1
Exhibit 10.51
LOAN AND SECURITY AGREEMENT
Dated March 27, 1998
by and between
ROADHOUSE GRILL, INC.
as Borrower
00-0000000
(Federal Tax ID No. of Borrower)
and
FINOVA CAPITAL CORPORATION
as Lender
$2,880,000
Amount of Loan
2
LOAN AND SECURITY AGREEMENT
AGREEMENT, dated as of March 27, 1998, by and between ROADHOUSE GRILL,
INC., a Florida corporation ("BORROWER"), having its principal place of business
at 0000 X. Xxxxxxx Xxxxxx, Xxxxx 000, Xx. Xxxxxxxxxx, Xxxxxxx 00000; and FINOVA
CAPITAL CORPORATION, a Delaware corporation ("LENDER"), having a place of
business at 000 Xxxx Xxxxxxx Xxxx, Xxxxxxx, Xxx Xxxxxx 00000.
W I T N E S S E T H:
WHEREAS, Borrower has requested Lender to make a loan to Borrower and
Lender is willing to make such loan to Borrower upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and intending to be legally bound hereby, the parties
hereto covenant and agree as follows:
ARTICLE 1. DEFINITIONS
1.1 DEFINITIONS.
In addition to other words and terms defined elsewhere in this
Agreement, as used herein the following words and terms have the following
meanings, respectively, unless the context hereof otherwise clearly requires:
"AGREEMENT" means this Loan and Security Agreement as amended, modified
or supplemented from time to time.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other day
on which banking institutions are authorized or obligated to close in New Jersey
or Arizona.
"CLOSING DATE" means the date on which the parties enter into this
Agreement.
"COLLATERAL" means all assets of Borrower in which Borrower has granted
or will xxxxx x Xxxx to Lender, pursuant to this or any other Loan Documents
between Borrower and Lender, including but not limited to, those assets
described and defined as Collateral in Section 3.1.
"CONSTITUENT DOCUMENTS" means the certificate of incorporation,
certificate of organization, agreement of partnership or limited partnership,
organizational agreement, operating agreement, by-laws, or such other similar
document
3
pursuant to which Borrower is organized or its affairs are
governed.
"DEFAULT" means an event which with notice or lapse of time, or both,
would constitute an Event of Default.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"EVENT OF DEFAULT" means any of the Events of Default
described in Section 7.1 hereof.
"EXECUTIVE OFFICER" means the President, the Chief Executive
Officer, or the Chief Financial Officer of Borrower elected from
time to time.
"FRANCHISE" means Roadhouse Grill.
"GAAP" means generally accepted accounting principles in the United
States of America (as such principles may change from time to time) applied on a
consistent basis (except for changes in application in which Borrower's
independent certified public accountants concur), applied both to classification
of items and amounts.
"INTEREST RATE" means the Index Rate plus three (3.15%) percent. The
"INDEX RATE" shall be the highest yield, as published in THE WALL STREET
JOURNAL, on the Friday preceding the Closing Date, for Treasury Notes having a
maturity date on or closest to the Maturity Date. Interest shall be calculated
on the basis of a year of 360 days and twelve months of thirty (30) days each
and charged on a daily basis.
"LAW" means any law (including common law), constitution, statute,
treaty, regulation, rule, ordinance, order, injunction, writ, decree or award of
any government or governmental agency.
"LEGAL REQUIREMENTS" means any and all present and future judicial, and
administrative rulings or decisions, and any and all present and future federal,
state, and local laws, ordinances, rules, regulations, permits and certificates,
in each case, in any way applicable to Borrower (or the ownership or use of the
Collateral or its other assets) or this transaction.
"LIEN" means any mortgage, pledge, lien, security interest (including
without limitation any conditional sale or other title retention agreement),
grant of a leasehold, charge or other encumbrance of any nature whatsoever, and
also means the filing
- 2 -
4
of or the agreement to give any financing statement or analogous document under
the UCC or analogous law of any jurisdiction.
"LOAN" has the meaning given to such term in Section 2.1
hereof.
"LOAN DOCUMENTS" means this Agreement, the Note, and any other
agreements, instruments and documents evidencing a debt from Borrower to Lender
in connection with this Agreement or any existing agreement between Borrower and
Lender (as the same may from time to time be amended, modified or supplemented).
"LOAN YEAR(S)" means each of 365 or 366 (as the case may be)
consecutive days commencing on the first payment date of the Loan and each
anniversary date thereof.
"MATURITY DATE" means the date upon which the one hundred and twenty
(120) consecutive monthly payment of principal and interest is scheduled to be
due.
"NOTE" means the promissory note of Borrower executed and delivered by
Borrower under this Agreement, in substantially the form annexed hereto as
Exhibit A with the blanks appropriately filled in.
"OBLIGATIONS" means all of the indebtedness, liabilities and
obligations of every kind and nature of Borrower to Lender, now existing or
hereafter arising, arising under, in connection with or evidenced by this
Agreement, the Note, or the other Loan Documents.
"OFFICE", when used in connection with Lender, means its office located
at 000 Xxxx Xxxxxxx Xxxx, Xxxxxxx, Xxx Xxxxxx 00000, or such other office of
Lender as may be designated in writing from time to time by Lender to Borrower.
"PERSON" means an individual, corporation, limited liability company,
national banking association, partnership, trust, unincorporated association,
joint venture, joint-stock company, government (including political
subdivisions), governmental authority or agency, or any other entity.
"PLAN" means any employee benefit plan which is covered by ERISA and
which is maintained by Borrower or, in the case of a plan to which more than one
employer contributes, to which Borrower made contributions at any time within
the five plan years preceding the date of termination.
- 3 -
5
"PREMISES" shall mean the property located on Exhibit B and all other
locations at which Borrower has Obligations to Lender pursuant to the Loan
Documents.
"SECURED DEBT" All principal, interest, late charges, other charges,
prepayment and other premiums, indemnification amounts due or to become due by
Borrower to Lender and all other liabilities of Borrower to Lender, howsoever
created, whether now existing or hereafter arising including, without
limitation, obligations under any guarantee and amounts due or to become due
under the Loan Documents.
"TERM" means the period beginning on the first payment date following
the Closing Date and ending on the Maturity Date.
"UCC" means the Uniform Commercial Code as adopted in the
State of Arizona.
1.2 GENERAL INTERPRETIVE PRINCIPLES.
For purposes of this Agreement, except as otherwise expressly provided
herein or unless the context otherwise requires:
(i) any pronoun used shall be deemed to cover
both gender forms as well as the neuter form;
(ii) all references to the plural shall include
the singular, the singular, the plural, and the part of the
whole;
(iii) the word "or" has the inclusive meaning
frequently identified by the phrase "and/or";
(iv) accounting terms not otherwise defined
herein have the meanings assigned to them in accordance with
GAAP;
(v) the words "herein", "herewith", "hereunder"
and "hereof" and similar terms in this Agreement refer to this
Agreement as a whole and not to any particular provision of this
Agreement;
(vi) references herein to "Articles",
"Sections", "Subsections", "Paragraphs", and other subdivisions without
reference to a document are to designated Articles, Sections, Subsections,
Paragraphs and other subdivisions of this Agreement;
(vii) a reference to a Subsection without further
reference to a Section is a reference to such Subsection as
- 4 -
6
contained in the same Section in which the reference appears, and this rule
shall also apply to Paragraphs and other subdivisions;
(viii) the term "include" or "including" shall
mean, without limitation, by reason of enumeration; and
(ix) the term "satisfactory to Lender" or
"satisfaction of Lender" or "satisfactory to counsel" or "satisfaction of
counsel" or other similar terms means satisfactory to Lender or its counsel in
its sole and absolute discretion.
ARTICLE 2. THE LOAN
2.1 THE LOAN.
Subject to the terms and conditions and relying upon the
representations and warranties herein set forth, including, without limitation,
the fulfillment of each and every condition of lending, Lender agrees to make a
Loan to Borrower in the principal amount of Three Million Five Hundred Thousand
($2,800,000) Dolllars (the "Loan").
2.2 USE OF PROCEEDS.
The proceeds of the Loan shall be used by Borrower solely to refinance
the existing debts of Borrower secured by Liens on the assets of Borrower.
2.3 THE NOTE.
The obligation of Borrower to repay the Loan and to pay interest
thereon shall be evidenced by the Note. The Note shall be dated the Closing Date
and shall be executed by Borrower delivered to Lender on the Closing Date.
2.4 DISBURSEMENT.
Subject to the conditions set forth herein, Lender shall, on the
Closing Date, credit, by wire transfer, the amount of the Loan to the account of
the Person or Persons specified in writing by Borrower.
