to pay the costs and expenses, including reasonable attorneys'
fees, incurred by Lender as a result of the Event of Default. The remainder of
any proceeds, net of Lender's costs and expenses, shall be applied to the
satisfaction of the Obligations and any excess paid over to the Elmer's
Entities.
5. USE. The Elmer's Entities agree that the Equipment will be used at
the Premises solely in the conduct of the Elmer's Entities' business as a
Permitted Concept and will at all times remain in the possession and control of
the Elmer's Entities at the Premises and will not be removed without Lender's
prior written consent. The Elmer's Entities promise that the Equipment at all
times will be used and operated under and in compliance with all Applicable
Regulations, except for such noncompliance which will not have, and will not
reasonably be expected to have, a Material Adverse Effect. The Elmer's Entities
will not permit any Collateral to be subject to any lien, charge or encumbrance
except that of Lender and will keep the Collateral free and clear of any and all
liens, charges, encumbrances, and adverse claims. The Elmer's Entities will not
sell, lease, rent, or otherwise dispose of any item of Collateral without the
prior written consent of Lender.
6. MAINTENANCE AND IMPROVEMENT. The Elmer's Entities shall at all
times, at their own expense, keep the Equipment in good and efficient working
order, condition and repair and well maintained, ordinary wear and tear
excepted, and shall make all inspections and repairs required by law, regulation
or insurance policy. The Elmer's Entities shall also make any alterations,
improvements or additions to the Equipment that are required by law or
regulation. Any alterations, improvements, or additions to the Equipment shall
be made at the expense of the Elmer's Entities, shall constitute accessions to
the Equipment and shall be subject to Lender's security interest.
7. LOSS AND DAMAGE. The Elmer's Entities shall bear the risk of damage,
loss, theft, or destruction, partial or complete, of the Equipment from
whatsoever source arising, whether or not such loss or damage is covered by
insurance. The Elmer's Entities shall promptly notify Lender in writing in the
event of any damage, loss, theft, or destruction, partial or complete, of any
item of Equipment. While no Event of Default shall have occurred and be
continuing, Lender agrees to apply insurance proceeds payable to Lender by
reason of any such damage, loss, theft, or destruction, at the option of Lender,
to (a) repair or restore the Equipment to good condition and working order, (b)
replace the Equipment with similar equipment in good repair, condition and
working order, or (c) pay Lender, in cash, an amount equal to the unamortized
cost for that item and all other amounts then due and owing under this
Agreement, and upon payment of that amount, this Agreement shall terminate with
respect to that item only, and Lender will release its interest in that item;
provided, however, such release shall not limit or effect in any manner the
amounts otherwise payable by the Elmer's Entities to Lender under the Loan
Documents. Upon the occurrence and during the continuance of an Event of
Default, Lender shall have the right to apply the insurance proceeds from any
damage, loss, theft or destruction to any item of Equipment toward the
Obligations in such order, priority and proportions as Lender shall determine or
pay such proceeds in whole or in part to the Elmer's Entities to be applied
toward repair, restoration or replacement of the Equipment as contemplated by
the preceding subitems (a) and (b) of this Section 7.
8. INSURANCE. The Elmer's Entities shall procure and continuously
maintain and pay for (a) all risk physical damage insurance covering loss or
damage to the Equipment for not less than the full replacement value thereof
naming Lender as additional insured and loss payee, (b) bodily injury and
property damage combined single limit liability insurance in an amount not less
than Two Million Dollars ($2,000,000) for each location at which any of the
Equipment is located, and (c) such other insurance as may from time to time be
reasonably required by Lender in order to protect its interests with respect to
the Equipment, with such insurance companies and pursuant to such contracts or
policies and with such deductibles as are satisfactory to Lender. All contracts
and policies shall include provisions for the protection of Lender
notwithstanding any act or neglect of or breach or default by the Elmer's
Entities, shall provide for payment of insurance proceeds to Lender, shall
provide that they may not be modified,
4
terminated or canceled unless Lender is given at least thirty (30) days' advance
written notice thereof, and shall provide that the coverage is "primary
coverage" for the protection of the Elmer's Entities or Lender notwithstanding
any other coverage carried by Lender or the Elmer's Entities protecting against
similar risks. The Elmer's Entities shall promptly notify any appropriate
insurer and Lender of each and every occurrence that may become the basis of a
claim or cause of action against the insured and provide Lender with all data
pertinent to such occurrence. The Elmer's Entities shall furnish Lender with
certificates of such insurance or copies of policies upon request and shall
furnish Lender with renewal certificates not less than thirty (30) days prior to
the renewal date. Proceeds of all insurance are payable first to Lender to the
extent of its interest.
9. TAXES. The Elmer's Entities agree to pay all taxes, assessments and
other governmental charges of whatsoever kind and character by whom payable on
or relating to any item of Equipment or the sale, ownership, use, shipment,
transportation, delivery or operation thereof or payable in respect to any
obligation of the Elmer's Entities. Upon receipt of a request therefore from
Lender, the Elmer's Entities will submit written evidence of payment of the
obligations described in this section.
10. APPLICABLE LAW. The Elmer's Entities acknowledge that this
Agreement was substantially negotiated in the State of Arizona, the executed
Agreement was delivered in the State of Arizona, all payments under the Notes
will be delivered in the State of Arizona and there are substantial contacts
between the parties and the transactions contemplated herein and the State of
Arizona. For purposes of any action or proceeding arising out of this Agreement,
the parties hereto hereby expressly submit to the jurisdiction of all federal
and state courts located in the State of Arizona. The Elmer's Entities consent
that they may be served with any process or paper by registered mail or by
personal service within or without the State of Arizona in accordance with
applicable law. Furthermore, the Elmer's Entities waive and agree not to assert
in any such action, suit or proceeding that they are not personally subject to
the jurisdiction of such courts, that the action, suit or proceeding is brought
in an inconvenient forum or that venue of the action, suit or proceeding is
improper. It is the intent of the parties hereto that all provisions of this
Agreement shall be governed by and construed under the laws of the State of
Arizona, without giving effect to its principles of conflicts of law. To the
extent that a court of competent jurisdiction finds Arizona law inapplicable
with respect to any provisions hereof, then, as to those provisions only, the
laws of the state where the Collateral is located shall be deemed to apply.
Nothing in this Section shall limit or restrict the right of Lender to commence
any proceeding in the federal or state courts located in the state in which the
Collateral is located to the extent Lender deems such proceeding necessary or
advisable to exercise remedies available under this Agreement or the other Loan
Documents.
11. ASSIGNMENT. Lender may assign in whole or in part its rights under
this Agreement, including, without limitation, in connection with any Transfer,
Participation and/or Securitization. Upon any unconditional assignment of
Lender's entire right and interest hereunder, Lender shall automatically be
relieved, from and after the date of such assignment, of liability for the
performance of any obligation of Lender contained herein.
12. POSSESSION. Until a Event of Default shall occur, the Elmer's
Entities may retain possession of the Collateral and may use it in any lawful
manner not inconsistent with this Agreement, with the provisions of any policies
of insurance thereon or the other Loan Documents.
13. WAIVER. No Event of Default hereunder by the Elmer's Entities shall
be deemed to have been waived by Lender except by a writing to that effect
signed by Lender and no waiver of any Event of Default shall operate as a waiver
of any other Event of Default on a future occasion. No modification, rescission,
waiver, release or amendment of any provision of this Agreement shall be made
except by a written agreement signed by the Elmer's Entities and Lender.
14. SEVERABILITY. In case any one or more of the provisions contained
herein or in the Note shall be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision hereof, and this Agreement shall be construed as if such
provision had never been contained herein or therein.
15. NOTICES. All notices, demands, designations, certificates,
requests, offers, consents, approvals, appointments and other instruments given
pursuant to this Agreement (collectively called "Notices") shall be in
5
writing and given by (i) hand delivery, (ii) facsimile, (iii) express overnight
delivery service or (iv) certified or registered mail, return receipt requested,
and shall be deemed to have been delivered upon (a) receipt, if hand delivered,
(b) transmission, if delivered by facsimile, (c) the next business day, if
delivered by express overnight delivery service, or (d) the third business day
following the day of deposit of such notice with the United States Postal
Service, if sent by certified or registered mail, return receipt requested.
Notices shall be provided to the parties and addresses (or facsimile numbers, as
applicable) specified below:
If to Borrower: 00000 X.X. Xxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
And to: 000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxx Xxxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Lender: GE Capital Franchise Finance Corporation
00000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Collateral Management
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
or to such other address or such other person as either party may from time to
time hereafter specify to the other party in a notice delivered in the manner
provided above. Whenever in this Agreement the giving of Notice is required, the
giving thereof may be waived in writing at any time by the person or persons
entitled to receive such Notice.
16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each thereof shall be deemed to be an original, and all such
counterparts shall constitute but one and the same instrument.
17. HEADINGS. The headings appearing in this Agreement have been
inserted for convenient reference only and shall not modify, define, limit or
expand the express provisions of this Agreement.
18. CHARACTERIZATION; INTERPRETATION. It is the intent of the parties
hereto that the business relationship created by the Notes, this Agreement and
the other Loan Documents is solely that of creditor and debtor and has been
entered into by both parties in reliance upon the economic and legal bargains
contained in the Loan Documents. None of the agreements contained in the Loan
Documents is intended, nor shall the same be deemed or construed, to create a
partnership between Lender and any of the Elmer's Entities, to make them joint
venturers, to make any of the Elmer's Entities an agent, legal representative,
partner, subsidiary or employee of Lender, nor to make Lender in any way
responsible for the debts, obligations or losses of the Elmer's Entities.
Lender and the Elmer's Entities acknowledge and warrant to each other
that each has been represented by independent counsel and has executed this
Agreement after being fully advised by said counsel as to its effect and
significance. This Agreement shall be interpreted and construed in a fair and
impartial manner without regard to such factors as the party which prepared the
instrument, the relative bargaining powers of the parties or the domicile of any
party.
19. TIME OF THE ESSENCE. Time is of the essence in the performance of
each and every obligation under this Agreement.
6
20. WAIVER OF JURY TRIAL AND PUNITIVE, CONSEQUENTIAL, SPECIAL AND
INDIRECT DAMAGES. THE ELMER'S ENTITIES AND LENDER HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY WITH
RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR
COUNTERCLAIM BROUGHT BY ANY OF THE PARTIES HERETO AGAINST THE OTHER OR ITS
SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS OR ANY DOCUMENT CONTEMPLATED HEREIN
OR RELATED HERETO. THIS WAIVER BY THE PARTIES HERETO OF ANY RIGHT ANY MAY HAVE
TO A TRIAL BY JURY HAS BEEN NEGOTIATED AND IS AN ESSENTIAL ASPECT OF THEIR
BARGAIN. FURTHERMORE, THE ELMER'S ENTITIES AND LENDER HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT THEY MAY HAVE TO SEEK PUNITIVE,
CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES FROM THE OTHERS AND ANY OF THE
OTHER'S AFFILIATES, OFFICERS, DIRECTORS OR EMPLOYEES OR ANY OF THEIR SUCCESSORS
WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR
COUNTERCLAIM BROUGHT BY ANY PARTY AGAINST THE OTHERS OR ANY OF THE OTHER'S
AFFILIATES, OFFICERS, DIRECTORS OR EMPLOYEES OR ANY OF THEIR SUCCESSORS WITH
RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, ANY
OF THE OTHER LOAN DOCUMENTS OR ANY DOCUMENT CONTEMPLATED HEREIN OR RELATED
HERETO. THE WAIVER BY THE ELMER'S ENTITIES AND LENDER OF ANY RIGHT THEY MAY HAVE
TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES HAS BEEN
NEGOTIATED BY THE PARTIES HERETO AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.
7
IN WITNESS WHEREOF, the Elmer's Entities have executed this Agreement
effective as of the day and year first above written.
BORROWER:
ELMER'S RESTAURANTS, INC., an Oregon corporation,
successor by merger to ERI Acquisition Corp.
By ______________________________________________________
Printed Name ____________________________________________
Its _____________________________________________________
ELMER'S PANCAKES & STEAKHOUSE, INC., an Oregon
corporation
By ______________________________________________________
Printed Name ____________________________________________
Its _____________________________________________________
GRASS VALLEY LTD., INC., an Oregon corporation
By ______________________________________________________
Printed Name ____________________________________________
Its _____________________________________________________
CBW FOOD COMPANY, LLC, an Oregon limited liability
company
By ______________________________________________________
Printed Name ____________________________________________
Its _____________________________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me on ____________,
2005 by _______________________, _____________________ of Elmer's Restaurants,
Inc., an Oregon corporation, on behalf of the corporation.
__________________________________
Notary Public
My Commission Expires:
_______________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me on ____________,
2005 by _______________________, _____________________ of Elmer's Pancakes &
Steakhouse, [ ], an Oregon corporation, on behalf of the corporation.
__________________________________
Notary Public
My Commission Expires:
_______________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me on ____________,
2005 by _______________________, _____________________ of Grass Valley LTD.,
Inc., an Oregon corporation, on behalf of the corporation.
__________________________________
Notary Public
My Commission Expires:
_______________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me on ____________,
2005 by _______________________, _____________________ of CBW Food Company, LLC,
an Oregon limited liability company, on behalf of the limited liability company.
__________________________________
Notary Public
My Commission Expires:
_______________________________________
EXHIBIT A TO SECURITY AGREEMENT
PREMISES
EXHIBIT B TO SECURITY AGREEMENT
LIQUOR LICENSES
EXHIBIT C TO SECURITY AGREEMENT
FRANCHISE AND ROYALTIES AGREEMENTS
EXHIBIT D TO SECURITY AGREEMENT
FRANCHISE NOTES
EXHIBIT L
VARIABLE RATE PROMISSORY NOTE
PROMISSORY NOTE
Dated as of March _____, 2005
$[3,000,000.00] Scottsdale, Arizona
ERI ACQUISITION CORP., an Oregon corporation ("Borrower"), for value
received, hereby promises to pay to GE CAPITAL FRANCHISE FINANCE CORPORATION, a
Delaware corporation ("Lender"), whose address is 00000 Xxxxx Xxxxxxxxx Xxxxx,
Xxxxxxxxxx, Xxxxxxx 00000, or order, on or before April 1, 2015 (the "Maturity
Date") the principal sum of $[3,000,000.00], as herein provided. Initially
capitalized terms which are not otherwise defined in this Note shall have the
meanings set forth in that certain Loan Agreement dated as of the date of this
Note between Borrower and Lender, as such agreement may be amended, restated
and/or supplemented from time to time (the "Loan Agreement"). In addition, the
following terms shall have the following meanings for all purposes of this Note:
"Adjustable Rate" means an annual interest rate equal to the sum of the
Adjustable Rate Basis plus 3.55.
"Adjustable Rate Basis" means, for any Interest Period, the annual
interest rate (rounded upwards, if necessary, to the nearest 1/100th of one
percent) equal to the three month London Interbank Offered Rate ("LIBOR") on the
Adjustable Rate Reset Date as published in The Wall Street Journal. If for any
reason such rate is no longer published in The Wall Street Journal, Lender shall
select such replacement index as Lender in its sole discretion determines most
closely approximates such rate.
"Adjustable Rate Reset Date" means the last Business Day of each
calendar quarter, prior to the next Interest Period.
"First Payment Date" means May 1, 2005.
"Interest Period" means (i) initially, the period beginning on the date
of this Note and ending on the last day of the calendar quarter in which such
date occurs, and (ii) thereafter, the period beginning on the first day of the
calendar quarter and ending on the last day of such calendar quarter.
"Payment Period" means (i) initially, the twelve month period beginning
on the First Payment Date and ending on the day immediately prior to the first
Payment Reset Date, and (ii) thereafter, the twelve month period beginning on
each Payment Reset Date and ending on the day immediately prior to the next
Payment Reset Date.
"Payment Reset Calculation" means the level monthly payment calculated
by the full amortization of the outstanding principal amount of this Note on the
Payment Reset Date at the Adjustable Rate (with the definition of "Adjustable
Rate Reset Date" defined to mean the last Business Day of the calendar quarter
prior to the next Payment Reset Date, unless such quarter ends less than one
month prior to the next Payment Reset Date, in which case such date shall be the
last Business Day of the preceding calendar quarter over the remaining
originally scheduled term of this Note.
"Payment Reset Date" means each anniversary of the First Payment Date.
Borrower shall pay interest on the outstanding principal amount of this
Note at the Adjustable Rate, determined monthly as described above, on the basis
of a 360-day year consisting of twelve 30-day months, provided, that, interest
on the principal amount of this Note for the period commencing with the date
such principal amount is advanced by Lender through the last day in the month in
which this Note is dated shall be due and payable upon delivery of this Note.
Commencing on the First Payment Date, Borrower shall pay consecutive monthly
installments on the first day of each calendar month during the term of this
Note prior to the Maturity Date in lawful money of the United States. The
monthly installments shall be level during a Payment Period. The initial level
monthly payments for the first Payment Period shall be equal to $____________
until the first Payment Reset Date, at which time, and on each succeeding
Payment Reset Date thereafter, the level monthly payment to be paid by
Borrower shall be adjusted for the next succeeding Payment Period based on the
Payment Reset Calculation. All outstanding principal and unpaid accrued interest
shall be paid on the Maturity Date.
