Exhibit 10.7
GUARANTEE OF FUTURE ADVANCES AGREEMENT
--------------------------------------
GUARANTEE OF FUTURE ADVANCES AGREEMENT (this "Agreement"), dated as of
October 21, 1999, by and among INTERNATIONAL FAST FOOD CORPORATION, a company
organized under the laws of the State of Florida, United States ("IFFC"),
INTERNATIONAL FAST FOOD POLSKA S.P. z.o.o., a Polish limited liability company
organized under the laws of Poland ("IFFP"), XXXXXXXX XXXXXXXX ("Xxxxxxxx"), and
BURGER KING CORPORATION, a company organized under the laws of State of Florida,
United States ("BKC").
WHEREAS, IFFC is the owner of all the issued and outstanding shares
(the "IFFP Shares") of IFFP;
WHEREAS, on February 24, 1999, Citibank (Poland) S.A. ("Citibank")
agreed to provide credit to IFFP in the aggregate amount of U.S. $5,000,000,
pursuant to a credit agreement dated February 24, 1999 (as amended, the "Credit
Agreement");
WHEREAS, as a condition to the disbursement of funds under the Credit
Agreement, BKC issued a guarantee in favor of Citibank to secure the repayment
by IFFP of amounts borrowed under the Credit Agreement (as amended, the
"Guarantee");
WHEREAS, in consideration of the Guarantee, IFFC granted BKC a
perfected security interest in the IFFP Shares to secure BKC's claims which may
arise as a result of the payment by BKC of any amounts under the Guarantee;
WHEREAS, as a condition to the making of the Guarantee, IFFC agreed to
reimburse BKC for any payments that it may be required to make to Citibank under
the Guarantee, together with related costs, expenses and interest, as more fully
said forth in that certain Reimbursement Agreement dated as of February 24, 1999
(as amended, the "Reimbursement Agreement"), by and among IFFC, IFFP and BKC;
WHEREAS, Citibank has agreed to increase the available credit under the
Credit Agreement to an aggregate amount of U.S. $8,000,000, and BKC has agreed
to increase the amount of the Guarantee to secure the repayment by IFFP of
amounts borrowed under the Credit Agreement;
WHEREAS, in the event that Citibank is willing to further increase the
amount which may be borrowed under the Credit Agreement, BKC has agreed to
increase the amount of the Guarantee to a maximum aggregate amount of U.S.
$10,000,000, upon the terms, and subject to the conditions, of this Agreement;
and
WHEREAS, concurrently herewith, IFFC, IFFP and BKC have agreed to amend
and restate the documents executed in connection with the transactions described
above (such documents are collectively referred to herein as the "Transaction
Documents") to reflect the increased amount of the Credit Agreement and the
Guarantee and to grant BKC additional security for the repayment of IFFC's and
IFFP's obligations under the Transaction Documents.
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereby agree as follows:
1. GUARANTEE OF FUTURE ADVANCES. In the event that Citibank agrees to increase
the amount which may be borrowed under the Credit Facility, BKC shall guarantee
the repayment to Citibank, upon the terms and subject to the conditions set
forth herein.
2. MAXIMUM AMOUNT OF GUARANTEE. The maximum amount that BKC shall guarantee
under the Credit Agreement shall not exceed U.S.$10,000,000 (the "Maximum
Guarantee").
3. INCREMENTAL INCREASE OF GUARANTEE. Any increase in the Guarantee from U.S.
$8,000,000 up to the Maximum Guaranty shall be in incremental amounts of U.S.
$500,000 (each such increase is referred to herein as an "Incremental Guarantee
Increase"), up to the Maximum Guarantee and subject to Section 4 below.
4. CONDITIONS TO INCREMENTAL GUARANTEE INCREASE. Each Incremental Guarantee
Increase is subject the occurrence of each of the following events:
4.1 SATISFACTION OF PERFORMANCE CRITERIA. IFFP shall have satisfied the
performance criteria (the "Performance Criteria") set forth on Schedule 1 hereto
prior to each Incremental Guarantee Increase. BKC makes no assurance or
representation that the performance criteria specified on Schedule will be met.
In addition, IFFP shall conduct its business in the ordinary course and shall
take no action other than in the ordinary course which would affect the cash
flows, financial condition or results of operations. IFFP shall be required to
provide BKC with a statement of cash flows of IFFP on a monthly basis during the
12-month period ending September 30, 2000, and thereafter such statements shall
be provided to BKC on a quarterly basis for so long as the Guaranty shall remain
in effect. Such statement of cash flows shall be provided to BKC on or before
the date which is 20 days from the end of such reporting period. BKC shall have
the right from time to time at its expense during normal business hours and upon
reasonable notice to conduct an audit of IFFP's books and records to evaluate
IFFP's financial performance.
4.2 APPROVAL OF ADVANCES. IFFP shall indicate in writing to BKC the
proposed use of the requested additional advances under the Credit Agreement,
and BKC shall have determined, in the exercise of its reasonable business
judgement, that such advances are reasonable and necessary to meet IFFP's
business requirements.