- 5 -
7
2.5 LOAN ACCOUNT.
Lender shall maintain a loan account on its books in the name of
Borrower for the Loan in which will be recorded all payments of principal
thereof and all accruals and payments of interest thereon. The entries in the
loan account (in the absence of manifest error in the making thereof) shall be
conclusive evidence of the outstanding principal thereof and accrued interest
thereon from time to time. Lender shall provide Borrower with statements of said
account from time to time on request.
2.6 INTEREST RATES.
2.6.1 INTEREST PRIOR TO MATURITY. Prior to maturity
(whether by acceleration or otherwise) the unpaid principal
amount of the Loan shall bear interest at the Interest Rate.
2.6.2 INTEREST AFTER MATURITY. Commencing with the day after
the principal amount of any part of the Loan shall have become due and payable
(by acceleration or otherwise), such part of the Loan or the entire Loan (as the
case may be) shall bear interest at the daily rate of five percent (5%) per
annum above the Interest Rate (the "Default Rate").
2.6.3 MAXIMUM RATE. Lender and Borrower intend the Loan
Documents to comply in all respects with all provisions of Law and not to
violate, in any way, any legal limitations on interest charges. Accordingly, if,
for any reason, Borrower is required to pay, or has paid, interest at a rate in
excess of the highest rate of interest which may be charged by Lender or which
Borrower may legally contract to pay under applicable law (the "Maximum Rate"),
then the Interest Rate shall be deemed to be reduced, automatically and
immediately, to the Maximum Rate, and interest payable hereunder shall be
computed and paid at the Maximum Rate and the portion of all prior payments of
interest in excess of the Maximum Rate shall be deemed to have been prepayments
of the outstanding principal of the Loan and applied to the installments in the
inverse order of their maturities.
2.7 PAYMENTS.
2.7.1 TIME; PLACE; MANNER. All payments to be made in respect
of principal, interest, or other amounts due from Borrower hereunder or under
the Note shall become due at 12:00 o'clock noon, New Jersey time, on the day
when due without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived. Such payments shall be made to Lender in
lawful money of the United States of America in immediately available funds.
2.7.2 PAYMENTS OF PRINCIPAL AND INTEREST. The Loan, together
with interest thereon at the Interest Rate, shall be repaid in one hundred and
twenty (120) equal consecutive monthly
- 6 -
8
payments of principal and interest each in an amount which will fully amortize
the Loan at the Interest Rate over the Term. If the Closing Date is not the
first day of the month, the first such monthly payment of principal and interest
shall be due and payable on the first day of the second month succeeding the
Closing Date and the payments shall continue on a like day in each and every
month thereafter through and including the Maturity Date, and Borrower shall
pay, at the Closing Date, interest only, at the Interest Rate, from the Closing
Date to the last day of the month in which the Closing Date occurs. If the
Closing Date is the first day of a month, the first such monthly payment of
principal and interest shall be due on the first day of the immediately
succeeding month. Lender shall compute the amount of each payment and advise
Borrower of such amount. The entire unpaid principal balance which was not
payable earlier, whether due to regularly scheduled payments, acceleration or
otherwise, together with any unpaid interest, fees, costs and charges shall be
due and payable on the Maturity Date. After the maturity of all or any part of
the Loan (by acceleration or otherwise), interest on the Loan or such part
thereof shall be due and payable at the Default Rate on demand.
2.7.3 APPLICATION OF PAYMENTS. Each payment under this
Agreement and the other Loan Documents shall be applied, first to fees, costs,
expenses and charges, if any, owing to Lender, then to interest as may be due
hereunder, and the balance of such payment shall be applied to the principal
balance of the Loan.
2.7.4 NET PAYMENTS. All payments hereunder and under the Note
shall be made by Borrower to Lender without defense, set-off, claim or
counterclaim and without deduction for any present or future income, stamp or
other taxes, levies, imposts, deductions, charges or withholdings whatsoever
imposed, assessed, levied or collected by or for the benefit of any jurisdiction
or taxing authority. In addition, Borrower shall pay any and all taxes (stamp or
otherwise) payable or determined to be payable in connection with the execution
and delivery of this Agreement, the Note and the other Loan Documents and on all
payments to be made by Borrower hereunder and under the Note and the other Loan
Documents (other than Lender's income taxes) and all taxes payable in connection
with or related to the Collateral.
2.8 PREPAYMENTS. Borrower may only prepay the Loan in accordance with
the terms of the Note and Article 9 below.
9
ARTICLE 3. SECURITY
3.1 SECURITY.
As security for the full and timely payment and performance of all of
the Obligations of Borrower to Lender, Borrower hereby assigns, pledges,
transfers and sets over to Lender, and hereby agrees that Lender shall have, and
hereby grants to and creates in favor of Lender, a first security interest under
the UCC subject to no other Liens, other than those from Borrower to Lender, in
and to the following, in each case whether now existing or hereafter arising,
now owned or hereafter acquired, wherever located ("Collateral"):
3.1.1 All personal property and fixtures of Borrower, of every
kind and description, including, without limitation, equipment, furniture,
machinery, licenses and permits as located on and or used in connection with the
Premises, subject only to any prior encumbrances on equipment at the Premises,
as previously disclosed to Lender; and
3.1.2 All accessions and additions thereto, substitutions for,
and all replacements of, any and all of the foregoing, and all proceeds of the
foregoing, cash and non-cash, including insurance proceeds.
3.2 LENDER HAS RIGHTS AND REMEDIES OF A SECURED PARTY.
In addition to all rights and remedies given to Lender by this
Agreement, Lender shall have all the rights and remedies of a secured party
under the UCC.
3.3 ADDITIONAL PROVISIONS APPLICABLE TO THE COLLATERAL.
The parties agree that, at all times during the term of this Agreement,
the following provisions shall be applicable to the Collateral:
3.3.1 Borrower covenants and agrees that it will keep accurate
and complete books and records concerning the Collateral owned or acquired by it
in accordance with GAAP.
3.3.2 Lender shall have the right to review the books and
records of Borrower pertaining to the Collateral and to copy the same and to
make excerpts therefrom, all at such reasonable times upon reasonable notice and
as often as Lender may reasonably request.
3.3.3 Borrower shall maintain and keep its principal place of
business and its chief executive office at the address set forth at the
beginning of this Agreement, and at no other location without giving Lender at
least thirty (30) days prior written notice of any move. Borrower shall maintain
and keep its records concerning the Collateral at such address and at no other
- 8 -
10
location without giving Lender at least thirty (30) days prior written notice of
any move. Borrower shall keep all Collateral only at the Premises. Borrower may
not move the Collateral without the prior written consent of Lender.
3.3.4 Except for Liens granted to Lender, Borrower shall not
sell, lease, transfer or otherwise dispose of or encumber any of the Collateral.
3.3.5 Borrower shall cause the Collateral to be maintained and
preserved in the same condition, repair and working order as when new, ordinary
wear and tear excepted, and shall promptly make or cause to be made all repairs,
replacements and other improvements in connection therewith which are necessary
or desirable to that end.
3.3.6 Borrower shall not affix or permit the Collateral to
become affixed to real estate or to any other goods, and such Collateral shall
remain personal property, whether or not so affixed.
3.4 CERTAIN COVENANTS.
Borrower covenants and agrees with Lender for the benefit of Lender
that:
3.4.1 Borrower has and will have good and merchantable title
to all of its assets, including the Collateral, in each case as from time to
time owned or acquired by it, and shall keep the Collateral free and clear of
all Liens, other than those granted to Lender. Borrower will defend such title
against the claims and demands of all Persons whomsoever.
3.4.2 Borrower will faithfully preserve and protect Lender's
Liens in the Collateral and will, at its own cost and expense, cause said Liens
to be perfected and continued perfected, and for such purpose Borrower will from
time to time at the request of Lender and at the expense of Borrower, make,
execute, acknowledge and deliver, and file or record, or cause to be filed or
recorded, in the proper filing places, all such instruments, documents and
notices, including without limitation financing statements and continuation
statements, as Lender may deem necessary or advisable from time to time in order
to perfect and continue perfected said security interest. Borrower will do all
such other acts and things and make, execute, acknowledge and deliver all such
other instruments and documents, including without limitation further security
agreements, pledges, endorsements, assignments and notices, as Lender may deem
necessary or advisable from time to time in order to perfect and preserve the
priority of said Liens as a first and only Lien on and security interest in the
Collateral prior to the rights of all other Persons therein or thereto.
- 9 -
11
3.4.3 Borrower will not, without the prior written consent of
Lender, (i) borrow or permit any Person to borrow against the Collateral other
than the Loan to Borrower from Lender pursuant to this Agreement; (ii) create,
incur, assume or suffer to exist any Lien with respect to any of the Collateral;
(iii) permit any levy or attachment to be made against any of the Collateral
except any levy or attachment relating to this Agreement; or (iv) permit any
mortgage/deed of trust or financing statement to be on record file with respect
to any of the Collateral, except mortgages/financing statements in favor of
Lender.