Upon execution of this Note, Borrower shall authorize Lender to
establish arrangements whereby all payments of principal and interest hereunder
are transferred by Automated Clearing House Debit initiated by Lender directly
from an account at a U.S. bank in the name of Borrower to such account as Lender
may designate or as Lender may otherwise designate. Each payment of principal
and interest hereunder shall be applied first toward any past due payments under
this Note (including payment of all Costs (as herein defined)), then to accrued
interest at the Adjustable Rate, and the balance, after the payment of such
accrued interest, if any, shall be applied to the unpaid principal balance of
this Note; provided, however, each payment hereunder after an Event of Default
has occurred shall be applied as Lender in its sole discretion may determine.
After application of any monthly payment in the above manner, in the event that
the outstanding principal amount of this Note exceeds 110% of the original
principal balance of this Note, Borrower shall prepay, without premium or
penalty, on the first day of the next succeeding calendar month after each such
occurrence, a principal amount equal to the difference between the outstanding
principal balance of this Note and the original principal balance of this Note
(the "Negative Amortization Amount"). Lender shall notify Borrower in writing on
or before the twenty-fifth day of each calendar month during the term of this
Note of Lender's determination of the Negative Amortization Amount, if any,
payable on the first day of the next succeeding calendar month. Lender shall
also notify Borrower in writing on or before the twenty-fifth day of the
calendar month prior to the next Payment Reset Date during the term of this Note
of Lender's determination of the level monthly payment to be paid by Borrower
based on the Payment Reset Calculation for the next Payment Period.
Borrower may prepay this Note in full, but not in part (except as
otherwise set forth in Section 5.B of the Loan Agreement), including all accrued
but unpaid interest hereunder and all sums advanced by Lender pursuant to the
Loan Documents and any Other Agreements, provided that (i) no Event of Default
has occurred under any of the Loan Documents or any Other Agreements, and (ii)
any such prepayment shall only be made on a regularly scheduled payment date
upon not less than 30 days prior written notice from Borrower to Lender.
Provided no Event of Default shall have occurred and be continuing,
Borrower shall have an option (the "Conversion Option"), exercisable only once
between the seventh (7th) and twenty-fourth (24th) month following Closing, to
convert the interest rate accruing under this Note (the "Conversion") from the
Adjustable Rate to a fixed rate of interest (the "Base Interest Rate"). Borrower
shall exercise the Conversion Option by providing Lender written notice of
Borrower's election (the "Conversion Notice"). The Conversion shall be deemed
effective on the first day of the second calendar month following delivery of
the Conversion Notice to Lender (the "Conversion Date"), and this Note shall be
deemed modified as of the Conversion Date to reflect the Conversion. Lender
shall notify Borrower ten (10) days following delivery of Conversion Notice of
the Base Interest Rate, which Base Interest Rate shall be equal to the then
current weekly average yield of five-year U.S. Dollar Swaps (as published in
Federal Reserve Statistical Release H.15[519]) rate (the "Base Rate") plus
3.24%. From and after the Conversion Date, fixed equal monthly payments, based
on the amortization of the outstanding principal amount of this Note as of the
Conversion Date (including any accrued interest at the Adjustable Rate) over the
period from and after the Conversion Date until the Maturity Date at the Base
Interest Rate shall be due and payable commencing on the first day of the
calendar month following the month in which the Conversion Date occurs and
continuing on the first day of each month thereafter until the Maturity Date, at
which time the outstanding principal balance of this Note and unpaid interest
accrued at the Base Interest Rate shall be due and payable. Lender shall provide
Borrower with an amortization schedule setting forth the principal and interest
payments due under this Note from and after the Conversion Date, and such
amortization schedule shall be prima facie evidence of such principal and
interest payments.
Borrower may prepay this Note in full, but not in part (except as
otherwise set forth below), including all accrued but unpaid interest hereunder
and all sums advanced by Lender pursuant to the Loan Documents and any Other
Agreements, provided that (i) no Event of Default has occurred under any of the
Loan Documents or any Other Agreements, (ii) any such prepayment shall only be
made on a regularly scheduled payment date upon not less than 30 days prior
written notice from Borrower to Lender, and (iii) except as otherwise set forth
below, from and after the Conversion Date, any such prepayment shall be made
together with payment of an amount equal to the sum of:
2
(a) prior to the fourth anniversary of the Final Disbursement
Date, a prepayment fee equal to 1% of the amount prepaid; and
(b) a prepayment premium equal to the positive difference (if
any) between (i) the present value of the stream of monthly principal
and interest payments due under this Note from the date of such
prepayment through the scheduled Maturity Date (the "Remaining
Scheduled Term"), calculated using the interpolated yield, at the time
of such prepayment, of the two U.S. Dollar Interest Rate Swaps (as
published in Federal Reserve Statistical Release H.15[519]) whose terms
most closely match the Remaining Scheduled Term, and (ii) the present
value of the stream of monthly principal and interest payments due
under this Note from the date of such prepayment through the scheduled
Maturity Date, calculated using the interpolated yield of the two U.S.
Dollar Interest Rate Swaps whose terms most closely match the
originally scheduled term of this Note.
The foregoing prepayment fee and prepayment premium, as applicable,
shall be due and payable regardless of whether such prepayment is the result of
a voluntary prepayment by Debtor or as a result of Lender declaring the unpaid
principal balance of this Note, accrued interest and all other sums due under
this Note, the other Loan Documents and any Other Agreements, due and payable as
contemplated below. In addition to the foregoing prepayment right, Borrower may
prepay up to 20% of the original loan balance every 12-month period on the
anniversary of the Closing Date with no prepayment premium or fees, regardless
of whether this Note bears interest at a variable or fixed rate at the time of
such prepayment, subject to the following conditions:
(i) no Event of Default has occurred under any of the Loan
Documents or any Other Agreements,
(ii) any such prepayment shall only be made on a regularly
scheduled payment date upon not less than 30 days prior written notice
from Borrower to Lender,
(iii) a maximum of three such partial prepayments can be made
during the term of this Note, although the 20% prepayment limitation
shall not be cumulative (i.e. the maximum partial prepayment amount is
20% per year); and
(iv) Borrower shall pay Lender a $250 processing fee at the
time of each such partial prepayment.
In addition, but subject to the satisfaction of the preceding subitems (i), (ii)
and (iv), at any time while the variable rate of interest is in effect under
this Note, Borrower shall have the right to prepay up to $1,500,000.00 of the
principal balance of this Note with no prepayment premium or fees.
This Note is secured by the Loan Agreement and the other Loan
Documents. Upon the occurrence of an Event of Default, Lender may declare the
entire unpaid principal balance of this Note, accrued interest, if any, and all
other sums due under this Note and any Loan Documents or Other Agreements due
and payable at once without notice to Borrower. All past-due principal and/or
interest shall bear interest from the due date to the date of actual payment at
the lesser of (i) the highest rate for which the undersigned may legally
contract, or (ii) the greater of 14% and the rate which is 6% per annum above
the Adjustable Rate (the "Default Rate"), and such Default Rate shall continue
to apply following a judgment in favor of Lender under this Note. If Borrower
fails to make any payment or installment due under this Note within five days of
its due date, Borrower shall pay to Lender, in addition to any other sum due
Lender under this Note or any other Loan Document, a late charge equal to 5% of
such past-due payment or installment (the "Late Charge"), which Late Charge is a
reasonable estimate of the loss that may be sustained by Lender due to the
failure of Borrower to make timely payments. All payments of principal and
interest due hereunder shall be made (i) without deduction of any present and
future taxes, levies, imposts, deductions, charges or withholdings, which
amounts shall be paid by Borrower, and (ii) without any other right of
abatement, reduction, setoff, defense, counterclaim, interruption, deferment or
recoupment for any reason whatsoever. Borrower will pay the amounts necessary
such that the gross amount of the principal and interest received by Lender is
not less than that required by this Note.
3
No delay or omission on the part of Lender in exercising any remedy,
right or option under this Note shall operate as a waiver of such remedy, right
or option. In any event, a waiver on any one occasion shall not be construed as
a waiver or bar to any such remedy, right or option on a future occasion.
Borrower hereby waives presentment, demand for payment, notice of dishonor,
notice of protest, and protest, notice of intent to accelerate, notice of
acceleration and all other notices or demands in connection with delivery,
acceptance, performance, default or endorsement of this Note. All notices,
consents, approvals or other instruments required or permitted to be given by
either party pursuant to this Note shall be given in accordance with the notice
provisions in the Loan Agreement. Should any indebtedness represented by this
Note be collected at law or in equity, or in bankruptcy or other proceedings, or
should this Note be placed in the hands of attorneys for collection after
default, Borrower shall pay, in addition to the principal and interest due and
payable hereon, all costs of collecting or attempting to collect this Note (the
"Costs"), including reasonable attorneys' fees and expenses of Lender (including
those fees and expenses incurred in connection with any appeal) and court costs
whether or not a judicial action is commenced by Lender. This Note may not be
amended or modified except by a written agreement duly executed by the party
against whom enforcement of this Note is sought. In the event that any one or
more of the provisions contained in this Note shall be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Note, and this
Note shall be construed as if such provision had never been contained herein or
therein. Time is of the essence in the performance of each and every obligation
under this Note.
Notwithstanding anything to the contrary contained in any of the Loan
Documents, the obligations of Borrower to Lender under this Note and any other
Loan Documents are subject to the limitation that payments of interest and late
charges to Lender shall not be required to the extent that receipt of any such
payment by Lender would be contrary to provisions of applicable law limiting the
maximum rate of interest that may be charged or collected by Lender. The portion
of any such payment received by Lender that is in excess of the maximum interest
permitted by such provisions of law shall be credited to the principal balance
of this Note or if such excess portion exceeds the outstanding principal balance
of this Note, then such excess portion shall be refunded to Borrower. All
interest paid or agreed to be paid to Lender shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and/or spread throughout the
full term of this Note (including, without limitation, the period of any renewal
or extension thereof) so that interest for such full term shall not exceed the
maximum amount permitted by applicable law.
This obligation shall bind Borrower and its successors and assigns, and
the benefits hereof shall inure to Lender and its successors and assigns.
4
IN WITNESS WHEREOF, Borrower has executed and delivered this Note
effective as of the date first set forth above.
BORROWER:
ERI ACQUISITION CORP., an Oregon corporation
By ____________________________________________
Printed Name __________________________________
Its ___________________________________________
EXHIBIT M
SUBSEQUENT STOCK PLEDGE AGREEMENT
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Agreement") is made as of _______,
2005 by and between the XXXXX X. XXXXX, XXXXXXX X. SERVICE, XXXX X. XXXXX,
XXXXXX X. XXXXXX, XXXXXXXXX X. XXXXXX, XXXXXX X. XXXXXXX, XXXXX X. XXXXXXX,
XXXXXXX X. XXX, XXXXX X. XXXXXXX-XXX, XXXXX X. XXXXXXX, XXXXX X. XXXXXX, XXXXX
X. XXXX, XXXXXXX X. XXXXXX, XXXXXX X. XXXXXXX, XXXXXX X. XXXXX, XXXXX XXXXXX,
XXXXX XXXXX-XXXXXX, XXXXXX XXXXXXXX, XXXXXXX X. XXXXXXX, XXXX X. WEEKS AND
XXXXXXX XXXXXXXX (collectively, "Shareholders"), and GE CAPITAL FRANCHISE
FINANCE CORPORATION, a Delaware corporation ("Lender").
PRELIMINARY STATEMENT:
Lender and Elmer's Restaurants, Inc., an Oregon corporation, successor
by merger to ERI Acquisition Corp., an Oregon corporation ("Borrower"), are
parties to that certain Loan Agreement dated as of March ___, 2005 (the "Loan
Agreement") pursuant to which Lender agreed to make a loan to Borrower in the
aggregate amount of $6,500,000.000 (the "Loan"). Capitalized terms not defined
herein shall have the meanings set forth in the Loan Agreement. Shareholders are
the holders of one hundred percent (100%) of the issued and outstanding common
stock of Borrower (the "Subject Common Stock"). Shareholders are entitled to
exercise all of the voting rights of the Subject Common Stock and receive all of
the distributions and dividends payable by Borrower on account of the Subject
Common Stock.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:
ARTICLE I
SECURITY INTEREST AND PLEDGE
Section 1.1. SECURITY INTEREST AND PLEDGE. Subject to the terms of this
Agreement, Shareholders hereby pledge and grant to Lender a first priority lien
upon and security interest in the following property now owned or hereafter
acquired, created or arising (collectively, the "Collateral"):
(a) The issued and outstanding shares the Subject Common Stock
which are represented by the stock certificates described on the
attached Schedule I; and
(b) all products and proceeds of the Subject Common Stock,
including, without limitation, all revenues, distributions, dividends,
stock dividends, securities, and other property, rights and interests
that Shareholders are entitled to receive at any time on account of the
same.
Section 1.2. OBLIGATIONS. The Collateral shall secure the following
indebtedness and obligations of Shareholders and Borrower, as applicable
(collectively, the "Obligations"):
(a) Payment of indebtedness evidenced by the Notes together
with all extensions, renewals, amendments and modifications thereof;
and
(b) Payment of all other indebtedness and other sums, with
interest thereon, which may be owed under, and performance of all other
obligations and covenants contained in the other Loan Documents,
together with any other instrument given to evidence or further secure
the payment and performance of any obligation secured hereby or thereby
(all of the documents, instruments and other agreements described in
this Section 1.2 are referred to collectively as, the "Documents").
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Shareholders represent and warrant to Lender as of the date of this
Agreement and the Closing Date that:
Section 2.1. TITLE. Shareholders own, and with respect to Collateral
acquired by Shareholders after the date hereof, will own, legally and
beneficially, the Collateral, free and clear of any lien, security interest,
pledge, hypothecation, claim or other encumbrance, or any right or option on the
part of any third person to purchase or otherwise acquire or obtain any lien or
security interest in the Collateral or any part thereof, except for the lien and
security interest granted hereunder in favor of Lender. The Collateral is
genuine, free from any restriction on transfer, duly and validly authorized and
issued and fully paid and non-assessable.
Section 2.2. AUTHORITY AND ENFORCEABILITY. Shareholders have the
authority to execute, deliver and perform this Agreement. This Agreement is the
legal, valid and binding obligation of Shareholders, enforceable against them in
accordance with its terms, and the execution, delivery and performance of this
Agreement by Shareholders does not and will not conflict with, result in a
breach of, or constitute a default under, the provisions of any indenture,
mortgage, deed of trust, security agreement, or other instrument or agreement or
any judgment, decree, order, law, statute, or other governmental rule or
regulation applicable to Shareholders, the Collateral or any other property of
Shareholders.
Section 2.3. FIRST PRIORITY SECURITY INTEREST. Upon the execution of
this Agreement by the parties hereto and the delivery to Lender of the stock
certificate(s) referred to in Section 1.1(a) and further described in Schedule I
hereof (together with irrevocable stock powers executed by Shareholders in blank
with respect to such stock certificate(s)), Lender shall have a valid first
priority lien upon and security interest in the Collateral.
Section 2.4. COLLATERAL GENUINE. The Collateral is genuine, free from
any restriction on transfer other than those imposed under applicable federal
and state securities laws, duly and validly authorized and issued, fully paid
and non-assessable, and is hereby duly and validly pledged and hypothecated to
Lender in accordance with law. The stock certificate(s) referred to in Section
1.1(a) and further described in Schedule I hereof represent 100% of the issued
and outstanding shares the common stock of Borrower and there are no other
classes of stock in Borrower; provided, however, stock options to acquire shares
of capital stock in Borrower have been issued to one or more of Shareholders and
certain employees of Borrower (the "Continuing Options"); provided, however, as
a condition precedent to the exercise by such Shareholders and/or employees of
such Continuing Options, such Shareholders or employees shall, and such
Shareholders hereby do, pledge to Lender all shares of common stock in Borrower
acquired pursuant to the exercise of all or any of the Continuing Options. Such
Shareholders agree that upon the exercise of such Continuing Options, the
Collateral shall be deemed modified to include the shares of capital stock
acquired pursuant to such exercise and such shares shall be included within the
definition of Subject Common Stock and subject to the terms and conditions of
this Agreement.
Section 2.5. NO ACTIONS. No action has been brought or, to the actual
knowledge of Shareholders, is threatened which would in any way prohibit or
restrict the execution and delivery of this Agreement by Shareholders or the
performance in all respects of Shareholders hereunder.
Section 2.6. GOVERNING DOCUMENTS. Shareholders have delivered to Lender
true, correct and complete copies of Borrower's articles of incorporation and
bylaws as presently in effect (collectively, the "Governing Documents"). The
Governing Documents are in full force and effect as of the date hereof.
Section 2.7. REASONABLY EQUIVALENT VALUE; SOLVENCY. (a) Shareholders
are entitled to exercise all of the voting rights of the Subject Common Stock
referred to in Section 1.1(a) hereof, and to receive all of the distributions
and dividends payable by Borrower to the holder of the Subject Common Stock;
(b) Shareholders have received reasonably equivalent value in exchange
for their execution and delivery of this Agreement;
(c) Shareholders are not insolvent and will not be rendered insolvent
by the execution, delivery and performance of this Agreement;
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(d) Shareholders have sufficient capital to engage in all present and
planned businesses and transactions; and
(e) Shareholders have not incurred, and does not intend to incur, debts
that would be beyond their ability to pay such debts as they mature.