4.3 GUARANTEE MUST BE REQUIRED. Citibank shall have indicated in
writing to BKC that it is not willing to make future advances under the Credit
Agreement unless BKC guarantee the repayment in full of such advances.
4.4 NO DEVELOPMENT OF NEW BKC RESTAURANTS. IFFP shall have agreed in
writing that it will not use the advances relating to the requested Incremental
Guarantee Increase to fund the development of new Burger King restaurants.
5. WITHDRAWAL OF GUARANTEE. Notwithstanding anything to the contrary contained
herein or in the Transaction Documents, this Agreement shall terminate (i)
automatically on October 21, 2002, or (ii) at such time as BKC terminates the
Guarantee in accordance with the terms therewith, if earlier or (iii) upon 30
days prior notice in the event that the cumulative net cash flow position as
defined as the net movement of total debt of IFFP during the 12-month period
ending October 30, 2001 is more than 10% less than the Performance Criteria for
such period as specified on Schedule 1. Further, any Incremental Guarantee
Increase may be terminated and withdrawn in the event that the cumulative net
cash flow position as defined as the net movement of total debt of IFFP are more
than 30% less than the Performance Criteria specified on Schedule 1.
6. REPRESENTATIONS AND WARRANTIES
------------------------------
6.1 REPRESENTATIONS AND WARRANTIES OF IFFC AND IFFP. Each of Xxxxxxxx,
IFFC and IFFP represents and warrants to BKC that:
2
(a) CORPORATE EXISTENCE AND QUALIFICATION. Each of IFFC and IFFP is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization. Each of IFFC and IFFP has all required
power and authority to own its properties and to carry on its business as
presently conducted.
(b) AUTHORITY, APPROVAL AND ENFORCEABILITY. This Agreement has been
duly executed and delivered by each of IFFC, IFFP and Xxxxxxxx, and each of
IFFC, IFFP and Xxxxxxxx has all requisite power and legal authority to execute
and deliver this Agreement, to consummate the transactions contemplated hereby,
and to perform its or his obligations hereunder. This Agreement constitutes the
legal, valid and binding obligation of each of IFFC, IFFP and Xxxxxxxx,
enforceable in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy laws or similar laws in affect from time to
time affecting creditors' rights generally.
(c) NO COMPANY DEFAULTS OR CONSENTS. Neither the execution and delivery
of this Agreement nor the effectuation of the transactions contemplated hereby
will:
(i) violate or conflict with any of the terms, conditions or
provisions of the certificate of incorporation or bylaws (or similar
organizational documents) of IFFC or IFFP;
(ii) violate any legal requirements applicable to IFFC, IFFP or
Xxxxxxxx;
(iii) violate, conflict with, result in a breach of, constitute a
default under (whether with or without notice or the lapse of time or both), or
accelerate or permit the acceleration of the performance required by, or give
any other party the right to terminate, any contract or permit applicable to
IFFC or IFFP;
(iv) result in the creation of any lien, charge or other
encumbrance on any property of IFFC or IFFP (except as expressly contemplated
hereby); or
(v) require IFFC, IFFP or Xxxxxxxx to obtain or make any waiver,
consent, action, approval or authorization of, or registration, declaration,
notice or filing with, any private non-governmental third party or any
governmental authority.
(d) NO PROCEEDINGS. Except as disclosed in IFFC's filings with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended, or for matters which are not, individually or in the
aggregate, material to IFFC or Xxxxxxxx, no suit, action or other proceeding is
pending or, to the knowledge of IFFC or IFFP, threatened, before any
governmental authority seeking to restrain such or prohibit its entry into this
Agreement, or seeking damages against IFFC, IFFP or Xxxxxxxx or their respective
properties as a result of the transactions contemplated by this Agreement.
(e) COMPLIANCE WITH LAWS. Each of IFFC and IFFP has all material
franchises, permits, licenses and other rights and privileges necessary to
permit it to own its properties and to conduct its businesses as presently
conducted. The business and operations of each of IFFC and IFFP have been and
are being conducted in accordance in all material respects with all applicable
laws, rules and regulations, and each of IFFC and IFFP is not in violation of
any judgment, law or regulation.
(f) DISCLOSURE; DUE DILIGENCE. This Agreement, when taken as a whole
with other documents and certificates furnished by each of IFFC, IFFP and
Xxxxxxxx to BKC or its counsel have been furnished in good faith and, do not
contain any untrue statement of material fact or omit any material fact
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading.
3
6.2 REPRESENTATIONS AND WARRANTIES BY BKC. BKC represents and warrants
to each of IFFC, IFFP and Xxxxxxxx that:
(a) CORPORATE EXISTENCE AND QUALIFICATION. BKC is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization. BKC has all required power and authority to own
its properties and to carry on its business as presently conducted.