3.4.4 Risk of loss of, damage to or destruction of the
Collateral is and shall remain upon Borrower. Borrower will insure the
Collateral as provided in Section 5.3 of this Agreement. If Borrower fails to
effect and keep in full force and effect such insurance or fails to pay the
premiums thereon when due, Lender may do so for the account of Borrower and add
the cost thereof to the Obligations and the same shall be payable to Lender on
demand. Borrower hereby assigns and sets over unto Lender for the benefit of
Lender all moneys which may become payable on account of such insurance,
including without limitation any return of unearned premiums which may be due
upon cancellation of any such insurance, and directs the insurers to pay Lender
any amount so due. The proceeds of insurance shall be applied to reduction of
the Obligations in any order Lender may choose or, in Lender's sole discretion,
to the repair or replacement of the Collateral, or any part thereof, in which
case Lender may impose such conditions on the disbursement of the proceeds as
Lender in its sole discretion deems appropriate.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender that:
4.1 ORGANIZATION AND QUALIFICATION.
Borrower is duly organized, validly existing and in good standing as a
corporation under the Laws of the State of Florida with full power and authority
to own its properties and to transact its business as now transacted and as
contemplated to be transacted. Borrower is qualified and in good standing to
transact business in the States of Florida, Louisiana and Georgia.
4.2 AUTHORITY AND AUTHORIZATION.
Borrower has full power and authority to execute, deliver and carry out
the provisions of this Agreement, the Note, the Mortgages and the other Loan
Documents to which it is a party, to
- 10 -
12
borrow hereunder and under the other Loan Documents and to create the Liens
provided for herein, and to perform its obligations hereunder and thereunder,
and all such action has been duly and validly authorized by all necessary
proceedings on its part.
4.3 EXECUTION AND BINDING EFFECT.
This Agreement, the Note and the other Loan Documents to which Borrower
is a party have been duly and validly executed and delivered by Borrower and
constitute the legal, valid and binding obligation of Borrower enforceable in
accordance with their respective terms.
4.4 AUTHORIZATIONS AND FILINGS.
Except for the filing of UCC financing statements, no authorization,
consent, approval, license, exemption or other action by, and no registration,
qualification, designation, declaration or filing with, any governmental
authority is or will be necessary or advisable in connection with the execution
and delivery of this Agreement, the Note, the other Loan Documents or the
consummation by Borrower of the transactions herein and therein contemplated, or
performance by Borrower of or compliance by Borrower with, the terms and
conditions hereof or thereof.
4.5 ABSENCE OF CONFLICTS.
Neither the execution and delivery of this Agreement, the Note, or the
other Loan Documents, nor consummation of the transactions herein or therein
contemplated nor performance of, or compliance with the terms and conditions
hereof or thereof will (a) result in any violation or breach of (i) the
provisions of Borrower' Constituent Documents, or (ii) any Law, or the order,
rule or regulation of any court or governmental agency or body having
jurisdiction over Borrower, or any of their respective properties, or (iii) any
agreement, bond, note, instrument or indenture to which Borrower is a party or
pursuant to which any of their respective properties are affected, or (b) result
in the creation or imposition of any Lien upon any property (now owned or
hereafter acquired) of Borrower, except for the Lien created by this Agreement
and other Loan Documents between Lender and Borrower.
- 11 -
13
4.6 FINANCIAL STATEMENTS.
Borrower has heretofore furnished to Lender certain financial
statements and related financial information ("Financial Statements"). Such
Financial Statements (including the notes thereto) present fairly the financial
condition of Borrower as of the dates of the balance sheets contained therein,
and the results of its operations for the periods then ended, all in conformity
with GAAP on a basis consistent with that of Financial Statements for
corresponding prior periods. Except as disclosed therein, the Borrower has no
material contingent liabilities (including liabilities for taxes), unusual
forward or long-term commitments or unrealized or anticipated losses from
unfavorable commitments.
4.7 NO DEFAULTS.
There is no Default under the Loan Documents or under the terms of the
Secured Debt.
4.8 LITIGATION.
There is no pending or threatened claim or proceeding by or before any
court or governmental agency against or affecting Borrower which, if adversely
decided would have a material adverse effect on the business, operations or
financial condition of Borrower or on the ability of Borrower to perform its
obligations under this Agreement, the Note or the other Loan Documents or on the
Collateral.
4.9 TITLE TO COLLATERAL.
Borrower has good title to all of its assets, including, without
limitation, the Collateral and all assets reflected in the most recent balance
sheet referred to in Section 4.6 hereof, free and clear of all Liens covering
the Collateral, other than the Liens granted hereunder to Lender covering the
Collateral, which are and will at all times be perfected first Liens covering
the Collateral.
4.10 TAXES.
All tax returns required to be filed by Borrower have been properly
prepared, executed and filed. All taxes, assessments, fees and other
governmental charges upon Borrower or upon any of its properties, incomes, sales
or franchises which are due and payable have been paid.
4.11 FINANCIAL ACCOUNTING PRACTICES.
Borrower makes and keeps books, records and accounts which, in
reasonable detail, accurately and fairly reflect Borrower's transactions and
dispositions of its assets.
- 12 -
14
4.12 POWER TO CARRY ON BUSINESS.
Borrower has all requisite power and authority to own and operate their
respective properties and to carry on its businesses as now conducted and as
presently planned to be conducted.
4.13 NO MATERIAL ADVERSE CHANGE.
Since the date of the Financial Statements referred to in Section 4.6,
there has been no material adverse change in the business, operations or
financial condition of Borrower.
4.14 COMPLIANCE WITH LAWS.
The Borrower is not in violation of any Law, except for violations
which in the aggregate do not have a material adverse effect on the business,
operations or financial condition of Borrower or on the Collateral.
4.15 COMPLIANCE WITH AGREEMENTS.
The Borrower is not default under any agreement, bond, note, indenture
or contract, except for defaults which in the aggregate do not have a material
adverse effect on the business, operation or financial condition of Borrower or
on the Collateral.
4.16 BANKRUPTCY.
The Borrower has not made or contemplates an assignment for the benefit
of creditors. No application or petition has been filed for the appointment of a
custodian, trustee, receiver or agent to take possession of the Collateral, or
to take possession of any of the other properties or assets of Borrower.
Borrower is generally paying its debts as such debts become due. The Borrower is
not "insolvent" as that term is defined in Section 101(26) of the "Bankruptcy
Code" (Title 11 of the United States Code, 11 U.S.C. Section 101, et seq.) or
would be insolvent after giving effect to the Loan and the transactions
contemplated by the Loan Documents. The Borrower has not filed a petition with
the Bankruptcy Court under the Bankruptcy Code, or commenced any proceeding
relating to Borrower under any bankruptcy or reorganization statute or under any
arrangement, insolvency, readjustment of debt, dissolution or liquidation law of
any jurisdiction. No petition or application of the type described above has
been filed or commenced against Borrower, in which (i) Borrower, by any act, has
indicated or intends to indicate its approval thereof, consent thereto, or
acquiescence therein; (ii) an order has been or is expected to be entered
appointing any such custodian, trustee, receiver or agent, adjudicating Borrower
bankrupt or insolvent, or approving such petition or application
- 13 -
15
in any such proceeding; (iii) the Bankruptcy Court has ordered or is expected to
order relief against Borrower under the Bankruptcy Code; or (iv) such petition
or application was not dismissed within ninety (90) days of such filing or
commencement.
4.17 ACCURATE AND COMPLETE DISCLOSURE.
No representation or warranty made by Borrower in this Agreement and no
statement made by Borrower in the Financial Statements furnished pursuant to
Section 5.6 hereof or otherwise, or any certificate, report, exhibit or document
furnished by Borrower to Lender pursuant to or in connection with this Agreement
or the Loan is false or misleading in any material respect (including by
omission of material information necessary to make such representation, warranty
or statement not misleading).
4.18 REGULATIONS G AND U.
Borrower is not engaged in the business of extending credit for the
purpose of purchasing or carrying "margin stock", as such term is used in
Regulations G or U promulgated by the Board of Governors of the Federal Reserve
System as amended from time to time. No part of the proceeds of the Loan will be
used to purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any "margin stock". Borrower does not own any
"margin stock".
4.19 PERFECTION.
There are no other Liens covering the Collateral, except as previously
disclosed to Lender.
4.20 PLACE OF BUSINESS.
Both the place of business (or chief executive office if there is more
than one place of business) of Borrower and the place where it keeps its
corporate records concerning the Collateral and all of its interest in, to and
under this Agreement are located at the address set forth at the beginning of
this Agreement.
4.21 LOCATION OF COLLATERAL.
For all purposes, including, without limitation, perfection of security
interests therein under Article 9 of the UCC, the Collateral is deemed located
and at all times shall be located at the Premises.
