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EXHIBIT 10.9
LOAN AGREEMENT
THIS LOAN AGREEMENT is made and entered into on this 1st day of March,
1999, by and among (i) KFC NATIONAL PURCHASING COOPERATIVE, INC., a Delaware
corporation d/b/a FoodService Purchasing Cooperative, Inc., with principal
office and place of business in Louisville, Kentucky (the "KFC Cooperative"),
(ii) PIZZA HUT NATIONAL PURCHASING COOP, INC., a Delaware corporation with
principal office and place of business in Louisville, Kentucky (the "Pizza Hut
Cooperative"), (iii) TACO XXXX NATIONAL PURCHASING COOP, INC., a Delaware
corporation with principal office and place of business in Louisville, Kentucky
(the "Taco Xxxx Cooperative"), (iv) UNIFIED FOODSERVICE PURCHASING COOP, LLC, a
Kentucky limited liability company with principal office and place of business
in Louisville, Kentucky ("Unified"), and (v) FIFTH THIRD BANK, KENTUCKY, INC., a
Kentucky banking corporation with principal office and place of business in
Louisville, Kentucky (the "Bank").
P R E L I M I N A R Y S T A T E M E N T:
A. The KFC Cooperative, the Pizza Hut Cooperative and the Taco Xxxx
Cooperative are the sole members of Unified, which is a newly-formed purchasing
cooperative focusing on the purchase of the food, packaging, supplies, equipment
and related products and services used by the owners and operators of the KFC
Outlets, the Pizza Hut Outlets and the Taco Xxxx Outlets, as such terms are
defined below.
B. The KFC Cooperative has requested the Bank to establish a revolving
line of credit in the principal amount of Fifteen Million Dollars ($15,000,000)
in favor of the KFC Cooperative to finance certain cash capital contributions
and loans that the KFC Cooperative is required to make to Unified pursuant to
the Unified Operating Agreement, as such term is defined below, to repay certain
outstanding Indebtedness, as such term is defined below, of the KFC Cooperative,
and to provide general working capital to the KFC Cooperative to pay its valid
operating expenses arising in the ordinary course of business.
C. The Pizza Hut Cooperative has requested the Bank to establish a
revolving line of credit in the principal amount of Two Million Dollars
($2,000,000) in favor of the Pizza Hut
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Cooperative to finance certain cash capital contributions and loans that the
Pizza Hut Cooperative is required to make to Unified pursuant to the Unified
Operating Agreement and to provide general working capital to the Pizza Hut
Cooperative to pay its valid operating expenses arising in the ordinary course
of business.
D. The Taco Xxxx Cooperative has requested the Bank to establish a
revolving line of credit in the principal amount of Eight Million Dollars
($8,000,000) in favor of the Taco Xxxx Cooperative to finance certain cash
capital contributions and loans that the Taco Xxxx Cooperative is required to
make to Unified pursuant to the Unified Operating Agreement and to provide
general working capital to the Taco Xxxx Cooperative to pay its valid operating
expenses arising in the ordinary course of business.
E. The Bank is willing to and desires to establish the foregoing
revolving lines of credit in favor of the KFC Cooperative, the Pizza Hut
Cooperative and the Taco Xxxx Cooperative in each case upon the terms and
conditions set forth in this Loan Agreement and the other Loan Documents, as
such term is defined below.
F. No Borrower shall be obligated for the obligations of any other
Borrower under this Loan Agreement or any other Loan Document, and Unified shall
not be liable for the obligations of any Borrower under this Loan Agreement or
any other Loan Document except to the extent of the collateral pledged by
Unified to the Bank to secure such Borrower's obligations to the Bank.
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements set forth herein, and for other good and
valuable consideration, the mutuality, receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS.
As used herein the following terms shall have the following meanings
unless the context otherwise requires:
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1.1 "Accounts Receivable" has the meaning ascribed to the term
"Accounts" in Section 9-106 of the Uniform Commercial Code as enacted in the
Commonwealth of Kentucky.
1.2 "Bank" has the meaning set forth in the preambles to this Loan
Agreement.
1.3 "Borrower" or "Borrowers" means, as the context shall require, the
KFC Cooperative, the Pizza Hut Cooperative and/or the Taco Xxxx Cooperative.
1.4 "Business Day" means each day of the week other than Saturdays,
Sundays and other days on which the Bank is closed to the public.
1.5 "Collateral" means, as the context requires, the KFC Collateral,
the Pizza Hut Collateral and/or the Taco Xxxx Collateral.
1.6 "Debt for Borrowed Money" means Indebtedness of the types described
in clauses (a) through (c) or (e) through (g), both inclusive in each instance,
of the definition of Indebtedness set forth below except that only guaranties of
Indebtedness which is itself included in Debt for Money Borrowed shall be
excluded from Debt for Money Borrowed.
1.7 "Default" shall mean any event specified in Section 11 hereof
whether or not any requirement for notice or lapse of time or any other
condition has been satisfied.
1.8 "Default Rate" means a variable rate equal to six percent (6%) per
annum plus the interest rate borne by the Promissory Note issued by the Borrower
in respect of which the Default Rate is being assessed.
1.9 "EBITDAP" means for the particular Borrower or for Unified and for
the period in question, the sum of (a) the Net Income of the particular Borrower
or Unified for such period, (b) the Interest Expense of the particular Borrower
or Unified for such period, (c) the income tax expense of the particular
Borrower or Unified for such period, (c) the depreciation expense and
amortization expense of the particular Borrower or Unified for such period, and
(e) the patronage dividends or
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patronage-based distributions paid by the particular Borrower to its
shareholders or by Unified to its members during such period, all as determined
in accordance with GAAP.
1.10 "GAAP" means those principles of accounting set forth in the
opinions and pronouncements of the Financial Accounting Standards Board and its
predecessors and the American Institute of Certified Public Accountants or those
principles of accounting which have other substantial authoritative support and
are applicable in the circumstances as of the date of application, as such
principles are from time to time supplemented and amended.
1.11 "Indebtedness" of the particular Borrower or Unified means and
includes, without duplication, all obligations of such Borrower or Unified which
in accordance with GAAP shall be classified upon a balance sheet of such
Borrower or Unified as liabilities of such Borrower or Unified, in each case as
determined for such Borrower or Unified in accordance with GAAP and in any event
shall include all (a) obligations of the particular Borrower or Unified for
borrowed money or which have been incurred in connection with the acquisition of
property or assets or for the deferred payment of the cost of construction or
improvement thereof or for the deferred purchase price of property (other than
current accounts payable), (b) obligations secured by any lien, security
interest or other charge upon property or assets owned by the particular
Borrower or Unified, even though such Borrower or Unified has not assumed or
become liable for the payment of such obligations, (c) obligations for the
deferred purchase price of property created or arising under any conditional
sale or other title retention agreement with respect to property acquired by the
particular Borrower or Unified notwithstanding the fact that the rights and
remedies of the seller, lender or lessor under such agreement in the event of
default are limited to repossession or sale of the property, (d) obligations
(other than obligations under any lease which is not a capital lease in
accordance with GAAP and obligations in an amount equal to the demand component
of any contract providing for usual and customary utility services, including
gas, water, electricity and wastewater treatment services) to purchase any
property or services of another person or entity if the contract requires that
payment for such property or services be made regardless of whether such
property is delivered or such services are performed, except that no obligation
shall
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constitute Indebtedness solely because the contract provides for liquidated
damages or reimbursement of expenses following cancellation, (e) all guaranties
of debt of another person or entity issued by the particular Borrower or
Unified, (f) all capital leases entered into or assumed by the particular
Borrower or Unified, and (g) obligations in respect of letters of credit but
only to the extent that the letter of credit does not support an obligation of
the particular Borrower or Unified already included in Indebtedness or which
would constitute a current account payable of the particular Borrower or
Unified.
1.12 "Interest Expense" means for the period in question, total
interest expense (including that attributable to capital leases in conformity
with GAAP) of the particular Borrower or Unified during such period with respect
to all outstanding Indebtedness of the particular Borrower or Unified,
including, without limitation, all capitalized interest, all commissions,
discounts and other fees and charges owed with respect to letters of credit and
banker's acceptance financing and net costs and benefits under interest rate
agreements, all as determined in accordance with GAAP.
1.13 "KFC Accounts Receivable" means those Accounts Receivable owed to
Unified in connection with the sale of KFC Inventory and KFC Goods and Equipment
by Unified to KFC Distributors or KFC Operators pursuant to Title Transactions.
1.14 "KFC Borrowing Base" means an amount equal to the sum of (a)
eighty percent (80%) of KFC Eligible Accounts Receivable, (b) eighty percent
(80%) of KFC Eligible Presold Inventory, (c) fifty percent (50%) of KFC Eligible
Inventory Held on Account, plus (d) for the period ending on May 31, 1999, the
sum of Two Hundred Fifty Thousand Dollars ($250,000.00).
1.15 "KFC Borrowing Base Report" means the report in the form of
Exhibit A attached hereto and made a part hereof.
1.16 "KFC Collateral" means (a) all of the assets described in the
Unified KFC Security Agreement, all of which pertain to and/or are otherwise
used by Unified in connection with the purchasing program established and
conducted by Unified for the benefit of the KFC Cooperative and the KFC
Operators pursuant to that certain Purchasing Program Management Agreement of
even date herewith, between Unified and the KFC Cooperative, as the
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same may hereafter be amended, modified and/or restated, in all of which Unified
has granted to the Bank a first priority security interest pursuant to the
Unified KFC Security Agreement, (b) the loan agreement, the promissory note and
the security agreement executed and delivered by Unified in favor of the KFC
Cooperative to evidence the loans made by the KFC Cooperative to Unified
pursuant to the Unified Operating Agreement, (c) the promissory note and the
security agreement executed and delivered by the Taco Xxxx Cooperative in favor
of the KFC Cooperative to evidence the Intercompany Liability (as such term is
defined in that certain Agreement and Plan of Corporate Separation of even date
herewith, adopted by the KFC Cooperative) owed by the Taco Xxxx Cooperative to
KFC Cooperative, in all of which the KFC Cooperative has granted to the Bank a
first priority security interest pursuant to the KFC Pledge Agreement, (d) the
promissory note executed and delivered by the Pizza Hut Cooperative in favor of
the KFC Cooperative to evidence the loan in the principal amount of $500,000
made by the KFC Cooperative to the Pizza Hut Cooperative, in which the KFC
Cooperative has granted to the Bank a first priority security interest pursuant
to the KFC Pledge Agreement, and (e) all other business assets of the KFC
Cooperative, in all of which the KFC Cooperative has granted to the Bank a first
priority security interest pursuant to the KFC Pledge Agreement, and (f) all
proceeds of the property described in subparts (a) through (e) above.
1.17 "KFC Cooperative" has the meaning set forth in the preambles to
this Loan Agreement.
1.18 "KFC Demand Deposit Account" means the demand deposit account
established by the KFC Cooperative with the Bank pursuant to this Loan
Agreement.
1.19 "KFC Deficiency Fee" has the meaning set forth in Section 2.8
hereof.
1.20 "KFC Default" means the occurrence of any Default with respect to
the KFC Cooperative or Unified.
1.21 "KFC Distributors" means, as of each date of determination
thereof, those distributors who have been approved by Tricon to sell KFC
Inventory to KFC Operators.
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1.22 "KFC Eligible Accounts Receivable" means good, bona fide
collectible KFC Accounts Receivable owed directly to Unified by KFC Distributors
and KFC Operators, but excluding from the definition of KFC Eligible Accounts
Receivable all of the following:
(a) Those KFC Accounts Receivable owed to Unified by KFC
Distributors which remain unpaid more than sixty (60) days after their
respective invoice dates;
(b) Those KFC Accounts Receivable owed to Unified by KFC Operators
which remain unpaid more than sixty (60) days after their respective invoice
dates;
(c) Those KFC Accounts Receivable which are subject to any right
of set off by the account debtor, to the extent of the amount subject to such
right of set off;
(d) Those KFC Accounts Receivable subject to liens and security
interests in favor of a party or parties other than the Bank and which are prior
to the security interest in the KFC Accounts Receivable granted by Unified to
the Bank pursuant to the Unified KFC Security Agreement;
(e) Those KFC Accounts Receivable owed to Unified by any account
debtor who, to the actual knowledge of the KFC Cooperative or Unified, is
subject to any insolvency, bankruptcy or dissolution proceedings;
(f) Those KFC Accounts Receivable evidencing or otherwise arising
out of the sale of assets of Unified, other than the sale of KFC Inventory and
KFC Goods and Equipment in the ordinary course of business;
(g) Those KFC Accounts Receivable which the KFC Cooperative,
Unified and/or the Bank believe in the exercise of good faith to be
uncollectible when due; and
(h) Any and all KFC Accounts Receivable owed by a particular
account debtor to the extent 25% or more of the total KFC Accounts Receivable of
such account debtor are more than sixty (60) days past due from their respective
invoice dates.
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1.23 "KFC Eligible Inventory Held on Account" means, as of each date of
determination thereof, all KFC Inventory Held on Account, valued at the lower of
cost or market value, but excluding from the definition of KFC Eligible
Inventory Held on Account all of the following:
(a) "defective" KFC Inventory Held on Account, which term, as used
herein, means KFC Inventory Held on Account which Unified does not intend to
sell and/or cannot sell to KFC Distributors and/or KFC Operators at established
prices therefor due to defects therein; and
(b) all KFC Inventory Held on Account subject to liens and
security interests in favor of a party or parties other than the Bank and which
are prior to the security interest in the KFC Inventory granted by Unified to
the Bank pursuant to the Unified KFC Security Agreement.
1.24 "KFC Eligible Presold Inventory" means, as of each date of
determination thereof, all KFC Presold Inventory, valued at the lower of cost or
market value, but excluding from the definition of KFC Eligible Presold
Inventory all of the following:
(a) "defective" KFC Presold Inventory, which term, as used herein,
means KFC Presold Inventory which Unified does not intend to sell and/or cannot
sell to the particular KFC Operators at agreed upon prices therefor due to
defects therein; and
(b) all KFC Presold Inventory subject to liens and security
interests in favor of a party or parties other than the Bank and which are prior
to the security interest in the KFC Inventory granted by Unified to the Bank
pursuant to the Unified KFC Security Agreement.
1.25 "KFC Event of Default" means the occurrence of any Event of
Default referred to in Section 11 hereof with respect to either the KFC
Cooperative or Unified.
1.26 "KFC Goods and Equipment" means those items of food, paper
products, supplies, equipment and other products and services (a) that have been
approved by Tricon for use and consumption at the KFC Outlets, (b) that have
been purchased by
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Unified pursuant to a Title Transaction, and (c) that does not constitute KFC
Inventory.
1.27 "KFC Inventory" means, collectively, the KFC Presold Inventory and
the KFC Inventory Held on Account.
1.28 "KFC Inventory Held on Account" means, as of each date of
determination thereof, those items of food, paper products, equipment and other
goods and services (a) that have been approved by Tricon for use and consumption
at the KFC Outlets, (b) that have been purchased by Unified in anticipation of
resale to KFC Distributors and/or KFC Operators and is being held by either
Unified or by the particular KFC Supplier on behalf of Unified, (c) the title to
which was acquired by Unified pursuant to a Title Transaction, and (d) that has
not yet been invoiced by Unified to the particular KFC Distributors and/or KFC
Operators.
1.29 "KFC Line of Credit" means the revolving line of credit in the
principal amount of Fifteen Million Dollars ($15,000,000.00) established by the
Bank in favor of the KFC Cooperative pursuant to and upon the terms and
conditions set forth in this Loan Agreement.
1.30 "KFC Minimum Compensating Balances Requirement" means, as of each
date of determination thereof, an amount equal to Thirty-Five Thousand Dollars
($35,000.00) for each One Million Dollars ($1,000,000.00) of the fully committed
principal amount of the KFC Line of Credit as it may exist from time to time. If
the KFC Line of Credit is not in integral multiples of One Million Dollars
($1,000,000.00), the KFC Minimum Compensating Balances Requirement shall be
prorated for that portion of the fully committed principal amount of the KFC
Line of Credit that is in excess of the highest integral multiple of One Million
Dollars ($1,000,000.00).
1.31 "KFC Operators" means, as of each date of determination thereof,
the owners of KFC Outlets, including those KFC Outlets owned directly by Tricon,
who are eligible to purchase KFC Inventory directly through Unified pursuant to
Title Transactions.
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1.32 "KFC Outlets" means, as of each date of determination thereof, the
KFC retail outlets that are owned by Tricon or by Tricon-approved franchisees of
the KFC restaurant concept.
1.33 "KFC Pledge Agreement" means that certain Security Agreement of
even date herewith, between the KFC Cooperative and the Bank, as supplemented
pursuant to that certain First Addendum to Security Agreement of even date
herewith, between the KFC Cooperative and the Bank, together with all future
amendments and modifications thereto.
1.34 "KFC Presold Inventory" means, as of each date of determination
thereof, those items of food, paper products, equipment and other goods and
services (a) that have been approved by Tricon for use and consumption at the
KFC Outlets, (b) that have been specially ordered by a KFC Operator through
Unified and is awaiting shipment to the KFC Operator in a warehouse owned or
leased by Unified, (c) the title to which was acquired by Unified pursuant to a
Title Transaction, and (d) that has not yet been invoiced by Unified to the
particular KFC Distributors and/or KFC Operators.
1.35 "KFC Promissory Note" means that certain Revolving Note of even
date herewith, made by the KFC Cooperative, payable to the order of the Bank,
and in the face principal amount of Fifteen Million Dollars ($15,000,000.00), as
supplemented pursuant to that certain First Addendum to Revolving Note of even
date herewith, between the KFC Cooperative and the Bank, together with all
future amendments, modifications, renewals, extensions, replacements and
restatements thereof.
1.36 "KFC Suppliers" means, as of each date of determination thereof,
those suppliers who have been approved by Tricon to sell KFC Inventory to KFC
Distributors and KFC Operators.
1.37 "Lines of Credit" means, collectively or individually, as the
context shall require, the KFC Line of Credit, the Pizza Hut Line of Credit and
the Taco Xxxx Line of Credit.
1.38 "Loan Agreement" means this Loan Agreement together with all
future amendments, modifications and supplements to this Loan Agreement
hereafter executed by the parties hereto.
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1.39 "Loan Documents" means, collectively, this Loan Agreement, the KFC
Promissory Note, the KFC Pledge Agreement, the Unified KFC Security Agreement,
the Pizza Hut Promissory Note, the Pizza Hut Pledge Agreement, the Unified Pizza
Hut Security Agreement, the Taco Xxxx Promissory Note, the Taco Xxxx Pledge
Agreement, the Unified Taco Xxxx Security Agreement and all other agreements,
documents and instruments that evidence, secure and/or pertain to the KFC Line
of Credit, the Pizza Hut Line of Credit and/or the Taco Xxxx Line of Credit.
1.40 "Net Income" means, for the period in question, the net income (or
loss), excluding extraordinary, non-recurring or unusual gains (but not
extraordinary, non-recurring or unusual losses), of the particular Borrower or
Unified for such period, after deducting therefrom all operating expenses,
provisions for all reserves and all other proper deductions for the same period,
including income taxes, all as determined in accordance with GAAP.
1.41 "Net Worth" means for the particular Borrower or Unified, as
applicable, and as of each date Net Worth is being determined, the total
shareholder or member equity of the particular Borrower or Unified as determined
in accordance with GAAP.
1.42 "Pizza Hut Accounts Receivable" means those Accounts Receivable
owed to Unified by Pizza Hut Distributors or Pizza Hut Operators in connection
with the sale of Pizza Hut Inventory and Pizza Hut Goods and Equipment by
Unified to Pizza Hut Distributors and Pizza Hut Operators pursuant to Title
Transactions.