ARTICLE III
AFFIRMATIVE AND NEGATIVE COVENANTS OF SHAREHOLDERS
Shareholders covenant and agree with Lender for so long as the
Obligations are outstanding that:
Section 3.1. ENCUMBRANCES. Shareholders shall not create, permit or
suffer to exist, and shall defend the Collateral against, any lien, security
interest or other encumbrance on the Collateral, except the pledge and security
interest in favor of Lender set forth in this Agreement, and shall defend
Shareholders' rights in the Collateral and Lender's security interest in the
Collateral against the claims of all other persons and entities.
Section 3.2. SALE OF COLLATERAL. Shareholders shall not sell, assign,
transfer or otherwise dispose of the Collateral or permit the foregoing to occur
without the prior written consent of Lender.
Section 3.3. DISTRIBUTIONS. If Shareholders shall become entitled to
receive or shall receive any stock certificate representing any shares of the
Subject Common Stock (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any
recapitalization, reclassification, increase, or reduction of capital or issued
in connection with any reorganization or any stock split), or any option or
right in the Subject Common Stock, whether as an addition to, in substitution
of, or in exchange for any Collateral, Shareholders agree to accept the same as
Lender's agent and to hold the same in trust for Lender, and to deliver the same
forthwith to Lender in the exact form received, with the appropriate endorsement
of Shareholders or with undated irrevocable stock powers duly executed in blank,
to be held by Lender as additional Collateral for the Obligations, subject to
the terms hereof. Any sums paid upon or in respect of the Collateral upon
liquidation or dissolution shall be paid over to Lender to be held by Lender as
Collateral subject to the terms hereof; and in case any distribution of capital
shall be made on or in respect of the Collateral or any property shall be
distributed upon or with respect to the Collateral pursuant to any
recapitalization or reclassification of capital stock or pursuant to any
reorganization, the property so distributed shall be delivered to Lender to be
held by Lender, as Collateral, subject to the terms hereof. All sums of money
and property so paid or distributed in respect of the Collateral that are
received by Shareholders shall, until paid or delivered to Lender, be held by
Shareholders in trust as additional security for the obligations of Borrower and
Shareholders under the Documents.
Section 3.4. FURTHER ASSURANCES. From time to time, upon a reasonable
request by Lender, Shareholders shall execute and deliver such other and further
instruments, documents or assurances, to (a) more effectively subject the
Collateral to the performance of the terms and provisions of this Agreement and
the other Documents, (b) give Lender possession of the Collateral, or (c)
effectuate any sale of any Collateral as herein provided.
Section 3.5. PAYMENT OF ASSESSMENTS. Shareholders will cause to be paid
before delinquency all taxes, charges, liens and assessments heretofore or
hereafter levied or assessed against the Collateral, or any part thereof, or
against Lender for or on account of the interest created by this Agreement and
the Documents, and, upon Lender's request, will furnish Lender with receipts
showing payment of such taxes and assessments at least ten (10) calendar days
before the applicable delinquency date therefor.
Section 3.6. DEFENDING THE COLLATERAL. Upon obtaining any knowledge
that the validity of this Agreement, the Documents or any rights, titles,
security interests or other interests created or evidenced hereby and thereby
shall be attacked, endangered or questioned, or if any legal proceedings are
instituted with respect thereto, Shareholders shall give prompt written notice
thereof to Lender and at Shareholders' own cost and expense, shall diligently
endeavor to cure any defect that may be developed or claimed, and will take all
necessary and proper steps for the defense of such legal proceedings. Lender
(whether or not named as a party to legal proceedings with respect
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thereto) is hereby authorized and empowered to take such additional steps as it
determines in its reasonable judgment and discretion may be necessary or proper
for the defense of any such legal proceedings or the protection of the validity
or priority of this Agreement and the rights, titles, security interests and
other interests created or evidenced hereby, and all reasonable expenses so
incurred of every kind and character shall constitute sums advanced pursuant to
this Agreement. Shareholders will not do or suffer to be done any act whereby
the value of any part of the Collateral may be decreased.
Section 3.7. COSTS AND EXPENSES. If Shareholders should fail to comply
with any of Shareholders' agreements, covenants or obligations under this
Agreement, within the applicable periods set forth in this Agreement, then
Lender (in Shareholders' name or in Lender's own name) may perform them or cause
them to be performed for Shareholders' account and at Shareholders' expense, but
shall have no obligation to perform any of them or cause them to be performed.
Any and all expenses incurred or paid by Lender pursuant to this Section 3.7
shall become the additional obligations of Shareholders to Lender, due and
payable on demand, and each shall bear interest from the date Lender incurs or
pays such expenses to the date of actual payment by Shareholders or Borrower at
the lesser of the highest rate not prohibited by applicable law or the rate of
14% per annum. Upon making any such payment or incurring any such expense,
Lender shall be fully and automatically subrogated to all of the rights of the
person, corporation or body politic receiving such payment. Any amounts owing by
Shareholders to Lender pursuant to this or any other provision of this Agreement
shall automatically and without notice be secured by this Agreement.
Shareholders and Lender each agree and consent that the amount and nature of any
such expense and the time when it was paid shall be conclusively established by
the affidavit of Lender or any of Lender's officers or agents. The exercise of
the privileges granted to Lender in this Section is cumulative of all other
rights given by this Agreement, and of all rights given Lender by law.
Section 3.8. NO ADDITIONAL STOCK. Without the prior written consent of
Lender, the Shareholders shall not permit Borrower to issue any additional
shares of stock in Borrower (other than the shares of common stock referred to
in Section 1.1(a) and further described in Schedule I hereof), including,
without limitation, any shares of preferred stock or any shares of stock
representing a stock dividend or stock split.
Section 3.9. NO INTERFERENCE. Shareholders shall cause Borrower to
recognize Lender's lien upon and security interest in the Collateral and shall
not permit Borrower to take any actions that would interfere with such lien and
security interest, Lender's rights under this Agreement or Shareholders'
obligations under this Agreement.
Section 3.10. BORROWER. Shareholders shall not permit Borrower to amend
or otherwise alter or rescind the Governing Documents without Lender's prior
written consent. The Governing Documents shall remain in full force and effect.
ARTICLE IV
RIGHTS OF LENDER AND SHAREHOLDERS
Section 4.1. VOTING RIGHTS. So long as no Event of Default (as defined
in Section 5.1 hereof) shall have occurred, Shareholders shall be entitled to
exercise any and all voting rights relating or pertaining to the Collateral or
any part thereof.
Section 4.2. DIVIDEND. Unless an Event of Default shall have occurred
and be continuing, Shareholders shall be entitled to receive all cash dividends
paid in respect of the Collateral; provided, that, the amount of any dividend
declared or paid prior to an Event of Default shall be reasonable and in no
event shall it exceed (a) the amount of the federal and state income tax
incurred by the Shareholders (not to exceed the maximum combined rate under
applicable federal and Oregon tax laws) attributable to their ownership of
Borrower and (b) Borrower's net income for the Dividend Period plus the
cumulative amount of net income for any prior Dividend Period to the extent not
previously paid as a dividend. As used herein, the term "Dividend Period" shall
mean the period of time commencing on the date of declaration of the dividend
immediately preceding the dividend at issue and ending on the day immediately
preceding the date of declaration of the dividend at issue.
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Section 4.3. LENDER'S DUTY OF CARE. Other than the exercise of
reasonable care in the physical custody of the Collateral while held by Lender
hereunder, Lender shall have no responsibility for or obligation or duty with
respect to all or any part of the Collateral or any matter or proceeding arising
out of or relating thereto. Lender shall not be responsible in any way for any
depreciation in the value of the Collateral. Lender shall have no duty or
responsibility to take any steps to preserve rights against prior parties or to
enforce collection of the Collateral by legal proceedings or otherwise, the sole
duty of Lender, their successors and assigns, being to receive collections,
remittances and payments on such Collateral as and when made and received by
Lender and, at Lender's option, to apply the amount or amounts so received,
after deduction of any collection costs incurred, as payment upon any of the
Obligations or to hold the same for the account and order of Shareholders.
Section 4.4. RELEASE OF COLLATERAL. (a) Notwithstanding the foregoing,
Lender shall be obligated to return the Collateral to Shareholders (including
the execution of any required written assignment of the same) within ten (10)
days after Shareholders' request if the Obligations have been satisfied in full.
(b) Lender agrees to release in the aggregate up to 15% of the Subject
Common Stock from the lien created by this Agreement upon the request of
Shareholders in connection with the sale of such Subject Common Stock to a
third-party acquirer provided that (i) no Event of Default shall have occurred
and be continuing, (ii) such acquirer agrees, in writing, to certain
restrictions placed on such Subject Common Stock, including, without limitation,
an agreement by such acquirer and its successors and permitted assigns in form
and substance reasonably satisfactory to Lender that such acquirer will vote
such Subject Common Stock with the majority interest holder (including Lender in
the event Lender becomes the owner of such Subject Common Stock by foreclosure
or otherwise):
(1) in connection with any decision to commence bankruptcy or
other similar proceedings;
(2) in any plan proposed by any party in any bankruptcy
proceeding; or
(3) in connection with the sale of the assets of Borrower;
(iii) the provisions of this subsection (b) shall be set forth in a restrictive
legend placed upon the applicable stock certificates of such Subject Common
Stock acquired by such acquirer; and (iv) the transferring Shareholder(s) shall
have paid or reimbursed Lender for its reasonable out-of-pocket costs and
expenses incurred in connection with the provisions of this subsection (b),
including, without limitation, reasonable attorneys' fees and costs.
Section 4.5. ADDITIONAL RIGHTS OF LENDER. Lender may, from time to
time, without notice to Shareholders, do any acts which it deems necessary or
desirable to preserve the value or marketability of the Collateral, or any part
thereof or interest therein, increase the income therefrom or protect the
security hereof including, without limitation, any of the following: (a) retain
or obtain a security interest in any property, in addition to the Collateral, to
secure any of the Obligations, (b) retain or obtain the primary or secondary
liability of any party or parties with respect to any of the Obligations, (c)
extend or renew for any period, regardless of whether such extension or renewal
period be longer than the original period, or exchange, any of the Obligations
or release or compromise any Obligations of any party or parties primarily or
secondarily liable thereon, (d) release its security interest in all or any
property, in addition to the Collateral, securing any of the Obligations, and
permit any substitution or exchange for any such property, (e) delay or omit to
exercise any right or power with respect to any Obligations, (f) delay in
enforcement of payment of indebtedness relating to the Obligations, (g) resort
to the Collateral for payment of any of the Obligations, regardless of whether
Lender has resorted to any other property, or has proceeded against any party
primarily or secondarily liable on any of the Obligations, and (h) make any
amendments to any of the Documents.
ARTICLE V
DEFAULTS AND REMEDIES
Section 5.1. EVENTS OF DEFAULT. For purposes of this Agreement, each of
the following shall be deemed an "Event of Default":
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(a) If any representation or warranty of Shareholders set
forth in this Agreement is false in any respect or if Shareholders
renders any false statement or account;
(b) If Shareholders fails to observe or perform any of its
covenants, obligations or conditions in this Agreement other than those
set forth in Sections 3.4, 3.5, 3.6 and 3.7;
(c) If Shareholders fails to observe or perform any of its
covenants set forth in Sections 3.4, 3.5, 3.6 and 3.7 of this
Agreement; provided, however, if any such event does not involve the
payment of any monetary sum, does not place any rights or property of
Lender in immediate jeopardy, and is within the reasonable power of
Shareholders to promptly cure after receipt of notice thereof, all as
determined by Lender in its reasonable discretion, then such event
shall not constitute an Event of Default hereunder, unless otherwise
expressly provided herein, unless and until Lender shall have given
Shareholders notice thereof and a period of 15 days shall have elapsed
following receipt of such notice, an Event of Default shall be deemed
to have occurred hereunder without further notice or demand of any kind
being required. Notwithstanding the foregoing, Lender may, if it
determines in its sole and absolute discretion that (1) such failure
cannot reasonably be cured within such 15-day period, (2) Shareholders
are diligently pursuing a cure of such failure, and (3) that such
failure does not place the Collateral in immediate jeopardy or
otherwise adversely affect the Collateral or Lender's lien on such
Collateral, grant Shareholders up to an additional 15 days following
the initial 15-day period to cure such failure. If Shareholders fail to
correct or cure such failure within such additional 15-day period, an
Event of Default shall be deemed to have occurred hereunder without
further notice or demand of any kind being required;
(d) If any Shareholder or Borrower becomes insolvent within
the meaning of the Code, files or notifies Lender that it intends to
file a petition under the Code, initiates a proceeding under any
similar law or statute relating to bankruptcy, insolvency,
reorganization, winding up or adjustment of debts (collectively, an
"Action"), becomes the subject of either an involuntary Action or
petition under the Code, or is generally not paying its debts as the
same become due; and
(e) If there is an "Event of Default" under the Loan Agreement
or the Documents.
Section 5.2. RIGHTS AND REMEDIES. Upon the occurrence of an Event of
Default, Lender shall have the following rights and remedies:
(a) In addition to all other rights and remedies granted to
Lender in this Agreement, the Documents and the Loan Agreement, Lender
shall have all of the rights and remedies of a secured party under the
Uniform Commercial Code as adopted by the State of Arizona and all
rights and remedies otherwise available at law or in equity. Without
limiting the generality of the foregoing, Lender may:
(i) Sell or otherwise dispose of the Collateral, or
any part thereof, in one or more portions at public or private
sale or sales, at the offices of Lender or elsewhere, for
cash, on credit or for future delivery; or
(ii) Bid and become a purchaser at any sale free of
any right or equity of redemption in Shareholders, which right
or equity is hereby expressly waived and released by
Shareholders.
Lender shall give not less than ten (10) days' prior written
notice of the time and place of any public sale or of the time after
which any private sale may take place and that such notice shall
constitute reasonable notice of such matters. Shareholders shall be
liable for all reasonable attorneys' fees and other expenses incurred
by Lender in connection with the enforcement of Lender's rights under
this Agreement and the Documents. Shareholders waives all rights of
marshaling in respect of the Collateral. Any public sale shall be held
at such time or times, within ordinary business hours and at such place
or places, as Lender may fix in the notice of sale. Lender may sell the
Collateral in one lot, as an entirety, or in separate portions as
Lender may determine in its absolute discretion. Lender shall not be
obligated to make any sale pursuant to any such notice. Lender may,
without notice or publication, adjourn any public or private sale or
cause the same to be adjourned from time to time by announcement at any
time and place fixed for the
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sale, and such sale may be made at any time or place to which the same
may be so adjourned. In case of any sale of all or any part of the
Collateral on credit or for future delivery, the Collateral so sold may
be retained by Lender until the sales price is paid by the purchaser
thereof, but Lender shall incur no liability in case of the failure of
such purchaser to take up and pay for the Collateral so sold, and in
case of any such failure, such Collateral may again be sold upon like
notice. Shareholders and Lender hereby agree that each and every method
of disposition described in this Section shall constitute disposition
in a commercially reasonable manner. On any sale of the Collateral,
Lender is hereby authorized to comply with any limitation or
restriction with which compliance is necessary, in the view of Lender's
counsel, in order to avoid any violation of applicable law or in order
to obtain any required approval of the purchaser or purchasers by any
applicable governmental authority.
(b) Lender shall have the right to declare any and all
payments due under the Documents immediately due and payable and the
right to recover all fees and expenses in connection with the
collection or enforcement of the Obligations.
(c) Lender shall have the right to xxx for specific
performance of any Obligations or to recover damages for breach
thereof.
(d) Lender may cause any or all of the Collateral held by it
to be transferred into the name of Lender or the name or names of
Lender's nominee or nominees.
(e) Lender shall be entitled to receive all cash dividends
payable in respect of the Collateral.
(f) Lender shall have the right, but shall not be obligated
to, exercise or cause to be exercised all voting rights and corporate
powers in respect of the Collateral, and Shareholders shall deliver to
Lender upon request, irrevocable proxies with respect to the Collateral
in form satisfactory to Lender.
Shareholders agree that, in connection with the exercise of the
foregoing rights and remedies, Lender may be unable to effect a public sale of
all or any part of the Collateral by reason of certain prohibitions contained in
applicable federal and state securities laws, including, without limitation,
applicable "Blue Sky" laws, as now or hereafter in effect. As a result, Lender
may be required to resort to one or more private sales to a restricted group of
purchasers who will be obligated to agree, among other things, to acquire the
Collateral for their own account, for investment and not with a view to the
distribution or resale thereof. Shareholders recognize that such private sales
may be made at prices and on other terms less favorable to the seller than if
the Collateral were sold at public sales, and that Lender has no obligation to
delay the sale of the Collateral for the period of time necessary to permit the
issuer of the Collateral, even if such issuer would agree, to register the
Collateral for public sale under such applicable securities laws. Shareholders
and Lender hereby agree that any private sale or sales made under such
circumstances shall be deemed to have been made in a commercially reasonable
manner. Shareholders further agree to use their reasonable best efforts to do or
cause to be done all such other acts as may be necessary to make such sale or
sales of all or any portion of the Collateral pursuant to this Agreement valid
and binding and in compliance with any and all other requirements of applicable
law.