4.22 NAME CHANGES, MERGERS, ACQUISITIONS. Borrower has not
within the six-year period immediately preceding the Closing
Date, changed its name, been the surviving entity of a merger or
- 14 -
16
consolidation, or acquired all or substantially all of the assets of any Person.
ARTICLE 5. COVENANTS
Borrower covenants that from and after the date hereof and until
payment in full of the Note and interest thereon and all other amounts due from
Borrower hereunder or under the Note or the other Loan Documents, unless Lender
shall otherwise consent in writing:
5.1 REPORTING AND INFORMATION REQUIREMENTS.
5.1.1 ANNUAL FINANCIAL STATEMENTS. As soon as practicable, and
in any event within ninety (90) days after the close of each fiscal year of
Borrower, Borrower shall furnish to Lender its annual audit reports for such
year for Borrower including audited statements of income, retained earnings and
changes in financial position of Borrower for such fiscal year and audited
balance sheets of Borrower as of the close of such fiscal year, and notes to
each, all in reasonable detail, setting forth in comparative form the
corresponding figures for the preceding fiscal year where such presentation is
appropriate under GAAP, certified without qualification by independent certified
public accountants of recognized standing selected by Borrower and satisfactory
to Lender, together with (or included in such certification) a written statement
of such accountants substantially to the effect that (i) such accountants
examined such financial statements in accordance with generally accepted
auditing standards and accordingly made such tests of accounting records and
such other auditing procedures as they considered necessary in the circumstances
and (ii) in the opinion of such accountants such financial statements present
fairly the financial position of Borrower as of the end of such fiscal year and
the results of its operations and the changes in its financial position for the
fiscal year then ended, in conformity with GAAP applied on a basis consistent
with that of the preceding fiscal year (except for changes in application in
which such accountants concur).
5.1.2 QUARTERLY FINANCIAL STATEMENTS. Within forty-five (45)
days after the end of each of the first three fiscal quarters of each fiscal
year, Borrower shall furnish to Lender a copy of its interim financial
statements of the type described in Section 5.1.1 above, certified by an
Executive Officer of Borrower or if Borrower chooses, audited, as set forth in
Section 5.1.1 above, and certified by an Executive Officer of Borrower.
5.1.3 FURTHER REQUESTS. Borrower will promptly furnish to
Lender such other information (financial or otherwise)
- 15 -
17
concerning Borrower, its assets or the Collateral in such form as Lender may
reasonably request.
5.1.4 COMPLIANCE CERTIFICATES. At the same time Borrower
delivers the financial statements required under the provisions of Sections
5.1.1 and 5.1.2, Borrower shall furnish to Lender a certificate of an Executive
Officer to the effect that no Default or Event of Default exists, or, if such
cannot be so certified, specifying in reasonable detail the exceptions, if any,
to such statement. Such certificate shall be accompanied by a detailed
calculation indicating compliance with Article 5 hereof.
5.1.5 NOTICE OF EVENT OF DEFAULT. Promptly upon
becoming aware of any Default or Event of Default, Borrower shall give Lender
notice thereof, together with a written statement of a Chief Executive Officer
of Borrower setting forth the details thereof and any action with respect
thereto taken or contemplated to be taken by Borrower.
5.1.6 NOTICE OF MATERIAL ADVERSE CHANGE. Promptly upon
becoming aware thereof, Borrower shall give Lender written notice about any
material adverse change in the business, operations or financial condition of
Borrower or on the Collateral or on the ability of Borrower to perform their
obligations under this Agreement, the Note or the other Loan Documents.
5.1.7 NOTICE OF MATERIAL PROCEEDINGS. Promptly upon becoming
aware thereof Borrower shall give Lender written notice of the commencement,
existence or threat of any proceeding by or before any court or administrative
agency against or affecting Borrower or the Collateral which, if adversely
decided, would have a material adverse effect on the business, operations or
financial condition of Borrower or on the ability of Borrower to perform its
obligations under this Agreement, the Note, the other Loan Documents or on the
Collateral.
5.1.8 VISITATION. Borrower shall permit such persons as Lender
may designate to visit and inspect the Collateral and to examine the books and
records of Borrower and take copies and extracts therefrom, and to discuss its
affairs with officers of Borrower and its independent accountants, at such
reasonable times and as often as Lender may reasonably request.
5.1.9 OTHER DELIVERIES. Promptly upon their becoming
available, Borrower shall furnish to Lender, copies of all registration
statements and any amendments and supplements thereto and any regular and
periodic reports filed by Borrower with any securities exchange or with the
Securities and Exchange Commission or any governmental authority succeeding to
any or all of the functions of said commissions and all letters of comment
- 16 -
18
or correspondence sent to Borrower from such exchanges or to such exchanges from
Borrower.
5.2 PRESERVATION OF EXISTENCE AND FRANCHISES.
5.2.1 The Borrower shall not enter into any merger,
reorganization or consolidation, or wind up, liquidate or dissolve, nor agree to
do any of the foregoing.
5.2.2 Borrower will qualify to do business and will remain in
good standing under the laws of each jurisdiction in which it is required to be
qualified by reason of the location of the properties owned or leased by it or
the conduct of its business.
5.2.3 Borrower shall do, or cause to be done, all things
reasonably necessary to preserve and keep in full force and effect its corporate
existence and all permits, licenses, rights and privileges necessary or
appropriate for the conducting of its restaurant business as now and hereafter
conducted. Borrower shall not change its name, except as Borrower may use trade
names. Borrower shall continue to engage in the same kind of restaurant business
and shall not make any material change in its business or in the nature of its
operations or engage in any unrelated line of business.
5.2.4 Borrower will comply with all Laws relative to the
conduct of its business or the location of the properties owned or leased by it,
the non-compliance with which could have a material adverse effect on the
business, operations, assets or financial or other condition of Borrower, as
contemplated hereby, or the ability of Borrower to perform its Obligations under
this Agreement, the Note or the other Loan Documents and will obtain or cause to
be obtained as promptly as possible any permit, license, consent, privilege or
approval of any governmental authority and make any filing or registration
therewith which at the time shall be required with respect to the performance of
its Obligations under this Agreement, the Note or the other Loan Documents or
for the operation of its business as presently conducted or as contemplated by
it.
5.2.5 Borrower shall not (a) convey, assign, sell, mortgage,
encumber, pledge, hypothecate, grant a security interest in, grant options with
respect to, lease or otherwise dispose of all or any part of any legal or
beneficial interest in any part or all of the Collateral (including, without
limitation, the Premises) or any interest therein; or (b) convey, assign,
transfer or otherwise dispose of a material portion of its assets (other than
the Collateral, the prohibition on transfer of which is governed by subparagraph
(a) above).
- 17 -
19
5.3 INSURANCE.
Borrower shall, at its own expense, maintain and deliver evidence to
Lender of such insurance as required by Lender.
5.4 PAYMENT OF TAXES AND OTHER POTENTIAL CHARGES.
Borrower shall pay or discharge
5.4.1 all taxes, assessments and other governmental charges or
levies imposed upon it or any of its properties, including the Collateral, or
income (including such as may arise under ERISA or any similar provision of
law), on or prior to the date on which penalties attach thereto; and
5.4.2 all lawful claims of materialmen, mechanics, carriers,
warehousemen, landlords and other like Persons which, if unpaid, might result in
the creation of a Lien upon any such property, on or prior to the date when due;
PROVIDED, that unless and until foreclosure, distraint, levy, sale or similar
proceedings shall have been commenced, Borrower need not pay or discharge any
such tax, assessment, charge, levy, claim or current liability so long as (i)
the validity thereof is contested in good faith and by appropriate proceedings
diligently pursued, (ii) in Lender's sole judgment there is no reasonably
foreseeable risk of forfeiture of the Collateral, and (iii) such reserves or
other appropriate provisions as may be required by GAAP shall have been made
therefor, and so long as such failure to pay or discharge does not have a
material adverse effect on the business, operations or financial condition of
Borrower or the Collateral.
5.5 FINANCIAL ACCOUNTING PRACTICES.
Borrower shall make and keep books, records and accounts which, in
reasonable detail, accurately and fairly reflect its business, including all
transactions and dispositions of its assets, all prepared in accordance with
GAAP. Lender and/or its agents shall have the right to review the books and
records of Borrower and to photocopy the same and to make excerpts therefrom, at
all reasonable times and upon reasonable notice and as often as Lender may
reasonably request.
- 18 -
20
5.6 COMPLIANCE WITH LAWS.
Borrower shall comply with all applicable Laws in all respects,
PROVIDED, that Borrower shall not be deemed to be in violation of this Section
5.6 as a result of any failures to comply which would not result in fines,
penalties, injunctive relief or other civil or criminal liabilities which, in
the aggregate, would not materially affect the business or operations of
Borrower or the ability of Borrower to perform its obligations under this
Agreement, the Note or the other Loan Documents or the Collateral.