1.43 "Pizza Hut Borrowing Base" means an amount equal to the sum of (a)
eighty percent (80%) of Pizza Hut Eligible Accounts Receivable, (b) eighty
percent (80%) of Pizza Hut Eligible Presold Inventory, (c) fifty percent (50%)
of Pizza Hut Eligible Inventory Held on Account, and (d) for the period ending
May 31, 1999 only, the sum of One Hundred Thousand Dollars ($100,000.00).
1.44 "Pizza Hut Borrowing Base Report" means the report in the form of
Exhibit B attached hereto and made a part hereof.
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1.45 "Pizza Hut Collateral" means (a) all of the property described in
the Unified Pizza Hut Security Agreement, all of which pertain to and/or are
otherwise used by Unified in connection with the purchasing program established
and conducted by Unified for the benefit of the Pizza Hut Cooperative and the
Pizza Hut Operators pursuant to that certain Purchasing Program Management
Agreement of even date herewith, between Unified and the Pizza Hut Cooperative,
as the same may hereafter be amended, modified and/or restated, in all of which
Unified has granted to the Bank a first priority security interest pursuant to
the Unified Pizza Hut Security Agreement, (b) the loan agreement, the promissory
note and the security agreement executed and delivered by Unified in favor of
the Pizza Hut Cooperative to evidence the loans made by the Pizza Hut
Cooperative to Unified pursuant to the Unified Operating Agreement, in all of
which the Pizza Hut Cooperative has granted to the Bank a first priority
security interest pursuant to the Pizza Hut Pledge Agreement, (c) all other
business assets of the Pizza Hut Cooperative, in all of which the Pizza Hut
Cooperative has granted to the Bank a first priority security interest pursuant
to the Pizza Hut Pledge Agreement, and (d) all proceeds of the property
described in subparts (a) through (c) above.
1.46 "Pizza Hut Cooperative" has the meaning set forth in the preambles
to this Loan Agreement.
1.47 "Pizza Hut Demand Deposit Account" means the demand deposit
account established by the Pizza Hut Cooperative with the Bank pursuant to this
Loan Agreement.
1.48 "Pizza Hut Deficiency Fee" has the meaning set forth in Section
3.8 hereof.
1.49 "Pizza Hut Default" means the occurrence of any Default with
respect to the Pizza Hut Cooperative or Unified.
1.50 "Pizza Hut Distributors" means, as of each date of determination
thereof, those distributors who have been approved by Tricon to sell Pizza Hut
Inventory to Pizza Hut Operators.
1.51 "Pizza Hut Eligible Accounts Receivable" means good, bona fide
collectible Pizza Hut Accounts Receivable owed directly to Unified by Pizza Hut
Distributors and Pizza Hut
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Operators, but excluding from the definition of Pizza Hut Eligible Accounts
Receivable all of the following:
(a) Those Pizza Hut Accounts Receivable owed to Unified by Pizza
Hut Distributors which remain unpaid more than sixty (60) days after their
respective invoice dates;
(b) Those Pizza Hut Accounts Receivable owed to Unified by Pizza
Hut Operators which remain unpaid more than sixty (60) days after their
respective invoice dates;
(c) Those Pizza Hut Accounts Receivable which are subject to any
right of set off by the account debtor, to the extent of the amount subject to
such right of set off;
(d) Those Pizza Hut Accounts Receivable subject to liens and
security interests in favor of a party or parties other than the Bank and which
are prior to the security interest in the Pizza Hut Accounts Receivable granted
by Unified to the Bank pursuant to the Unified Pizza Hut Security Agreement;
(e) Those Pizza Hut Accounts Receivable owed to Unified by any
account debtor who, to the actual knowledge of the Pizza Hut Cooperative or
Unified, is subject to any insolvency, bankruptcy or dissolution proceedings;
(f) Those Pizza Hut Accounts Receivable evidencing or otherwise
arising out of the sale of assets of Unified, other than the sale of Pizza Hut
Inventory and Pizza Hut Goods and Equipment in the ordinary course of business;
(g) Those Pizza Hut Accounts Receivable which the Pizza Hut
Cooperative, Unified and/or the Bank believe in the exercise of good faith to be
uncollectible when due; and
(h) Any and all Pizza Hut Accounts Receivable owed by a particular
account debtor to the extent 25% or more of the total Pizza Hut Accounts
Receivable of such account debtor are more than sixty (60) days past due from
their respective invoice dates.
1.52 "Pizza Hut Eligible Inventory Held on Account" means, as of each
date of determination thereof, all Pizza Hut Inventory Held on Account, valued
at the lower of cost or market
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value, but excluding from the definition of Pizza Hut Eligible Inventory Held on
Account all of the following:
(a) "defective" Pizza Hut Inventory Held on Account, which term,
as used herein, means Pizza Hut Inventory Held on Account which Unified does not
intend to sell and/or cannot sell to Pizza Hut Distributors and/or Pizza Hut
Operators at established prices therefor due to defects therein; and
(b) all Pizza Hut Inventory Held on Account subject to liens and
security interests in favor of a party or parties other than the Bank and which
are prior to the security interest in the Pizza Hut Inventory granted by Unified
to the Bank pursuant to the Unified Pizza Hut Security Agreement.
1.53 "Pizza Hut Eligible Presold Inventory" means, as of each date of
determination thereof, all Pizza Hut Presold Inventory, valued at the lower of
cost or market value, but excluding from the definition of Pizza Hut Eligible
Presold Inventory all of the following:
(a) "defective" Pizza Hut Presold Inventory, which term, as used
herein, means Pizza Hut Presold Inventory which Unified does not intend to sell
and/or cannot sell to the particular Pizza Hut Operators at agreed upon prices
therefor due to defects therein; and
(b) all Pizza Hut Presold Inventory subject to liens and security
interests in favor of a party or parties other than the Bank and which are prior
to the security interest in the Pizza Hut Inventory granted by Unified to the
Bank pursuant to the Unified Pizza Hut Security Agreement.
1.54 "Pizza Hut Event of Default" means the occurrence of any Event of
Default referred to in Section 11 hereof with respect to either the Pizza Hut
Cooperative or Unified.
1.55 "Pizza Hut Goods and Equipment" means those items of food, paper
products, supplies, equipment and other products and services (a) that have been
approved by Tricon for use and consumption at the Pizza Hut Outlets, (b) that
have been purchased by Unified pursuant to a Title Transaction, and (c) that
does not constitute Pizza Hut Inventory.
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1.56 "Pizza Hut Inventory" means, collectively, the Pizza Hut Presold
Inventory and the Pizza Hut Inventory Held on Account.
1.57 "Pizza Hut Inventory Held on Account" means, as of each date of
determination thereof, those items of food, paper products, equipment and other
goods and services (a) that have been approved by Tricon for use and consumption
at the Pizza Hut Outlets, (b) that have been purchased by Unified in
anticipation of resale to Pizza Hut Distributors and/or Pizza Hut Operators and
is being held by either Unified or by the particular Pizza Hut Supplier on
behalf of Unified, (c) the title to which was acquired by Unified pursuant to a
Title Transaction, and (d) that has not yet been invoiced by Unified to the
particular Pizza Hut Distributors and/or Operators.
1.58 "Pizza Hut Line of Credit" means the revolving line of credit in
the principal amount of Two Million Dollars ($2,000,000.00) established by the
Bank in favor of the Pizza Hut Cooperative pursuant to and upon the terms and
conditions set forth in this Loan Agreement.
1.59 "Pizza Hut Minimum Compensating Balances Requirement" means, as of
each date of determination thereof, an amount equal to Thirty-Five Thousand
Dollars ($35,000.00) for each One Million Dollars ($1,000,000.00) of the fully
committed principal amount of the Pizza Hut Line of Credit as it may exist from
time to time. If the Pizza Hut Line of Credit is not in integral multiples of
One Million Dollars ($1,000,000.00), the Pizza Hut Minimum Compensating Balances
Requirement shall be prorated for that portion of the fully committed principal
amount of the Pizza Hut Line of Credit that is in excess of the highest integral
multiple of One Million Dollars ($1,000,000.00).
1.60 "Pizza Hut Operators" means, as of each date of determination
thereof, the owners of Pizza Hut Outlets, including those Pizza Hut Outlets
owned directly by Tricon, who are eligible to purchase Pizza Hut Inventory
directly through Unified pursuant to Title Transactions.
1.61 "Pizza Hut Outlets" means, as of each date of determination
thereof, the Pizza Hut retail outlets that are owned by Tricon or by
Tricon-approved franchisees of the Pizza Hut restaurant concept.
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1.62 "Pizza Hut Pledge Agreement" means that certain Security Agreement
of even date herewith, between the Pizza Hut Cooperative and the Bank, as
supplemented pursuant to that certain First Addendum to Security Agreement of
even date herewith, between the Pizza Hut Cooperative and the Bank, together
with all future amendments and modifications thereto.
1.63 "Pizza Hut Presold Inventory" means, as of each date of
determination thereof, those items of food, paper products, equipment and other
goods and services (a) that have been approved by Tricon for use and consumption
at the Pizza Hut Outlets, (b) that have been specially ordered by a Pizza Hut
Operator through Unified and is awaiting shipment to the Pizza Hut Operator in a
warehouse owned or leased by Unified, (c) the title to which was acquired by
Unified pursuant to a Title Transaction, and (d) that has not yet been invoiced
by Unified to the particular Pizza Hut Distributors and/or Pizza Hut Operators.
1.64 "Pizza Hut Promissory Note" means that certain Revolving Note of
even date herewith, made by the Pizza Hut Cooperative, payable to the order of
the Bank, and in the face principal amount of Two Million Dollars
($2,000,000.00), as supplemented pursuant to that certain First Addendum to
Revolving Note of even date herewith, between the Pizza Hut Cooperative and the
Bank, together with all future amendments, modifications, renewals, extensions,
replacements and restatements thereof.
1.65 "Pizza Hut Suppliers" means, as of each date of determination
thereof, those suppliers who have been approved by Tricon to sell Pizza Hut
Inventory to Pizza Hut Distributors and Pizza Hut Operators.
1.66 "Prime Rate" means the interest rate per annum announced from time
to time by the Bank as its Prime Rate.
1.67 "Promissory Notes" means, collectively or individually, as the
context shall require, the KFC Promissory Note, the Pizza Hut Promissory Note
and the Taco Xxxx Promissory Note.
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1.68 "Secured Obligations" means, with respect to each Borrower, (a)
all loans, advances, indebtedness and other obligations of such Borrower owed to
the Bank and/or any affiliate of Fifth Third Bankcorp of every kind and
description whether now existing or hereafter arising including, without
limitation, those owed to others and acquired by the Bank by purchase,
assignment or otherwise and whether direct or indirect, primary or as guarantor
or surety, absolute or contingent, liquidated or unliquidated, matured or
unmatured, whether or not secured by additional collateral, and (b) all
liabilities, obligations and indebtedness of such Borrower arising under this
Loan Agreement and all other Loan Documents to which such Borrower is a party,
and all obligations of such Borrower to perform or forbear from performing acts,
all amounts represented by letters of credit now or hereafter issued by the Bank
for the benefit of or at the request of such Borrower and such Borrower's
obligation for all reasonable expenses and attorneys' fees incurred by Bank
under this Loan Agreement or any other Loan Document to which such Borrower is a
party or related to any of the Secured Obligations.
1.69 "Taco Xxxx Accounts Receivable" means those Accounts Receivable
owed to Unified by Taco Xxxx Distributors or Taco Xxxx Operators in connection
with the sale of Taco Xxxx Inventory and Taco Xxxx Goods and Equipment by
Unified to Taco Xxxx Distributors and Taco Xxxx Operators pursuant to Title
Transactions.
1.70 "Taco Xxxx Borrowing Base" means an amount equal to the sum of (a)
eighty percent (80%) of Taco Xxxx Eligible Accounts Receivable, (b) eighty
percent (80%) of Taco Xxxx Eligible Presold Inventory, and (c) fifty percent
(50%) of Taco Xxxx Eligible Inventory Held on Account, and (d) for the period
ending May 31, 1999 only, the sum of One Hundred Fifty Thousand Dollars
($150,000.00).
1.71 "Taco Xxxx Borrowing Base Report" means the report in the form of
Exhibit C attached hereto and made a part hereof.
1.72 "Taco Xxxx Collateral" means (a) all of the property described in
the Unified Taco Xxxx Security Agreement, all of which contributed by the Taco
Xxxx Cooperative to Unified or otherwise acquired by Unified and that pertain to
and/or are otherwise used by Unified in connection with the purchasing
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program established and conducted by Unified for the benefit of the Taco Xxxx
Cooperative and the Taco Xxxx Operators pursuant to that certain Purchasing
Program Management Agreement of even date herewith, between Unified and the Taco
Xxxx Cooperative, as the same may hereafter be amended, modified and/or
restated, in all of which Unified has granted to the Bank a first priority
security interest pursuant to the Unified Taco Xxxx Security Agreement, (b) the
loan agreement, the promissory note and the security agreement executed and
delivered by Unified in favor of the Taco Xxxx Cooperative to evidence the loans
made by the Taco Xxxx Cooperative to Unified pursuant to the Unified Operating
Agreement, in all of which the Taco Xxxx Cooperative has granted to the Bank a
first priority security interest pursuant to the Taco Xxxx Pledge Agreement, (c)
all other business assets of the Taco Xxxx Cooperative, in all of which the Taco
Xxxx Cooperative has granted to the Bank a first priority security interest
pursuant to the Taco Xxxx Pledge Agreement, and (d) all proceeds of the property
described in subparts (a) through (c) above.
1.73 "Taco Xxxx Cooperative" has the meaning set forth in the preambles
to this Loan Agreement.
1.74 "Taco Xxxx Demand Deposit Account" means the demand deposit
account established by the Taco Xxxx Cooperative with the Bank pursuant to this
Loan Agreement.
1.75 "Taco Xxxx Deficiency Fee" has the meaning set forth in Section
4.8 hereof.
1.76 "Taco Xxxx Default" means the occurrence of any Default with
respect to the Taco Xxxx Cooperative or Unified.
1.77 "Taco Xxxx Distributors" means, as of each date of determination
thereof, those distributors who have been approved by Tricon to sell Taco Xxxx
Inventory to Taco Xxxx Operators.
1.78 "Taco Xxxx Eligible Accounts Receivable" means good, bona fide
collectible Taco Xxxx Accounts Receivable owed directly to Unified by Taco Xxxx
Distributors and Taco Xxxx Operators, but excluding from the definition of Taco
Xxxx Eligible Accounts Receivable all of the following:
(a) Those Taco Xxxx Accounts Receivable owed to Unified by Taco
Xxxx Distributors which remain unpaid more than sixty (60) days after their
respective invoice dates;
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(b) Those Taco Xxxx Accounts Receivable owed to Unified by Taco
Xxxx Operators which remain unpaid more than sixty (60) days after their
respective invoice dates;
(c) Those Taco Xxxx Accounts Receivable which are subject to any
right of set off by the account debtor, to the extent of the amount subject to
such right of set off;
(d) Those Taco Xxxx Accounts Receivable subject to liens and
security interests in favor of a party or parties other than the Bank and which
are prior to the security interest in the Taco Xxxx Accounts Receivable granted
by Unified to the Bank pursuant to the Unified Taco Xxxx Security Agreement;
(e) Those Taco Xxxx Accounts Receivable owed to Unified by any
account debtor who, to the actual knowledge of the Taco Xxxx Cooperative or
Unified, is subject to any insolvency, bankruptcy or dissolution proceedings;
(f) Those Taco Xxxx Accounts Receivable evidencing or otherwise
arising out of the sale of assets of Unified, other than the sale of Taco Xxxx
Inventory and Taco Xxxx Goods and Equipment in the ordinary course of business;
(g) Those Taco Xxxx Accounts Receivable which the Taco Xxxx
Cooperative, Unified and/or the Bank believe in the exercise of good faith to be
uncollectible when due; and
(h) Any and all Taco Xxxx Accounts Receivable owed by a particular
account debtor to the extent 25% or more of the total Taco Xxxx Accounts
Receivable of such account debtor are more than sixty (60) days past due from
their respective invoice dates.
1.79 "Taco Xxxx Eligible Inventory Held on Account" means, as of each
date of determination thereof, all Taco Xxxx Inventory Held on Account, valued
at the lower of cost or market value, but excluding from the definition of Taco
Xxxx Eligible Inventory Held on Account all of the following:
(a) "defective" Taco Xxxx Inventory Held on Account, which term,
as used herein, means Taco Xxxx Inventory Held on Account which Unified does not
intend to sell and/or cannot sell
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to Taco Xxxx Distributors and/or Taco Xxxx Operators at established prices
therefor due to defects therein; and
(b) all Taco Xxxx Inventory Held on Account subject to liens and
security interests in favor of a party or parties other than the Bank and which
are prior to the security interest in the Taco Xxxx Inventory granted by Unified
to the Bank pursuant to the Unified Taco Xxxx Security Agreement.
1.80 "Taco Xxxx Eligible Presold Inventory" means, as of each date of
determination thereof, all Taco Xxxx Presold Inventory, valued at the lower of
cost or market value, but excluding from the definition of Taco Xxxx Eligible
Presold Inventory all of the following:
(a) "defective" Taco Xxxx Presold Inventory, which term, as used
herein, means Taco Xxxx Presold Inventory which Unified does not intend to sell
and/or cannot sell to the particular Taco Xxxx Operators at agreed upon prices
therefor due to defects therein; and
(b) all Taco Xxxx Presold Inventory subject to liens and security
interests in favor of a party or parties other than the Bank and which are prior
to the security interest in the Taco Xxxx Inventory granted by Unified to the
Bank pursuant to the Unified Taco Xxxx Security Agreement.
1.81 "Taco Xxxx Event of Default" means the occurrence of any Event of
Default referred to in Section 11 hereof with respect to either the Taco Xxxx
Cooperative or Unified.
1.82 "Taco Xxxx Goods and Equipment" means those items of food, paper
products, supplies, equipment and other products and services (a) that have been
approved by Tricon for use and consumption at the Taco Xxxx Outlets, (b) that
have been purchased by Unified pursuant to a Title Transaction, and (c) that
does not constitute Taco Xxxx Inventory.
1.83 "Taco Xxxx Inventory" means, collectively, the Taco Xxxx Presold
Inventory and the Taco Xxxx Inventory Held on Account.
1.84 "Taco Xxxx Inventory Held on Account" means, as of each date of
determination thereof, those items of food, paper
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products, equipment and other goods and services (a) that have been approved by
Tricon for use and consumption at the Taco Xxxx Outlets, (b) that have been
purchased by Unified in anticipation of resale to Taco Xxxx Distributors and/or
Taco Xxxx Operators and is being is being held by either Unified or by the
particular Taco Xxxx Supplier on behalf of Unified, (c) the title to which was
acquired by Unified pursuant to a Title Transaction, and (d) that has not yet
been invoiced by Unified to the particular Taco Xxxx Distributors and/or Taco
Xxxx Operators.
1.85 "Taco Xxxx Line of Credit" means the revolving line of credit in
the principal amount of Eight Million Dollars ($8,000,000.00) established by the
Bank in favor of the Taco Xxxx Cooperative pursuant to and upon the terms and
conditions set forth in this Loan Agreement.
1.86 "Taco Xxxx Minimum Compensating Balances Requirement" means, as of
each date of determination thereof, an amount equal to Thirty-Five Thousand
Dollars ($35,000.00) for each One Million Dollars ($1,000,000.00) of the fully
committed principal amount of the Taco Xxxx Line of Credit as it may exist from
time to time. If the Taco Xxxx Line of Credit is not in integral multiples of
One Million Dollars ($1,000,000.00), the Taco Xxxx Minimum Compensating Balances
Requirement shall be prorated for that portion of the fully committed principal
amount of the Taco Xxxx Line of Credit that is in excess of the highest integral
multiple of One Million Dollars ($1,000,000.00).