Section 5.3. POWER OF ATTORNEY. Shareholders hereby constitute and
appoint Lender as Shareholders' true, lawful and irrevocable attorney-in-fact
(which appointment shall be deemed coupled with an interest), with full
authority in the place and stead of Shareholders and in the name of
Shareholders, or otherwise, from time to time after the occurrence and during
the continuance of an Event of Default, in Lender's discretion, to take any
action and execute any instrument which Lender may deem necessary or advisable
to accomplish the purposes of this Agreement, including, without limitation, to
demand, receive, and enforce payments and to give receipts, releases and
satisfactions and to xxx for moneys payable to Shareholders with respect to any
of the Collateral.
Section 5.4. SELECTION OF SECURITY. Lender may resort to any security
given by this Agreement or to any other security now existing or hereafter given
to secure the Obligations, in whole or in part, and in such portions and in such
order as may seem best to Lender in its sole and absolute discretion, and any
such action shall not in any way be considered as a waiver of any of the rights,
benefits or security interests evidenced by this Agreement.
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Section 5.5. WAIVER OF APPRAISEMENT LAWS. To the fullest extent
Shareholders may do so by applicable law, Shareholders agree that Shareholders
will not at any time insist upon, plead, claim or take the benefit or advantage
of any law now or hereafter in force providing for any appraisement, valuation,
stay, extension or redemption. Shareholders, for Shareholders', successors,
receivers, trustees and assigns, and for any and all other persons ever claiming
any interest in the Collateral, to the fullest extent permitted by law, hereby
waives and releases all rights of redemption arising with respect to the sale of
the Collateral, valuation, appraisement, stay of execution, and all rights to a
marshaling of the assets of Shareholders, including the Collateral, or to a sale
in inverse order of alienation in the event of foreclosure of the security
interest hereby created.
Section 5.6. APPLICATION OF PROCEEDS. Lender shall apply any proceeds
received by it from the exercise of remedies under Section 5.2 as follows:
(a) First, to the payment of all costs and expenses of any
sale or collection hereunder and all proceedings in connection
therewith, including reasonable attorneys' fees;
(b) Second, to the reimbursement of Lender of any reasonable
disbursements made by Lender in accordance with the terms hereof or
which Lender deems expedient to pay with respect to the Collateral;
(c) Third, to the payment of the Obligations due Lender in
such order as Lender shall elect in its sole and absolute discretion;
and
(d) The remainder of such proceeds, if any, to Shareholders.
ARTICLE VI
MISCELLANEOUS
Section 6.1. NO WAIVER; CUMULATIVE REMEDIES. No failure on the part of
Lender to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power or privilege under this Agreement shall operate as
a waiver thereof, nor shall any single or partial exercise of any right, power
or privilege under this Agreement preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. The rights and remedies
provided for in this Agreement are cumulative and not exclusive of any rights
and remedies provided by law.
Section 6.2. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of Shareholders and Lender and their respective
successors and assigns, except that Shareholders may not assign any of their
rights or obligations under this Agreement except as contemplated by Section
6.12.
Section 6.3. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the
Documents, together with any other certificates, instruments or agreements to be
delivered in connection therewith, represent the final agreement among the
parties and may not be contradicted by evidence of prior, contemporaneous, or
subsequent oral agreements of the parties. There are no oral agreements between
the parties. The provisions of this Agreement may be amended or waived only by
an instrument in writing signed by the parties hereto.
Section 6.4. COPIES OF RECORDS. Lender may call at Shareholders' place
or places of business at reasonable times and upon reasonable notice, and,
without unreasonable hindrance or delay, inspect, audit, check and make extracts
from and copies of the books, records, journals, orders, receipts,
correspondence and other data relating to the Collateral or to any transaction
between or among Lender and Shareholders, and Shareholders shall assist Lender
in such actions.
Section 6.5. SUBROGATION. To the extent that proceeds of the
Obligations are used to pay indebtedness secured by any outstanding lien,
security interest, charge or prior encumbrance against the Collateral, such
proceeds have been advanced by Lender at Shareholders' request, and Lender shall
be subrogated to any and all rights,
8
security interests and liens owned by any owner or holder of such outstanding
liens, security interests, charges or encumbrances, irrespective of whether said
liens, security interests, charges or encumbrances are released.
Section 6.6. NOTICES. All notices, demands, designations, certificates,
requests, offers, consents, approvals, appointments and other instruments given
pursuant to this Agreement (collectively called "Notices") shall be in writing
and given by (i) hand delivery, (ii) facsimile, (iii) express overnight delivery
service or (iv) certified or registered mail, return receipt requested, and
shall be deemed to have been delivered upon (a) receipt, if hand delivered, (b)
transmission, if delivered by facsimile, (c) the next business day, if delivered
by express overnight delivery service, or (d) the third business day following
the day of deposit of such notice with the United States Postal Service, if sent
by certified or registered mail, return receipt requested. Notices shall be
provided to the parties and addresses (or facsimile numbers, as applicable)
specified below:
If to Shareholders: 00000 X.X. Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Attention: Xxxxx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
And to: 000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxx Xxxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Lender: GE Capital Franchise Finance Corporation
00000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Collateral Management
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
or to such other address or such other person as either party may from time to
time hereafter specify to the other party in a notice delivered in the manner
provided above. Whenever in this Agreement the giving of Notice is required, the
giving thereof may be waived in writing at any time by the person or persons
entitled to receive such Notice.
Section 6.7. APPLICABLE LAW. Shareholders acknowledges that this
Agreement was substantially negotiated in the State of Arizona, the Agreement
was executed and delivered by Shareholders in the State of Arizona, all payments
under the Documents will be delivered in the State of Arizona and there are
substantial contacts between the parties and the transactions contemplated
herein and the State of Arizona. For purposes of any action or proceeding
arising out of this Agreement, the parties hereto hereby expressly submit to the
jurisdiction of all federal and state courts located in the State of Arizona.
Shareholders consent to service with any process or paper by registered mail or
by personal service within or without the State of Arizona in accordance with
applicable law. Furthermore, Shareholders waive and agree not to assert in any
such action, suit or proceeding that it is not personally subject to the
jurisdiction of such courts, that the action, suit or proceeding is brought in
an inconvenient forum or that venue of the action, suit or proceeding is
improper. It is the intent of the parties hereto that all provisions of this
Agreement shall be governed by and construed under the laws of the State of
Arizona, without giving effect to its conflict of laws principles. Nothing in
this Section shall limit or restrict the right of Lender to commence any
proceeding in the federal or state courts located in the state in which
Shareholders maintains their residences or chief executive offices, as
applicable, to the extent Lender deems such proceeding necessary or advisable to
exercise remedies available under this Agreement or the Documents.
Section 6.8. HEADINGS. The headings appearing in this Agreement have
been inserted for convenient reference only and shall not modify, define, limit
or expand the express provisions of this Agreement.
9
Section 6.9. SEVERABILITY. In case any one or more of the provisions
contained in this Agreement shall be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision hereof, and this Agreement shall be
construed as if such provision had never been contained herein.
Section 6.10. CONSTRUCTION. Shareholders and Lender acknowledge and
warrant to one another that each has been represented by independent counsel and
has executed this Agreement after being fully advised by said counsel as to its
effect and significance. This Agreement shall be interpreted and construed in a
fair and impartial manner without regard to such factors as the party which
prepared the instrument, the relative bargaining powers of the parties or the
domicile of any party.
Section 6.11. OBLIGATIONS ABSOLUTE. The obligations of Shareholders
under this Agreement shall be absolute and unconditional and shall not be
released, discharged, reduced or in any way impaired by any circumstance
whatsoever, including, without limitation, any amendment, modification,
extension or renewal of this Agreement, or any release, subordination, or
impairment of collateral, or any waiver, consent, extension, indulgence,
compromise, settlement, or other action or inaction in respect of this Agreement
or any of the Documents, or any exercise or failure to exercise any right,
remedy, power or privilege in respect of this Agreement or any of the Documents.
Section 6.12. ASSIGNMENT. Lender may assign, in whole or in part, its
rights under this Agreement at any time, including, without limitation, to an
affiliate of Lender for the purpose of exercising Lender's rights and remedies
under this Agreement. Upon any unconditional assignment of Lender's entire right
and interest hereunder, Lender shall automatically be relieved, from and after
the date of such assignment, of liability for the performance of any obligation
of Lender contained herein. Shareholders may not assign any of their rights
under this Agreement without the prior written consent of Lender, which consent
may be withheld in the sole and absolute discretion of Lender.
Section 6.13. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, and all such
counterparts shall constitute but one and the same instrument.
Section 6.14. TIME OF THE ESSENCE. Time is of the essence in the
performance of each and every obligation under this Agreement.
Section 6.15. WAIVER OF JURY TRIAL AND PUNITIVE, CONSEQUENTIAL, SPECIAL
AND INDIRECT DAMAGES. SHAREHOLDERS AND LENDER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO
ANY AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM
BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER OR ITS SUCCESSORS WITH
RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, ANY
OF THE OTHER LOAN DOCUMENTS OR ANY DOCUMENT CONTEMPLATED HEREIN OR RELATED
HERETO. THIS WAIVER BY THE PARTIES HERETO OF ANY RIGHT EITHER MAY HAVE TO A
TRIAL BY JURY HAS BEEN NEGOTIATED AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.
FURTHERMORE, SHAREHOLDERS AND LENDER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL,
SPECIAL AND INDIRECT DAMAGES FROM THE OTHER AND ANY OF THE OTHER'S AFFILIATES,
OFFICERS, DIRECTORS OR EMPLOYEES OR ANY OF THEIR SUCCESSORS WITH RESPECT TO ANY
AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM
BROUGHT BY EITHER PARTY AGAINST THE OTHER OR ANY OF THE OTHER'S AFFILIATES,
OFFICERS, DIRECTORS OR EMPLOYEES OR ANY OF THEIR SUCCESSORS WITH RESPECT TO ANY
MATTER ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, ANY OF THE OTHER
LOAN DOCUMENTS OR ANY DOCUMENT CONTEMPLATED HEREIN OR RELATED HERETO. THE WAIVER
BY SHAREHOLDERS AND LENDER OF ANY RIGHT THEY MAY HAVE TO SEEK PUNITIVE,
CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES HAS BEEN NEGOTIATED BY THE PARTIES
HERETO AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.
10
IN WITNESS WHEREOF, Shareholders and Lender have duly executed and
delivered this Agreement as of the date first above written.
Shareholders:
__________________________________________________________
XXXXX X. XXXXX
__________________________________________________________
XXXXXXX X. SERVICE
__________________________________________________________
XXXX X. XXXXX
__________________________________________________________
XXXXXX X. XXXXXX
__________________________________________________________
XXXXXXXXX X. XXXXXX
__________________________________________________________
XXXXXX X. XXXXXXX
__________________________________________________________
XXXXX X. XXXXXXX
__________________________________________________________
XXXXXXX X. XXX
__________________________________________________________
XXXXX X. XXXXXXX-XXX
__________________________________________________________
XXXXX X. XXXXXXX
__________________________________________________________
XXXXX X. XXXXXX
__________________________________________________________
XXXXX X. XXXX
__________________________________________________________
XXXXXXX X. XXXXXX
__________________________________________________________
XXXXXX X. XXXXXXX
__________________________________________________________
XXXXXX X. XXXXX
__________________________________________________________
XXXXX XXXXXX
__________________________________________________________
XXXXX XXXXX-XXXXXX
__________________________________________________________
XXXXXX XXXXXXXX
__________________________________________________________
XXXXXXX X. XXXXXXX
__________________________________________________________
XXXX X. WEEKS
__________________________________________________________
XXXXXXX XXXXXXXX
Lender:
GE CAPITAL FRANCHISE FINANCE CORPORATION, a Delaware
corporation
By ______________________________________________________
Printed Name ____________________________________________
Its _____________________________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxx X. Xxxxx.
_____________________________
Notary Public
My Commission Expires:
________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxxx X. Service.
_____________________________
Notary Public
My Commission Expires:
________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxx X. Xxxxx.
_____________________________
Notary Public
My Commission Expires:
________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxx X. XXXXXX.
_____________________________
Notary Public
My Commission Expires:
________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxxxxx X. XXXXXX.
_____________________________
Notary Public
My Commission Expires:
________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxx X. Xxxxxxx.
_____________________________
Notary Public
My Commission Expires:
________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxx X. Xxxxxxx.
_____________________________
Notary Public
My Commission Expires:
________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxxx X. Xxx.
_____________________________
Notary Public
My Commission Expires:
________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxx X. Xxxxxxx-Xxx.
_____________________________
Notary Public
My Commission Expires:
________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxx X. Xxxxxxx.
_____________________________
Notary Public
My Commission Expires:
________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxx X. XXXXXX.
_____________________________
Notary Public
My Commission Expires:
________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxx X. Xxxx.
_____________________________
Notary Public
My Commission Expires:
________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxxx X. Xxxxxx.
_____________________________
Notary Public
My Commission Expires:
________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by. Xxxxxx X. Xxxxxxx.
_____________________________
Notary Public
My Commission Expires:
________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxx X. Xxxxx.
_____________________________
Notary Public
My Commission Expires:
________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxx Xxxxxx.
_____________________________
Notary Public
My Commission Expires:
________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxx Xxxxx-Xxxxxx.
_____________________________
Notary Public
My Commission Expires:
________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxx Xxxxxxxx.
_____________________________
Notary Public
My Commission Expires:
________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxxx X. Xxxxxxx.
_____________________________
Notary Public
My Commission Expires:
________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxx X. Weeks.
_____________________________
Notary Public
My Commission Expires:
________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxxx Xxxxxxxx.
_____________________________
Notary Public
My Commission Expires:
________________________________
STATE OF ARIZONA )
) SS.
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me on _____________,
2005 by ________________________, ____________________ of GE Capital Franchise
Finance Corporation, a Delaware corporation, by the corporation.
_____________________________
Notary Public
My Commission Expires:
________________________________
SCHEDULE I
COMMON STOCK
-------------------- ------------------ ------------------ -------------------------------------
CERTIFICATE NUMBER NUMBER OF SHARES REGISTERED OWNER ADDRESS OF OWNER ON STOCK REGISTRAR
-------------------- ------------------ ------------------ -------------------------------------
-------------------- ------------------ ------------------ -------------------------------------
The foregoing stock certificates shall be delivered to Lender
concurrently with the execution and delivery of this Agreement.
EXHIBIT N
SUBSEQUENT GUARANTY
[Subject to Negotiation]
EXHIBIT O
FRANCHISE NOTES
EXHIBIT P
LIQUOR LICENSES
EXHIBIT Q
INDIVIDUAL GUARANTY
NONRECOURSE GUARANTY OF PAYMENT AND PERFORMANCE
THIS NONRECOURSE GUARANTY OF PAYMENT AND PERFORMANCE (this "Guaranty")
is made as of March _______, 2005, by the individuals listed on the attached
Schedule I (individually, "Guarantor" and collectively, "Guarantors"), for the
benefit of GE CAPITAL FRANCHISE FINANCE CORPORATION, a Delaware corporation
("Lender").
1. For valuable consideration, the receipt of which is hereby
acknowledged, subject to the limitations of Section 3 below, Guarantors, jointly
and severally, unconditionally, absolutely and irrevocably guarantee and promise
to pay to Lender, or order, any and all amounts, including, without limitation,
principal and interest, taxes, insurance premiums, impounds, reimbursements,
late charges, default interest, damages, indemnity obligations and all other
amounts, costs, fees, expenses and charges of any kind or type whatsoever, which
may or at any time be due to Lender pursuant to the following agreements
(collectively, the "Documents"):
A. Loan Agreement (the "Loan Agreement"), dated as of the date of this
Guaranty between Lender and ERI Acquisition Corp., an Oregon corporation
("ERI"), pertaining to a loan in the aggregate amount of $6,500,000.00 made by
Lender to ERI (the "Loan"). Elmer's Restaurants, Inc., an Oregon corporation
("Borrower"), will be the successor by merger to ERI upon consummation of the
Merger. Initially capitalized terms not otherwise defined in this Guaranty shall
have the meanings set forth in the Loan Agreement;
B. Promissory Note, dated as of the date of the Loan Agreement,
executed by Borrower and payable to Lender, in the amount of $3,500,000.00, as
such promissory note may be amended and restated as contemplated by the Loan
Agreement (the "Fixed Rate Promissory Note"), and Promissory Note to be executed
by Borrower and payable to Lender, in the amount of $[ ] (the "Variable Rate
Promissory Note") (the "Fixed Rate Promissory Note and the Variable Rate
Promissory Note are defined collectively as the "Notes"); and
C. Any other Loan Document and any other document, agreement,
instrument or certificate contemplated by any of the foregoing agreements, or
any other documents, agreements, instruments or certificates now or hereafter
entered into between Lender and Borrower with respect to the Loan, including,
without limitation, any amendment of the foregoing documents, agreements,
instruments or certificates now or hereafter entered into between Lender and
Borrower.