5.7 MATERIAL OBLIGATIONS.
Borrower shall pay and satisfy, when due, all material liabilities and
obligations, including, without limitation, all obligations under all leases
(real or personal property) to which it is a party.
5.8 MAINTENANCE OF COLLATERAL.
Borrower will maintain and preserve the Collateral in good condition,
repair and working order, promptly repairing, replacing or rebuilding any part
of the Collateral which may be destroyed by any casualty, or become damaged,
worn or dilapidated.
5.9 MAINTENANCE OF PRINCIPAL PLACE OF BUSINESS.
Borrower shall maintain and keep its principal place of business and
chief executive office at the address set forth at the beginning of this
Agreement, and at no other location without giving Lender at least thirty (30)
days prior written notice of any move. Borrower shall maintain and keep its
records at such address and at no other location without giving Lender at least
thirty (30) days prior written notice of any move.
5.10 AMENDMENT TO CONSTITUENT DOCUMENTS.
Borrower shall not amend or modify any of its Constituent Documents.
5.11 SATISFACTION OF CERTAIN OBLIGATIONS.
In the event Borrower fails to make any payment or do any act as herein
provided (including, but not limited to, maintaining any insurance required to
be maintained under the Loan Documents or paying all taxes in accordance with
the terms hereof) or there shall be a claim or Lien asserted or filed against
the Collateral, Lender may, but shall not be obligated to (and without releasing
Borrower from any obligation hereunder), make all such payments and perform all
such acts or otherwise
- 19 -
21
satisfy such obligations. All sums paid by Lender in respect thereof and all
costs, fees and expenses, including reasonable attorneys' fees, court costs,
expenses and other charges relating thereto, which are incurred by Lender on
account thereof, shall bear interest at the Default Rate, shall be payable on
demand by Borrower to Lender, and shall be additional Obligations hereunder
secured by the Collateral.
5.12 FURTHER ASSURANCES.
Borrower shall cause to be done, executed, acknowledged and delivered
all and every such further act, conveyance and assurance as Lender shall require
for accomplishing the purposes of this Agreement, the Note and the other Loan
Documents. Borrower will defend and protect its title with respect to the
Collateral and will indemnify Lender with respect thereto. Any payment in
respect of such indemnity shall be made directly to Lender on demand in
immediately available funds. Forthwith after notice from Lender, Borrower shall
promptly, without further consideration, execute, acknowledge and deliver such
further instruments and documents and will take such other actions as Lender may
deem necessary or advisable from time to time to ensure the enforceability or
priority of the Liens granted hereby, or otherwise to confirm and carry out the
intent and purpose of this Agreement.
ARTICLE 6. FINANCIAL COVENANTS
6.1 CASH FLOW COVERAGE RATIO.
Borrower shall be in compliance with the following financial covenants
(all financial terms used herein shall be determined in accordance with GAAP
consistently applied, except as they may be otherwise defined herein):
Borrower shall maintain a Cash Flow Coverage Ratio of not less than
1.75 to 1.0. "Cash Flow Coverage Ratio" means at any date, the ratio of (x) the
sum of the net income of Borrower, plus depreciation, plus amortization of
intangibles, plus amortization of capitalized costs that relate to expenses
actually incurred in the pre-opening of Franchise restaurants, plus interest
expense actually paid on all senior debt ("Interest Expense"), plus capitalized
lease obligations to (y) Interest Expense plus for any period the sum of current
maturities of senior debt plus scheduled principal payments under capitalized
leases under which Borrower is the obligor. For the purposes of calculating the
Cash Flow Coverage Ratio, extraordinary gains and losses on the sale of assets
shall be excluded and inventory shall be calculated on a first in first out
basis.
- 20 -
22
6.2 LEVERAGE RATIO.
Borrower shall maintain at all times throughout the Term a Leverage
Ratio of not greater than 3.0 to 1.0. Leverage Ratio means at any date, the
ratio of (x) all of the Indebtedness of Borrower to (y) (a) the aggregate amount
of all assets of Borrower as may be properly classified as such in accordance
with GAAP consistently applied excluding such other assets as are properly
classified as intangible assets under GAAP, less (b) the aggregate amount of all
liabilities of the Borrower. "Indebtedness" means with respect to Borrower, all:
(i) liabilities or obligations, direct and contingent, which in accordance with
GAAP would be included in determining total liabilities as shown on the
liability side of a balance sheet of Borrower at the date as of which
Indebtedness is to be determined, including, without limitation, contingent
liabilities which, in accordance with such principles, would be set forth in a
specific dollar amount on the liability side of such balance sheet, and
capitalized lease obligations of Borrower; (ii) liabilities or obligations of
others for which Borrower is directly or indirectly liable, by way of guaranty
(whether by direct guaranty, suretyship, discount, endorsement, take-or-pay
agreement, agreement to purchase or advance or keep in funds or other agreement
having the effect of a guaranty) or otherwise; (iii) liabilities or whether or
not such liabilities or obligations shall have been assumed by it; and (iv)
liabilities or obligations of Borrower, direct or contingent, with respect to
letters of credit issued for the account of such Borrower and bankers
acceptances created for Borrower.
ARTICLE 7. DEFAULTS AND REMEDIES
7.1 EVENTS OF DEFAULT.
A default by the Borrower under the terms of this agreement, shall
constitute a default under the terms of the Loan Documents which secure the
Obligations of Borrower to Lender.
The occurrence of one or more of the following described events is an
Event of Default:
7.1.1 Borrower fails to make any payment of principal of or
interest on the Note or under the terms of this agreement or the Loan Documents,
within five (5) days when due; or
7.1.2 Borrower fails to perform or observe any of its
covenants or agreements contained herein or in any other Loan Documents which
cannot be cured; or
7.1.3 Borrower fails to perform or observe any other covenant
or agreement to be performed or observed by it hereunder or under the other Loan
Documents and such failure continues
- 21 -
23
unremedied for a period of thirty (30) days after written notice of such failure
by Lender to Borrower; or
7.1.4 Borrower voluntarily creates, suffers to exist, incurs
or assumes any Lien, security interest, charge or encumbrance on, or with
respect to, any part of or all the Collateral (other than Liens permitted under
this Agreement) (collectively, the "Second Lien"), or the Liens held by Lender
in and to the Collateral shall cease to be the first perfected Lien in and to
the Collateral provided, however, Borrower shall be permitted within thirty (30)
days of the existence of a Second Lien to bond over such Second Lien with an
unrelated third party; or
7.1.5 Borrower sells, assigns, leases, or otherwise
disposes of or relinquishes possession of, any Collateral except
as permitted hereunder; or
7.1.6 any representation or warranty made by Borrower herein
or in any other Loan Documents or in any document or certificate furnished by
Borrower to Lender in connection herewith or therewith at any time proves to
have been incorrect in any material respect when made; or
7.1.7 this Agreement or any Loan Documents at any time for any
reason ceases to be in full force and effect or is declared by a court or
governmental agency of competent jurisdiction to be null and void; or
7.1.8 Borrower is indicted or threatened with indictment by a
governmental authority under any criminal statute or there is commenced against
Borrower a criminal or civil proceeding pursuant to which the proceedings,
penalties or remedies sought or available include forfeiture of any of the
Collateral or a material portion of the assets of Borrower; or
7.1.9 there is a material adverse change in the
business, operations or financial condition of Borrower or in the
Collateral; or
7.1.10 a proceeding is instituted seeking a decree or order
for relief in respect of Borrower in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect or for
the appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of Borrower, or for any substantial
part of its properties or for the dissolution, winding-up or liquidation of its
affairs or any substantial part of any of its properties and such proceeding
remains undismissed or unstayed for a period of sixty (60) consecutive days or
such court enters a decree or order granting the relief sought in such
proceeding; or
- 22 -
24
7.1.11 Borrower voluntarily suspends transaction of its
business, commences a voluntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect, consents to the entry of an
order for relief in an involuntary case under any such law or consents to the
appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar official) of Borrower for any
substantial part of any of its properties, or makes a general assignment for the
benefit of creditors, or takes any action in furtherance of any of the
foregoing; or
7.1.12 There shall be a judgment or judgments against Borrower
for any amount in excess of $25,000 in the aggregate, which shall remain unpaid,
unstayed on appeal, undischarged, unbonded with unrelated third party, covered
by insurance or undismissed for a period of thirty (30) days or more; or
7.1.13 Borrower fails to perform or observe any of its
covenants or agreements contained in Section 5.3 hereof or any such insurance
shall at any time cease to be in full force and effect; or
7.1.14 Borrower ceases to operate the Premises as a
Roadhouse Grill.