1.87 "Taco Xxxx Operators" means, as of each date of determination
thereof, the owners of Taco Xxxx Outlets, including those Taco Xxxx Outlets
owned directly by Tricon, who are eligible to purchase Taco Xxxx Inventory
directly through Unified pursuant to Title Transactions.
1.88 "Taco Xxxx Outlets" means, as of each date of determination
thereof, the Taco Xxxx retail outlets that are owned by Tricon or by
Tricon-approved franchisees of the Taco Xxxx restaurant concept.
1.89 "Taco Xxxx Pledge Agreement" means that certain Security Agreement
of even date herewith, between the Taco Xxxx Cooperative and the Bank, as
supplemented pursuant to that certain First Addendum to Security Agreement of
even date
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herewith, between the Taco Xxxx Cooperative and the Bank, together with all
future amendments and modifications thereto.
1.90 "Taco Xxxx Presold Inventory" means, as of each date of
determination thereof, those items of food, paper products, equipment and other
goods and services (a) that have been approved by Tricon for use and consumption
at the Taco Xxxx Outlets, (b) that have been specially ordered by a Taco Xxxx
Operator through Unified and is awaiting shipment to the Taco Xxxx Operator in a
warehouse owned or leased by Unified, (c) the title to which was acquired by
Unified pursuant to a Title Transaction, and (d) that has not yet been invoiced
by Unified to the particular Taco Xxxx Distributors and/or Taco Xxxx Operators.
1.91 "Taco Xxxx Promissory Note" means that certain Revolving Note of
even date herewith, made by the Taco Xxxx Cooperative, payable to the order of
the Bank, and in the face principal amount of Eight Million Dollars
($8,000,000.00), as supplemented pursuant to that certain First Addendum to
Revolving Note of even date herewith, between the Taco Xxxx Cooperative and the
Bank, together with all future amendments, modifications, renewals, extensions,
replacements and restatements thereof.
1.92 "Taco Xxxx Suppliers" means, as of each date of determination
thereof, those suppliers who have been approved by Tricon to sell Taco Xxxx
Inventory to Taco Xxxx Distributors and Taco Xxxx Operators.
1.93 "Title Transactions" means, as the case may be, the sale of KFC
Inventory and KFC Goods and Equipment directly by Unified to KFC Distributors
and/or KFC Operators, the sale of Pizza Hut Inventory and Pizza Hut Goods and
Equipment directly by Unified to Pizza Hut Distributors and/or Pizza Hut
Operators, and the sale of Taco Xxxx Inventory and Taco Xxxx Goods and Equipment
directly by Unified to Taco Xxxx Distributors and/or Taco Xxxx Operators, in
each case where the KFC Inventory and the KFC Goods and Equipment, the Pizza Hut
Inventory and the Pizza Hut Goods and Equipment, and the Taco Xxxx Inventory and
the Taco Xxxx Goods and Equipment was purchased by Unified from the particular
KFC Supplier, the particular Pizza Hut Supplier or the particular Taco Xxxx
Supplier and resold directly by Unified to the particular KFC Distributors
and/or KFC Operators,
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the particular Pizza Hut Distributors and/or Pizza Hut Operators and the
particular Taco Xxxx Distributors and/or Taco Xxxx Operators.
1.94 "Total Liabilities" means, with respect to the particular Borrower
or Unified, as the case may be, and as of each date determination of Total
Liabilities is being made, (a) all Indebtedness of the particular Borrower or
Unified as at such date, including, without limitation, all Debt for Borrowed
Money of the particular Borrower or Unified and all amounts due under all
capital leases entered into or assumed by the particular Borrower or Unified,
(b) all current liabilities of the particular Borrower or Unified, and (c) and
all other liabilities and obligations of the particular Borrower or Unified, in
each case as determined for the particular Borrower or Unified in accordance
with GAAP.
1.95 "Transaction Documents" means all agreements, documents and
instruments executed and delivered in connection with the formation and initial
capitalization of each of the Pizza Hut Cooperative, the Taco Xxxx Cooperative
and Unified including, without limitation, (a) the Unified Operating Agreement,
(b) that certain Asset Contribution and Liability Assumption Agreement of even
date herewith, between Unified and the KFC Cooperative, (c) that certain Tricon
Purchasing Coop Agreement of even date herewith, between Tricon and Unified, (d)
that certain SCM Transfer Agreement of even date herewith, among Unified,
Tricon, KFC Corporation, Taco Xxxx Corp., Pizza Hut, Inc. and Tricon Restaurant
Services Group, Inc., (e) that certain Purchasing Program Management Agreement
of even date herewith, between Unified and the KFC Cooperative, (f) that certain
Purchasing Program Management Agreement of even date herewith, between Unified
and the Pizza Hut Cooperative, (g) that certain Purchasing Program Management
Agreement of even date herewith, between Unified and the Taco Xxxx Cooperative,
and (h) each loan agreement, promissory note and security agreement executed and
delivered by Unified in favor of each Borrower in connection with the loans made
by each Borrower to Unified.
1.96 "Tricon" means Tricon Global Restaurants, Inc., a Delaware
corporation.
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1.97 "Unified" has the meaning set forth in the preambles to this Loan
Agreement.
1.98 "Unified Deficiency Fee" has the meaning set forth in Section 9.6
hereof.
1.99 "Unified Operating Agreement" means that certain Operating
Agreement dated as of March 1, 1999, among the KFC Cooperative, the Pizza Hut
Cooperative and the Taco Xxxx Cooperative, and joined in by Unified Purchasing
Group of Canada, Inc., together with all future amendments and modifications
thereto.
1.100 "Unified KFC Security Agreement" means that certain Security
Agreement of even date herewith, between Unified and the Bank, as supplemented
pursuant to that certain First Addendum to Security Agreement of even date
herewith, between Unified and the Bank, pursuant to which Unified has granted to
the Bank a first priority security interest in all of the KFC Collateral owned
by Unified to secure the payment of the KFC Promissory Note and the other
Secured Obligations owed by the KFC Cooperative to the Bank.
1.101 "Unified Pizza Hut Security Agreement" means that certain
Security Agreement of even date herewith, between Unified and the Bank, as
supplemented pursuant to that certain First Addendum to Security Agreement of
even date herewith, between Unified and the Bank, pursuant to which Unified has
granted to the Bank a first priority security interest in all of the Pizza Hut
Collateral owned by Unified to secure the payment of the Pizza Hut Promissory
Note and the other Secured Obligations owed by the Pizza Hut Cooperative to the
Bank.
1.102 "Unified Taco Xxxx Security Agreement" means that certain
Security Agreement of even date herewith, between Unified and the Bank, as
supplemented pursuant to that certain First Addendum to Security Agreement of
even date herewith, between Unified and the Bank, pursuant to which Unified has
granted to the Bank a first priority security interest in all of the Taco Xxxx
Collateral owned by Unified to secure the payment of the Taco Xxxx Promissory
Note and the other Secured Obligations owed by the Taco Xxxx Cooperative to the
Bank.
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1.103 Singular and Plural. Terms in the singular number shall include
the plural and those in the plural shall include the singular.
1.104 Use of Defined Terms. All terms defined in this Loan Agreement
shall, unless the context clearly requires to the contrary, have the defined
meanings when used in the other Loan Documents.
SECTION 2. KFC LINE OF CREDIT.
2.1 KFC Line of Credit. The Bank hereby establishes a revolving line of
credit in favor of the KFC Cooperative in the original principal amount of
Fifteen Million Dollars ($15,000,000.00) (the "KFC Line of Credit"). The KFC
Cooperative agrees that the proceeds of the KFC Line of Credit shall be used
solely by the KFC Cooperative to make the cash capital contributions and the
loans required to be made by the KFC Cooperative to Unified pursuant to the
Unified Operating Agreement, to repay certain outstanding Indebtedness of the
KFC Cooperative, and to provide general working capital to the KFC Cooperative
to pay its valid operating expenses arising in the ordinary course of business.
The KFC Cooperative may obtain advances under the KFC Line of Credit pursuant
to, and subject to the terms and conditions set forth in, this Loan Agreement.
2.2 Advances under the KFC Line of Credit. Subject to the terms and
conditions of this Loan Agreement, the Bank shall make to the KFC Cooperative
such advances under the KFC Line of Credit as the KFC Cooperative may from time
to time request in accordance with the provisions of this Loan Agreement. All
advances under the KFC Line of Credit shall be evidenced by, shall bear interest
at the rates established in, shall be payable and otherwise made on the terms
set forth in this Loan Agreement and the KFC Promissory Note.
2.3 Term of KFC Line of Credit. The KFC Line of Credit shall become
effective immediately as of the date of this Loan Agreement, and as of the date
hereof, the KFC Cooperative may obtain advances under the KFC Line of Credit in
each case subject to the terms and conditions contained herein. The KFC Line of
Credit shall continue in effect until April 1, 2001, unless sooner terminated
(a) by the Bank upon the occurrence and during the continuation of a KFC Event
of Default, or (b) by the
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KFC Cooperative at any time in its sole and absolute discretion; provided, in
the event the KFC Cooperative terminates the KFC Line of Credit on any date
other than a six-month anniversary of the date of this Loan Agreement, the
provisions of Section 2.8 hereof shall survive until the next succeeding
six-month anniversary of the date of this Loan Agreement. Upon termination of
the KFC Line of Credit by the Bank upon the occurrence and during the
continuation of a KFC Event of Default, or by the KFC Cooperative at any time in
its sole and absolute discretion, or otherwise at the stated maturity date of
the KFC Line of Credit, the entire unpaid principal balance of and all accrued
and unpaid interest on the KFC Promissory Note shall be due and payable in full
to the Bank. The termination of the KFC Line of Credit, for whatever reason,
shall not in any way release or relieve the KFC Cooperative or Unified from
their respective obligations incurred under the Loan Documents or in connection
herewith or under the KFC Promissory Note or the other Loan Documents, and the
provisions hereof and the other Loan Documents to which the KFC Cooperative or
Unified is a party shall continue in full force and effect until the KFC
Promissory Note and all other Secured Obligations owed by the KFC Cooperative to
the Bank have been paid in full to the Bank. In the event the KFC Cooperative
terminates the KFC Line of Credit, which the KFC Cooperative has the right to do
at any time in its sole and absolute discretion, (i) the KFC Cooperative shall
be obligated to pay the KFC Promissory Note and the other Secured Obligations
owed by the KFC Cooperative to the Bank in full to the Bank, and (ii) the Bank
shall have the right, at its sole option, to terminate the Pizza Hut Line of
Credit and/or the Taco Xxxx Line of Credit.
2.4 KFC Borrowing Base.
(a) The sum of the aggregate unpaid principal balance of the
advances under the KFC Line of Credit at any one time outstanding shall not
exceed the lesser of (i) Fifteen Million Dollars ($15,000,000.00), or (ii) the
then existing KFC Borrowing Base. The provisions of this Section 2.4(a) shall
take priority and govern over any conflicting or inconsistent provision of this
Loan Agreement or any other Loan Document.
(b) Unified shall deliver monthly to the Bank, within twenty (20)
days after the end of each month, a KFC Borrowing Base Report prepared and dated
as of the end of the immediately
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preceding month and substantially in the form of Exhibit A attached hereto and
made a part hereof, together with a KFC Accounts Receivable Aging Report
prepared and dated as of the end of the immediately preceding month and
substantially in the form of Exhibit D attached hereto and made a part hereof.
Each KFC Borrowing Base Report and each KFC Accounts Receivable Aging Report
shall be certified to be true, correct and accurate by the President or Chief
Financial Officer of Unified. Unified shall, in addition, from time to time
deliver to the Bank such other information concerning the KFC Accounts
Receivable and KFC Inventory as the Bank may reasonably request. The Bank
reserves the right to audit, from time to time, the KFC Accounts Receivable
and/or the KFC Inventory.
(c) The Bank shall fund each advance under the KFC Line of Credit
requested by the KFC Cooperative by depositing the entire amount thereof into an
operating account maintained by the KFC Cooperative with the Bank on the date
requested by a duly authorized officer of the KFC Cooperative, a list of which
shall be provided by the KFC Cooperative to the Bank, provided that notice of
the request for such advance has been received by the Bank by 3:00 P.M.
Louisville, Kentucky time on the date of the request, which must be a Business
Day (unless the date of the request is the last Business Day of a month, in
which event such notice must be received by the Bank by 11:00 A.M., Louisville,
Kentucky time on such date); notice of a request for an advance under the KFC
Line of Credit received by the Bank after such time shall be funded on the next
Business Day. The obligation of the Bank to fund each request for an advance
under the KFC Line of Credit is further subject to the prior satisfaction of
each and every condition precedent to the making of such advance, including,
without limitation, the condition precedent that the amount of the advance
requested, when combined with the aggregate amount of all outstanding advances
under the KFC Line of Credit, does not exceed the lesser of Fifteen Million
Dollars ($15,000,000.00) or the then existing KFC Borrowing Base.
(d) If any representation or fact pertaining to the KFC Eligible
Accounts Receivable, the KFC Eligible Presold Inventory and/or the KFC Eligible
Inventory Held on Account contained in any KFC Borrowing Base Report or in any
KFC Accounts Receivable Aging Report shall prove to be untrue, or if all or any
part of the KFC Accounts Receivable shall cease to
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constitute KFC Eligible Account Receivables and/or the KFC Inventory shall cease
to constitute KFC Eligible Presold Inventory and/or KFC Eligible Inventory Held
on Account, as applicable, for whatever reason, then such KFC Accounts
Receivable and/or KFC Inventory affected thereby (collectively, the "KFC
Disqualified Assets"), shall automatically be excluded from the KFC Borrowing
Base. If the then aggregate principal balance of the advances outstanding under
the KFC Line of Credit exceeds the KFC Borrowing Base, after excluding the KFC
Disqualified Assets, the KFC Cooperative shall immediately notify the Bank in
writing thereof and shall, without demand or further notice, repay to the Bank
such amount of the advances under the KFC Line of Credit as is sufficient to
reduce the outstanding principal balance of the advances under the KFC Line of
Credit to an amount equal to or less than the KFC Borrowing Base, after
excluding the KFC Disqualified Assets.
2.5 Procedures and Conditions. The obtaining by the KFC Cooperative of
each advance under the KFC Line of Credit shall be subject to the following
terms and conditions:
(a) Each advance under the KFC Line of Credit shall be in integral
multiples of One Hundred Thousand Dollars ($100,000.00) or, if less, the amount
available to be borrowed under the KFC Line of Credit at the time the advance is
requested by the KFC Cooperative. Whenever the KFC Cooperative desires that the
Bank make an advance under the KFC Line of Credit to the KFC Cooperative, the
KFC Cooperative shall give the Bank telephonic or facsimile notice of the amount
of the advance requested and the date on which such advance is to be made by the
Bank. At the request of the Bank, the KFC Cooperative shall confirm in writing
any telephonic request for an advance under the KFC Line of Credit.
(b) The Bank shall not incur any liability to the KFC Cooperative
in acting upon any telephonic notice referred to above which the Bank believes
in good faith to have been given by a duly authorized officer or other person
authorized to borrow on behalf of the KFC Cooperative or for otherwise acting in
good faith under this Section 2.5, and, upon the funding of any advance under
the KFC Line of Credit by the Bank in accordance with this Loan Agreement
pursuant to any telephonic notice, the Borrower shall have effected such advance
hereunder.
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(c) The Bank shall make the proceeds of each advance under the KFC
Line of Credit requested by the KFC Cooperative available to the KFC Cooperative
on the date requested by the KFC Cooperative (which shall be a Business Day) by
causing an amount of same day funds equal to the proceeds of such advance to be
credited to the operating account maintained by the KFC Cooperative with the
Bank.
(d) The KFC Cooperative shall have no right to obtain, and the
Bank shall have no obligation to make, any advance under the KFC Line of Credit
if a KFC Default or a KFC Event of Default has occurred and is continuing.
(e) Each request by the KFC Cooperative for an advance under the
KFC Line of Credit shall, in and of itself, constitute a continuing
representation and warranty by the KFC Cooperative to the Bank (i) that the KFC
Cooperative then is, and at the time the advance is actually made will be,
entitled under this Loan Agreement to obtain the particular advance, and (ii)
that all of the covenants, agreements, representations and warranties made by
the KFC Cooperative herein and in the other Loan Documents to which the KFC
Cooperative is a party are true and correct, and have been fully complied with,
as of the date of such request.
(f) The KFC Cooperative shall have no right to obtain any advance
under the KFC Line of Credit unless all of the terms and conditions set forth in
this Section 2.5 have been fully satisfied with regard to that advance.
(g) The KFC Cooperative shall not pay down the outstanding
principal balance of the KFC Line of Credit to an amount less than One Thousand
Dollars ($1,000.00) at any one time during the period of this Loan Agreement,
and in the event that the outstanding principal balance of the KFC Line of
Credit is paid down to an amount less than One Thousand Dollars ($1,000.00), the
Bank shall have no obligation to make any further advances under the KFC Line of
Credit to the KFC Cooperative, and the KFC Cooperative shall have no right to
obtain any further advances under the KFC Line of Credit, until the Bank has
completely satisfied itself that it has a properly perfected security interest
in and lien on all of the KFC Collateral with the priority intended under this
Loan Agreement to
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secure the payment of all such additional advances to be made to the KFC
Cooperative pursuant hereto.
2.6 Interest on the Advances Under the KFC Line of Credit. The
aggregate advances under the KFC Line of Credit shall bear interest as provided
in the KFC Promissory Note. All accrued interest on the KFC Line of Credit shall
be paid monthly to the Bank through the maturity date of the KFC Line of Credit,
whether the stated maturity date of the KFC Line of Credit, an accelerated
maturity date of the KFC Line of Credit or otherwise. All interest on the KFC
Promissory Note shall be computed based upon the actual number of days elapsed
over an assumed year of three hundred sixty (360) days.
2.7 Late Charge; Post-Maturity Interest. The KFC Cooperative shall be
obligated to pay to the Bank a late charge equal to five percent (5%) of any
installment of accrued interest on the KFC Promissory Note not paid to the Bank
when due or within ten (10) days thereafter. Further, all installments of
accrued interest on and all unpaid principal of the KFC Promissory Note not paid
to the Bank when due or within ten (10) days thereafter shall bear interest at
the Default Rate until such overdue installments of accrued interest and/or
unpaid principal have been paid in full to the Bank.
2.8 Deficiency Fee. The KFC Cooperative hereby agrees to pay to the
Bank, in respect of each calendar quarter during the term of the KFC Line of
Credit, a deficiency fee (the "KFC Deficiency Fee") in an amount equal to the
product of (a) the Prime Rate plus two percent (2%) per annum as of the last day
of such calendar quarter, and (b) the positive difference, if any, between (i)
the KFC Minimum Compensating Balances Requirement, less (ii) the sum of the
average daily collected balances maintained in the KFC Demand Deposit Account
during such calendar quarter. The KFC Deficiency Fee shall be due and payable to
the Bank quarterly in arrears within ten (10) days after the KFC Cooperative has
received an invoice for the KFC Deficiency Fee from the Bank. Any KFC Deficiency
Fee not paid to the Bank when due shall bear interest at the Default Rate, and
the KFC Deficiency Fee, together with all accrued interest thereon, shall
continue to be immediately due and payable to the Bank.
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2.9 Purpose. The KFC Cooperative agrees that the proceeds of the KFC
Line of Credit shall be used solely by the KFC Cooperative to make the cash
capital contributions and the loans required to be made by the KFC Cooperative
to Unified pursuant to the Unified Operating Agreement, to repay certain
outstanding Indebtedness of the KFC Cooperative and to provide general working
capital to the KFC Cooperative to pay its valid operating expenses arising in
the ordinary course of business. The KFC Cooperative further agrees that no
portion of the proceeds of the KFC Line of Credit shall be used to purchase or
carry any margin stock, to extend credit to others for the purpose of purchasing
or carrying margin stock or for any purpose proscribed by Regulation G,
Regulation T, Regulation U or Regulation X of the Board of Governors of the
Federal Reserve System.