2. Subject to the limitations of the following Section 3, each
Guarantor also unconditionally guarantees the truthfulness and accuracy of all
representations, warranties and certifications of Borrower, the satisfaction of
all conditions by Borrower and the full and timely performance of all
obligations to be performed by Borrower, under or pursuant to the Documents (the
matters which are guaranteed pursuant to Sections 1 and 2 are hereinafter
collectively referred to as the "Obligations"). The obligations of each
Guarantor under this Guaranty are primary, joint and several and independent of
the obligations of any and every other Guarantor or of Borrower, and a separate
action or actions may be brought and executed against any one or more of the
Guarantors, whether or not such action is brought against Borrower or any other
Guarantor and whether or not Borrower or any other Guarantor be joined in such
action or actions.
3. (a) Except as otherwise provided in this Section, Lender shall not
enforce the liability and obligation of Guarantors to perform and observe the
obligations contained in this Guaranty by any action or proceeding wherein a
money judgment shall be sought against Guarantors, except that the provisions of
this Section shall not limit Lender's right to exercise any rights and remedies
under the Stock Pledge Agreement executed and delivered by Guarantors and the
Indemnity, including bringing a foreclosure action under the Stock Pledge
Agreement, seeking specific performance or other appropriate action or
proceeding to enable Lender to enforce and realize its rights under the Stock
Pledge Agreement with respect to the capital stock pledged to Lender and under
the Indemnity and any other collateral given to Lender created by the Documents;
provided, however, but without limiting any rights and remedies Lender has under
the Indemnity to seek any judgment against Guarantors, (i) that any judgment in
any action or proceeding initiated by Lenders pursuant to this Guaranty shall be
enforceable against Guarantors only to the extent of Guarantors' interest in the
Stock Pledge Agreement and in any other collateral given to Lender; and (ii)
Lender, by accepting this Guaranty, agrees that it shall not, except as
otherwise provided in
this Section, xxx for, seek or demand any deficiency judgment against Guarantors
in any action or proceeding under or by reason of or under or in connection with
this Guaranty or the other Documents.
(b) The provisions of this Section shall not (i) constitute a waiver,
release or impairment of the Obligations; (ii) impair the right of Lender to
name Guarantors as a party defendant in any action or suit for foreclosure of
the Stock Pledge Agreement and the sale of the capital stock pledged pursuant to
such agreement; (iii) affect the validity or enforceability of any indemnity,
guaranty, lease or similar instrument made in connection with the Documents; or
(iv) impair the right of Lender to obtain the appointment of a receiver.
(c) Notwithstanding the provisions of this Section to the contrary,
Guarantors shall be personally liable to Lender to perform and observe the
obligations contained in this Guaranty and the other Documents in the event of
(i) fraud or intentional misrepresentation by Guarantors in connection with the
execution and delivery of this Guaranty and the other Documents; (ii)
Guarantors' intentional or willful misapplication or misappropriation of
Royalties or other sums payable under the Franchise Agreements; (iii) the
intentional or willful misapplication or misappropriation of insurance proceeds
or condemnation awards received by Guarantors; (iv) any act of actual waste,
willful damage or arson by Guarantors; or (v) the seizure of the Collateral or
any portion thereof, by governmental authorities or others pursuant to The
Racketeer Influenced and Corrupt Organizations Act and/or any other applicable
federal or state forfeiture laws. Nothing herein shall be deemed to be a waiver
of any right which Lender may have under Sections 506(a), 506(b), 1111(b) or any
other provisions of the U.S. Bankruptcy Code to file a claim for the full amount
of the Obligations secured by this Guaranty or to require that all Collateral
shall continue to secure all of the Obligations owing to Lender in accordance
with the Documents.
4. Subject to the limitations of Section 3 above, this is an absolute
and unconditional guaranty of payment and performance and not of collection and
each Guarantor unconditionally (a) waives any requirement that Lender first make
demand upon, or seek to enforce or exhaust remedies against, Borrower or any
other person or entity (including any other Guarantor) or any of the collateral
or property of Borrower or such other person or entity before demanding payment
from, or seeking to enforce this Guaranty against, such Guarantor; (b) waives
and agrees not to assert any and all rights, benefits and defenses which might
otherwise be available under the provisions of Ariz. Rev. Stat. xx.xx. 12-1641
and xx.xx. 12-1642 et seq., 44-141, 44-142 or 47-3605, Arizona Rules of Civil
Procedure Rule 17(f), or any other Arizona statutes or rules (including any
statutes or rules amending, supplementing or supplanting same) which might
operate, contrary to Guarantor's agreements in this Guaranty, to limit
Guarantor's liability under, or the enforcement of, this Guaranty; (c) covenants
that this Guaranty will not be discharged until all of the Obligations are fully
satisfied; and (d) agrees that this Guaranty shall remain in full effect without
regard to, and shall not be affected or impaired by, any invalidity,
irregularity or unenforceability in whole or in part of any of the Documents, or
any limitation of the liability of Borrower or Guarantor thereunder, or any
limitation on the method or terms of payment thereunder which may now or
hereafter be caused or imposed in any manner whatsoever.
5. Subject to the limitations of Section 3 above, this Guaranty is a
continuing guaranty, and the obligations, undertakings and conditions to be
performed or observed by each Guarantor under this Guaranty shall not be
affected or impaired by reason of the happening from time to time of the
following with respect to the Documents, all without notice to, or the further
consent of, any Guarantor: (a) the waiver by Lender of the observance or
performance by Borrower, Guarantors or any one or more of them of any of the
obligations, undertakings, conditions or other provisions contained in any of
the Documents, except to the extent of such waiver; (b) the extension, in whole
or in part, of the time for payment of any amount owing or payable under the
Documents; (c) the modification or amendment (whether material or otherwise) of
any of the obligations of Borrower under, or any other provisions of, any of the
Documents, except to the extent of such modification or amendment; (d) the
taking or the omission of any of the actions referred to in any of the Documents
(including, without limitation, the giving of any consent referred to therein);
(e) any failure, omission, delay or lack on the part of Lender to enforce,
assert or exercise any provision of the Documents, including any right, power or
remedy conferred on Lender in any of the Documents or any action on the part of
Lender granting indulgence or extension in any form; (f) the assignment to or
assumption by any third party of any or all of the rights or obligations of
Borrower under all or any of the Documents; (g) the release or discharge of
Borrower from the performance or observance of any obligation, undertaking or
condition to be performed by Borrower under any of the Documents by operation of
law, including any rejection or disaffirmance of any of the Documents in any
bankruptcy or similar proceedings; (h) the receipt and acceptance by Lender or
any other person or entity of notes, checks or other
2
instruments for the payment of money and extensions and renewals thereof; (i)
any action, inaction or election of remedies by Lender which results in any
impairment or destruction of any subrogation rights of Guarantors, or any rights
of Guarantors to proceed against any other person or entity for reimbursement;
(j) any setoff, defense, counterclaim, abatement, recoupment, reduction, change
in law or any other event or circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor, indemnitor or surety
under the laws of the State of Arizona, the state(s) in which the Collateral is
located or any other jurisdiction; and (k) the termination or renewal of any of
the Obligations or any other provision thereof.
6. Each Guarantor represents and warrants to Lender that: (a) neither
the execution nor delivery of this Guaranty nor fulfillment of nor compliance
with the terms and provisions hereof will conflict with, or result in a breach
of the terms or conditions of, or constitute a default under, any agreement or
instrument to which such Guarantor is now a party or by which such Guarantor may
be bound, or result in the creation of any lien, charge or encumbrance upon any
property or assets of such Guarantor, which conflict, breach, default, lien,
charge or encumbrance could result in a material adverse change in the financial
condition of such Guarantor; (b) no further consents, approvals or
authorizations are required for the execution and delivery of this Guaranty by
such Guarantor or for such Guarantor's compliance with the terms and provisions
of this Guaranty; (c) this Guaranty is the legal, valid and binding agreement of
such Guarantor and is enforceable against such Guarantor in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, liquidation, reorganization and other laws affecting the rights of
creditors generally and subject to general principles of equity; (d) such
Guarantor has the full power, authority, capacity and legal right to execute and
deliver this Guaranty, and, to the extent such Guarantor is a corporation,
partnership, limited liability company or other form of entity, the parties
executing this Guaranty on behalf of Guarantor are fully authorized and directed
to execute the same to bind Guarantor; (e) such Guarantor is not a "foreign
individual," "foreign corporation," "foreign partnership," "foreign limited
liability company," "foreign trust," or "foreign estate," as those terms are
defined in the U.S. Internal Revenue Code and the regulations promulgated
thereunder; such Guarantor's Social Security Number or Federal Tax
Identification Number is accurately set forth herein next to the signature of
such Guarantor; such Guarantor has delivered to Lender either audited financial
statements or, if such Guarantor does not have audited financial statements,
certified financial statements; such financial statements and other information
relating to such Guarantor heretofore delivered to Lender are true, correct and
complete in all material respects as of the date of this Guaranty; such
Guarantor understands that Lender is relying upon such information, and such
Guarantor represents that such reliance is reasonable; and the financial
statements of such Guarantor delivered by Borrower to Lender pursuant to the
Loan Agreement have been prepared in accordance with generally accepted
accounting principles consistently applied and accurately reflect, as of the
date of this Guaranty, the financial condition of such Guarantor; (f) during the
term of this Guaranty, such Guarantor will not transfer or dispose of any
material part of its assets except in the ordinary course of business for full
and fair consideration and reasonably equivalent value; furthermore, such
Guarantor will furnish Lender annually, within ninety (90) days after the close
of each calendar year, a financial statement consisting of a balance sheet and
such other financial information as Lender may reasonably request; (g) the
Documents are conclusively presumed to have been signed in reliance on this
Guaranty and the assumption by each Guarantor of its obligations under this
Guaranty results in direct financial benefit to such Guarantor; and Guarantors
and Borrower are Affiliates of each other, each Guarantor is subject to the same
control, directly or indirectly, as the other Guarantors and Borrower, and (iii)
Guarantors and Borrower are financially interdependent on each other. As a
result of such common control, each Guarantor acknowledges and agrees that a
common enterprise exists and that each Guarantor will receive consideration for
its execution and delivery of this Guaranty.
7. This Guaranty shall commence upon execution and delivery of any of
the Documents and shall continue in full force and effect until all of the
Obligations are duly, finally and permanently paid, performed and discharged and
are not subject to any right of reborrowing or extension by Borrower, and Lender
gives Guarantors written notice of the full and final satisfaction of the
Obligations. The Obligations shall not be considered fully paid, performed and
discharged unless and until all payments by Borrower to Lender are no longer
subject to any right on the part of any person whomsoever, including but not
limited to Borrower, Borrower as a debtor-in-possession and/or any trustee in
bankruptcy, to disgorge such payments or seek to recoup the amount of such
payments or any part thereof. This Guaranty shall remain in full force and
effect and continue to be effective in the event that (i) any petition is filed
by or against Borrower or any Guarantor for liquidation or reorganization,
including, without limitation, under Title 11 of the United States Code, 11
U.S.C. Sec. 101 et seq. (the "Code"), (ii) Borrower or any Guarantor becomes
insolvent or makes an assignment for the benefit of creditors or (iii) a
receiver or trustee is appointed for all or any significant part of Borrower's
or such Guarantor's assets. This Guaranty shall continue to be
3
effective or be reinstated, as applicable, if at any time payment and
performance of the Obligations, or any part thereof, is, pursuant to applicable
law, rescinded or reduced in amount, or must otherwise be restored or returned
by Lender, whether as a "voidable preference", "fraudulent conveyance" or
otherwise, all as though such payment or performance had not been made. In the
event that any payment of the Obligations, or any part thereof, is rescinded,
reduced, restored or returned, the Obligations shall be reinstated and deemed
reduced only by such amount paid to Lender and not so rescinded, reduced,
restored or returned. Guarantors shall neither have any right of subrogation,
indemnity or reimbursement nor hold any other claim against Borrower, and each
of them does hereby release Borrower from any and all claims by such Guarantor
now or hereafter arising against Borrower. Furthermore, each Guarantor hereby
unconditionally and irrevocably waives (a) any right to participate in any
security now or hereafter held by Lender or in any claim or remedy of Lender or
any other person against Borrower with respect to the Obligations, (b) any
statute of limitations affecting Guarantors' liability hereunder, (c) all
principles and provisions of law which conflict with the terms of this Guaranty,
and (d) diligence, presentment, protest, demand for performance, notice of
nonperformance, notice of intent to accelerate, notice of acceleration, notice
of protest, notice of dishonor, notice of execution of any Documents, notice of
extension, renewal, alteration or amendment, notice of acceptance of this
Guaranty, notice of defaults under any of the Documents and all other notices
whatsoever.
8. Notwithstanding the preceding Section 7 in the event that Guarantors
shall have any claims against Borrower, any indebtedness of Borrower now or
hereafter held by any or all Guarantors is hereby subordinated to the
indebtedness of Borrower to Lender. Any such indebtedness of Borrower to
Guarantors, if Lender so requests, shall be collected, enforced and received by
Guarantors as trustee for Lender and be paid over to Lender on account of the
Obligations, but without reducing or affecting in any manner the liability of
Guarantors under the other provisions of this Guaranty.
9. It is not necessary for Lender to inquire into the powers of
Borrower or its officers, directors, partners or agents acting or purporting to
act on its behalf, and Guarantors shall be liable for the Obligations in
accordance with their terms notwithstanding any lack of authorization or defect
in execution or delivery by Borrower.
10. In addition to the amounts guaranteed under this Guaranty,
Guarantors agree to pay (i) all of Lender's attorneys' fees and other costs and
expenses which may be incurred by Lender in the enforcement of this Guaranty and
(ii) interest (including postpetition interest to the extent a petition is filed
by or against Borrower under the Code) at the Default Rate (as defined in the
Notes) on any Obligations not paid when due. Guarantors, jointly and severally,
hereby agree to indemnify and hold harmless Lender for, from and against any
loss, cause of action, claim, cost, expense or fee, including but not limited to
attorney's fees and court costs, suffered or occasioned by the failure of
Borrower to satisfy its obligations under the Documents. The agreement to
indemnify Lender contained in this paragraph shall be enforceable
notwithstanding the invalidity or unenforceability of the Documents or any of
them or the invalidity or unenforceability of any other paragraph contained in
this Guaranty. All moneys available to Lender for application in payment or
reduction of the liabilities of Borrower under the Documents may be applied by
Lender to the payment or reduction of such liabilities of Borrower, in such
manner, in such amounts and at such time or times as Lender may elect.
11. All notices, demands, requests, consents, approvals or other
instruments required or permitted to be given pursuant to this Guaranty shall be
in writing and given by (i) hand delivery, (ii) facsimile, (iii) express
overnight delivery service or (iv) certified or registered mail, return receipt
requested, and shall be deemed to have been delivered upon (a) receipt, if hand
delivered, (b) transmission, if delivered by facsimile, (c) the next Business
Day (as defined in the Loan Agreement), if delivered by express overnight
delivery service or (d) the third Business Day following the day of deposit of
such notice with the United States Postal Service, if sent by certified or
registered mail, return receipt requested. Notices shall be provided to the
addresses (or facsimile numbers, as applicable) specified below: If to
Guarantors: c/o Xx. Xxxxxx X. Xxxxxxx, 0000 Xxxxxxxx Xxxxxxxxx, Xxxxxx, XX
00000, with a copy to Mr. Xxxxx Xxxxx, 00000 X.X. Xxxxx Xxxxxx, Xxxxxxxx, XX
00000, Telephone: (000) 000-0000, Telecopy: (000) 000-0000; If to Lender: GE
Capital Franchise Finance Corporation, 00000 Xxxxx Xxxxxxxxx Xxxxx, Xxxxxxxxxx,
XX 00000, Attention: Collateral Management, Telephone: (000) 000-0000, Telecopy:
(000) 000-0000, or to such other address or such other person as either
Guarantors or Lender may from time to time hereafter specify to the other party
in a notice delivered in the manner provided above.
4
12. This Guaranty is delivered in the State of Arizona, and it is the
intent of Guarantors and Lender that this Guaranty shall be deemed to be a
contract made under and governed by the internal laws of the State of Arizona,
without regard to its principles of conflicts of law. For purposes of any action
or proceeding involving this Guaranty, Guarantors jointly and severally submit
to the jurisdiction of all federal and state courts located in the State of
Arizona and consent that they may be served with any process or paper by
registered mail or by personal service within or without the State of Arizona in
accordance with applicable law. Furthermore, Guarantors waive and agree not to
assert in any such action, suit or proceeding that they are not personally
subject to the jurisdiction of such courts, that the action, suit or proceeding
is brought in an inconvenient forum or that venue of the action, suit or
proceeding is improper. Nothing contained in this section shall limit or
restrict the right of Lender to commence any proceeding in the federal or state
courts located in the state(s) in which the Collateral is located and/or where
Guarantors maintain their chief executive offices to the extent Lender deems
such proceeding necessary or advisable to exercise remedies available under the
Documents.