7.2 REMEDIES.
In case of an Event of Default, Lender may, at any time
thereafter, at its option and without notice, exercise any or all of the
following remedies:
7.2.1 ACCELERATION. Declare the entire Obligations
immediately due and payable, without notice, and it shall thereupon be
immediately due and payable; or
7.2.2 JUDICIAL FORECLOSURE AND OTHER ACTION. Commence and
maintain an action or actions in any court of competent jurisdiction to
foreclose the Mortgages pursuant to the Laws of the state where the Premises are
located or to obtain specific enforcement of the covenants of Borrower
hereunder. Borrower agrees that such covenants shall be specifically enforceable
by injunction or any other appropriate equitable remedy; or
7.2.3 OFFSET RIGHTS. Apply in satisfaction of the Obligations
or any amount at any time to become due or payable in connection with the
ownership, occupancy, use, restoration or repair of the Premises, any deposits
or other sums credited by or due from Lender to Borrower, including, without
limitation, Insurance Proceeds and the Taking Proceeds (as defined in the Loan
Documents); or
- 23 -
25
7.2.4 CURE A DEFAULT. Without releasing Borrower from any
obligation hereunder or under the Loan Documents, cure any default by Borrower.
In connection therewith, Lender may enter upon the Premises and do such acts and
things as Lender deems necessary or desirable to protect the Premises or the
Leases (as defined in the Loan Documents); or
7.2.5 POSSESSION OF PREMISES. Take physical possession of the
Premises and of all books, records, documents and accounts relating thereto and
exercise, without interference from Borrower, any and all rights which Borrower
has with respect to the Premises, including, without limitation, the right at
Borrower's expense, to rent and lease the same and to hire a professional
property manager for the Premises. If necessary to obtain possession as provided
for above, Lender may, without liability to Borrower or other persons, invoke
any and all legal remedies to dispossess Borrower, including, without
limitation, one or more actions for forcible entry and detainer, trespass and
restitution. In connection with any action taken by Lender pursuant to this
Section 7.2.5 Lender shall not be liable for any loss sustained by Borrower
resulting from any failure to let the Premises or from any other act or omission
of Lender in managing the Premises unless caused by the willful misconduct or
gross negligence of Lender, nor shall Lender be obligated to perform or
discharge any obligation, duty or liability under any Lease or by reason of any
Loan Document. Should Lender incur any such liability, the amount thereof shall
be secured hereby and Borrower shall reimburse Lender therefor immediately upon
demand. Lender shall have full power to make, from time to time, all
alterations, renovations, repairs and replacements to the Premises as may seem
proper to Lender; or
7.2.6 RECEIVER. Secure the appointment of a receiver for the
Premises whether such receivership be incident to a proposed sale of such
Premises or otherwise, and without regard to the value of the Premises or the
solvency of Borrower. Borrower hereby consents to the appointment of such
receiver or receivers, waives any and all defenses to such appointment and
agrees not to oppose any application therefor by Lender. The appointment of such
receiver, trustee or other appointee by virtue of any court order, or laws shall
not impair or in any manner prejudice the rights of Lender to receive payment of
rents and income; or
- 24 -
26
7.2.7 UNIFORM COMMERCIAL CODE REMEDIES. Exercise any and all
rights of a secured party with respect to that portion of the Mortgage which
constitutes personal property under the UCC of the state. Written notice mailed
to Borrower, as provided herein, 10 days prior to the date of public sale of the
Personalty (as defined in the Mortgages) or prior to the date, after which
private sale of such Personalty will be made, shall constitute reasonable
notice. Any sale made pursuant to the provisions of this Section 7.2.7 shall be
deemed to have been a public sale conducted in a commercially reasonable manner,
if held contemporaneously with the sale of the remainder of the Premises. In the
event of a foreclosure sale, whether made by Lender under the terms hereof, or
under judgment of a court, such Personalty and the other parts of the Premises
may, at the option of Lender, be sold in parts or as a whole; or
7.2.8 SUBROGATION. Have and exercise all rights and remedies
of any person, entity or body politic to whom Lender renders payment or
performance in connection with the exercise of its rights and remedies under the
Loan Documents; or
7.2.9 OTHER. Take such other actions or commence such other
proceedings as Lender deems necessary or advisable to protect its interest in
the Premises and/or collect the Obligations.
Any sums advanced by Lender under this Article hereof shall bear
interest at the Default Rate, (but in no event more than the maximum rate
permitted by law); and shall be payable by Borrower on demand and such sums
together with such interest thereon shall constitute a part of the Obligations.
7.3 HOLDING OVER. Should Borrower, after an Event of Default, continue
in possession of any part of the Premises unlawfully, Borrower shall be a tenant
from day to day, terminable at the will of either Borrower or Lender, at a
reasonable rental per diem, such rental to be due and payable daily to Lender.
7.4 GENERAL PROVISIONS RELATING TO REMEDIES.
7.4.1 CUMULATIVE REMEDIES. All of the rights, remedies and
options set forth herein or otherwise available at law or in equity are
cumulative and concurrent and may be exercised without regard to the adequacy of
or exclusion of, any other right, remedy, option or security held by Lender.
7.4.2 RIGHT TO PURCHASE. At any sales of the Premises pursuant
hereto, Lender shall have the right to purchase the Premises being sold, and in
such cases the right to credit against the amount of the bid made therefor (to
the extent necessary) all or any of the Obligations then due. If Lender
- 25 -
27
acquires the Premises Borrower shall not be entitled to any proceeds of the
further sale of the Premises by Lender.
7.4.3 NO WAIVER OR RELEASE BY LENDER. Lender may resort to any
remedies and the security given by the Loan Documents in whole or in part, and
in such portions and in such order as may seem best to Lender in its sole
discretion, and any such action shall not in any way be considered as a waiver
of any of the rights, benefits or remedies evidenced by the Loan Documents. The
failure of Lender to exercise any right, remedy or option provided for in the
Loan Documents shall not be deemed to be a waiver of any of the covenants or
obligations secured by the Loan Documents. No sale of all or any of the
Premises, no forbearance on the part of Lender and no extension of the time for
the payment of the whole or any part of the Obligations or any other indulgence
given by Lender to Borrower or any other person or entity including, without
limitation, any surrender, compromise, release, renewal, extension, exchange or
substitution which Lender may grant in respect of the Premises or any interest
therein or any release or indulgence granted to any maker, endorser, guarantor
or surety of any of the Obligations, shall operate to release or in any manner
affect Lender's interest in the Premises or the liability of Borrower to pay the
Obligations, except to the extent that such liability shall be reduced by
proceeds of sale of all or any of the Premises received by Lender.
7.4.4 WAIVER BY BORROWER. Borrower hereby waives
the benefit of any laws providing for appraisal or redemption, waives any right
to bring or utilize any defense, counterclaim or setoff, other than one in good
faith which denies the existence or sufficiency of the facts upon which the
foreclosure action is grounded or which is based on Lender's wrongful actions.
If any defense, counterclaim or setoff (other than one permitted by the
preceding sentence) is timely raised in such foreclosure action, such defense,
counterclaim or setoff shall be dismissed. If such defense, counterclaim or
setoff is based on a claim which could be tried in an action for money damages,
the foregoing waiver shall not bar a separate action for such damages (unless
such claim is required by Laws or applicable rules of procedure to be pleaded in
or consolidated with the action initiated by Lender) but such separate action
shall not thereafter be consolidated with Lender's foreclosure action. The
bringing of such separate action for money damages shall not be deemed to afford
any grounds for staying Lender's foreclosure action.
- 26 -
28
ARTICLE 8. EXPENSES AND INDEMNITIES
8.1 EXPENSES.
Borrower shall promptly reimburse Lender for all costs, fees and
expenses incurred by Lender in connection with the negotiation, preparation,
execution, delivery, administration, operation and enforcement of each of the
Loan Documents, including, but not limited to, the attorneys' and paralegals'
fees of in-house and outside counsel, expert witness fees, lien, title search
and insurance fees, appraisal fees, all charges and expenses incurred in
connection with any and all environmental reports and environmental remediation
activities, and all other costs, expenses, taxes and filing or recording fees
payable in connection with the transactions contemplated by this Agreement,
including, without limitation, all such costs, fees and expenses as Lender shall
incur or for which Lender shall become obligated in connection with (i) any
proceeding relating to the Loan Documents or the Collateral, (ii) actions taken
with respect to the Collateral and Lender's security interest therein,
including, without limitation, the defense or prosecution of any action
involving Lender and Borrower or any third party, (iii) enforcement of any of
Lender's rights and remedies with respect to the Obligations or Collateral, (iv)
consultation with Lender's attorneys and participation in any workout,
bankruptcy or other insolvency or other proceeding involving any Borrower or any
affiliate, whether or not suit is filed, and (v) any other matters relating to
or arising out of the Loan and/or the Loan Documents. After an Event of Default,
Borrower shall be responsible and liable for any and all costs incurred by
Lender in connection with any inspection or verification of the Collateral.