2.10 Payments. All payments on the KFC Promissory Note shall be in
legal tender of the United States of America in immediately available funds. If
the date any payment is due under the KFC Promissory Note shall not be a
Business Day, the payment otherwise then due shall be due and payable on the
next succeeding Business Day (provided, interest shall continue to accrue on
each such non-Business Day).
2.11 Security. The KFC Promissory Note and the other Secured
Obligations owed by the KFC Cooperative to the Bank shall at all times be
secured by the KFC Pledge Agreement and the Unified KFC Security Agreement
together with accompanying UCC-1 Financing Statements executed by the KFC
Cooperative and Unified.
2.12 Reduction in the KFC Line of Credit. The KFC Cooperative shall
have the right on each six-month anniversary of the date of this Loan Agreement,
upon not less than thirty (30) days prior written notice to the Bank, to reduce
the committed principal amount of the KFC Line of Credit to a lesser amount
without the payment of any premium to the Bank. In such event, the KFC
Cooperative, Unified and the Bank shall execute and deliver such amendment
documents as shall be necessary or appropriate to evidence such reduction in the
committed principal amount of the KFC Line of Credit. To the extent the unpaid
principal of the KFC Line of Credit exceeds the committed principal amount of
the KFC Line of Credit as reduced by the KFC Cooperative, the KFC Cooperative
shall immediately pay to the
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Bank, without prior demand or notice by the Bank, such amount of the unpaid
principal of the KFC Line of Credit as exceeds the committed principal amount of
the KFC Line of Credit. The KFC Cooperative shall have no right to subsequently
increase the committed principal amount of the KFC Line of Credit, after it has
been reduced by the KFC Cooperative pursuant to this Section 2.12, without the
prior written consent of the Bank.
SECTION 3. PIZZA HUT LINE OF CREDIT.
3.1 Pizza Hut Line of Credit. The Bank hereby establishes a revolving
line of credit in favor of the Pizza Hut Cooperative in the original principal
amount of Two Million Dollars ($2,000,000.00) (the "Pizza Hut Line of Credit").
The Pizza Hut Cooperative agrees that the proceeds of the Pizza Hut Line of
Credit shall be used solely by the Pizza Hut Cooperative to make the cash
capital contributions and the loans required to be made by the Pizza Hut
Cooperative to Unified pursuant to the Unified Operating Agreement and to
provide general working capital to the Pizza Hut Cooperative to pay its valid
operating expenses arising in the ordinary course of business. The Pizza Hut
Cooperative may obtain advances under the Pizza Hut Line of Credit pursuant to,
and subject to the terms and conditions set forth in, this Loan Agreement.
3.2 Advances under the Pizza Hut Line of Credit. Subject to the terms
and conditions of this Loan Agreement, the Bank shall make to the Pizza Hut
Cooperative such advances under the Pizza Hut Line of Credit as the Pizza Hut
Cooperative may from time to time request in accordance with the provisions of
this Loan Agreement. All advances under the Pizza Hut Line of Credit shall be
evidenced by, shall bear interest at the rates established in, shall be payable
and otherwise made on the terms set forth in this Loan Agreement and the Pizza
Hut Promissory Note.
3.3 Term of Pizza Hut Line of Credit. The Pizza Hut Line of Credit
shall become effective immediately as of the date of this Loan Agreement, and as
of the date hereof, the Pizza Hut Cooperative may obtain advances under the
Pizza Hut Line of Credit in each case subject to the terms and conditions
contained herein. The Pizza Hut Line of Credit shall continue in effect until
April 1, 2001, unless sooner terminated (a) by the Bank upon the occurrence and
during the continuation of a Pizza
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Hut Event of Default, or (b) by the Pizza Hut Cooperative at any time in its
sole and absolute discretion; provided, in the event the Pizza Hut Cooperative
terminates the Pizza Hut Line of Credit on any date other than a six-month
anniversary of the date of this Loan Agreement, the provisions of Section 3.8
hereof shall survive until the next succeeding six-month anniversary of the date
of this Loan Agreement. Upon termination of the Pizza Hut Line of Credit by the
Bank upon the occurrence and during the continuation of a Pizza Hut Event of
Default, or by the Pizza Hut Cooperative at any time in its sole and absolute
discretion, or otherwise at the stated maturity date of the Pizza Hut Line of
Credit, the entire unpaid principal balance of and all accrued and unpaid
interest on the Pizza Hut Promissory Note shall be due and payable in full to
the Bank. The termination of the Pizza Hut Line of Credit, for whatever reason,
shall not in any way release or relieve the Pizza Hut Cooperative or Unified
from their respective obligations incurred under the Loan Documents or in
connection herewith or under the Pizza Hut Promissory Note or the other Loan
Documents, and the provisions hereof and the other Loan Documents to which the
Pizza Hut Cooperative or Unified is a party shall continue in full force and
effect until the Pizza Hut Promissory Note and all other Secured Obligations
owed by the Pizza Hut Cooperative to the Bank have been paid in full to the
Bank. In the event the Pizza Hut Cooperative terminates the Pizza Hut Line of
Credit, which the Pizza Hut Cooperative has the right to do at any time in its
sole and absolute discretion, (i) the Pizza Hut Cooperative shall be obligated
to pay the Pizza Hut Promissory Note and the other Secured Obligations owed by
the Pizza Hut Cooperative to the Bank in full to the Bank, and (ii) the Bank
shall have the right, at its sole option, to terminate the KFC Line of Credit
and/or the Taco Xxxx Line of Credit.
3.4 Pizza Hut Borrowing Base.
(a) The sum of the aggregate unpaid principal balance of the
advances under the Pizza Hut Line of Credit at any one time outstanding shall
not exceed the lesser of (i) Two Million Dollars ($2,000,000.00), or (ii) the
then existing Pizza Hut Borrowing Base. The provisions of this Section 3.4(a)
shall take priority and govern over any conflicting or inconsistent provision of
this Loan Agreement or any other Loan Document.
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(b) Unified shall deliver monthly to the Bank, within twenty (20)
days after the end of each month, a Pizza Hut Borrowing Base Report prepared and
dated as of the end of the immediately preceding month and substantially in the
form of Exhibit B attached hereto and made a part hereof, together with a Pizza
Hut Accounts Receivable Aging Report prepared and dated as of the end of the
immediately preceding month and substantially in the form of Exhibit E attached
hereto and made a part hereof. Each Pizza Hut Borrowing Base Report and each
Pizza Hut Accounts Receivable Aging Report shall be certified to be true,
correct and accurate by the President or Chief Financial Officer of Unified.
Unified shall, in addition, from time to time deliver to the Bank such other
information concerning the Pizza Hut Accounts Receivable and Pizza Hut Inventory
as the Bank may reasonably request. The Bank reserves the right to audit, from
time to time, the Pizza Hut Accounts Receivable and/or the Pizza Hut Inventory.
(c) The Bank shall fund each advance under the Pizza Hut Line of
Credit requested by the Pizza Hut Cooperative by depositing the entire amount
thereof into an operating account maintained by the Pizza Hut Cooperative with
the Bank on the date requested by a duly authorized officer of the Pizza Hut
Cooperative, a list of which shall be provided by the Pizza Hut Cooperative to
the Bank, provided that notice of the request for such advance has been received
by the Bank by 3:00 P.M. Louisville, Kentucky time on the date of the request,
which must be a Business Day (unless the date of the request is the last
Business Day of a month, in which event such notice must be received by the Bank
by 11:00 A.M., Louisville, Kentucky time on such date); notice of a request for
an advance under the Pizza Hut Line of Credit received by the Bank after such
time shall be funded on the next Business Day. The obligation of the Bank to
fund each request for an advance under the Pizza Hut Line of Credit is further
subject to the prior satisfaction of each and every condition precedent to the
making of such advance, including, without limitation, the condition precedent
that the amount of the advance requested, when combined with the aggregate
amount of all outstanding advances under the Pizza Hut Line of Credit, does not
exceed the lesser of Two Million Dollars ($2,000,000.00) or the then existing
Pizza Hut Borrowing Base.
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(d) If any representation or fact pertaining to the Pizza Hut
Eligible Accounts Receivable, the Pizza Hut Eligible Presold Inventory and/or
the Pizza Hut Eligible Inventory Held on Account contained in any Pizza Hut
Borrowing Base Report or in any Pizza Hut Accounts Receivable Aging Report shall
prove to be untrue, or if all or any part of the Pizza Hut Accounts Receivable
shall cease to constitute Pizza Hut Eligible Account Receivables and/or the
Pizza Hut Inventory shall cease to constitute Pizza Hut Eligible Presold
Inventory and/or Pizza Hut Eligible Inventory Held on Account, as applicable,
for whatever reason, then such Pizza Hut Accounts Receivable and/or Pizza Hut
Inventory affected thereby (collectively, the "Pizza Hut Disqualified Assets"),
shall automatically be excluded from the Pizza Hut Borrowing Base. If the then
aggregate principal balance of the advances outstanding under the Pizza Hut Line
of Credit exceeds the Pizza Hut Borrowing Base, after excluding the Pizza Hut
Disqualified Assets, the Pizza Hut Cooperative shall immediately notify the Bank
in writing thereof and shall, without demand or further notice, repay to the
Bank such amount of the advances under the Pizza Hut Line of Credit as is
sufficient to reduce the outstanding principal balance of the advances under the
Pizza Hut Line of Credit to an amount equal to or less than the Pizza Hut
Borrowing Base, after excluding the Pizza Hut Disqualified Assets.
3.5 Procedures and Conditions. The obtaining by the Pizza Hut
Cooperative of each advance under the Pizza Hut Line of Credit shall be subject
to the following terms and conditions:
(a) Each advance under the Pizza Hut Line of Credit shall be in
integral multiples of One Hundred Thousand Dollars ($100,000.00) or, if less,
the amount available to be borrowed under the Pizza Hut Line of Credit at the
time the advance is requested by the Pizza Hut Cooperative. Whenever the Pizza
Hut Cooperative desires that the Bank make an advance under the Pizza Hut Line
of Credit to the Pizza Hut Cooperative, the Pizza Hut Cooperative shall give the
Bank telephonic or facsimile notice of the amount of the advance requested and
the date on which such advance is to be made by the Bank. At the request of the
Bank, the Pizza Hut Cooperative shall confirm in writing any telephonic request
for an advance under the Pizza Hut Line of Credit.
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(b) The Bank shall not incur any liability to the Pizza Hut
Cooperative in acting upon any telephonic notice referred to above which the
Bank believes in good faith to have been given by a duly authorized officer or
other person authorized to borrow on behalf of the Pizza Hut Cooperative or for
otherwise acting in good faith under this Section 3.5, and, upon the funding of
any advance under the Pizza Hut Line of Credit by the Bank in accordance with
this Loan Agreement pursuant to any telephonic notice, the Borrower shall have
effected such advance hereunder.
(c) The Bank shall make the proceeds of each advance under the
Pizza Hut Line of Credit requested by the Pizza Hut Cooperative available to the
Pizza Hut Cooperative on the date requested by the Pizza Hut Cooperative (which
shall be a Business Day) by causing an amount of same day funds equal to the
proceeds of such advance to be credited to the operating account maintained by
the Pizza Hut Cooperative with the Bank.
(d) The Pizza Hut Cooperative shall have no right to obtain, and
the Bank shall have no obligation to make, any advance under the Pizza Hut Line
of Credit if a Pizza Hut Default or a Pizza Hut Event of Default has occurred
and is continuing.
(e) Each request by the Pizza Hut Cooperative for an advance under
the Pizza Hut Line of Credit shall, in and of itself, constitute a continuing
representation and warranty by the Pizza Hut Cooperative to the Bank (i) that
the Pizza Hut Cooperative then is, and at the time the advance is actually made
will be, entitled under this Loan Agreement to obtain the particular advance,
and (ii) that all of the covenants, agreements, representations and warranties
made by the Pizza Hut Cooperative herein and in the other Loan Documents to
which the Pizza Hut Cooperative is a party are true and correct, and have been
fully complied with, as of the date of such request.
(f) The Pizza Hut Cooperative shall have no right to obtain any
advance under the Pizza Hut Line of Credit unless all of the terms and
conditions set forth in this Section 3.5 have been fully satisfied with regard
to that advance.
(g) The Pizza Hut Cooperative shall not pay down the outstanding
principal balance of the Pizza Hut Line of Credit to
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an amount less than One Thousand Dollars ($1,000.00) at any one time during the
period of this Loan Agreement, and in the event that the outstanding principal
balance of the Pizza Hut Line of Credit is paid down to an amount less than One
Thousand Dollars ($1,000.00), the Bank shall have no obligation to make any
further advances under the Pizza Hut Line of Credit to the Pizza Hut
Cooperative, and the Pizza Hut Cooperative shall have no right to obtain any
further advances under the Pizza Hut Line of Credit, until the Bank has
completely satisfied itself that it has a properly perfected security interest
in and lien on all of the Pizza Hut Collateral with the priority intended under
this Loan Agreement to secure the payment of all such additional advances to be
made to the Pizza Hut Cooperative pursuant hereto.
3.6 Interest on the Advances Under the Pizza Hut Line of Credit. The
aggregate advances under the Pizza Hut Line of Credit shall bear interest as
provided in the Pizza Hut Promissory Note. All accrued interest on the Pizza Hut
Line of Credit shall be paid monthly to the Bank through the maturity date of
the Pizza Hut Line of Credit, whether the stated maturity date of the Pizza Hut
Line of Credit, an accelerated maturity date of the Pizza Hut Line of Credit or
otherwise. All interest on the Pizza Hut Promissory Note shall be computed based
upon the actual number of days elapsed over an assumed year of three hundred
sixty (360) days.
3.7 Late Charge; Post-Maturity Interest. The Pizza Hut Cooperative
shall be obligated to pay to the Bank a late charge equal to five percent (5%)
of any installment of accrued interest on the Pizza Hut Promissory Note not paid
to the Bank when due or within ten (10) days thereafter. Further, all
installments of accrued interest on and all unpaid principal of the Pizza Hut
Promissory Note not paid to the Bank when due or within ten (10) days thereafter
shall bear interest at the Default Rate until such overdue installments of
accrued interest and/or unpaid principal have been paid in full to the Bank.
3.8 Deficiency Fee. The Pizza Hut Cooperative hereby agrees to pay to
the Bank, in respect of each calendar quarter during the term of the Pizza Hut
Line of Credit, a deficiency fee (the "Pizza Hut Deficiency Fee") in an amount
equal to the product of (a) the Prime Rate plus two percent (2%) per annum as of
the last day of such calendar quarter, and (b) the positive
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difference, if any, between (i) the Pizza Hut Minimum Compensating Balances
Requirement, less (ii) the sum of the average daily collected balances
maintained in the Pizza Hut Demand Deposit Account during such calendar quarter.
The Pizza Hut Deficiency Fee shall be due and payable to the Bank quarterly in
arrears within ten (10) days after the Pizza Hut Cooperative has received an
invoice for the Pizza Hut Deficiency Fee from the Bank. Any Pizza Hut Deficiency
Fee not paid to the Bank when due shall bear interest at the Default Rate, and
the Pizza Hut Deficiency Fee, together with all accrued interest thereon, shall
continue to be immediately due and payable to the Bank.
3.9 Purpose. The Pizza Hut Cooperative agrees that the proceeds of the
Pizza Hut Line of Credit shall be used solely by the Pizza Hut Cooperative to
make the cash capital contributions and the loans required to be made by the
Pizza Hut Cooperative to Unified pursuant to the Unified Operating Agreement and
to provide general working capital to the Pizza Hut Cooperative to pay its valid
operating expenses arising in the ordinary course of business. The Pizza Hut
Cooperative further agrees that no portion of the proceeds of the Pizza Hut Line
of Credit shall be used to purchase or carry any margin stock, to extend credit
to others for the purpose of purchasing or carrying margin stock or for any
purpose proscribed by Regulation G, Regulation T, Regulation U or Regulation X
of the Board of Governors of the Federal Reserve System.
3.10 Payments. All payments on the Pizza Hut Promissory Note shall be
in legal tender of the United States of America in immediately available funds.
If the date any payment is due under the Pizza Hut Promissory Note shall not be
a Business Day, the payment otherwise then due shall be due and payable on the
next succeeding Business Day (provided, interest shall continue to accrue on
each such non-Business Day).
3.11 Security. The Pizza Hut Promissory Note and the other Secured
Obligations owed by the Pizza Hut Cooperative to the Bank shall at all times be
secured by the Pizza Hut Pledge Agreement and the Unified Pizza Hut Security
Agreement together with accompanying UCC-1 Financing Statements executed by the
Pizza Hut Cooperative and Unified.
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3.12 Reduction in the Pizza Hut Line of Credit. The Pizza Hut
Cooperative shall have the right on each six-month anniversary of the date of
this Loan Agreement, upon not less than thirty (30) days prior written notice to
the Bank, to reduce the committed principal amount of the Pizza Hut Line of
Credit to a lesser amount without the payment of any premium to the Bank. In
such event, the Pizza Hut Cooperative, Unified and the Bank shall execute and
deliver such amendment documents as shall be necessary or appropriate to
evidence such reduction in the committed principal amount of the Pizza Hut Line
of Credit. To the extent the unpaid principal of the Pizza Hut Line of Credit
exceeds the committed principal amount of the Pizza Hut Line of Credit as
reduced by the Pizza Hut Cooperative, the Pizza Hut Cooperative shall
immediately pay to the Bank, without prior demand or notice by the Bank, such
amount of the unpaid principal of the Pizza Hut Line of Credit as exceeds the
committed principal amount of the Pizza Hut Line of Credit. The Pizza Hut
Cooperative shall have no right to subsequently increase the committed principal
amount of the Pizza Hut Line of Credit, after it has been reduced by the Pizza
Hut Cooperative pursuant to this Section 3.12, without the prior written consent
of the Bank.
SECTION 4 TACO XXXX LINE OF CREDIT.
4.1 Taco Xxxx Line of Credit. The Bank hereby establishes a revolving
line of credit in favor of the Taco Xxxx Cooperative in the original principal
amount of Eight Million Dollars ($8,000,000.00) (the "Taco Xxxx Line of
Credit"). The Taco Xxxx Cooperative agrees that the proceeds of the Taco Xxxx
Line of Credit shall be used solely by the Taco Xxxx Cooperative to make the
cash capital contributions and the loans required to be made by the Taco Xxxx
Cooperative to Unified pursuant to the Unified Operating Agreement and to
provide general working capital to the Taco Xxxx Cooperative to pay its valid
operating expenses arising in the ordinary course of business. The Taco Xxxx
Cooperative may obtain advances under the Taco Xxxx Line of Credit pursuant to,
and subject to the terms and conditions set forth in, this Loan Agreement.
4.2 Advances under the Taco Xxxx Line of Credit. Subject to the terms
and conditions of this Loan Agreement, the Bank shall make to the Taco Xxxx
Cooperative such advances under the Taco Xxxx Line of Credit as the Taco Xxxx
Cooperative may from
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time to time request in accordance with the provisions of this Loan Agreement.
All advances under the Taco Xxxx Line of Credit shall be evidenced by, shall
bear interest at the rates established in, shall be payable and otherwise made
on the terms set forth in this Loan Agreement and the Taco Xxxx Promissory Note.