13. Each Guarantor intends that the business relationship created
between Borrower and Lender, by the Loan Agreement, the Notes and the other
Documents is solely that of creditor and debtor and has been entered into by
such parties in reliance upon the economic and legal bargains contained in the
Documents. Furthermore, Guarantors shall support the intent of Guarantors,
Borrower and Lender that the Loan, the Notes and the Loan Agreement do not
create a joint venture, partnership, trust, trust agreement or the like, if, and
to the extent that, any challenge occurs, and Guarantors shall not assert that
the Loan, the Notes or the Loan Agreement creates a joint venture, partnership,
trust, trust agreement or the like. Guarantors acknowledge that Lender did not
prepare or assist in the preparation of any of the projected financial figures
used by Borrower in analyzing the economic viability and feasibility of the
transactions contemplated by the Loan Agreement. Furthermore, Guarantors
acknowledge that Borrower has not relied upon, nor may it hereafter rely upon,
the analysis undertaken by Lender in determining the amount of the Loan, and
that such analysis will not be made available to Borrower.
14. All of Lender's rights and remedies under the Documents and this
Guaranty are intended to be distinct, separate and cumulative and no such right
and remedy is intended to be in exclusion of or a waiver of any of the others.
If under applicable law, Lender proceeds to realize benefits under any Document
granting Lender a lien upon any collateral pledged under such Document, either
by judicial foreclosure or by non-judicial sale or enforcement, Lender may, at
is sole option, determine which of such remedies or rights it may pursue without
affecting any of such rights and remedies under this Guaranty. If, in the
exercise of any of its rights and remedies, Lender shall forfeit any of its
rights or remedies, including its right to enter a deficiency judgment against
Borrower or any pledgor, whether because of any applicable laws pertaining to
"election of remedies" or the like, Guarantors hereby consent to such action by
Lender and waives any claim based upon such action, even if such action by
Lender shall result in a full or partial loss of any rights of subrogation which
Guarantors might otherwise have had but for such action by Lender. Any election
of remedies which results in the denial or impairment of the right of Lender to
seek a deficiency judgment against Borrower or any pledgor shall not impair each
Guarantor's obligation to pay the full amount of the Obligations. In the event
Lender shall bid at any foreclosure or trustee's sale or at any private or
public sale permitted by law or under the Documents, Lender may bid all or less
than the amount of the Obligations and the amount of such bid need not be paid
by Lender but shall be credited against the Obligations. The amount of the
successful bid at any such sale shall be conclusively deemed to be the fair
market value of the collateral and the difference between such bid amount and
the remaining balance of the Obligations shall be conclusively deemed to be the
amount of the Obligations guaranteed under this Guaranty, notwithstanding that
any present or future law or court decision or ruling may have the effect of
reducing the amount of any deficiency claim to which Lender might otherwise be
entitled but for such bidding at any such sale.
15. This Guaranty is solely for the benefit of Lender, its successors
and assigns and is not intended to nor shall it be deemed to be for the benefit
of any third party, including, without limitation, Borrower. This Guaranty and
all obligations of Guarantor hereunder shall be binding upon the successors and
assigns of each Guarantor (including, a debtor-in-possession on behalf of such
Guarantor) and shall, together with the rights and remedies of Lender,
hereunder, inure to the benefit of Lender, all future holders of any instrument
evidencing any of the Obligations and its successor and assigns. No sales,
participations, assignments, transfers or other dispositions of any agreement
governing or instrument evidencing the Obligations or any portion thereof or
interest therein shall in any manner affect the rights of Lender or its
successors and assigns hereunder. Guarantors may not assign, sell, hypothecate
or otherwise transfer any interest in or obligations under this Guaranty.
5
16. If any provision of this Guaranty is unenforceable, the
enforceability of the other provisions shall not be affected and they shall
remain in full force and effect. Each Guarantor agrees to take such action and
to sign such other documents as may be appropriate to carry out the intent of
this Guaranty. This Guaranty may be executed in one or more counterparts, each
of which shall be deemed an original.
17. LENDER, BY ACCEPTING THIS GUARANTY, AND EACH OF THE GUARANTORS
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT THEY MAY HAVE TO
A TRIAL BY JURY WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION,
PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY LENDER OR ANY OF THE GUARANTORS
AGAINST THE OTHER OR THEIR SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF
OR IN CONNECTION WITH THIS GUARANTY, THE RELATIONSHIP OF LENDER, BORROWER AND/OR
THE GUARANTORS, BORROWER'S USE OF THE COLLATERAL, AND/OR ANY CLAIM FOR INJURY OR
DAMAGE, OR ANY EMERGENCY OR STATUTORY REMEDY. THIS WAIVER BY LENDER AND THE
GUARANTORS OF ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY HAS BEEN NEGOTIATED AND
IS AN ESSENTIAL ASPECT OF THEIR BARGAIN. FURTHERMORE, EACH OF THE GUARANTORS AND
LENDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT THEY MAY
HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES FROM THE
OTHER AND ANY OF THE OTHER'S AFFILIATES, OFFICERS, DIRECTORS OR EMPLOYEES OR ANY
OF THEIR SUCCESSORS WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION,
PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY LENDER OR ANY OF THE GUARANTORS
AGAINST THE OTHER OR ANY OF THE OTHER'S AFFILIATES, OFFICERS, DIRECTORS OR
EMPLOYEES OR ANY OF THEIR SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF
OR IN CONNECTION WITH THIS GUARANTY OR ANY DOCUMENTS CONTEMPLATED HEREIN OR
RELATED HERETO. THE WAIVER BY LENDER AND THE GUARANTORS OF ANY RIGHT THEY MAY
HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES HAS BEEN
NEGOTIATED BY THE PARTIES HERETO AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.
18. Guarantors shall be liable under this Guaranty for the maximum
amount of such liability that can be incurred hereby without rendering this
Guaranty, as it relates to any of the Guarantors, voidable under applicable laws
relating to fraudulent conveyance or fraudulent transfer, and not for any
greater amount. Guarantors agree that the Obligations may at any time and from
time to time exceed the amount of the liability of Guarantors hereunder without
impairing this Guaranty or affecting the rights and remedies of Lender
hereunder.
IN WITNESS WHEREOF, the undersigned Guarantors have executed this
Guaranty effective as of the date set forth in the introductory paragraph of
this Guaranty.
SIGNATURES OF GUARANTORS ON FOLLOWING PAGES
6
__________________________________
XXXXX X. XXXXX
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxx X. Xxxxx.
__________________________________
Notary Public
My Commission Expires:
___________________________
__________________________________
XXXXXXX X. SERVICE
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxxx X. Service.
__________________________________
Notary Public
My Commission Expires:
___________________________
__________________________________
XXXXXX X. XXXXXX
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxx X. XXXXXX.
__________________________________
Notary Public
My Commission Expires:
___________________________
__________________________________
XXXXXXXXX X. XXXXXX
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxxxxx X. XXXXXX.
__________________________________
Notary Public
My Commission Expires:
___________________________
__________________________________
XXXXXX X. XXXXXXX
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxx X. Xxxxxxx.
__________________________________
Notary Public
My Commission Expires:
___________________________
__________________________________
XXXXX X. XXXXXXX
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxx X. Xxxxxxx.
__________________________________
Notary Public
My Commission Expires:
___________________________
__________________________________
XXXXXXX X. XXX
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxxx X. Xxx.
__________________________________
Notary Public
My Commission Expires:
___________________________
__________________________________
XXXXX X. XXXXXXX-XXX
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxx X. Xxxxxxx-Xxx.
__________________________________
Notary Public
My Commission Expires:
___________________________
__________________________________
XXXXX X. XXXXXXX
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by. Xxxxx X. Xxxxxxx.
__________________________________
Notary Public
My Commission Expires:
___________________________
__________________________________
XXXXX X. XXXXXX
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxx X. XXXXXX.
__________________________________
Notary Public
My Commission Expires:
___________________________
__________________________________
XXXXX X. XXXX
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxx X. Xxxx.
__________________________________
Notary Public
My Commission Expires:
___________________________
__________________________________
XXXXXXX X. XXXXXX
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxxx X. Xxxxxx.
__________________________________
Notary Public
My Commission Expires:
___________________________
__________________________________
XXXXXX X. XXXXXXX
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxx X. Xxxxxxx.
__________________________________
Notary Public
My Commission Expires:
___________________________
__________________________________
XXXXXX X. XXXXX
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxx X. Xxxxx.
__________________________________
Notary Public
My Commission Expires:
___________________________
__________________________________
XXXXX XXXXXX
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxx Xxxxxx.
__________________________________
Notary Public
My Commission Expires:
___________________________
__________________________________
XXXXX XXXXX-XXXXXX
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxx Xxxxx-Xxxxxx.
__________________________________
Notary Public
My Commission Expires:
___________________________
__________________________________
XXXXXX XXXXXXXX
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxx Xxxxxxxx.
__________________________________
Notary Public
My Commission Expires:
___________________________
__________________________________
XXXXXXX X. XXXXXXX
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxxx X. Xxxxxxx.
__________________________________
Notary Public
My Commission Expires:
___________________________
__________________________________
XXXX X. WEEKS
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxx X. Weeks.
__________________________________
Notary Public
My Commission Expires:
___________________________
__________________________________
XXXXXXX XXXXXXXX
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxxx Xxxxxxxx.
__________________________________
Notary Public
My Commission Expires:
___________________________
SCHEDULE I
LIST OF GUARANTORS
EXHIBIT R
SUBSIDIARY GUARANTY
LIMITED GUARANTY OF PAYMENT AND PERFORMANCE
THIS LIMITED GUARANTY OF PAYMENT AND PERFORMANCE (this "Guaranty") is
made as of ___________________________, 2005, by ELMER'S PANCAKES & STEAKHOUSE,
INC., an Oregon corporation, GRASS VALLEY LTD, INC., an Oregon corporation, and
CBW FOOD COMPANY, LLC, an Oregon limited liability company (individually,
"Guarantor" and collectively, "Guarantors"), for the benefit of GE CAPITAL
FRANCHISE FINANCE CORPORATION, A DELAWARE CORPORATION ("Lender").
1. For valuable consideration, the receipt of which is hereby
acknowledged, Guarantors, jointly and severally, unconditionally, absolutely and
irrevocably guarantee and promise to pay to Lender, or order, any and all
amounts, including, without limitation, principal and interest, taxes, insurance
premiums, impounds, reimbursements, late charges, default interest, damages,
indemnity obligations and all other amounts, costs, fees, expenses and charges
of any kind or type whatsoever, which may or at any time be due to Lender
pursuant to the following agreements (collectively, the "Documents"):
A. Loan Agreement (the "Loan Agreement"), dated as of March ___, 2005
between Lender and ERI Acquisition Corp., an Oregon corporation ("ERI"),
pertaining to a loan in the aggregate amount of $6,500,000.00 made by Lender to
ERI (the "Loan"). Elmer's Restaurants, Inc., an Oregon corporation ("Borrower"),
is the successor by merger to ERI. Initially capitalized terms not otherwise
defined in this Guaranty shall have the meanings set forth in the Loan
Agreement;
B. Promissory Note, dated as of the date of the Loan Agreement,
executed by Borrower and payable to Lender, in the amount of $3,500,000.00 (the
"Fixed Rate Promissory Note");
C. Promissory Note, dated as of the date hereof, executed by Borrower
and payable to Lender, in the amount of $[ ] (the "Variable Rate Promissory
Note") (the "Fixed Rate Promissory Note and the Variable Rate Promissory Note
are defined collectively as the "Notes");
D. Security Agreement dated as of the dated hereof by Borrower and
Guarantors for the benefit of Lender;
E. Intellectual Property Security Agreement dated as of the date hereof
by Borrower, Franchisor and the other Subsidiaries in favor of Lender;
F. Any other document, agreement, instrument or certificate
contemplated by any of the foregoing agreements, or any other documents,
agreements, instruments or certificates now or hereafter entered into between
Lender and Borrower with respect to the Loan; and
G. Any amendment of the foregoing documents, agreements, instruments or
certificates now or hereafter entered into between Lender and Borrower.
2. (a) Each Guarantor also unconditionally guarantees the truthfulness
and accuracy of all representations, warranties and certifications of Borrower,
the satisfaction of all conditions by Borrower and the full and timely
performance of all obligations to be performed by Borrower, under or pursuant to
the Documents (the matters which are guaranteed pursuant to Sections 1 and 2 are
hereinafter collectively referred to as the "Obligations"). The obligations of
each Guarantor under this Guaranty are primary, joint and several and
independent of the obligations of any and every other Guarantor or of Borrower,
and a separate action or actions may be brought and executed against any one or
more of the Guarantors, whether or not such action is brought against Borrower
or any other Guarantor and whether or not Borrower or any other Guarantor be
joined in such action or actions.
(b) Notwithstanding anything in this Guaranty to the contrary, the
obligation of each Guarantor under this Guaranty is limited to the dollar amount
corresponding to such Guarantor on the attached Schedule I.
3. This is an absolute and unconditional guaranty of payment and
performance and not of collection and each Guarantor unconditionally (a) waives
any requirement that Lender first make demand upon, or seek to enforce or
exhaust remedies against, Borrower or any other person or entity (including any
other Guarantor) or any of the collateral or property of Borrower or such other
person or entity before demanding payment from, or seeking to enforce this
Guaranty against, such Guarantor; (b) waives and agrees not to assert any and
all rights, benefits and defenses which might otherwise be available under the
provisions of Ariz. Rev. Stat. xx.xx. 12-1641 and xx.xx. 12-1642 et seq.,
44-141, 44-142 or 47-3605, Arizona Rules of Civil Procedure Rule 17(f), or any
other Arizona statutes or rules (including any statutes or rules amending,
supplementing or supplanting same) which might operate, contrary to Guarantor's
agreements in this Guaranty, to limit Guarantor's liability under, or the
enforcement of, this Guaranty; (c) covenants that this Guaranty will not be
discharged until all of the Obligations are fully satisfied; and (d) agrees that
this Guaranty shall remain in full effect without regard to, and shall not be
affected or impaired by, any invalidity, irregularity or unenforceability in
whole or in part of any of the Documents, or any limitation of the liability of
Borrower or Guarantor thereunder, or any limitation on the method or terms of
payment thereunder which may now or hereafter be caused or imposed in any manner
whatsoever.
4. This Guaranty is a continuing guaranty, and the obligations,
undertakings and conditions to be performed or observed by each Guarantor under
this Guaranty shall not be affected or impaired by reason of the happening from
time to time of the following with respect to the Documents, all without notice
to, or the further consent of, any Guarantor: (a) the waiver by Lender of the
observance or performance by Borrower, Guarantors or any one or more of them of
any of the obligations, undertakings, conditions or other provisions contained
in any of the Documents, except to the extent of such waiver; (b) the extension,
in whole or in part, of the time for payment of any amount owing or payable
under the Documents; (c) the modification or amendment (whether material or
otherwise) of any of the obligations of Borrower under, or any other provisions
of, any of the Documents, except to the extent of such modification or
amendment; (d) the taking or the omission of any of the actions referred to in
any of the Documents (including, without limitation, the giving of any consent
referred to therein); (e) any failure, omission, delay or lack on the part of
Lender to enforce, assert or exercise any provision of the Documents, including
any right, power or remedy conferred on Lender in any of the Documents or any
action on the part of Lender granting indulgence or extension in any form; (f)
the assignment to or assumption by any third party of any or all of the rights
or obligations of Borrower under all or any of the Documents; (g) the release or
discharge of Borrower from the performance or observance of any obligation,
undertaking or condition to be performed by Borrower under any of the Documents
by operation of law, including any rejection or disaffirmance of any of the
Documents in any bankruptcy or similar proceedings; (h) the receipt and
acceptance by Lender or any other person or entity of notes, checks or other
instruments for the payment of money and extensions and renewals thereof; (i)
any action, inaction or election of remedies by Lender which results in any
impairment or destruction of any subrogation rights of Guarantors, or any rights
of Guarantors to proceed against any other person or entity for reimbursement;
(j) any setoff, defense, counterclaim, abatement, recoupment, reduction, change
in law or any other event or circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor, indemnitor or surety
under the laws of the State of Arizona, the state(s) in which the Collateral is
located or any other jurisdiction; and (k) the termination or renewal of any of
the Obligations or any other provision thereof.