- 27 -
29
8.2 ENVIRONMENTAL MATTERS.
8.2.1 DEFINITIONS. The following definitions apply to the
provisions of this Section 8.2: (a) the term "Applicable Law" shall include, but
shall not be limited to, each statute named or referred to in this Section 8.2.1
and all rules and regulations thereunder, and any other local, state and/or
federal laws, rules, regulations or ordinances, whether currently in existence
or hereafter enacted, which govern, to the extent applicable to the Premises or
to Borrower, (i) the existence, cleanup and/or remedy of contamination on real
property; (ii) the protection of the environment from soil, air or water
pollution, or from spilled, deposited or otherwise emplaced contamination; (iii)
the emission or discharge of hazardous substances into the environment; (iv) the
control of hazardous wastes; or (v) the use, generation, transport, treatment,
removal or recovery of Hazardous Substances; (b) the term "Hazardous
Substance(s)" shall mean (i) any oil, flammable substance, explosives,
radioactive materials, hazardous wastes or substances, toxic wastes or
substances or any other wastes, materials or pollutants which either pose a
hazard to the Premises or to persons on or about the Premises or cause the
Premises to be in violation of any Applicable Law; (ii) asbestos in any form
which is or could become friable, urea formaldehyde foam insulation,
transformers or other equipment which contain dielectric fluid containing levels
of polychlorinated biphenyls, or radon gas; (iii) any chemical, material or
substance defined as or included in the definition of "hazardous substances,"
"waste," "hazardous wastes," hazardous materials," "extremely hazardous waste,"
"restricted hazardous waste," or "toxic substances" or words or similar import
under any Applicable Law, including, but not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), 42 USC ss.
9601 ET SEQ.; the Resource Conservation and Recovery Act ("RCRA"), 42 USC ss.
6901 ET SEQ.; the Hazardous Materials Transportation Act, 49 USC ss. 1801 ET
SEQ.; the Federal Water Pollution Control Act, 33 USC ss. 1251 ET SEQ.; and
every other Applicable Law; (iv) any other chemical, material or substance,
exposure to which is prohibited, limited or regulated by any governmental
authority which may or could pose a hazard to the health or safety of the
occupants of the Premises or the owners and/or occupants of property adjacent to
or surrounding the Premises, or any other person coming upon the property or
adjacent property; and (v) any other chemical, materials or substance which may
or could pose a hazard to the environment.
8.2.2 COVENANTS AND REPRESENTATIONS. (1) Borrower represents
and warrants that there have not been during the period of Borrower's possession
of any interest in the Premises and, to the best of its knowledge after
reasonable inquiry, there have not been at any other time, any activities on the
Premises involving, directly or indirectly, the use, generation,
- 28 -
30
treatment, storage or disposal of any Hazardous Substances except in compliance
with Applicable Law (i) under, on or in the land included in the Premises,
whether contained in soil, tanks, sumps, ponds, lagoons, barrels, cans or other
containments, structures or equipment, (ii) incorporated in the buildings,
structures or improvements included in the Premises, including any building
material containing asbestos, or (iii) used in connection with any operations on
or in the Premises. (2) Without limiting the generality of the foregoing and to
the extent not included within the scope of this Section 8.2.2, Borrower
represents and warrants that it is in full compliance with Applicable Law and
has received no notice from any person or any governmental agency or other
entity of any violation by Borrower or its affiliates of any Applicable Law. (3)
Borrower shall be solely responsible for and agrees to indemnify Lender, protect
and defend Lender with counsel reasonably acceptable to Lender, and hold Lender
harmless from and against any claims, actions, administrative proceedings,
judgments, damages, punitive damages, penalties, fines, costs, liabilities
(including sums paid in settlements of claims), interest or losses, attorneys'
fees (including any fees and expenses incurred in enforcing this indemnity),
consultant fees, expert fees, and other out-of-pocket costs or expenses actually
incurred by Lender (collectively, the "Environmental Costs"), that may, at any
time or from time to time, arise directly or indirectly from or in connection
with: (i) the presence, suspected presence, release or suspected release of any
Hazardous Substance whether into the air, soil, surface water or groundwater of
or at the Premises, or any other violation of Applicable Law, or (ii) any breach
of the foregoing representations and covenants; except to the extent any of the
foregoing result from the actions of Lender, its employees, agents and
representatives. All Environmental Costs incurred or advanced by Lender shall be
deemed to be made by Lender in good faith and shall constitute Obligations
hereunder.
ARTICLE 9. MISCELLANEOUS
9.1 FURTHER ASSURANCES.
Borrower shall at any time and from time to time upon the written
request of Lender, execute and deliver such further agreements, instruments and
documents and do such further acts and things as Lender may reasonably request
in order to effect the purposes of this Agreement.
- 29 -
31
9.2 GENERAL INDEMNITY.
Borrower shall indemnify, defend and hold harmless Lender from
and against, and, upon demand, reimburse Lender for, all claims, demands,
liabilities, losses, damages, judgments, penalties, costs and expenses,
including, without limitation, reasonable attorneys' fees and disbursements,
which may be imposed upon, asserted against or incurred or paid by Lender, on
account of any act performed or omitted to be performed under this Agreement,
the Note or the other Loan Documents or on account of any transaction arising
out of or in any way connected with the Collateral or this Agreement, the Note
or the other Loan Documents (including, without limitation, any litigation
matter involving claims or alleged claims by or disputes with third parties),
except as a result of the willful misconduct or gross negligence of Lender.
9.3 NO IMPLIED WAIVER; CUMULATIVE REMEDIES.
No course of dealing and no delay or failure of Lender in exercising
any right, power or privilege under this Agreement, the Note or any of the other
Loan Documents shall affect such right, power or privilege except as and to the
extent that the assertion of any such right, power or privilege shall be barred
by an applicable statute of limitations; nor shall any single or partial
exercise thereof or any abandonment or discontinuance of steps to enforce such a
right, power or privilege preclude any further exercise thereof or of any other
right, power or privilege. The rights and remedies of Lender under this
Agreement, the Note or the other Loan Documents are cumulative and not exclusive
of any rights or remedies which Lender would otherwise have.
9.4 TAXES.
Borrower agrees to pay or reimburse Lender for any and all stamp,
document, transfer, recording or filing taxes or fees and all similar
impositions payable or hereafter determined by Lender to be payable in
connection with this Agreement, the Note or the other Loan Documents (including
but not limited to those necessary or advisable to record or to ensure the
enforceability or priority of this Agreement, the Note or the other Loan
Documents), as determined by Lender in its sole discretion from time to time,
and any other documents, instruments or transactions pursuant to or in
connection herewith, and Borrower agrees to save Lender harmless from and
against any and all present or future claims or liabilities with respect to or
resulting from any delay in paying or omission to pay any such taxes, fees or
similar impositions.
- 30 -
32
9.5 TIME OF ESSENCE.
Time is of the essence for the performance by Borrower of the
Obligations set forth in this Agreement and the other Loan Documents.
9.6 FURTHER ASSURANCES.
Borrower shall promptly upon request of Lender (a) correct any defect,
error or omission which may be discovered in the contents of any Loan Document
or in the execution or acknowledgment thereof; (b) as to the Collateral,
execute, acknowledge, deliver and record or file such further instruments
(including, without limitation, mortgages, deeds of trust, security agreements,
financing statements and specific assignments of rents or leases) and do such
further acts, in either case as may be necessary, desirable or proper in
Lender's reasonable opinion to (i) protect and preserve the first and valid lien
and security interest of the Mortgage on the Premises or to subject thereto any
property intended by the terms thereof to be covered thereby; and (ii) protect
the interest and security interest of Lender in the Premises against the rights
or interests of third parties. Borrower hereby appoints Lender as its
attorney-in-fact, coupled with an interest, to take such actions necessary to
perfect and preserve the valid liens and security interests in the Collateral
and to perform such obligations on behalf of the Borrower, at Borrower's sole
expense, if Borrower fails to comply fully with this Section 9.6.
9.7 MODIFICATIONS, AMENDMENTS OR WAIVERS.
Lender and Borrower may from time to time enter into written agreements
amending, modifying or supplementing this Agreement, the Note or the other Loan
Documents or changing the rights of Lender or Borrower hereunder or thereunder,
and Lender may from time to time grant waivers or consents to a departure from
the due performance of the obligations of Borrower thereunder. Any such
agreement, waiver or consent must be in writing and shall be effective only to
the extent set forth in such writing. In the case of any such waiver or consent,
any Event of Default so waived or consented to shall be deemed to be cured and
not continuing, but no such waiver or consent shall extend to any subsequent or
other Event of Default or impair any right consequent thereto.