4.3 Term of Taco Xxxx Line of Credit. The Taco Xxxx Line of Credit
shall become effective immediately as of the date of this Loan Agreement, and as
of the date hereof, the Taco Xxxx Cooperative may obtain advances under the Taco
Xxxx Line of Credit in each case subject to the terms and conditions contained
herein. The Taco Xxxx Line of Credit shall continue in effect until April 1,
2001, unless sooner terminated (a) by the Bank upon the occurrence and during
the continuation of a Taco Xxxx Event of Default, or (b) by the Taco Xxxx
Cooperative at any time in its sole and absolute discretion; provided, in the
event the Taco Xxxx Cooperative terminates the Taco Xxxx Line of Credit on any
date other than a six-month anniversary of the date of this Loan Agreement, the
provisions of Section 4.8 hereof shall survive until the next succeeding
six-month anniversary of the date of this Loan Agreement. Upon termination of
the Taco Xxxx Line of Credit by the Bank upon the occurrence and during the
continuation of a Taco Xxxx Event of Default, or by the Taco Xxxx Cooperative at
any time in its sole and absolute discretion, or otherwise at the stated
maturity date of the Taco Xxxx Line of Credit, the entire unpaid principal
balance of and all accrued and unpaid interest on the Taco Xxxx Promissory Note
shall be due and payable in full to the Bank. The termination of the Taco Xxxx
Line of Credit, for whatever reason, shall not in any way release or relieve the
Taco Xxxx Cooperative or Unified from their respective obligations incurred
under the Loan Documents or in connection herewith or under the Taco Xxxx
Promissory Note or the other Loan Documents, and the provisions hereof and the
other Loan Documents to which the Taco Xxxx Cooperative or Unified is a party
shall continue in full force and effect until the Taco Xxxx Promissory Note and
all other Secured Obligations owed by the Taco Xxxx Cooperative to the Bank have
been paid in full to the Bank. In the event the Taco Xxxx Cooperative terminates
the Taco Xxxx Line of Credit, which the Taco Xxxx Cooperative has the right to
do at any time in its sole and absolute discretion, (i) the Taco Xxxx
Cooperative shall be obligated to pay the Taco Xxxx Promissory Note and the
other Secured Obligations owed by
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the Taco Xxxx Cooperative to the Bank in full to the Bank, and (ii) the Bank
shall have the right, at its sole option, to terminate the KFC Line of Credit
and/or the Pizza Hut Line of Credit.
4.4 Taco Xxxx Borrowing Base.
(a) The sum of the aggregate unpaid principal balance of the
advances under the Taco Xxxx Line of Credit at any one time outstanding shall
not exceed the lesser of (i) Eight Million Dollars ($8,000,000.00), or (ii) the
then existing Taco Xxxx Borrowing Base. The provisions of this Section 4.4(a)
shall take priority and govern over any conflicting or inconsistent provision of
this Loan Agreement or any other Loan Document.
(b) Unified shall deliver monthly to the Bank, within twenty (20)
days after the end of each month, a Taco Xxxx Borrowing Base Report prepared and
dated as of the end of the immediately preceding month and substantially in the
form of Exhibit C attached hereto and made a part hereof, together with a Taco
Xxxx Accounts Receivable Aging Report prepared and dated as of the end of the
immediately preceding month and substantially in the form of Exhibit F attached
hereto and made a part hereof. Each Taco Xxxx Borrowing Base Report and each
Taco Xxxx Accounts Receivable Aging Report shall be certified to be true,
correct and accurate by the President or Chief Financial Officer of Unified.
Unified shall, in addition, from time to time deliver to the Bank such other
information concerning the Taco Xxxx Accounts Receivable and Taco Xxxx Inventory
as the Bank may reasonably request. The Bank reserves the right to audit, from
time to time, the Taco Xxxx Accounts Receivable and/or the Taco Xxxx Inventory.
(c) The Bank shall fund each advance under the Taco Xxxx Line of
Credit requested by the Taco Xxxx Cooperative by depositing the entire amount
thereof into an operating account maintained by the Taco Xxxx Cooperative with
the Bank on the date requested by a duly authorized officer of the Taco Xxxx
Cooperative, a list of which shall be provided by the Taco Xxxx Cooperative to
the Bank, provided that notice of the request for such advance has been received
by the Bank by 3:00 P.M. Louisville, Kentucky time on the date of the request,
which must be a Business Day (unless the date of the request is the last
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Business Day of a month, in which event such notice must be received by the Bank
by 11:00 A.M., Louisville, Kentucky time on such date); notice of a request for
an advance under the Taco Xxxx Line of Credit received by the Bank after such
time shall be funded on the next Business Day. The obligation of the Bank to
fund each request for an advance under the Taco Xxxx Line of Credit is further
subject to the prior satisfaction of each and every condition precedent to the
making of such advance, including, without limitation, the condition precedent
that the amount of the advance requested, when combined with the aggregate
amount of all outstanding advances under the Taco Xxxx Line of Credit, does not
exceed the lesser of Eight Million Dollars ($8,000,000.00) or the then existing
Taco Xxxx Borrowing Base.
(d) If any representation or fact pertaining to the Taco Xxxx
Eligible Accounts Receivable, the Taco Xxxx Eligible Presold Inventory and/or
the Taco Xxxx Eligible Inventory Held on Account contained in any Taco Xxxx
Borrowing Base Report or in any Taco Xxxx Accounts Receivable Aging Report shall
prove to be untrue, or if all or any part of the Taco Xxxx Accounts Receivable
shall cease to constitute Taco Xxxx Eligible Account Receivables and/or the Taco
Xxxx Inventory shall cease to constitute Taco Xxxx Eligible Presold Inventory
and/or Taco Xxxx Eligible Inventory Held on Account, as applicable, for whatever
reason, then such Taco Xxxx Accounts Receivable and/or Taco Xxxx Inventory
affected thereby (collectively, the "Taco Xxxx Disqualified Assets"), shall
automatically be excluded from the Taco Xxxx Borrowing Base. If the then
aggregate principal balance of the advances outstanding under the Taco Xxxx Line
of Credit exceeds the Taco Xxxx Borrowing Base, after excluding the Taco Xxxx
Disqualified Assets, the Taco Xxxx Cooperative shall immediately notify the Bank
in writing thereof and shall, without demand or further notice, repay to the
Bank such amount of the advances under the Taco Xxxx Line of Credit as is
sufficient to reduce the outstanding principal balance of the advances under the
Taco Xxxx Line of Credit to an amount equal to or less than the Taco Xxxx
Borrowing Base, after excluding the Taco Xxxx Disqualified Assets.
4.5 Procedures and Conditions. The obtaining by the Taco Xxxx
Cooperative of each advance under the Taco Xxxx Line of Credit shall be subject
to the following terms and conditions:
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(a) Each advance under the Taco Xxxx Line of Credit shall be in
integral multiples of One Hundred Thousand Dollars ($100,000.00) or, if less,
the amount available to be borrowed under the Taco Xxxx Line of Credit at the
time the advance is requested by the Taco Xxxx Cooperative. Whenever the Taco
Xxxx Cooperative desires that the Bank make an advance under the Taco Xxxx Line
of Credit to the Taco Xxxx Cooperative, the Taco Xxxx Cooperative shall give the
Bank telephonic or facsimile notice of the amount of the advance requested and
the date on which such advance is to be made by the Bank. At the request of the
Bank, the Taco Xxxx Cooperative shall confirm in writing any telephonic request
of an advance under the Taco Xxxx Line of Credit.
(b) The Bank shall not incur any liability to the Taco Xxxx
Cooperative in acting upon any telephonic notice referred to above which the
Bank believes in good faith to have been given by a duly authorized officer or
other person authorized to borrow on behalf of the Taco Xxxx Cooperative or for
otherwise acting in good faith under this Section 4.5, and, upon the funding of
any advance under the Taco Xxxx Line of Credit by the Bank in accordance with
this Loan Agreement pursuant to any telephonic notice, the Borrower shall have
effected such advance hereunder.
(c) The Bank shall make the proceeds of each advance under the
Taco Xxxx Line of Credit requested by the Taco Xxxx Cooperative available to the
Taco Xxxx Cooperative on the date requested by the Taco Xxxx Cooperative (which
shall be a Business Day) by causing an amount of same day funds equal to the
proceeds of such advance to be credited to the operating account maintained by
the Taco Xxxx Cooperative with the Bank.
(d) The Taco Xxxx Cooperative shall have no right to obtain, and
the Bank shall have no obligation to make, any advance under the Taco Xxxx Line
of Credit if a Taco Xxxx Default or a Taco Xxxx Event of Default has occurred
and is continuing.
(e) Each request by the Taco Xxxx Cooperative for an advance under
the Taco Xxxx Line of Credit shall, in and of itself, constitute a continuing
representation and warranty by the Taco Xxxx Cooperative to the Bank (i) that
the Taco Xxxx Cooperative then is, and at the time the advance is actually
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made will be, entitled under this Loan Agreement to obtain the particular
advance, and (ii) that all of the covenants, agreements, representations and
warranties made by the Taco Xxxx Cooperative herein and in the other Loan
Documents to which the Taco Xxxx Cooperative is a party are true and correct,
and have been fully complied with, as of the date of such request.
(f) The Taco Xxxx Cooperative shall have no right to obtain any
advance under the Taco Xxxx Line of Credit unless all of the terms and
conditions set forth in this Section 2.5 have been fully satisfied with regard
to that advance.
(g) The Taco Xxxx Cooperative shall not pay down the outstanding
principal balance of the Taco Xxxx Line of Credit to an amount less than One
Thousand Dollars ($1,000.00) at any one time during the period of this Loan
Agreement, and in the event that the outstanding principal balance of the Taco
Xxxx Line of Credit is paid down to an amount less than One Thousand Dollars
($1,000.00), the Bank shall have no obligation to make any further advances
under the Taco Xxxx Line of Credit to the Taco Xxxx Cooperative, and the Taco
Xxxx Cooperative shall have no right to obtain any further advances under the
Taco Xxxx Line of Credit, until the Bank has completely satisfied itself that it
has a properly perfected security interest in and lien on all of the Taco Xxxx
Collateral with the priority intended under this Loan Agreement to secure the
payment of all such additional advances to be made to the Taco Xxxx Cooperative
pursuant hereto.
4.6 Interest on the Advances Under the Taco Xxxx Line of Credit. The
aggregate advances under the Taco Xxxx Line of Credit shall bear interest as
provided in the Taco Xxxx Promissory Note. All accrued interest on the Taco Xxxx
Line of Credit shall be paid monthly to the Bank through the maturity date of
the Taco Xxxx Line of Credit, whether the stated maturity date of the Taco Xxxx
Line of Credit, an accelerated maturity date of the Taco Xxxx Line of Credit or
otherwise. All interest on the Taco Xxxx Promissory Note shall be computed based
upon the actual number of days elapsed over an assumed year of three hundred
sixty (360) days.
4.7 Late Charge; Post-Maturity Interest. The Taco Xxxx Cooperative
shall be obligated to pay to the Bank a late charge equal to five percent (5%)
of any installment of accrued
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interest on the Taco Xxxx Promissory Note not paid to the Bank when due or
within ten (10) days thereafter. Further, all installments of accrued interest
on and all unpaid principal of the Taco Xxxx Promissory Note not paid to the
Bank when due or within ten (10) days thereafter shall bear interest at the
Default Rate until such overdue installments of accrued interest and/or unpaid
principal have been paid in full to the Bank.
4.8 Deficiency Fee. The Taco Xxxx Cooperative hereby agrees to pay to
the Bank, in respect of each calendar quarter during the term of the Taco Xxxx
Line of Credit, a deficiency fee (the "Taco Xxxx Deficiency Fee") in an amount
equal to the product of (a) the Prime Rate plus two percent (2%) per annum as of
the last day of such calendar quarter, and (b) the positive difference, if any,
between (i) the Taco Xxxx Minimum Compensating Balances Requirement, less (ii)
the sum of the average daily collected balances maintained in the Taco Xxxx
Demand Deposit Account during such calendar quarter. The Taco Xxxx Deficiency
Fee shall be due and payable to the Bank quarterly in arrears within ten (10)
days after the Taco Xxxx Cooperative has received an invoice for the Taco Xxxx
Deficiency Fee from the Bank. Any Taco Xxxx Deficiency Fee not paid to the Bank
when due shall bear interest at the Default Rate, and the Taco Xxxx Deficiency
Fee, together with all accrued interest thereon, shall continue to be
immediately due and payable to the Bank.
4.9 Purpose. The Taco Xxxx Cooperative agrees that the proceeds of the
Taco Xxxx Line of Credit shall be used solely by the Taco Xxxx Cooperative to
make the cash capital contributions and the loans required to be made by the
Taco Xxxx Cooperative to Unified pursuant to the Unified Operating Agreement and
to provide general working capital to the Taco Xxxx Cooperative to pay its valid
operating expenses arising in the ordinary course of business. The Taco Xxxx
Cooperative further agrees that no portion of the proceeds of the Taco Xxxx Line
of Credit shall be used to purchase or carry any margin stock, to extend credit
to others for the purpose of purchasing or carrying margin stock or for any
purpose proscribed by Regulation G, Regulation T, Regulation U or Regulation X
of the Board of Governors of the Federal Reserve System.
4.10 Payments. All payments on the Taco Xxxx Promissory Note shall be
in legal tender of the United States of America in
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immediately available funds. If the date any payment is due under the Taco Xxxx
Promissory Note shall not be a Business Day, the payment otherwise then due
shall be due and payable on the next succeeding Business Day (provided, interest
shall continue to accrue on each such non-Business Day).
4.11 Security. The Taco Xxxx Promissory Note and the other Secured
Obligations owed by the Taco Xxxx Cooperative to the Bank shall at all times be
secured by the Taco Xxxx Pledge Agreement and the Unified Taco Xxxx Security
Agreement together with accompanying UCC-1 Financing Statements executed by the
Taco Xxxx Cooperative and Unified.
4.12 Reduction in the Taco Xxxx Line of Credit. The Taco Xxxx
Cooperative shall have the right on each six-month anniversary of the date of
this Loan Agreement, upon not less than thirty (30) days prior written notice to
the Bank, to reduce the committed principal amount of the Taco Xxxx Line of
Credit to a lesser amount without the payment of any premium to the Bank. In
such event, the Taco Xxxx Cooperative, Unified and the Bank shall execute and
deliver such amendment documents as shall be necessary or appropriate to
evidence such reduction in the committed principal amount of the Taco Xxxx Line
of Credit. To the extent the unpaid principal of the Taco Xxxx Line of Credit
exceeds the committed principal amount of the Taco Xxxx Line of Credit as
reduced by the Taco Xxxx Cooperative, the Taco Xxxx Cooperative shall
immediately pay to the Bank, without prior demand or notice by the Bank, such
amount of the unpaid principal of the Taco Xxxx Line of Credit as exceeds the
committed principal amount of the Taco Xxxx Line of Credit. The Taco Xxxx
Cooperative shall have no right to subsequently increase the committed principal
amount of the Taco Xxxx Line of Credit, after it has been reduced by the Taco
Xxxx Cooperative pursuant to this Section 4.12, without the prior written
consent of the Bank.
SECTION 5. CONDITIONS PRECEDENT TO KFC LINE OF CREDIT.
5.1 Conditions Precedent to KFC Line of Credit. The obligation of the
Bank to establish the KFC Line of Credit in favor of the KFC Cooperative is
expressly subject to the delivery of the following documents to the Bank, in
each case dated the date of this Loan Agreement or such other date as
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shall be satisfactory to the Bank and in form and substance satisfactory to the
Bank:
(a) Corporate Documents.
(i) Copies of the Certificate of Incorporation and the
Bylaws of the KFC Cooperative, a Certificate of Existence duly issued on behalf
of the KFC Cooperative by each of the Secretary of State of Delaware and the
Secretary of State of Kentucky, and resolutions of the Board of Directors of the
KFC Cooperative authorizing the execution, delivery and performance of this Loan
Agreement and the other Loan Documents to which the KFC Cooperative is a party
by the KFC Cooperative and an incumbency certificate with respect to the KFC
Cooperative, all certified by the Secretary or an Assistant Secretary of the KFC
Cooperative and further certifying the names and true signatures of the officers
of the KFC Cooperative authorized to sign this Loan Agreement and the other Loan
Documents to be delivered by the KFC Cooperative hereunder.
(ii) Copies of the Articles of Organization and the Operating
Agreement of Unified, a Certificate of Existence duly issued on behalf of
Unified by the Secretary of State of Kentucky, and resolutions of the Board of
Directors of Unified authorizing the execution, delivery and performance of this
Loan Agreement and the other Loan Documents to which Unified is a party by
Unified and an incumbency certificate with respect to Unified, all certified by
the Secretary or an Assistant Secretary of Unified and further certifying the
names and true signatures of the officers of Unified authorized to sign this
Loan Agreement and the other Loan Documents to which Unified is a party.
(b) Loan Agreement. This Loan Agreement, duly executed and
delivered by the KFC Cooperative, the Pizza Hut Cooperative, the Taco Xxxx
Cooperative and Unified.
(c) KFC Promissory Note. The KFC Promissory Note, duly executed
and delivered by the KFC Cooperative.
(d) KFC Pledge Agreement. The KFC Pledge Agreement and
accompanying UCC-1 Financing Statements, in each case duly executed and
delivered by the KFC Cooperative.
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(e) Unified KFC Security Agreement. The Unified KFC ecurity
Agreement and accompanying UCC-1 Financing Statements, in each case duly
executed and delivered by Unified.
(f) Legal Opinion. An opinion of Xxxxx, Xxxx & Heyburn PLLC,
counsel to the KFC Cooperative and Unified, in substantially the form attached
hereto and made a part hereof as Exhibit G.
(g) UCC-3 Termination Statements. All Uniform Commercial Code
Termination Statements necessary to release of record all liens and security
interests encumbering the KFC Collateral.
(h) Certificate of Insurance. A Certificate of Insurance,
confirming that the KFC Cooperative and Unified have obtained all of the
insurance required under this Loan Agreement and the other Loan Documents.
(i) UCC Search Reports. UCC-11 Search Reports with respect to the
KFC Cooperative and Unified from the Clerk of Jefferson County, the Secretary of
State of Kentucky and each other appropriate public office.
(j) Other Documents. Such other documents, instruments, approvals
(and, if requested by the Bank, certified duplicates of executed copies thereof)
or opinions as the Bank may reasonably request.
(k) Certificates of the KFC Cooperative. Certificates signed by a
duly authorized officer of the KFC Cooperative, dated the date of this Loan
Agreement, stating that:
(i) The representations and warranties of the KFC Cooperative
and Unified contained in Section 8 hereof are correct on and as of the date of
this Loan Agreement as though made on and as of such date; and
(ii) No KFC Event of Default referred to in Section 11 hereof
has occurred and is continuing, or would result from the consummation of the
transactions contemplated in this Loan Agreement, and no event has occurred and
is continuing which would constitute a KFC Event of Default but for the
requirement that notice be given or time elapse or both.
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(l) Satisfaction of Other Conditions Precedent. The conditions
precedent set forth in Sections 6 and 7 of this Loan Agreement shall have been
satisfied to the Bank's satisfaction.
(m) Transaction Documents. The Transaction Documents shall have
been fully executed and delivered by all parties thereto and all of the
transactions required to be consummated thereunder as of the date of this Loan
Agreement shall have been consummated or shall be consummated contemporaneously
with the initial advances under the KFC Line of Credit, the Pizza Hut Line of
Credit and the Taco Xxxx Line of Credit.
(n) Net Worth. Each Borrower and Unified shall have or, in the case
of Unified will have, contemporaneously with the initial advances under the KFC
Line of Credit, the Pizza Hut Line of Credit and the Taco Xxxx Line of Credit,
met the initial minimum Net Worth required under Section 10 hereof.
5.2 Conditions Precedent to Advances Under the KFC Line of Credit. The
obligation of the Bank to make each advance under the KFC Line of Credit is
expressly subject to the satisfaction of the following conditions precedent:
(a) No Existing KFC Default or KFC Event of Default. No KFC Default
or KFC Event of Default shall have occurred and be continuing.