5. Each Guarantor represents and warrants to Lender that: (a) neither
the execution nor delivery of this Guaranty nor fulfillment of nor compliance
with the terms and provisions hereof will conflict with, or result in a breach
of the terms or conditions of, or constitute a default under, any agreement or
instrument to which such Guarantor is now a party or by which such Guarantor may
be bound, or result in the creation of any lien, charge or encumbrance upon any
property or assets of such Guarantor, which conflict, breach, default, lien,
charge or encumbrance could result in a material adverse change in the financial
condition of such Guarantor; (b) no further consents, approvals or
authorizations are required for the execution and delivery of this Guaranty by
such Guarantor or for such Guarantor's compliance with the terms and provisions
of this Guaranty; (c) this Guaranty is the legal, valid and binding agreement of
such Guarantor and is enforceable against such Guarantor in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, liquidation, reorganization and other laws affecting the rights of
creditors generally and subject to general principles of equity; (d) such
Guarantor has the full power, authority, capacity and legal right to execute and
deliver this Guaranty, and, to the extent such Guarantor is a corporation,
partnership, limited liability company or other form of entity, the parties
executing this Guaranty on behalf of Guarantor are fully authorized and directed
to execute the same to bind Guarantor; (e) such Guarantor is not a "foreign
individual," "foreign corporation," "foreign partnership," "foreign limited
liability company," "foreign trust," or "foreign estate," as those terms are
defined in the U.S. Internal
2
Revenue Code and the regulations promulgated thereunder; such Guarantor's Social
Security Number or Federal Tax Identification Number is accurately set forth
herein next to the signature of such Guarantor; such Guarantor has delivered to
Lender either audited financial statements or, if such Guarantor does not have
audited financial statements, certified financial statements; such financial
statements and other information relating to such Guarantor heretofore delivered
to Lender are true, correct and complete in all material respects as of the date
of this Guaranty; such Guarantor understands that Lender is relying upon such
information, and such Guarantor represents that such reliance is reasonable; and
the financial statements of such Guarantor delivered by Borrower to Lender
pursuant to the Loan Agreement have been prepared in accordance with generally
accepted accounting principles consistently applied and accurately reflect, as
of the date of this Guaranty, the financial condition of such Guarantor; (f)
during the term of this Guaranty, such Guarantor will not transfer or dispose of
any material part of its assets except in the ordinary course of business for
full and fair consideration and reasonably equivalent value; furthermore, such
Guarantor will furnish Lender annually, within ninety (90) days after the close
of each calendar year, a financial statement consisting of a balance sheet and
such other financial information as Lender may reasonably request; (g) the
Documents are conclusively presumed to have been signed in reliance on this
Guaranty and the assumption by each Guarantor of its obligations under this
Guaranty results in direct financial benefit to such Guarantor; and Guarantors
and Borrower are Affiliates of each other, each Guarantor is subject to the same
control, directly or indirectly, as the other Guarantors and Borrower, and (iii)
Guarantors and Borrower are financially interdependent on each other. As a
result of such common control, each Guarantor acknowledges and agrees that a
common enterprise exists and that each Guarantor will receive consideration for
its execution and delivery of this Guaranty.
6. This Guaranty shall commence upon execution and delivery of any of
the Documents and shall continue in full force and effect until all of the
Obligations are duly, finally and permanently paid, performed and discharged and
are not subject to any right of reborrowing or extension by Borrower, and Lender
gives Guarantors written notice of the full and final satisfaction of the
Obligations. The Obligations shall not be considered fully paid, performed and
discharged unless and until all payments by Borrower to Lender are no longer
subject to any right on the part of any person whomsoever, including but not
limited to Borrower, Borrower as a debtor-in-possession and/or any trustee in
bankruptcy, to disgorge such payments or seek to recoup the amount of such
payments or any part thereof. This Guaranty shall remain in full force and
effect and continue to be effective in the event that (i) any petition is filed
by or against Borrower or any Guarantor for liquidation or reorganization,
including, without limitation, under Title 11 of the United States Code, 11
U.S.C. Sec. 101 et seq. (the "Code"), (ii) Borrower or any Guarantor becomes
insolvent or makes an assignment for the benefit of creditors or (iii) a
receiver or trustee is appointed for all or any significant part of Borrower's
or such Guarantor's assets. This Guaranty shall continue to be effective or be
reinstated, as applicable, if at any time payment and performance of the
Obligations, or any part thereof, is, pursuant to applicable law, rescinded or
reduced in amount, or must otherwise be restored or returned by Lender, whether
as a "voidable preference", "fraudulent conveyance" or otherwise, all as though
such payment or performance had not been made. In the event that any payment of
the Obligations, or any part thereof, is rescinded, reduced, restored or
returned, the Obligations shall be reinstated and deemed reduced only by such
amount paid to Lender and not so rescinded, reduced, restored or returned.
7. Guarantors shall neither have any right of subrogation, indemnity or
reimbursement nor hold any other claim against Borrower, and each of them does
hereby release Borrower from any and all claims by such Guarantor now or
hereafter arising against Borrower. Furthermore, each Guarantor hereby
unconditionally and irrevocably waives (a) any right to participate in any
security now or hereafter held by Lender or in any claim or remedy of Lender or
any other person against Borrower with respect to the Obligations, (b) any
statute of limitations affecting Guarantors' liability hereunder, (c) all
principles and provisions of law which conflict with the terms of this Guaranty,
and (d) diligence, presentment, protest, demand for performance, notice of
nonperformance, notice of intent to accelerate, notice of acceleration, notice
of protest, notice of dishonor, notice of execution of any Documents, notice of
extension, renewal, alteration or amendment, notice of acceptance of this
Guaranty, notice of defaults under any of the Documents and all other notices
whatsoever.
8. Notwithstanding the preceding Section 7 in the event that Guarantors
shall have any claims against Borrower, any indebtedness of Borrower now or
hereafter held by any or all Guarantors is hereby subordinated to the
indebtedness of Borrower to Lender. Any such indebtedness of Borrower to
Guarantors, if Lender so requests, shall be collected, enforced and received by
Guarantors as trustee for Lender and be paid over to Lender on account of the
Obligations, but without reducing or affecting in any manner the liability of
Guarantors under the other provisions of this Guaranty.
3
9. It is not necessary for Lender to inquire into the powers of
Borrower or its officers, directors, partners or agents acting or purporting to
act on its behalf, and Guarantors shall be liable for the Obligations in
accordance with their terms notwithstanding any lack of authorization or defect
in execution or delivery by Borrower.
10. In addition to the amounts guaranteed under this Guaranty,
Guarantors agree to pay (i) all of Lender's attorneys' fees and other costs and
expenses which may be incurred by Lender in the enforcement of this Guaranty and
(ii) interest (including postpetition interest to the extent a petition is filed
by or against Borrower under the Code) at the Default Rate (as defined in the
Notes) on any Obligations not paid when due. Guarantors, jointly and severally,
hereby agree to indemnify and hold harmless Lender for, from and against any
loss, cause of action, claim, cost, expense or fee, including but not limited to
attorney's fees and court costs, suffered or occasioned by the failure of
Borrower to satisfy its obligations under the Documents. The agreement to
indemnify Lender contained in this paragraph shall be enforceable
notwithstanding the invalidity or unenforceability of the Documents or any of
them or the invalidity or unenforceability of any other paragraph contained in
this Guaranty. All moneys available to Lender for application in payment or
reduction of the liabilities of Borrower under the Documents may be applied by
Lender to the payment or reduction of such liabilities of Borrower, in such
manner, in such amounts and at such time or times as Lender may elect.
11. All notices, demands, requests, consents, approvals or other
instruments required or permitted to be given pursuant to this Guaranty shall be
in writing and given by (i) hand delivery, (ii) facsimile, (iii) express
overnight delivery service or (iv) certified or registered mail, return receipt
requested, and shall be deemed to have been delivered upon (a) receipt, if hand
delivered, (b) transmission, if delivered by facsimile, (c) the next Business
Day (as defined in the Loan Agreement), if delivered by express overnight
delivery service or (d) the third Business Day following the day of deposit of
such notice with the United States Postal Service, if sent by certified or
registered mail, return receipt requested. Notices shall be provided to the
addresses (or facsimile numbers, as applicable) specified below:
If to Guarantors: Elmer's Pancakes & Steakhouse, Inc.
Grass Valley Ltd, Inc.
CBW Food Company, LLC
00000 X.X. Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
And to: 000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxx Xxxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Lender: GE Capital Franchise Finance Corporation
00000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Collateral Management
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
or to such other address or such other person as either Guarantors or Lender may
from time to time hereafter specify to the other party in a notice delivered in
the manner provided above.
12. This Guaranty is delivered in the State of Arizona, and it is the
intent of Guarantors and Lender that this Guaranty shall be deemed to be a
contract made under and governed by the internal laws of the State of Arizona,
without regard to its principles of conflicts of law. For purposes of any action
or proceeding involving this Guaranty, Guarantors jointly and severally submit
to the jurisdiction of all federal and state courts located in the
4
State of Arizona and consent that they may be served with any process or paper
by registered mail or by personal service within or without the State of Arizona
in accordance with applicable law. Furthermore, Guarantors waive and agree not
to assert in any such action, suit or proceeding that they are not personally
subject to the jurisdiction of such courts, that the action, suit or proceeding
is brought in an inconvenient forum or that venue of the action, suit or
proceeding is improper. Nothing contained in this section shall limit or
restrict the right of Lender to commence any proceeding in the federal or state
courts located in the state(s) in which the Collateral is located and/or where
Guarantors maintain their chief executive offices to the extent Lender deems
such proceeding necessary or advisable to exercise remedies available under the
Documents.
13. Each Guarantor intends that the business relationship created
between Borrower and Lender, by the Loan Agreement, the Notes and the other
Documents is solely that of creditor and debtor and has been entered into by
such parties in reliance upon the economic and legal bargains contained in the
Documents. Furthermore, Guarantors shall support the intent of Guarantors,
Borrower and Lender that the Loan, the Notes and the Loan Agreement do not
create a joint venture, partnership, trust, trust agreement or the like, if, and
to the extent that, any challenge occurs, and Guarantors shall not assert that
the Loan, the Notes or the Loan Agreement creates a joint venture, partnership,
trust, trust agreement or the like. Guarantors acknowledge that Lender did not
prepare or assist in the preparation of any of the projected financial figures
used by Borrower in analyzing the economic viability and feasibility of the
transactions contemplated by the Loan Agreement. Furthermore, Guarantors
acknowledge that Borrower has not relied upon, nor may it hereafter rely upon,
the analysis undertaken by Lender in determining the amount of the Loan, and
that such analysis will not be made available to Borrower.
14. All of Lender's rights and remedies under the Documents and this
Guaranty are intended to be distinct, separate and cumulative and no such right
and remedy is intended to be in exclusion of or a waiver of any of the others.
If under applicable law, Lender proceeds to realize benefits under any Document
granting Lender a lien upon any collateral pledged under such Document, either
by judicial foreclosure or by non-judicial sale or enforcement, Lender may, at
is sole option, determine which of such remedies or rights it may pursue without
affecting any of such rights and remedies under this Guaranty. If, in the
exercise of any of its rights and remedies, Lender shall forfeit any of its
rights or remedies, including its right to enter a deficiency judgment against
Borrower or any pledgor, whether because of any applicable laws pertaining to
"election of remedies" or the like, Guarantors hereby consent to such action by
Lender and waives any claim based upon such action, even if such action by
Lender shall result in a full or partial loss of any rights of subrogation which
Guarantors might otherwise have had but for such action by Lender. Any election
of remedies which results in the denial or impairment of the right of Lender to
seek a deficiency judgment against Borrower or any pledgor shall not impair each
Guarantor's obligation to pay the full amount of the Obligations. In the event
Lender shall bid at any foreclosure or trustee's sale or at any private or
public sale permitted by law or under the Documents, Lender may bid all or less
than the amount of the Obligations and the amount of such bid need not be paid
by Lender but shall be credited against the Obligations. The amount of the
successful bid at any such sale shall be conclusively deemed to be the fair
market value of the collateral and the difference between such bid amount and
the remaining balance of the Obligations shall be conclusively deemed to be the
amount of the Obligations guaranteed under this Guaranty, notwithstanding that
any present or future law or court decision or ruling may have the effect of
reducing the amount of any deficiency claim to which Lender might otherwise be
entitled but for such bidding at any such sale.
15. This Guaranty is solely for the benefit of Lender, its successors
and assigns and is not intended to nor shall it be deemed to be for the benefit
of any third party, including, without limitation, Borrower. This Guaranty and
all obligations of Guarantor hereunder shall be binding upon the successors and
assigns of each Guarantor (including, a debtor-in-possession on behalf of such
Guarantor) and shall, together with the rights and remedies of Lender,
hereunder, inure to the benefit of Lender, all future holders of any instrument
evidencing any of the Obligations and its successor and assigns. No sales,
participations, assignments, transfers or other dispositions of any agreement
governing or instrument evidencing the Obligations or any portion thereof or
interest therein shall in any manner affect the rights of Lender or its
successors and assigns hereunder. Guarantors may not assign, sell, hypothecate
or otherwise transfer any interest in or obligations under this Guaranty.
16. If any provision of this Guaranty is unenforceable, the
enforceability of the other provisions shall not be affected and they shall
remain in full force and effect. Each Guarantor agrees to take such action and
to sign such other documents as may be appropriate to carry out the intent of
this Guaranty. This Guaranty may be executed in one or more counterparts, each
of which shall be deemed an original.
5
17. LENDER, BY ACCEPTING THIS GUARANTY, AND EACH OF THE GUARANTORS
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT THEY MAY HAVE TO
A TRIAL BY JURY WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION,
PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY LENDER OR ANY OF THE GUARANTORS
AGAINST THE OTHER OR THEIR SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF
OR IN CONNECTION WITH THIS GUARANTY, THE RELATIONSHIP OF LENDER, BORROWER AND/OR
THE GUARANTORS, BORROWER'S USE OF THE COLLATERAL, AND/OR ANY CLAIM FOR INJURY OR
DAMAGE, OR ANY EMERGENCY OR STATUTORY REMEDY. THIS WAIVER BY LENDER AND THE
GUARANTORS OF ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY HAS BEEN NEGOTIATED AND
IS AN ESSENTIAL ASPECT OF THEIR BARGAIN. FURTHERMORE, EACH OF THE GUARANTORS AND
LENDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT THEY MAY
HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES FROM THE
OTHER AND ANY OF THE OTHER'S AFFILIATES, OFFICERS, DIRECTORS OR EMPLOYEES OR ANY
OF THEIR SUCCESSORS WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION,
PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY LENDER OR ANY OF THE GUARANTORS
AGAINST THE OTHER OR ANY OF THE OTHER'S AFFILIATES, OFFICERS, DIRECTORS OR
EMPLOYEES OR ANY OF THEIR SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF
OR IN CONNECTION WITH THIS GUARANTY OR ANY DOCUMENTS CONTEMPLATED HEREIN OR
RELATED HERETO. THE WAIVER BY LENDER AND THE GUARANTORS OF ANY RIGHT THEY MAY
HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES HAS BEEN
NEGOTIATED BY THE PARTIES HERETO AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.
18. Guarantors shall be liable under this Guaranty for the maximum
amount of such liability that can be incurred hereby without rendering this
Guaranty, as it relates to any of the Guarantors, voidable under applicable laws
relating to fraudulent conveyance or fraudulent transfer, and not for any
greater amount. Guarantors agree that the Obligations may at any time and from
time to time exceed the amount of the liability of Guarantors hereunder without
impairing this Guaranty or affecting the rights and remedies of Lender
hereunder.
6
IN WITNESS WHEREOF, the undersigned Guarantors have executed this
Guaranty effective as of the date set forth in the introductory paragraph of
this Guaranty.
GUARANTORS:
ELMER'S PANCAKES & STEAKHOUSE, INC., an Oregon
corporation
By: _____________________________________________________
Printed Name: ___________________________________________
Its: ____________________________________________________
GRASS VALLEY LTD, INC., an Oregon corporation
By: _____________________________________________________
Printed Name: ___________________________________________
Its: ____________________________________________________
CBW FOOD COMPANY, LLC, an Oregon limited liability
company
By: _____________________________________________________
Printed Name: ___________________________________________
Its: ____________________________________________________
STATE OF )
-----------------------------------
) SS.
COUNTY OF )
----------------------------------
The foregoing instrument was acknowledged before me on this _____ day
of _______________, 2005, by ____________________________________________,
__________________________ of Elmer's Pancakes & Steakhouse, Inc., an Oregon
corporation, on behalf of the corporation.
__________________________________
Notary Public
My Commission Expires:
____________________________________________
STATE OF )
-----------------------------------
) SS.
COUNTY OF )
----------------------------------
The foregoing instrument was acknowledged before me on this _____ day
of _______________, 2005, by ____________________________________________,
__________________________ of Grass Valley Ltd, Inc., an Oregon corporation, on
behalf of the corporation.
__________________________________
Notary Public
My Commission Expires:
____________________________________________
STATE OF )
-----------------------------------
) SS.
COUNTY OF )
----------------------------------
The foregoing instrument was acknowledged before me on this _____ day
of _______________, 2005, by ____________________________________________,
__________________________ of CBW Food Company, LLC, an Oregon limited liability
company, on behalf of the limited liability company.
__________________________________
Notary Public
My Commission Expires:
____________________________________________
SCHEDULE I
EXHIBIT S
CONTROL AGREEMENT
SECURITIES ACCOUNT CONTROL AGREEMENT
THIS SECURITIES ACCOUNT CONTROL AGREEMENT (this "Agreement") is entered
into as of March , 2005, by and among ERI ACQUISITION CORP., an Oregon
corporation ("Customer"), XXXXX FARGO BROKERAGE SERVICES, LLC ("Intermediary"),
and GE CAPITAL FRANCHISE FINANCE CORPORATION, a Delaware corporation ("Secured
Party").