- 31 -
33
9.8 HOLIDAYS.
Except as otherwise provided herein, whenever any payment or action to
be made or taken hereunder or the Note or any other Loan Document shall be
stated to be due on a day which is not a Business Day, such payment or action
shall be made or taken on the next following Business Day (and such day shall be
included in the calculation of interest due), unless such next succeeding
Business Day falls in a different calendar month, in which case payment or
action shall be made or taken on the next preceding Business Day.
9.9 NOTICES.
Except as otherwise provided herein, all notices and other
communications required under the terms and provisions of this Agreement, the
Note or the other Loan Documents shall be in writing and shall become effective
when delivered by hand or received by overnight courier, telex, facsimile,
telegram or registered first class mail, postage prepaid, addressed as follows:
If to Lender, at:
FINOVA Capital Corporation
000 Xxxx Xxxxxxx Xxxx
Xxxxxxx, Xxx Xxxxxx 00000
Facsimile No. 000-000-0000
Attention: Xxxxxxx X. XxXxxxxx
Senior Vice President
with a copy to: Winick & Rich, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No. 000-000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
If to Borrower, at:
Roadhouse Grill, Inc.
0000 X. Xxxxxxx Xxxxxx
Xxxxx 000
Xx. Xxxxxxxxxx, XX 00000
Facsimile No. 000-000-0000
Attention: Xxxxxx Xxxxx, CFO
with a copy to: Xxxxx XxXxxxxx Xxxxx
Xxxxxxxx & Xxxxxxx, P.A.
000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Facsimile No. 000-000-0000
Attention: Xxxxx Xxxxxx, Esq.
- 32 -
34
or at such other address as either party may, from time to time, designate in
writing to the other party hereto.
If any notice is given by telex, facsimile transmission, or telegram,
the party giving such notice shall confirm such notice by a writing delivered by
hand or overnight courier; PROVIDED, HOWEVER, that for all purposes hereunder,
notice shall be deemed effective at the time given by telex, telecopier or
telegram.
9.10 GOVERNING LAW.
THIS AGREEMENT, THE NOTE, THE OTHER LOAN DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO AND THERETO SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ARIZONA.
9.11 PERSONAL JURISDICTION AND SERVICE OF PROCESS.
BORROWER IRREVOCABLY CONSENTS THAT ANY LEGAL ACTION OR PROCEEDING
AGAINST BORROWER UNDER, ARISING OUT OF, OR IN ANY MANNER RELATING TO THIS
AGREEMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN ANY STATE
COURT OF THE STATE OF ARIZONA LOCATED IN MARICOPA COUNTY OR IN THE UNITED STATES
DISTRICT COURT FOR THE DISTRICT OF ARIZONA. BORROWER, BY ITS EXECUTION AND
DELIVERY OF THIS AGREEMENT, EXPRESSLY AND IRREVOCABLY CONSENTS AND SUBMITS TO
THE PERSONAL JURISDICTION OF ANY OF SUCH COURTS IN ANY SUCH ACTION OR
PROCEEDING. BORROWER FURTHER AGREES THAT ANY LEGAL ACTION OR PROCEEDING BORROWER
MAY BRING, ARISING OUT OF OR IN ANY MANNER RELATING TO THIS AGREEMENT OR THE
OTHER LOAN DOCUMENTS, SHALL ONLY BE BROUGHT IN ANY STATE COURT OF THE STATE OF
ARIZONA LOCATED IN MARICOPA COUNTY OR IN THE UNITED STATES DISTRICT COURT FOR
THE DISTRICT OF ARIZONA. BORROWER ALSO IRREVOCABLY CONSENTS TO THE SERVICE OF
ANY COMPLAINT, SUMMONS, NOTICE OR OTHER PROCESS RELATING TO SUCH ACTION OR
PROCEEDING BY DELIVERY THEREOF TO BORROWER IN THE MANNER PROVIDED FOR NOTICES IN
THIS AGREEMENT. BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES ANY CLAIM OR
DEFENSE IN ANY SUCH ACTION OR PROCEEDING BASED ON ANY ALLEGED LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS OR ANY SIMILAR BASIS.
BORROWER SHALL NOT BE ENTITLED IN ANY SUCH ACTION OR PROCEEDING TO ASSERT ANY
DEFENSE GIVEN OR ALLOWED UNDER THE LAWS OF ANY STATE OTHER THAN THE STATE OF
ARIZONA, UNLESS SUCH DEFENSE IS ALSO GIVEN OR ALLOWED BY THE LAWS OF THE STATE
OF ARIZONA. NOTHING HEREIN SHALL AFFECT OR IMPAIR IN ANY MANNER OR TO ANY EXTENT
THE RIGHT OF LENDER TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
BORROWER IN ANY OTHER JURISDICTION OR TO SERVE PROCESS IN ANY MANNER PERMITTED
BY LAW.
- 33 -
35
9.12 WAIVER OF JURY TRIAL.
BORROWER AND LENDER HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY WITH
RESPECT TO ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY AGREEMENT,
INSTRUMENT OR DOCUMENT EXECUTED AND DELIVERED IN CONNECTION HEREWITH OR
THEREWITH, INCLUDING THE LOAN DOCUMENTS.
9.13 SEVERABILITY.
The provisions of this Agreement, the Note and any other Loan Document
are intended to be severable. If any such provision is held invalid or
unenforceable in whole or in part in any jurisdiction, such provision shall, as
to such jurisdiction, be ineffective to the extent of such invalidity or un-
enforceability without in any manner affecting the validity or enforceability
thereof in any other jurisdiction or the remaining provisions hereof in any
jurisdiction.
9.14 PRIOR UNDERSTANDINGS.
This Agreement and the other Loan Documents supersede all prior
understandings and agreements, whether written or oral, between the parties
hereto relating to the transactions provided for herein or therein.
9.15 SURVIVAL.
All representations and warranties of Borrower contained in this
Agreement or any other Loan Document or made in writing in connection herewith
or therewith shall survive the execution and delivery of this Agreement, the
Note and the other Loan Documents, any investigation or inspection by Lender,
the making of the Loan hereunder, the payment of the Note or the expiration of
this Agreement. All covenants and agreements of Borrower contained herein shall
continue in full force until payment in full of the Obligations. Borrower's
obligation to pay the principal of and interest on the Note and all such other
amounts shall be absolute and unconditional under any and all circumstances.
9.16 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and shall inure to the benefit of
Lender and Borrower and their respective successors and permitted assigns,
except that Borrower may not assign, delegate or transfer any of its rights or
obligations hereunder or any interest herein without the written consent of
Lender which Lender may withhold in its absolute discretion. Any actual or
attempted assignment by Borrower without Lender's consent shall be null, void
and of no effect whatsoever. Lender may assign or otherwise transfer any or all
of its rights, title,
- 34 -
36
interests and obligations hereunder and under the Note and the other Loan
Documents in whole or in part. If Lender makes such an assignment, the assignee
shall have all of the rights of the Lender and Borrower shall not assert against
the assignee any defense, counterclaims or setoff which Borrower may have
against Lender. Except to the extent otherwise required by its context, the word
"Lender" where used in this Agreement shall mean and include the holder of the
Note originally issued to Lender, and the holder of such Note shall be bound by
and have the benefits of this Agreement to the same extent as if such holder had
been a signatory hereto, except that no assignee shall be deemed to assume any
obligation or duty imposed upon Lender hereunder or the other Loan Documents and
Borrower shall look only to Lender for performance thereof. As used in this
Section 9.16, "assign" shall be deemed to include a pledge, sale of, or grant of
a mortgage on, or a security interest in, any of the Collateral or this
Agreement or the other Loan Documents by Lender and the term "assignee" shall be
deemed to refer to the recipient of such pledge, sale, mortgage or security
interest.
9.17 COUNTERPARTS.
This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts each of which, when so
executed and delivered by the parties, constituting an original but all such
counterparts together constituting but one and the same instrument.
9.18 PUBLICITY.
Lender is hereby authorized to issue appropriate press releases and to
cause a tombstone to be published announcing the consummation of the
transactions contemplated in this Agreement, including the aggregate amount of
the Loan.
- 35 -
37
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto
duly authorized, have executed and delivered this Agreement effective as of the
day and year first above written.
ROADHOUSE GRILL, INC.
By: /s/ Xxxxxx Xxxxx
---------------------------------------
Xxxxxx Xxxxx, CFO
FINOVA CAPITAL CORPORATION
By: /s/ Xxxxxxx X. XxXxxxxx
---------------------------------------
Name: Xxxxxxx X. XxXxxxxx
-------------------------------------
Title: Vice President
-------------------------------------
- 36 -