(b) Continuation of Representations and Warranties. The
representations and warranties set forth in Section 8 with respect to the KFC
Cooperative and Unified shall be true and correct as of the date of the making
of any such advance under the KFC Line of Credit.
SECTION 6. CONDITIONS PRECEDENT TO PIZZA HUT LINE OF CREDIT.
6.1 Conditions Precedent to Pizza Hut Line of Credit. The obligation of
the Bank to establish the Pizza Hut Line of Credit in favor of the Pizza Hut
Cooperative is expressly subject to the delivery of the following documents to
the Bank, in each case dated the date of this Loan Agreement or such other date
as shall be satisfactory to the Bank and in form and substance satisfactory to
the Bank:
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(a) Corporate Documents.
(i) Copies of the Certificate of Incorporation and the Bylaw/s
of the Pizza Hut Cooperative, a Certificate of Existence duly issued on behalf
of the Pizza Hut Cooperative by each of the Secretary of State of Delaware and
the Secretary of State of Kentucky, and resolutions of the Board of Directors of
the Pizza Hut Cooperative authorizing the execution, delivery and performance of
this Loan Agreement and the other Loan Documents to which the Pizza Hut
Cooperative is a party by the Pizza Hut Cooperative and an incumbency
certificate with respect to the Pizza Hut Cooperative, all certified by the
Secretary or an Assistant Secretary of the Pizza Hut Cooperative and further
certifying the names and true signatures of the officers of the Pizza Hut
Cooperative authorized to sign this Loan Agreement and the other Loan Documents
to be delivered by the Pizza Hut Cooperative hereunder.
(ii) Copies of the Articles of Organization and the Operating
Agreement of Unified, a Certificate of Existence duly issued on behalf of
Unified by the Secretary of State of Kentucky, and resolutions of the Board of
Directors of Unified authorizing the execution, delivery and performance of this
Loan Agreement and the other Loan Documents to which Unified is a party by
Unified and an incumbency certificate with respect to Unified, all certified by
the Secretary or an Assistant Secretary of Unified and further certifying the
names and true signatures of the officers of Unified authorized to sign this
Loan Agreement and the other Loan Documents to which Unified is a party.
(b) Loan Agreement. This Loan Agreement, duly executed and
delivered by the KFC Cooperative, the Pizza Hut Cooperative, the Taco Xxxx
Cooperative and Unified.
(c) Pizza Hut Promissory Note. The Pizza Hut Promissory Note, duly
executed and delivered by the Pizza Hut Cooperative.
(d) Pizza Hut Pledge Agreement. The Pizza Hut Pledge Agreement and
accompanying UCC-1 Financing Statements, in each case duly executed and
delivered by the Pizza Hut Cooperative.
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(e) Unified Pizza Hut Security Agreement. The Unified Pizza Hut
Security Agreement and accompanying UCC-1 Financing Statements, in each case
duly executed and delivered by Unified.
(f) Legal Opinion. An opinion of Xxxxx, Xxxx & Heyburn PLLC,
counsel to the Pizza Hut Cooperative and Unified, in substantially the form
attached hereto and made a part hereof as Exhibit G.
(g) UCC-3 Termination Statements. All Uniform Commercial Code
Termination Statements necessary to release of record all liens and security
interests encumbering the Pizza Hut Collateral.
(h) Certificate of Insurance. A Certificate of Insurance,
confirming that the Pizza Hut Cooperative and Unified have obtained all of the
insurance required under this Loan Agreement and the other Loan Documents.
(i) UCC Search Reports. UCC-11 Search Reports with respect to the
Pizza Hut Cooperative and Unified from the Clerk of Jefferson County, the
Secretary of State of Kentucky and each other appropriate public office.
(j) Other Documents. Such other documents, instruments, approvals
(and, if requested by the Bank, certified duplicates of executed copies thereof)
or opinions as the Bank may reasonably request.
(k) Certificates of the Pizza Hut Cooperative. Certificates signed
by a duly authorized officer of the Pizza Hut Cooperative, dated the date of
this Loan Agreement, stating that:
(i) The representations and warranties of the Pizza Hut
Cooperative and Unified contained in Section 8 hereof are correct on and as of
the date of this Loan Agreement as though made on and as of such date; and
(ii) No Pizza Hut Event of Default referred to in Section 11
hereof has occurred and is continuing, or would result from the consummation of
the transactions contemplated in this Loan Agreement, and no event has occurred
and is continuing
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which would constitute a Pizza Hut Event of Default but for the requirement that
notice be given or time elapse or both.
(l) Satisfaction of Other Conditions Precedent. The conditions
precedent set forth in Sections 5 and 7 of this Loan Agreement shall have been
satisfied to the Bank's satisfaction.
(m) Transaction Documents. The Transaction Documents shall have
been fully executed and delivered by all parties thereto and all of the
transactions required to be consummated thereunder as of the date of this Loan
Agreement shall have been consummated or shall be consummated contemporaneously
with the initial advances under the KFC Line of Credit, the Pizza Hut Line of
Credit and the Taco Xxxx Line of Credit.
(n) Net Worth. Each Borrower and Unified shall have or, in the
case of Unified will have, contemporaneously with the initial advances under the
KFC Line of Credit, the Pizza Hut Line of Credit and the Taco Xxxx Line of
Credit, met the initial minimum Net Worth required under Section 10 hereof.
6.2 Conditions Precedent to Advances Under the Pizza Hut Line of
Credit. The obligation of the Bank to make each advance under the Pizza Hut Line
of Credit is expressly subject to the satisfaction of the following conditions
precedent:
(a) No Existing Pizza Hut Default or Pizza Hut Event of Default. No
Pizza Hut Default or Pizza Hut Event of Default shall have occurred and be
continuing.
(b) Continuation of Representations and Warranties. The
representations and warranties set forth in Section 8 with respect to the Pizza
Hut Cooperative and Unified shall be true and correct as of the date of the
making of any such advance under the Pizza Hut Line of Credit.
SECTION 7. CONDITIONS PRECEDENT TO TACO XXXX LINE OF CREDIT.
7.1 Conditions Precedent to Taco Xxxx Line of Credit. The obligation of
the Bank to establish the Taco Xxxx Line of Credit in favor of the Taco Xxxx
Cooperative is expressly subject to the delivery of the following documents to
the Bank, in each case dated the date of this Loan Agreement or such other date
as
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shall be satisfactory to the Bank and in form and substance satisfactory to the
Bank:
(a) Corporate Documents.
(i) Copies of the Certificate of Incorporation and the Bylaws
of the Taco Xxxx Cooperative, a Certificate of Existence duly issued on behalf
of the Taco Xxxx Cooperative by each of the Secretary of State of Delaware and
the Secretary of State of Kentucky, and resolutions of the Board of Directors of
the Taco Xxxx Cooperative authorizing the execution, delivery and performance of
this Loan Agreement and the other Loan Documents to which the Taco Xxxx
Cooperative is a party by the Taco Xxxx Cooperative and an incumbency
certificate with respect to the Taco Xxxx Cooperative, all certified by the
Secretary or an Assistant Secretary of the Taco Xxxx Cooperative and further
certifying the names and true signatures of the officers of the Taco Xxxx
Cooperative authorized to sign this Loan Agreement and the other Loan Documents
to be delivered by the Taco Xxxx Cooperative hereunder.
(ii) Copies of the Articles of Organization and the Operating
Agreement of Unified, a Certificate of Existence duly issued on behalf of
Unified by the Secretary of State of Kentucky, and resolutions of the Board of
Directors of Unified authorizing the execution, delivery and performance of this
Loan Agreement and the other Loan Documents to which Unified is a party by
Unified and an incumbency certificate with respect to Unified, all certified by
the Secretary or an Assistant Secretary of Unified and further certifying the
names and true signatures of the officers of Unified authorized to sign this
Loan Agreement and the other Loan Documents to which Unified is a party.
(b) Loan Agreement. This Loan Agreement, duly executed and
delivered by the KFC Cooperative, the Pizza Hut Cooperative, the Taco Xxxx
Cooperative and Unified.
(c) Taco Xxxx Promissory Note. The Taco Xxxx Promissory Note, duly
executed and delivered by the Taco Xxxx Cooperative.
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(d) Taco Xxxx Pledge Agreement. The Taco Xxxx Pledge Agreement and
accompanying UCC-1 Financing Statements, in each case duly executed and
delivered by the Taco Xxxx Cooperative.
(e) Unified Taco Xxxx Security Agreement. The Unified Taco Xxxx
Security Agreement and accompanying UCC-1 Financing Statements, in each case
duly executed and delivered by Unified.
(f) Legal Opinion. An opinion of Xxxxx, Xxxx & Xxxxxxx PLLC,
counsel to the Taco Xxxx Cooperative and Unified, in substantially the form
attached hereto and made a part hereof as Exhibit G.
(g) UCC-3 Termination Statements. All Uniform Commercial Code
Termination Statements necessary to release of record all liens and security
interests encumbering the Taco Xxxx Collateral.
(h) Certificate of Insurance. A Certificate of Insurance,
confirming that the Taco Xxxx Cooperative and Unified have obtained all of the
insurance required under this Loan Agreement and the other Loan Documents.
(i) UCC Search Reports. UCC-11 Search Reports with respect to
the Taco Xxxx Cooperative and Unified from the Clerk of Jefferson County, the
Secretary of State of Kentucky and each other appropriate public office.
(j) Other Documents. Such other documents, instruments, approvals
(and, if requested by the Bank, certified duplicates of executed copies thereof)
or opinions as the Bank may reasonably request.
(k) Certificates of the Taco Xxxx Cooperative. Certificates signed
by a duly authorized officer of the Taco Xxxx Cooperative, dated the date of
this Loan Agreement, stating that:
(i) The representations and warranties of the Taco Xxxx
Cooperative and Unified contained in Section 8 hereof are correct on and as of
the date of this Loan Agreement as though made on and as of such date; and
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(ii) No Taco Xxxx Event of Default referred to in Section 11
hereof has occurred and is continuing, or would result from the consummation of
the transactions contemplated in this Loan Agreement, and no event has occurred
and is continuing which would constitute a Taco Xxxx Event of Default but for
the requirement that notice be given or time elapse or both.
(l) Satisfaction of Other Conditions Precedent. The conditions
precedent set forth in Sections 5 and 6 of this Loan Agreement shall have been
satisfied to the Bank's satisfaction.
(m) Transaction Documents. The Transaction Documents shall have
been fully executed and delivered by all parties thereto and all of the
transactions required to be consummated thereunder as of the date of this Loan
Agreement shall have been consummated or shall be consummated contemporaneously
with the initial advances under the KFC Line of Credit, the Pizza Hut Line of
Credit and the Taco Xxxx Line of Credit.
(n) Net Worth. Each Borrower and Unified shall have or, in the case
of Unified will have, contemporaneously with the initial advances under the KFC
Line of Credit, the Pizza Hut Line of Credit and the Taco Xxxx Line of Credit,
met the initial minimum Net Worth required under Section 10 hereof.
7.2 Conditions Precedent to Advances Under the Taco Xxxx Line of
Credit. The obligation of the Bank to make each advance under the Taco Xxxx Line
of Credit is expressly subject to the satisfaction of the following conditions
precedent:
(a) No Existing Taco Xxxx Default or Taco Xxxx Event of
Default. No Taco Xxxx Default or Taco Xxxx Event of Default shall have occurred
and be continuing.
(b) Continuation of Representations and Warranties. The
representations and warranties set forth in Section 8 with respect to the Taco
Xxxx Cooperative and Unified shall be true and correct as of the date of the
making of any such advance under the Taco Xxxx Line of Credit.
SECTION 8. REPRESENTATIONS AND WARRANTIES.
In order to induce the Bank to execute and deliver this Loan Agreement
and the other Loan Documents to which it is a
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party and to establish each of the KFC Line of Credit, the Pizza Hut Line of
Credit and the Taco Xxxx Line of Credit, each Borrower, as to itself only, and
Unified, as to itself and each Borrower, hereby represents and warrants to the
Bank as follows:
8.1 Corporate Existence.
(a) Each Borrower is a corporation duly organized and validly
existing and in good standing under the laws of the State of Delaware and is
duly qualified to transact business as a foreign corporation under the laws of
the Commonwealth of Kentucky and each other state in which it is required by law
to qualify to transact business.
(b) Unified is a limited liability company duly organized and
validly existing and in good standing under the laws of the Commonwealth of
Kentucky and is duly qualified to transact business as a foreign limited
liability company under the laws of each state in which it is required by law to
qualify to transact business.
8.2 Requisite Power and Authority. Each Borrower and Unified has the
requisite power and authority to execute, deliver and perform its obligations
under this Loan Agreement and each other Loan Document to which it is a party.
8.3 No Violation. The execution, delivery and performance of this Loan
Agreement and the other Loan Documents to which each Borrower and Unified is a
party will not violate any provision of law or the formation documents of any
Borrower or Unified or, except as otherwise described in writing to the Bank,
any agreement, document or instrument to which any Borrower or Unified is a
party or which is binding on it or its property, and will not result in the
creation or imposition of any lien, charge or any encumbrance on, or security
interest in, any of its property pursuant to the provisions of any such
agreement, document or instrument.
8.4 No Material Litigation. Except as described on Exhibit I attached
hereto and made a part hereof, there is no litigation and no administrative
investigation proceeding of or before any governmental body (including the
Internal Revenue Service) presently pending against any Borrower or Unified or
its property, the result of which could have a material adverse
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effect on such Borrower or Unified or its financial condition, results of
operations or property, nor, to the knowledge of any Borrower or Unified, is any
such litigation or proceeding presently threatened against it or its property.
8.5 No Default. No default hereunder has occurred and is continuing and
none of the Borrowers or Unified is in default under any agreement to which it
is a party and which default might, in the opinion of such Borrower or Unified,
have a material adverse affect on its financial condition, results of operations
or property.
8.6 Financial Condition. The financial statements of the KFC
Cooperative previously delivered to the Bank present fairly the financial
condition of the KFC Cooperative as of the dates thereof and the results of its
operations for the periods covered thereby.
8.7 Tax Returns and Tax Payments. Each Borrower and Unified has filed
all tax returns required by law to be filed by it and has paid all taxes,
assessments and other governmental charges levied upon its properties, assets,
income and franchises, other than those not yet delinquent and those being or
about to be contested by such Borrower or Unified and in respect of which such
Borrower or Unified has established appropriate accruals and/or reserves on its
books and records in accordance with GAAP. The charges, accruals and reserves on
the books of each Borrower and Unified in respect of its taxes are adequate in
the opinion of such Borrower and Unified. None of the Borrowers or Unified knows
of any unpaid assessment for additional taxes applicable to it.
8.8 Title to Properties; Liens. Each Borrower and Unified has good and
marketable title to all of its properties and assets, and none of such
properties or assets is or will be, as of the date of this Loan Agreement,
subject to any lien, encumbrance or security interest except for liens for taxes
not yet due and owing, the liens and security interests created under the Loan
Documents and other permitted liens and encumbrances.
8.9 Leases. Each Borrower and Unified enjoys quiet possession under
each lease to which it is a party as lessee, and all of such leases are to the
best knowledge of each
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Borrower and Unified, after due inquiry, validly existing and in full force and
effect, and, to the best knowledge of such Borrower and Unified, after due
inquiry, neither the lessor nor such Borrower or Unified as lessee is in default
under any of such leases. None of such leases contains any provision restricting
the incurrence of indebtedness by the lessee or any unusual or burdensome
provision materially adversely affecting the current and proposed operations of
such Borrower or Unified.
8.10 Full Disclosure. The financial statements referred to in Section
8.6 above do not and will not, nor does this Loan Agreement or any other Loan
Document or other written statement furnished by any Borrower or Unified to the
Bank in connection with the negotiation of this Loan Agreement and the other
Loan Documents, contain any untrue statement of a material fact or omit a
material fact necessary to make the statements contained therein or herein not
misleading. None of the Borrowers or Unified has failed to disclose to the Bank
any material fact known to such Borrower or Unified that could materially
adversely affect or, so far as such Borrower or Unified can reasonably foresee,
will materially adversely affect its financial condition, results of operations,
property, activities or prospect of future success.
8.11 Execution and Delivery. This Loan Agreement and the other Loan
Documents to which each Borrower or Unified is a party have been duly executed
and delivered by such Borrower and Unified and constitute the legal, valid and
binding obligations of such Borrower and Unified, enforceable in accordance with
their respective terms.
8.12 No Material Liabilities. None of the Borrowers or Unified has any
material liabilities, direct or contingent, other than as disclosed on its
financial statements or otherwise to the Bank, nor has any Borrower or Unified
guaranteed, or otherwise become responsible for, the material obligations of any
person or entity, other than as set forth in the financial statements referred
to in Section 8.6 hereof.
8.13 Agreements Requiring Subordination. There is no agreement,
indenture, contract or instrument to which any Borrower or Unified is a party,
or by which any Borrower or Unified may be bound, that requires a subordination
of right of
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payment to the Bank of any of the Secured Obligations to any other obligation of
any Borrower or Unified.
8.14 Permits and Licenses to Conduct Business. Each Borrower and
Unified possesses, and will hereafter possess, to the best of its knowledge, all
permits, memberships, franchises, contracts, licenses, trademark rights,
tradenames, tradename rights and fictitious name rights necessary to enable it
to conduct the business in which it is now engaged or proposes to engage without
conflict with the rights of others.
8.15 ERISA. Each employee benefit plan or other plan maintained by each
Borrower and Unified for its employees that is subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), has been
maintained and funded in all material respects in accordance with its terms and
with all provisions of ERISA applicable thereto.
8.16 Environmental Conditions. To the best knowledge of each Borrower
and Unified, there are no present Environmental Conditions, as hereinafter
defined, in any way relating to the business of such Borrower or Unified, and
there have been no past Environmental Conditions which at present materially
affect, or may in the future materially affect, such Borrower or Unified. For
purposes of this Loan Agreement, Environmental Conditions means (a) the
introduction into the environmental of any pollution, including without
limitation any contaminant, irritant or pollutant or other toxic or hazardous
substance (whether or not such pollution constituted at the time thereof a
violation of any statute, law, ordinance or regulation), as a result of any
spill, discharge, leak, emission, escape, injection, dumping or release of any
kind whatsoever of any substance or exposure of any type in any work places or
to any medium, including without limitation air, land, surface waters or ground
waters, or from any generation, transportation, treatment, discharge, storage or
disposal of waste materials, raw materials, hazardous materials, toxic materials
or products of any kind or from the storage, use or handling of any hazardous or
toxic materials or other substances, as a result of which any Borrower or
Unified or any of the assets of any Borrower or Unified may suffer or be
subjected to any lien, or (b) any noncompliance with or violation of any
environmental law, whether federal, state or local, as a result of or in
connection with any of the foregoing.
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SECTION 9. AFFIRMATIVE COVENANTS.