(b) AUTHORITY, APPROVAL AND ENFORCEABILITY This Agreement has been duly
executed and delivered by BKC, and BKC has all requisite power and legal
authority to execute and deliver this Agreement, to consummate the transactions
contemplated hereby, and to perform its obligations hereunder. This Agreement
constitutes the legal, valid and binding obligation of BKC, enforceable in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy laws or similar laws in affect from time to time affecting
creditors' rights generally.
(c) DISCLOSURE; DUE DILIGENCE. This Agreement, when taken as a whole
with other documents and certificates furnished by BKC to each of IFFC, IFFP and
Xxxxxxxx or their counsel have been furnished in good faith and, do not contain
any untrue statement of material fact or omit any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading.
7. MISCELLANEOUS.
-------------
7.1 FURTHER ASSURANCES. Each of the parties hereto agrees with the
other parties hereto that it will cooperate with such other parties and will
execute and deliver, or cause to be executed and delivered, all such other
instruments and documents, and will take such other actions, as such other
parties may reasonably request from time to time to effectuate the provisions
and purposes of this Agreement.
7.2 BINDING ON SUCCESSORS, TRANSFEREES AND ASSIGNS; ASSIGNMENT. This
Agreement shall be binding upon the parties hereto and their respective
successors, transferees and assigns. Notwithstanding the foregoing no party
hereto may assign any of its obligations hereunder without the prior written
consent of the other parties hereto; provided, that BKC may assign its rights
and delegate its duties under this Agreement to one or more of its subsidiaries
or affiliates subject to the approval of Citibank, if required.
7.3 AMENDMENTS; WAIVERS. No amendment to or waiver of any provisions of
this Agreement, nor consent to any departure therefrom by any party hereto,
shall in any event be effective unless the same shall be in writing and signed
by such party, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
7.4 NO WAIVER; REMEDIES. No failure on the part of any party hereto to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any right. The
remedies herein provided are cumulative and not exclusive of any remedy provided
by law.
7.5 EXPENSES. IFFC shall pay or reimburse BKC for all of its legal,
accounting and other expenses directly related to the consummation of the
transactions contemplated hereby, together with the costs and expenses of
enforcing any of its rights hereunder and under the Transaction Documents.
4
7.6 JURISDICTION. Any claim arising out of this Agreement shall be
brought in any state or federal court located in Miami-Dade County, Florida,
United States. For the purpose of any suit, action or proceeding instituted with
respect to any such claim, each of the parties hereto irrevocably submits to the
jurisdiction of such courts in Miami-Dade County, Florida, United States. Each
of the parties hereto further irrevocably consents to the service of process out
of said courts by mailing a copy thereof by registered mail, postage prepaid, to
such party and agrees that such service, to the fullest extent permitted by law,
(i) shall be deemed in every respect effective service of process upon it in any
such suit, action or proceeding and (ii) shall be taken and held to be a valid
personal service upon and a personal delivery to it. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding brought in any such court located in Miami-Dade County,
Florida, United States, and any claim that any such suit, action or proceeding
brought in such court has been brought in an inconvenient forum. Notwithstanding
the foregoing, at the option of BKC, any claims against IFFP hereunder shall be
settled by the Arbitration Court at the Polish Chamber of Commerce with its seat
in Warsaw in accordance with its rules, and all such proceedings will be
conducted in the English language.
7.7 GOVERNING LAW; SEVERABILITY. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of Florida,
United States, without regard to any conflict of law, rule or principle that
would give effect to the laws of another jurisdiction.
7.8 NOTICES. All notices, requests and other communications to any
party hereunder shall be writing (including facsimile transmission or similar
writing) and shall be given to such party, addressed to it, at its address or
facsimile number set forth on the signature pages below, or at such other
address or facsimile number as such party may hereafter specify for such purpose
by notice to the other party. Each such notice, request or communication shall
be deemed effective when received at the address or facsimile number specified
below.
7.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original, and all of which counterparts, when taken together,
shall constitute one and the same Agreement.
5
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
INTERNATIONAL FAST FOOD CORPORATION
By: /s/ Xxxxxxxx Xxxxxxxx
---------------------
Name: Xxxxxxxx Xxxxxxxx
Title: Chairman and CEO
c/o Xxxxxxxx Xxxxxxxx
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxx Xxxxx, XX 00000, XXX
INTERNATIONAL FAST FOOD POLSKA
S.P. Z.O.O.
By: /s/ Xxxxxxxx Xxxxxxxx
---------------------
Name: Xxxxxxxx Xxxxxxxx
Title: Authorized Signature
00 Xxxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxx
/s/ Xxxxxxxx Xxxxxxxx
---------------------
Xxxxxxxx Xxxxxxxx, in his
individual capacity
BURGER KING CORPORATION
By: /s/ Xxxxxx Xxxxxxxxx
Name: Xxxxxx Xxxxxxxxx
Title: Vice President
c/o Burger Xxxx XXX
Xxxxxxx Xxxxx
Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxx XX00XX
Attn: General Counsel and
Vice President -
Financial Affairs
Fax no: 00 0000 000000
With a copy to:
Xxxxx & XxXxxxxx
0000 Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000 X.X.X.
Fax no: (000) 000-0000
6