RECITALS
A. Customer maintains that certain Account No. (the "Securities
Account") with Intermediary pursuant to an agreement between Intermediary and
Customer dated as of (the "Account Agreement"), a copy of which is attached
hereto as Exhibit A, and Customer has granted to Secured Party a security
interest in the Securities Account and all financial assets and other property
now or at any time hereafter held in the Securities Account.
B. Secured Party, Customer and Intermediary have agreed to enter into
this Agreement to perfect Secured Party's security interests in the Collateral,
as defined below.
NOW, THEREFORE, in consideration of their mutual covenants and promises,
the parties agree as follows:
1. DEFINITIONS. As used herein:
(a) the term "Collateral" shall mean: (i) the Securities Account; (ii)
the financial assets described on the attached Exhibit B and any other financial
assets credited to the Securities Account; (iii) all security entitlements with
respect to the financial assets credited to the Securities Account; (iv) any and
all other investment property or assets maintained or recorded in the Securities
Account; and (v) all replacements or substitutions for, and proceeds of the sale
or other disposition of, any of the foregoing, including without limitation,
cash proceeds; and
(b) the terms "investment property," "entitlement order," "financial
asset" and "security entitlement" shall have the respective meanings set forth
in the Minnesota Uniform Commercial Code. The parties hereby expressly agree
that all property, including without limitation, cash, certificates of deposit
and mutual funds, at any time held in the Securities Account is to be treated as
a "financial asset."
2. AGREEMENT FOR CONTROL. Intermediary is authorized by Customer and
agrees to comply with all entitlement orders originated by Secured Party with
respect to the Securities Account, and all other requests or instructions from
Secured Party regarding disposition and/or delivery of the Collateral, without
further consent or direction from Customer or any other party.
3. CUSTOMER'S RIGHTS WITH RESPECT TO THE COLLATERAL.
(a) Intermediary agrees that, without the prior written consent of
Secured Party: (i) Customer, or any party authorized by Customer to act with
respect to the Securities Account, shall not give trading instructions to
Intermediary with respect to Collateral in the Securities Account; and (ii)
Intermediary shall not distribute to Customer or any other party in accordance
with Customer's directions that portion of the Collateral which consists of
interest and/or cash dividends earned on financial assets maintained in the
Securities Account.
(b) Without Secured Party's prior written consent, except to the extent
permitted by Section 3(a) hereof: (i) neither Customer nor any party other than
Secured Party may withdraw any Collateral from the Securities Account; and (ii)
Intermediary will not comply with any entitlement order or request to withdraw
any Collateral from the Securities Account given by any party other than Secured
Party.
4. INTERMEDIARY'S REPRESENTATIONS AND WARRANTIES. Intermediary
represents and warrants to Secured Party that:
(a) The Securities Account is maintained with Intermediary solely in
Customer's name.
(b) Intermediary has no knowledge of any claim to, security interest in
or lien upon any of the Collateral, except: (i) the security interests in favor
of Secured Party; and (ii) Intermediary's liens securing fees and charges, or
payment for open trade commitments, as described in Section 4(e) hereof.
(c) Attached hereto as Exhibit A is a true and complete copy of the
Account Agreement.
(d) Attached hereto as Exhibit B is an accurate and complete statement
of the financial assets in the Securities Account as of the date of this
Agreement.
(e) Any claim to, security interest in or lien upon any of the
Collateral which Intermediary now has or at any time hereafter acquires shall be
junior and subordinate to the security interests of Secured Party in the
Collateral, except for Intermediary's liens securing: (i) fees and charges owed
by Customer with respect to the operation of the Securities Account; and (ii)
payment owed to Intermediary for open trade commitments for purchases in and for
the Securities Account.
(f) All property credited to the Securities Account, and all other
rights of Customer against Intermediary arising out of the Securities Account,
including any free credit balances, will be treated as "financial assets" under
Article 8 of the Uniform Commercial Code.
5. AGREEMENTS OF INTERMEDIARY AND CUSTOMER. Intermediary and Customer
agree that:
(a) Intermediary shall flag its books, records and systems to reflect
Secured Party's security interests in the Collateral, and shall provide notice
thereof to any party making inquiry as to Customer's accounts with Intermediary
to whom or which Intermediary is legally required or permitted to provide
information.
(b) Intermediary shall send copies of all statements relating to the
Securities Account simultaneously to Customer and Secured Party.
(c) Intermediary shall promptly notify Secured Party if any other party
asserts any claim to, security interest in or lien upon any of the Collateral,
and Intermediary shall not enter into any control, custodial or other similar
agreement with any other party that would create or acknowledge the existence of
any such other claim, security interest or lien.
(d) Without Secured Party's prior written consent, Intermediary and
Customer shall not amend or modify the Account Agreement, other than amendments
to reflect ordinary and reasonable changes in Intermediary's fees and charges
for handling the Securities Account.
(e) Neither Intermediary nor Customer shall terminate the Account
Agreement without giving thirty (30) days' prior written notice to Secured
Party.
6. AGREEMENT OF CUSTOMER. Customer agrees to indemnify and hold harmless
Intermediary, its officers, directors, employees and agents, against claims,
liabilities or expenses (including reasonable attorney's fees) arising out of
Intermediary's compliance with any instructions from Secured Party with respect
to the Securities Account, except if such claims, liabilities or expenses are
caused by Intermediary's negligence or willful misconduct.
7. MISCELLANEOUS.
(a) This Agreement shall not create any obligation or duty of
Intermediary except as expressly set forth herein.
(b) As to the matters specifically the subject of this Agreement, in the
event of any conflict between this Agreement and the Account Agreement or any
other agreement between Intermediary and Customer, the terms of this Agreement
shall control.
2
(c) All notices, requests and demands which any party is required or may
desire to give to any other party under any provision of this Agreement must be
in writing (unless otherwise specifically provided) and delivered to each party
at the address or facsimile number set forth below its signature, or to such
other address or facsimile number as any party may designate by written notice
to all other parties. Each such notice, request and demand shall be deemed given
or made as follows: (i) if sent by hand delivery, upon delivery; (ii) if sent by
facsimile, upon receipt; and (iii) if sent by mail, upon the earlier of the date
of receipt or three (3) days after deposit in the U.S. mail, first class and
postage prepaid.
(d) The prevailing party in the prosecution or defense of any action
arising out of this Agreement, including any action for declaratory relief,
shall be reimbursed by the party whose course of action necessitated such
prosecution or defense for all costs and expenses, including reasonable
attorneys' fees (to include outside counsel fees and all allocated costs of the
prevailing party's in-house counsel), expended or incurred by the prevailing
party in connection therewith, whether incurred at the trial or appellate level,
in an arbitration proceeding, bankruptcy proceeding or otherwise.
(e) This Agreement shall be binding upon and inure to the benefit of the
heirs, executors, administrators, legal representatives, successors and assigns
of the parties; provided however, that Intermediary may not assign its
obligations hereunder without Secured Party's prior written consent. This
Agreement may be amended or modified only in writing signed by all parties
hereto.
(f) This Agreement shall terminate upon: (i) Intermediary's receipt of
written notice from Secured Party expressly stating that Secured Party no longer
claims any security interest in the Collateral; or (ii) termination of the
Account Agreement pursuant to Section 5(e) hereof and Intermediary's delivery of
all Collateral to Secured Party or its designee in accordance with Secured
Party's written instructions.
(g) This Agreement shall be governed by and construed in accordance with
the laws of the State of Minnesota.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
INTERMEDIARY: SECURED PARTY
XXXXX FARGO BROKERAGE SERVICES, LLC GE CAPITAL FRANCHISE FINANCE CORPORATION
By: By:
Title: Title:
Address: Address:
FAX No: FAX No: 000-000-0000
CUSTOMER:
ERI ACQUISITION CORP.
By:
Title:
Address:
FAX No:
3
EXHIBIT A
ACCOUNT AGREEMENT
EXHIBIT B
FINANCIAL ASSETS
EXHIBIT T
INDEMNITY
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT (the "Agreement") is made as of March____,
2005 by XXXXX X. XXXXX, XXXXXXX X. SERVICE, XXXXXX X. XXXXXX, XXXXXXXXX X.
XXXXXX, XXXXXX X. XXXXXXX, XXXXX X. XXXXXXX, XXXXXXX X. XXX, XXXXX X.
XXXXXXX-XXX, XXXXX X. XXXXXXX, XXXXX X. XXXXXX, XXXXX X. XXXX, XXXXXXX X.
XXXXXX, XXXXXX X. XXXXXXX, XXXXXX X. XXXXX, XXXXX XXXXXX, XXXXX XXXXX-XXXXXX,
XXXXXX XXXXXXXX, XXXXXXX X. XXXXXXX, XXXX X. WEEKS AND XXXXXXX XXXXXXXX
(collectively, "Indemnitors"), for the benefit of GE CAPITAL FRANCHISE FINANCE
CORPORATION, a Delaware corporation ("Lender").
PRELIMINARY STATEMENTS
Unless otherwise expressly provided herein, all defined terms used in
this Agreement shall have the meanings set forth in that certain Loan Agreement
dated as of March , 2005 between Lender and Elmer's Acquisition Corp., an Oregon
corporation ("Borrower") (the "Loan Agreement"). Indemnitors own all of the
issued and outstanding shares of capital stock of Borrower.
Pursuant to the Loan Agreement, Lender has agreed to make the Loan to
Borrower. Lender's obligation to advance the Loan is conditioned upon
Indemnitors executing and delivering this Agreement.
AGREEMENT
1. DEFINITIONS. For purposes of this Agreement, the following terms shall have
the following meanings
"Elmer's" means Elmer's Restaurants, Inc., an Oregon corporation.
"Indemnified Parties" means Lender and its shareholders, directors,
officers, employees, affiliates, lenders, trustees, successors and assigns.
"Losses" means any and all claims, suits, liabilities (including,
without limitation, strict liabilities), actions, proceedings, obligations,
debts, damages, losses, costs, expenses, diminutions in value, fines, penalties,
charges, fees, expenses, judgments, awards, amounts paid in settlement and
damages of whatever kind or nature (including, without limitation, attorneys'
fees, court costs and other costs of defense), accruing or arising as a result
of a violation by Borrower, any of Indemnitors and/or Elmer's, of any federal or
state securities laws, including, without limitation, the Securities Act of 1933
and the Securities Exchange Act of 1934, as amended, in connection with the
Tender Offer and/or Merger, including without limitation, reasonable third-party
attorneys' fees and expenses.
"Merger" means either the short-form merger or the long-form merger of
Borrower and Elmer's to be consummated under applicable Oregon law following the
completion of the Tender Offer, with Elmer's being the surviving entity of such
merger.
"Tender Offer" means the cash-tender offer for common stock of Elmer's
to be made by the Individual Guarantors as described in that certain Schedule
13D for Elmer's filed with the Securities and Exchange Commission on or about
August 5, 2004, as amended.
2. INDEMNIFICATION. Indemnitors shall, jointly and severally,
indemnify, defend and hold harmless the Indemnified Parties for, from and
against any and all Losses. This Agreement shall survive the scheduled maturity
date or earlier repayment of the Loan.
3. WAIVER AND AMENDMENT. No provisions of this Agreement shall be
deemed waived or amended except by a written instrument unambiguously setting
forth the matter waived or amended and signed by the party against which
enforcement of such waiver or amendment is sought. Waiver of any matter shall
not be deemed a waiver of the same or any other matter on any future occasion.
4. FURTHER ASSURANCES. Each of the parties agrees to sign such other
and further documents as may be reasonably required to carry out the intentions
expressed in this Agreement.
5. EVENT OF DEFAULT. If any of the Indemnitors fail to satisfy their
respective obligations under this Agreement in any material respect, such
failure shall be an Event of Default under the documents evidencing the Loan.
6. FORUM SELECTION; JURISDICTION; VENUE; CHOICE OF LAW. Indemnitors
acknowledge that this Agreement was substantially negotiated in the State of
Arizona, the executed Agreement was delivered by Indemnitors in the State of
Arizona and there are substantial contacts between the parties and the
transactions contemplated herein and the State of Arizona. For purposes of any
action or proceeding arising out of this Agreement, the parties hereto hereby
expressly submit to the jurisdiction of all federal and state courts located in
the State of Arizona and Indemnitors consent that they may be served with any
process or paper by registered mail or by personal service within or without the
State of Arizona in accordance with applicable law. Furthermore, Indemnitors
waive and agree not to assert in any such action, suit or proceeding that they
are not personally subject to the jurisdiction of such courts, that the action,
suit or proceeding is brought in an inconvenient forum or that venue of the
action, suit or proceeding is improper. It is the intent of the parties hereto
that all provisions of this Agreement shall be governed by and construed under
the laws of the state of Arizona. Nothing in this Section shall limit or
restrict the right of Indemnified Parties to commence any proceeding in the
State of Oregon to the extent any Indemnified Party deems such proceeding
necessary or advisable to exercise remedies available under this Agreement.
7. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original.
8. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the Indemnified Parties, Indemnitors and their respective
successors and permitted assigns, including, without limitation, any
debtor-in-possession or any trustee appointed from a private panel. Lender shall
have the right to assign this Agreement to any purchaser or lessee of the
Premises, and this Agreement shall inure to the benefit of such purchaser or
lessee. The Indemnified Parties shall not have the right to assign this
Agreement without the prior consent of Lender, which consent may be withheld in
Lender's sole discretion.
9. NOTICES. All notices, consents, approvals or other instruments
required or permitted to be given by any party under this Agreement shall be
given as contemplated by the notice provision of the Loan Agreement (with all
notices given to Indemnitors being delivered to the address set forth in the
notice provision of the Loan Agreement for Borrower).
10. WAIVER OF JURY TRIAL. LENDER, BY ACCEPTANCE OF THIS AGREEMENT, AND
INDEMNITORS HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT THEY
MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY
ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY ANY OF THE PARTIES HERETO
AGAINST ANY OF THE OTHER PARTIES TO THIS AGREEMENT OR THEIR SUCCESSORS WITH
RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY
DOCUMENT CONTEMPLATED HEREIN OR RELATED HERETO. THIS WAIVER BY THE PARTIES
HERETO OF ANY RIGHT EITHER MAY HAVE TO A TRIAL BY JURY HAS BEEN NEGOTIATED AND
IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.
IN WITNESS WHEREOF, the Indemnitors have executed this Agreement for
the benefit of Lender as of the date first written above.
Indemnitors:
________________________________________________
XXXXX X. XXXXX
________________________________________________
XXXXXXX X. SERVICE
________________________________________________
XXXXXX X. XXXXXX
________________________________________________
XXXXXXXXX X. XXXXXX
________________________________________________
XXXXXX X. XXXXXXX
________________________________________________
XXXXX X. XXXXXXX
________________________________________________
XXXXXXX X. XXX
________________________________________________
XXXXX X. XXXXXXX-XXX
________________________________________________
XXXXX X. XXXXXXX
________________________________________________
XXXXX X. XXXXXX
________________________________________________
XXXXX X. XXXX
________________________________________________
XXXXXXX X. XXXXXX
________________________________________________
XXXXXX X. XXXXXXX
________________________________________________
XXXXXX X. XXXXX
________________________________________________
XXXXX XXXXXX
________________________________________________
XXXXX XXXXX-XXXXXX
________________________________________________
XXXXXX XXXXXXXX
________________________________________________
XXXXXXX X. XXXXXXX
________________________________________________
XXXX X. WEEKS
________________________________________________
XXXXXXX XXXXXXXX
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxx X. Xxxxx.
__________________________________
Notary Public
My Commission Expires:
__________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxxx X. Service.
__________________________________
Notary Public
My Commission Expires:
__________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxx X. XXXXXX.
__________________________________
Notary Public
My Commission Expires:
__________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxxxxx X. XXXXXX.
__________________________________
Notary Public
My Commission Expires:
__________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxx X. Xxxxxxx.
__________________________________
Notary Public
My Commission Expires:
__________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxx X. Xxxxxxx.
__________________________________
Notary Public
My Commission Expires:
__________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxxx X. Xxx.
__________________________________
Notary Public
My Commission Expires:
__________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxx X. Xxxxxxx-Xxx.
__________________________________
Notary Public
My Commission Expires:
__________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxx X. Xxxxxxx.
__________________________________
Notary Public
My Commission Expires:
__________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxx X. XXXXXX.
__________________________________
Notary Public
My Commission Expires:
__________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxx X. Xxxx.
__________________________________
Notary Public
My Commission Expires:
__________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxxx X. Xxxxxx.
__________________________________
Notary Public
My Commission Expires:
__________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by. Xxxxxx X. Xxxxxxx.
__________________________________
Notary Public
My Commission Expires:
__________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxx X. Xxxxx.
__________________________________
Notary Public
My Commission Expires:
__________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxx Xxxxxx.
__________________________________
Notary Public
My Commission Expires:
__________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxx Xxxxx-Xxxxxx.
__________________________________
Notary Public
My Commission Expires:
__________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxx Xxxxxxxx.
__________________________________
Notary Public
My Commission Expires:
__________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxxx X. Xxxxxxx.
__________________________________
Notary Public
My Commission Expires:
__________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxx X. Weeks.
__________________________________
Notary Public
My Commission Expires:
__________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this _______ day of
______________, 2005 by Xxxxxxx Xxxxxxxx.
__________________________________
Notary Public
My Commission Expires:
__________________________________
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