Each Borrower and Unified hereby as to itself only covenants and agrees
in favor of the Bank as to the following matters as they pertain to such
Borrower or Unified, which covenants shall remain in effect (a) with respect to
each Borrower so long as the Line of Credit established by the Bank in favor of
such Borrower remains in effect, and (b) with respect to Unified, so long as any
Line of Credit established by the Bank in favor of a Borrower remains in effect:
9.1 Financial Statements. Each Borrower and Unified shall furnish to
the Bank (a) within forty-five (45) days after the end of each fiscal quarter,
an unaudited balance sheet and unaudited statements of profit and loss and cash
flows of such Borrower and Unified, for the period from the commencement of the
current fiscal year of the Borrower or Unified to the date of such unaudited
financial statements, setting forth in comparative form the corresponding
figures for the corresponding period of the preceding fiscal year of such
Borrower or Unified, all in reasonable detail, prepared in accordance with GAAP,
and certified to be true, accurate and complete by the President or Chief
Financial Officer of such Borrower or Unified, (b) together with the unaudited
financial statements required to be delivered by each Borrower and Unified
pursuant to subpart (a) above, a compliance certificate in the form attached
hereto and made a part hereof as Exhibit H for such Borrower or Unified,
demonstrating compliance by such Borrower or Unified with the financial
covenants set forth in this Loan Agreement with respect to such Borrower or
Unified as of and for the period ended on the date of such unaudited financial
statements, (c) within seventy-five (75) days after the end of each fiscal year
of the Borrower and Unified, an audited balance sheet and audited statements of
profit and loss and cash flows of such Borrower and Unified for such fiscal
year, setting forth in comparative form the corresponding figures for the
preceding fiscal year of such Borrower and Unified, all in reasonable detail,
prepared in accordance with GAAP and certified by independent public accountants
of recognized standing selected by such Borrower and Unified, (d) such other
financial information with respect to any Borrower or Unified as the Bank may,
from time to time, reasonably request, and (e) within seventy-five (75) days
after the end of each fiscal year of each
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Borrower and Unified, a certificate of the President or Chief Financial Officer
of such Borrower or Unified stating (i) that a review of the activities of such
Borrower or Unified during such fiscal year has been made under his or her
supervision with a view to determining whether such Borrower or Unified has
kept, observed and fulfilled all of its obligations under this Loan Agreement,
and (ii) that, to the best of his or her knowledge, such Borrower or Unified
during such fiscal year has kept, observed, performed and fulfilled each and
every material covenant and condition set forth in this Loan Agreement and is
not then in material default under this Loan Agreement, or, if it shall be in
material default, specifying all such defaults and the nature and status
thereof. In addition, each Borrower and Unified shall submit to the Bank cash
flow, profit and loss and balance sheet projections, all prepared in accordance
with GAAP, thirty (30) days prior to the beginning of each succeeding fiscal
year of such Borrower and Unified.
9.2 Payment of Obligations. Each Borrower and Unified shall pay and
discharge, when due, all of its Indebtedness and other liabilities, except where
the same may be contested in good faith and where adequate accruals and reserves
have been established on the books and records of the particular Borrower or
Unified in accordance with GAAP. Each Borrower and Unified shall also maintain,
in accordance with GAAP, appropriate reserves for the accrual of taxes.
9.3 Maintenance of Properties. Each Borrower and Unified shall maintain
all of its tangible property in good working order and condition, reasonable
wear and tear excepted.
9.4 Notices. Each Borrower and Unified shall promptly give notice in
writing to the Bank of (a) all litigation which may exist between it and any
other entity including any regulatory body, the result of which might, in the
opinion of such Borrower or Unified, have a material adverse effect upon its
financial condition, results of operations or property, (b) any proposal by any
public or governmental agency or authority to acquire the assets or business of
such Borrower or Unified, (c) notice of any Default or Event of Default
applicable to such Borrower or Unified, and (d) notice of the occurrence of any
Environmental Condition applicable to such Borrower or Unified.
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9.5 Conduct of Business and Maintenance of Existence. Each Borrower and
Unified shall conduct its business in compliance with all applicable laws, rules
and regulations and shall take all actions that may be necessary to preserve,
renew and keep in full force and effect its corporate existence, assets, rights
and franchises necessary to continue such business.
9.6 Depository Relationship. Each Borrower shall maintain its primary
operating accounts with the Bank. In addition, Unified shall establish a demand
deposit account with the Bank and shall maintain a minimum of Two Hundred
Thousand Dollars ($200,000.00) in collected balances in such account at all
times. Unified hereby agrees to pay to the Bank, in respect of each calendar
quarter during the term of this Loan Agreement, a deficiency fee (the "Unified
Deficiency Fee") in an amount equal to the product of (a) the Prime Rate plus
two percent (2%) per annum as of the last day of such calendar quarter, and (b)
the positive difference, if any, between (i) Two Hundred Thousand Dollars
($200,000.00), less (ii) the sum of the average daily collected balances
maintained in such demand deposit account during such calendar quarter. The
Unified Deficiency Fee shall be due and payable to the Bank quarterly in arrears
within ten (10) days after Unified has received an invoice for the Unified
Deficiency Fee from the Bank. Any Unified Deficiency Fee not paid to the Bank
when due shall bear interest at the Default Rate, and the Unified Deficiency
Fee, together with all accrued interest thereon, shall continue to be
immediately due and payable to the Bank. The balances maintained in such demand
deposit account shall be eligible to receive earnings credits to be applied to
any service fees charged to such account.
9.7 Further Banking Services. Each Borrower and Unified shall offer to
the Bank the first opportunity to provide any and all other banking and
financial services, such as administration of employee benefit plans, cash
management services, trust services, and payroll services, that such Borrower or
Unified desires to obtain.
9.8 Further Assurances. Each Borrower and Unified shall from time to
time hereafter execute and deliver, or will cause to be executed and delivered,
such additional agreements, documents and instruments, will pay all filing fees
and taxes in connection therewith, and will take all such further actions as
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the Bank may reasonably request for the purposes of implementing or effectuating
the provisions of this Loan Agreement and the other Loan Documents, or in order
to more fully perfect or renew the liens and security interests granted in favor
of the Bank pursuant to the Loan Documents.
9.9 Review by Bank. The Bank shall have the right from time to time,
at its expense so long as no Default or Event of Default has occurred and is
continuing, to audit the accounts, records and reporting procedures of any
Borrower or Unified as determined by the Bank in its reasonable discretion. If
any Default or Event of Default with respect to a particular Borrower or Unified
has occurred and is continuing, any such audit conducted by the Bank shall be at
the expense of the particular Borrower or Unified.
9.10 Insurance.
(a) Each Borrower and Unified shall at all times maintain
insurance covering such risks as are customarily carried by business entities
engaged in the same business as such Borrower or Unified, including, without
limitation, the following insurance:
(i) Workers' compensation insurance in conformity with the
laws of the Commonwealth of Kentucky;
(ii) Comprehensive general public liability insurance with
respect to all activities in which such Borrower or Unified might incur
liability for the death or injury of any employee or other person or entity or
for damage to or destruction of the property of another person or entity, in a
combined single limit of an amount not less than One Million Dollars
($1,000,000.00) per occurrence for death or personal injury and One Hundred
Thousand Dollars ($100,000.00) for property damage, and with a deductible not in
excess of Ten Thousand Dollars ($10,000.00) per occurrence;
(iii) Casualty insurance on all tangible property owned by
such Borrower or Unified insuring against loss or damage by fire and such other
risks as are included in coverage of the type known as "all risk coverage", in
an amount not less than the actual cash value of such tangible property,
excepting only a deductible not exceeding Ten Thousand Dollars
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($10,000.00) with respect to each event of loss or damage, and with an eighty
percent (80%) co-insurance clause.
All of the insurance policies referred to in this Section 9.10 shall be
issued by insurers rated "B" or better by Best's or which meets equivalent
rating criteria, shall be in the above amounts or such other amounts as shall be
reasonably satisfactory to the Bank, and shall be in form reasonably
satisfactory to the Bank. Each Borrower and Unified shall forthwith deliver to
the Bank a standard certificate of insurance evidencing the insurance policies
described in this Section 9.10.
(b) The Bank shall be named as a lender loss payee under all
casualty insurance policies covering the tangible Collateral owned by each
Borrower and/or Unified as the Bank's interests may appear pursuant to a
standard mortgagee clause and with full waiver of subrogation rights against any
insureds or loss-payees. Each Borrower and Unified hereby collaterally assigns
to the Bank all rights to receive the proceeds of the casualty insurance
policies covering the tangible Collateral owned by such Borrower or Unified up
to an amount equal to the principal amount of the Line of Credit established by
the Bank in favor of the particular Borrower at the time of any loss, damage or
destruction to the tangible Collateral or any part thereof, and each Borrower
and Unified shall promptly (i) compromise, settle and/or receipt for any and all
claims under such insurance policies, and (ii) obtain such proceeds and,
together with the Bank, endorse and negotiate any check and/or draft for such
proceeds. All such insurance proceeds shall be applied to the replacement or
repair of the damaged Collateral pursuant to procedures completely satisfactory
to the Bank, unless an Event of Default with respect to the particular Borrower
has occurred and is continuing, in which event such proceeds, at the sole option
of the Bank, shall be applied to the replacement or repair of the damaged
Collateral pursuant to procedures completely satisfactory to the Bank and/or
shall be applied to the payment of the Secured Obligations owed by the
particular Borrower to the Bank in such order as the Bank may select in its sole
and absolute discretion.
(c) In case of the pending expiration, termination or cancellation
of any policy of insurance required under this Section 9.10, a renewal or
replacement thereof with receipt for
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the accompanying premium shall be delivered to the Bank not less than fifteen
(15) days before the date of such expiration. In the event of loss to any
tangible Collateral owned by any Borrower or Unified or any part thereof, such
Borrower or Unified shall give immediate written notice thereof to the Bank. If
any Borrower or Unified shall fail to obtain any of the insurance required under
this Section 9.10 and/or shall fail to pay any premiums for any of the insurance
required under this Section 9.10, or shall fail to pay for any necessary repairs
to or replacements of the tangible Collateral owned by such Borrower or Unified,
the Bank shall have the right, at its option and upon five (5) days prior
written notice to such Borrower or Unified (unless, within such five day period,
any of the insurance required under this Section 9.10 shall lapse, in which
event the foregoing written notice shall not be required), but not the
obligation, to pay the same, and all sums paid by the Bank shall become a
Secured Obligation owed by the particular Borrower to the Bank.
(d) Each of the insurance policies required hereunder shall
contain an endorsement that such policy may not be cancelled, terminated or
modified except upon not less than thirty (30) days' prior written notice to the
Bank.
9.11 Notice of Claims; Proceedings, Litigation or Disputes. Each
Borrower and Unified shall furnish to the Bank prompt written notice of any
material claims, proceedings, litigation or disputes (whether or not reported on
behalf of such Borrower or Unified) against, or to the knowledge of such
Borrower or Unified, threatened or affecting such Borrower or Unified which, if
determined adversely to such Borrower or Unified, would have a material adverse
effect on the financial condition, results of operations or property of such
Borrower or Unified. Without in any way limiting the foregoing, claims,
proceedings, litigation or disputes involving monetary amounts in excess of One
Hundred Thousand Dollars ($100,000.00) not fully covered by insurance shall be
deemed to be material.
9.12 Payment of Debts. Each Borrower and Unified shall pay in full all
of its debts, obligations and liabilities on or prior to their respective due
dates, unless the same are being contested in good faith by such Borrower or
Unified, such Borrower or Unified has established adequate reserves for the
payment of the same and the contesting thereof does not involve
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the risk of forfeiture or loss of any of the assets of such Borrower or Unified.
Each Borrower and Unified shall file all federal, state and local tax returns
and other reports which such Borrower or Unified is required by law to file, and
such Borrower and Unified shall promptly pay, when due, all taxes and other
similar charges other than tax assessments or similar charges being contested in
good faith by such Borrower or Unified and for which adequate reserves have been
established on the books of such Borrower or Unified.
9.13 Corporate Existence. Each Borrower and Unified shall maintain its
corporate existence and its qualification and good standing to transact business
in all states in which such qualification and good standing are hereafter
necessary in order for such Borrower or Unified to conduct its business and own
its properties as conducted in such states.
SECTION 10. NEGATIVE COVENANTS.
Each Borrower and Unified hereby as to itself only covenants and agrees
in favor of the Bank as to the following matters as they pertain to such
Borrower or Unified, which covenants shall remain in effect (a) with respect to
each Borrower so long as the Line of Credit established by the Bank in favor of
such Borrower remains in effect, and (b) with respect to Unified, so long as any
Line of Credit established by the Bank in favor of a Borrower remains in effect:
10.1 Limitation on Liens. None of the Borrowers or Unified shall
create, assume or suffer to exist any mortgage, pledge, encumbrance, assignment
or other lien on, or security interest in, any of its property or assets,
whether now owned or hereafter acquired by it, except (a) the liens and security
interests created in favor of the Bank pursuant to the Loan Documents, (b)
purchase money security interests and capital leases subject to the compliance
with the other covenants and agreements set forth in this Loan Agreement and
provided that each such purchase money security interest encumbers only the
assets financed by such purchase money security interest and secures solely the
unpaid purchase price of the assets financed by such purchase money security
interest, (c) liens for ad valorem taxes not yet due and payable, and (d) liens
for taxes and liens of mechanics, materialmen and other like liens arising
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by operation of law which are not yet overdue, provided that the Bank's failure
to protest any lien is not an approval of such lien nor a waiver of the Bank's
rights as to such lien or any future lien.
10.2 Limitation on Contingent Liabilities. None of the Borrowers or
Unified shall agree to purchase or remain liable in connection with the
indebtedness for borrowed money of any other person or entity except
endorsements of negotiable instruments for collection in the ordinary course of
business other than, with respect to the KFC Cooperative, the existing guarantee
issued by the KFC Cooperative to the National Cooperative Bank in an aggregate
amount not to exceed at any one time One Million Dollars ($1,000,000.00).
10.3 Limitation on Mergers. None of the Borrowers or Unified shall be
or become a party to any consolidation, reorganization (including without
limitation the types referred to in Section 368 of the Internal Revenue Code),
merger, share exchange or recapitalization without prior written consent of the
Bank.
10.4 Limitation on Disposition of Assets. None of the Borrowers or
Unified shall liquidate, sell, lease or otherwise dispose of its assets outside
of the ordinary course of business other than the disposition of obsolete
tangible assets no longer useful in the business of such Borrower or Unified.
10.5 Limitation on Loans. None of the Borrowers or Unified shall make
loans to or investments in any person or entity, except (a) as to each Borrower,
the loans required to be made by such Borrower to Unified pursuant to the
Unified Operating Agreement, (b) for investments of the cash of each Borrower
and Unified in investment-grade obligations, (c) except as to the KFC
Cooperative, the line of credit in the principal amount of One Hundred Thousand
Dollars ($100,000.00) established by the KFC Cooperative in favor of Kenco
Insurance Agency, Inc., and (d) except as to the KFC Cooperative, the
intercompany loans in an aggregate amount of up to One Million Five Hundred
Thousand Dollars ($1,500,000.00) made by the KFC Cooperative to FoodService
International, Inc., a wholly-owned subsidiary of the KFC Cooperative.
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10.6 Environmental. None of the Borrowers or Unified shall cause or
permit others to cause the handling, storing, transporting or disposing of
hazardous or toxic substances in violation of applicable federal, state and
local laws and regulations.
10.7 Acquisitions. None of the Borrowers or Unified shall acquire all
or substantially all of the assets, securities or other equity interests of any
person or entity without the prior written consent of the Bank.
10.8 Dividends and Distributions. None of the Borrowers shall pay any
dividends or distributions to its shareholders or redeem, purchase or acquire
any of its stock if a Default or an Event of Default applicable to such Borrower
has occurred and is continuing or will result from the payment of such dividends
or distributions or the redemption, acquisition or purchase of such stock.
10.9 Maximum Leverage Ratio of the KFC Cooperative. The KFC Cooperative
shall not permit the ratio of its Total Liabilities to its Net Worth to be
greater than 1.5 to 1.0 at any fiscal quarter end of the KFC Cooperative.
10.10 Minimum Net Worth of the KFC Cooperative. The KFC Cooperative
shall not permit, as of the date of this Loan Agreement or at any fiscal quarter
end, its Net Worth to be less than the greater of (a) the aggregate
contributions made to the capital of the KFC Cooperative by its stockholders, or
(b) Seventeen Million Dollars ($17,000,000.00).
10.11 Minimum Ratio of EBITDAP to Interest Expense of the KFC
Cooperative. The KFC Cooperative shall not permit at any fiscal quarter end of
the KFC Cooperative beginning with the fiscal quarter ending on September 30,
1999, the ratio of its EBITDAP for such fiscal quarter to its Interest Expense
for such fiscal quarter to be less than 1.5 to 1.0.
10.12 Minimum Net Income of the KFC Cooperative. The KFC Cooperative
shall not permit its Net Income, for any fiscal quarter, to be zero or less.
10.13 Maximum Leverage Ratio of the Pizza Hut Cooperative. The Pizza
Hut Cooperative shall not permit the ratio of its
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Total Liabilities to its Net Worth to be greater than 2.0 to 1.0 at any fiscal
quarter end of the Pizza Hut Cooperative.
10.14 Minimum Net Worth of the Pizza Hut Cooperative. The Pizza Hut
Cooperative shall not permit its Net Worth to be less than the greater of (a)
the aggregate contributions made to the capital of the Pizza Hut Cooperative by
its stockholders, as of the date of this Loan Agreement or at any fiscal quarter
end of the Pizza Hut Cooperative, or (b)(i) One Million Three Hundred Thousand
Dollars ($1,300,000.00) at the closing and on March 31, 1999 and June 30, 1999,
and (ii) Two Million Dollars ($2,000,000.00) at any subsequent fiscal quarter
end of the Pizza Hut Cooperative.
10.15 Minimum Ratio of EBITDAP to Interest Expense of the Pizza Hut
Cooperative. The Pizza Hut Cooperative shall not permit at any fiscal quarter
end of the Pizza Hut Cooperative beginning with the fiscal quarter ending on
September 30, 1999, the ratio of its EBITDAP for such fiscal quarter to its
Interest Expense for such fiscal quarter to be less than 1.5 to 1.0.
10.16 Minimum Net Income of the Pizza Hut Cooperative. The Pizza Hut
Cooperative shall not permit its Net Income, for any fiscal quarter, to be zero
or less.
10.17 Maximum Leverage Ratio of the Taco Xxxx Cooperative. The Taco
Xxxx Cooperative shall not permit the ratio of its Total Liabilities to its Net
Worth to be greater than 6.4 to 1.0 at any fiscal quarter end of the Taco Xxxx
Cooperative.
10.18 Minimum Net Worth of the Taco Xxxx Cooperative. The Taco Xxxx
Cooperative shall not permit its Net Worth to be less than the greater of (a)
the aggregate contributions made to the capital of the Taco Xxxx Cooperative by
its stockholders as of the date of this Loan Agreement or at any fiscal quarter
end of the Taco Xxxx Cooperative, or (b)(i) One Million Two Hundred Fifty
Thousand Dollars ($1,250,000.00) at March 31, 1999 and June 30, 1999, and (ii)
One Million Nine Hundred Thousand Dollars ($1,900,000.00) at any subsequent
fiscal quarter end of the Taco Xxxx Cooperative.
10.19 Minimum Ratio of EBITDAP to Interest Expense of the Taco Xxxx
Cooperative. The Taco Xxxx Cooperative shall not permit at any fiscal quarter
end of the Taco Xxxx Cooperative beginning with the fiscal quarter ending on
September 30, 1999,
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the ratio of its EBITDAP for such fiscal quarter to its Interest Expense for
such fiscal quarter to be less than 1.5 to 1.0.
10.20 Minimum Net Income of the Taco Xxxx Cooperative. The Taco Xxxx
Cooperative shall not permit its Net Income, for any fiscal quarter, to be zero
or less.
10.21 Minimum Current Ratio of Unified. Unified shall not permit the
ratio of its current assets to its current liabilities, in each case as
determined in accordance with GAAP, to be less than 1.0 to 1.0 at any fiscal
quarter end of Unified.
10.22 Minimum Net Worth of Unified. Unified shall not permit its Net
Worth to be less than the greater of (a) the aggregate contributions made to the
capital of Unified by its members as of the date of this Loan Agreement or at
any fiscal quarter end of Unified, or (b)(i) Two Million Five Hundred Thousand
Dollars ($2,500,000.00) at March 31, 1999 and June 30, 1999, and (ii) Six
Million Dollars ($6,000,000.00) at any subsequent fiscal quarter end of Unified.
10.23 Minimum Ratio of EBITDAP to Interest Expense of Unified. Unified
shall not permit at any fiscal quarter end of Unified beginning with the fiscal
quarter ending on September 30, 1999, the ratio of its EBITDAP for such fiscal
quarter to its Interest Expense for such fiscal quarter to be less than 1.5 to
1.0.
10.24 Minimum Net Income of Unified. Unified shall not permit its Net
Income, for any fiscal quarter, to be zero or less.
10.25 Amendments of Transaction Documents. None of the Borrowers or
Unified will amend, modify or supplement any Transaction Document without the
prior written consent of the Bank if such amendment, modification or supplement
could have a materially adverse effect on the particular Borrower or Unified
and/or on the ability of the particular Borrower or Unified to perform its
obligations under this Loan Agreement or the other Loan Documents to which it is
a party.
SECTION 11. EVENTS OF DEFAULT.
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The following events with respect to any Borrower or Unified shall
constitute Events of Default under this Loan Agreement as to such Borrower or
Unified only:
11.1 Default in Payment of Secured Obligations. If the particular
Borrower shall fail to pay any principal of and/or accrued interest on its
Promissory Note or any other Secured Obligation owed by such Borrower to the
Bank when due or within ten (10) days thereafter.
11.2 Default in Payment of Other Debt For Borrowed Money. If the
particular Borrower or Unified shall default in the payment of the principal of
or interest on any Debt for Money Borrowed (other than the Secured Obligations)
when the same shall become due and payable by the lapse of time, by declaration,
by call for redemption or otherwise, and such default shall continue beyond any
period of grace or notice, if any, allowed with respect thereto.
11.3 Breach of Specific Covenants. If the particular Borrower or
Unified shall fail to observe or perform any covenant or agreement contained in
Section 10 hereof, other than the covenants and agreements set forth in Section
10.1, 10.2, 10.4, 10.5 and 10.6, to be performed or observed by such Borrower or
Unified.
11.4 Default of Other Covenants. If the particular Borrower or Unified
shall fail to observe or perform any other covenant or agreement contained in
this Loan Agreement to be performed or observed by such Borrower or Unified and
which is not remedied within thirty (30) days after the date on which notice of
such default is first given to the particular Borrower or Unified by the Bank.
11.5 Breach of Representations or Warranties. If any representation or
warranty made by the particular Borrower or Unified herein, in any of the other
Loan Documents to which it is a party or in any statement or certificate
furnished by it to the Bank in connection with or pursuant to this Loan
Agreement is untrue in any material respect as of the date of the issuance or
making (or deemed issuance or making) thereof.
11.6 Other Events of Default. The occurrence of any event of default
under and as defined in the other Loan Documents to
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which the particular Borrower or Unified is a party and which is not effectively
cured or waived.
11.7 Cessation to be a Member of Unified. If the particular Borrower
shall cease to be a member of Unified.
11.8 Termination of Purchasing Program Management Agreement. If the
Purchasing Program Management Agreement entered into between the particular
Borrower and Unified shall be terminated and not replaced by an agreement
containing substantially similar terms and conditions as set forth in such
Purchasing Program Management Agreement.
11.9 Judgments. If a final judgment or judgments for the payment of
money aggregating in excess of One Hundred Thousand Dollars ($100,000.00) is or
are outstanding against the particular Borrower or Unified or against any
property or assets of the particular Borrower or Unified and any one of such
judgments has remained unpaid, unvacated, unbonded or unstayed by appeal or
otherwise for a period of thirty (30) days from the date of its entry.
11.10 Termination of Liens and Security Interests. If, for any reason
(other than the Bank's affirmative election to release or terminate the liens
and security interests created by the Loan Documents) any of the Loan Documents
to which the particular Borrower or Unified is a party shall cease (i) to create
valid and perfected first priority liens and security interests on the property
encumbered thereby in favor of the Bank, or (ii) to be in full force and effect
or shall be declared null and void, or the validity or enforceability thereof
shall be contested by the particular Borrower or Unified.
11.11 Insolvency. If a custodian, receiver, liquidator or trustee of
the particular Borrower or Unified, or of any of the property of the particular
Borrower or Unified, is appointed or takes possession of the particular Borrower
or Unified and its assets and such appointment or possession remains uncontested
or in effect for more than sixty (60) days; or the particular Borrower or
Unified generally fails to pay its debts as they become due or admits in writing
its inability to pay its debts as they mature; or the particular Borrower or
Unified is adjudicated bankrupt or insolvent; or any of the material property of
the particular Borrower or Unified is sequestered by
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court order and the order remains in effect for more than sixty (60) days; or a
petition is filed against the particular Borrower or Unified under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction, whether now or subsequently
in effect, and is not stayed or dismissed within sixty (60) days after filing;
or the particular Borrower or Unified files a petition in voluntary bankruptcy
or seeking relief under any provision of any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation law of
any jurisdiction, whether now or subsequently in effect; or the particular
Borrower or Unified consents to the filing of any petition against it under any
law; or consents to the appointment of or taking possession by a custodian,
receiver, trustee or liquidator of the particular Borrower or Unified or any of
the property of the particular Borrower or Unified.
SECTION 12. REMEDIES
12.1 Remedies With Respect to the KFC Cooperative. Upon the occurrence
of any KFC Event of Default, the Bank may at its election (a) terminate the KFC
Line of Credit, (b) declare the KFC Promissory Note and all other Secured
Obligations owed by the KFC Cooperative to the Bank to be forthwith due and
payable to the Bank, and the same shall thereupon become immediately due and
payable to the Bank without demand, presentment, protest or further notice of
any kind, all of which are hereby expressly waived by the KFC Cooperative,
and/or (c) proceed to enforce its liens and security interests in the KFC
Collateral granted to the Bank pursuant to the KFC Pledge Agreement and the
Unified KFC Security Agreement as well as all other remedies available to it
under the other Loan Documents and/or under applicable law or in equity in
respect of the occurrence of the KFC Event of Default.
12.2 Remedies With Respect to the Pizza Hut Cooperative. Upon the
occurrence of any Pizza Hut Event of Default, the Bank may at its election (a)
terminate the Pizza Hut Line of Credit, (b) declare the Pizza Hut Promissory
Note and all other Secured Obligations owed by the Pizza Hut Cooperative to the
Bank to be forthwith due and payable to the Bank, and the same shall thereupon
become immediately due and payable to the Bank without demand, presentment,
protest or further notice of any kind, all of which are hereby expressly waived
by the Pizza Hut Cooperative, and/or (c) proceed to enforce its liens and
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security interests in the Pizza Hut Collateral granted to the Bank pursuant to
the Pizza Hut Pledge Agreement and the Unified Pizza Hut Security Agreement as
well as all other remedies available to it under the other Loan Documents and/or
under applicable law or in equity in respect of the occurrence of the Pizza Hut
Event of Default.
12.3 Remedies With Respect to the Taco Xxxx Cooperative. Upon the
occurrence of any Taco Xxxx Event of Default, the Bank may at its election (a)
terminate the Taco Xxxx Line of Credit, (b) declare the Taco Xxxx Promissory
Note and all other Secured Obligations owed by the Taco Xxxx Cooperative to the
Bank to be forthwith due and payable to the Bank, and the same shall thereupon
become immediately due and payable to the Bank without demand, presentment,
protest or further notice of any kind, all of which are hereby expressly waived
by the Taco Xxxx Cooperative, and/or (c) proceed to enforce its liens and
security interests in the Taco Xxxx Collateral granted to the Bank pursuant to
the Taco Xxxx Pledge Agreement and the Unified Taco Xxxx Security Agreement as
well as all other remedies available to it under the other Loan Documents and/or
under applicable law or in equity in respect of the occurrence of the Taco Xxxx
Event of Default.
12.4 No Waiver; Remedies Cumulative. No remedy herein conferred or
reserved in favor of the Bank with respect to a particular Borrower or Unified
is intended to be exclusive of any other available remedy or remedies, but each
and every such remedy shall be cumulative with each and every other remedy given
under any other Loan Document or now or hereafter existing at law or in equity
or by statute. No delay or omission in the exercise of any right or power
accruing upon any default, omission or failure of performance hereunder shall
impair any such right or power or shall be construed to be a waiver thereof, but
any such right or power may be exercised from time to time and as often as may
be deemed expedient. In order to exercise any remedy reserved to the Bank in
this Loan Agreement or any other Loan Document, the Bank shall not be required
to give any notice other than such notice as may be herein expressly required.
In the event any provision contained in this Loan Agreement or any other Loan
Document should be breached by any party and thereafter duly waived by the other
party so empowered to act, such waiver shall be limited to the particular breach
so waived and shall not be deemed to waive any other breach hereunder. No
waiver, amendment, release or
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modification of this Loan Agreement or any other Loan Document shall be
established by conduct, custom or course of dealing, but solely by an instrument
in writing duly executed by the parties thereunto duly authorized by this Loan
Agreement or any other Loan Document.
12.5 Offset. Upon any default by a Borrower in the payment of any
accrued interest on and/or unpaid principal of its Promissory Note or any other
Secured Obligation owed by such Borrower to the Bank, and/or upon the occurrence
of any other Event of Default with respect to such Borrower or Unified and
during the continuation thereof, the Bank shall have the right then, or at any
time thereafter, to set off against, and to appropriate and apply toward the
payment of the Promissory Note and/or other Secured Obligations of such
Borrower, any and all deposit balances, other sums, indebtedness and other
property then held or owed by the Bank to or for the account of such Borrower,
and in and on all of which such Borrower hereby grants the Bank a first priority
security interest in and lien on to secure the payment of such Borrower's
Promissory Note and other Secured Obligations owed to the Bank, all without
notice to or demand upon such Borrower or any other person, all such notices and
demands being hereby expressly waived.
12.6 No Cross-Collateralization or Cross-Default Among the Borrowers.
The Bank expressly acknowledges and agrees that none of the KFC Line of Credit,
the Pizza Hut Line of Credit and the Taco Xxxx Line of Credit is either
cross-collateralized or cross-defaulted. In furtherance thereof, (a) the KFC
Collateral does not secure either the Pizza Hut Line of Credit or the Taco Xxxx
Line of Credit or any other Secured Obligation owed by the Pizza Hut Cooperative
or the Taco Xxxx Cooperative to the Bank, (b) the Pizza Hut Collateral does not
secure either the KFC Line of Credit or the Taco Xxxx Line of Credit or any
other Secured Obligation owed by the KFC Cooperative or the Taco Xxxx
Cooperative to the Bank, (c) the Taco Xxxx Collateral does not secure either the
KFC Line of Credit or the Pizza Hut Line of Credit or any other Secured
Obligation owed by the KFC Cooperative or the Pizza Hut Cooperative to the Bank,
(d) a KFC Default or a KFC Event of Default does not constitute a Pizza Hut
Default or a Pizza Hut Event of Default or a Taco Xxxx Default or a Taco Xxxx
Event of Default, (e) a Pizza Hut Default or a Pizza Hut Event of Default does
not constitute a KFC Default or a KFC Event of Default or a Taco Xxxx Default or
a Taco Xxxx Event of Default, (f) a Taco Xxxx Default or a Taco
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Xxxx Event of Default does not constitute a KFC Default or a KFC Event of
Default or a Pizza Hut Default or a Pizza Hut Event of Default, (g) no Borrower
is liable for the Secured Obligations owed by any other Borrower to the Bank,
and (h) Unified is not liable for any Secured Obligations owed by any Borrower
to the Bank except and only to the extent the assets of Unified constitute part
of the KFC Collateral, the Pizza Hut Collateral and the Taco Xxxx Collateral and
Unified has obligations in respect thereof under the Loan Documents to which
Unified is a party.
SECTION 13. MISCELLANEOUS.
13.1 Reimbursement of the Bank. The Borrowers and Unified jointly and
severally covenant and agree to reimburse the Bank for all actual out-of-pocket
expenses, including without limitation, reasonable attorneys' fees not to exceed
Twenty Thousand Dollars ($20,000.00), incurred by the Bank in connection with
the preparation, negotiation and execution and delivery of this Loan Agreement
and the other Loan Documents and the closing of the transactions contemplated
hereunder. Each Borrower, as to itself only, and Unified solely to the extent of
the Loan Documents to which it is a party, further covenants and agrees to
reimburse the Bank for all costs and expenses including, without limitation,
reasonable attorneys fees, incurred by the Bank in enforcing this Loan Agreement
and/or the other Loan Documents against the particular Borrower and/or Unified.
13.2 Notices. All notices, requests, demands and communications
pursuant to this Loan Agreement shall be in writing (except as otherwise
expressly permitted hereunder) and shall be personally delivered or sent by an
express courier service or by certified or registered United States mail,
postage prepaid and addressed as follows, or to such other address as may be
hereafter designated in writing by any party hereto to the other parties hereto:
If to the KFC Cooperative: KFC National Purchasing
Cooperative, Inc.
Attn: President and Chief
Executive Officer
000 Xxxxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
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Copy to: Xxxxxxxxx X. Xxxxxxxx, Esq.
Tricon Global Restaurants, Inc.
Law Department
0000 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
R. Xxxxx Xxxxxx, Esq.
Xxxxx, Xxxx & Heyburn PLLC
000 X. Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxx, XX 00000
If to the Pizza Hut
Cooperative: Pizza Hut National Purchasing Coop, Inc.
Attn: President and Chief
Executive Officer
000 Xxxxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Copy to: Xxxxxxxxx X. Xxxxxxxx, Esq.
Tricon Global Restaurants, Inc.
Law Department
0000 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
R. Xxxxx Xxxxxx, Esq.
Xxxxx, Xxxx & Heyburn PLLC
000 X. Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxx, XX 00000
If to the Taco Xxxx
Cooperative: Taco Xxxx National Purchasing Coop, Inc.
Attn: President and Chief
Executive Officer
000 Xxxxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Copy to: Xxxxxxxxx X. Xxxxxxxx, Esq.
Tricon Global Restaurants, Inc.
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Law Department
0000 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
R. Xxxxx Xxxxxx, Esq.
Xxxxx, Xxxx & Heyburn PLLC
000 X. Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxx, XX 00000
If to Unified: Unified FoodService Purchasing Coop, LLC
Attn: Chief Financial Officer
000 Xxxxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Copy to: Xxxxxxxxx X. Xxxxxxxx, Esq.
Tricon Global Restaurants, Inc.
Law Department
0000 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
R. Xxxxx Xxxxxx, Esq.
Xxxxx, Xxxx & Heyburn PLLC
000 X. Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxx, XX 00000
If to the Bank: Fifth Third Bank,
Kentucky, Inc.
Attn: Xx. Xxxx Xxxxxxx
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
All such notices shall be deemed given when personally delivered or one
(1) Business Day after having been delivered to an express courier service or
deposited in the United States mails each in case in accordance with the
provisions of this Section 13.2.
13.3 No Waiver, Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Bank, any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any
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right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided are cumulative and not exclusive of any rights or
remedies provided by law.
13.4 Entire Agreement; Amendments. Any amendments hereto must be in
writing signed by a duly authorized representative of the party to be charged.
This Loan Agreement (including any schedules and exhibits attached hereto)
contains the entire understanding of the parties with respect to its subject
matter. In the event of any conflict or discrepancy between this Loan Agreement
and any other document delivered in connection with this Loan Agreement, this
Loan Agreement shall control.
13.5 Governing Law. This Loan Agreement and the rights and obligations
of the parties hereunder shall be governed by and construed and interpreted in
accordance with the laws of the Commonwealth of Kentucky.
13.6 Effective Date of this Agreement. This Loan Agreement shall become
effective on the date when it shall have been executed by the Borrowers, Unified
and the Bank and fully executed counterparts thereof delivered to the Bank, such
date being herein called the "Effective Date of this Loan Agreement".
13.7 Severability. The provisions of this Loan Agreement are intended
to be severable. If any provision of this Loan Agreement shall be 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
unenforceability without in any manner affecting the validity or enforceability
thereof in any other jurisdiction or the remaining provisions hereof in any
jurisdiction.
13.8 Survival of Agreements, etc. All agreements, representations,
covenants, warranties and the like made herein shall survive the execution and
delivery of this Loan Agreement and the other Loan Documents.
13.9 Successors and Assigns. This Loan Agreement shall be binding upon
the parties hereto and their respective permitted successors and assigns, but
shall inure only to the benefit of the Borrowers, Unified and the Bank and their
respective permitted successors and assigns.
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13.10 Counterparts. This Loan Agreement may be executed in any number
of counterparts, each of which shall be deemed an original and all of which
taken together shall be deemed to constitute one and the same instrument.
13.11 Indemnity. Each Borrower shall indemnify and hold harmless the
Bank, its successors, assigns, agents and employees, from and against any and
all claims, actions, suits, proceedings, costs, expenses, damages, fines,
penalties and liabilities, including, without limitation, attorneys' fees and
costs, arising out of, connected with or resulting from (a) the operation of
such Borrower's businesses, (b) the Bank's preservation or attempted
preservation of the Collateral owned by such Borrower or by Unified on behalf of
such Borrower, and/or (c) any failure of the security interests and liens
granted to the Bank pursuant to the Loan Documents that secure such Borrower's
Promissory Note to be or to remain perfected or to have the priority as
contemplated therein. At the Bank's request, the particular Borrower shall, at
its own cost and expense, defend or cause to be defended any and all such
actions or suits that may be brought against the Bank and, in any event, shall
satisfy, pay and discharge any and all judgments, awards, penalties, costs and
fines that may be recovered against the Bank in any such action, plus all
attorneys' fees and costs related thereto to the extent permitted by applicable
law; provided, however, that the Bank shall give the particular Borrower (to the
extent the Bank seeks indemnification therefor from such Borrower under this
Section 13.11) written notice of any such claim, demand or suit after the Bank
has received written notice thereof, and the Bank shall not settle any such
claim, demand or suit, if the Bank seeks indemnification therefor from such
Borrower, without first giving notice to such Borrower of the Bank's desire to
settle and obtaining the consent of such Borrower to the same, which consent
such Borrower hereby agrees not to unreasonably withhold. All obligations of
each Borrower under this Section 13.11 shall survive the payment to the Bank of
the Promissory Note and the other Secured Obligations owed by such Borrower to
the Bank.
13.12 Time is of the Essence. Time shall be of the essence in the
performance of all obligations and covenants of each Borrower and Unified under
this Loan Agreement and the other Loan Documents to which such Borrower or
Unified is a party.
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13.13 Jurisdiction. Each Borrower and Unified hereby irrevocably agrees
that any legal action, suit or proceeding against such Borrower or Unified with
respect to the obligations and liabilities of such Borrower or Unified hereunder
or any other matter under or arising out of or in connection with this Loan
Agreement and/or the other Loan Documents or for recognition or enforcement of
any judgment rendered in any such action, suit or proceeding may be brought in
the Circuit Court of Jefferson County, Kentucky as the Bank may elect, and, by
execution and delivery of this Loan Agreement, each Borrower and Unified hereby
irrevocably accepts and submits to the non-exclusive jurisdiction of such court
in personam generally and unconditionally with respect to any such action, suit
or proceeding involving such Borrower or Unified. Each Borrower and Unified
further agrees that final judgment against such Borrower or Unified in any
action, suit or proceeding referred to herein shall be conclusive after all
appeals have been exhausted or waived by such Borrower or Unified, and may
thereafter be enforced in any other jurisdiction, within or outside the United
States of America, by suit on the judgment, a certified or exemplified copy of
which shall be conclusive evidence of the fact and of the amount of the
obligations and liabilities of such Borrower and Unified. Each Borrower and
Unified further irrevocably consents and agrees to the service of any and all
legal process, summons, notices and documents out of any of the aforesaid courts
in any such action, suit or proceeding by mailing copies thereof by registered
or certified air mail, postage prepaid, to such Borrower or Unified at the
address set forth in Section 13.2 hereof or by serving copies thereof upon any
statutory or registered agent for service of process of such Borrower or
Unified. Each Borrower and Unified agrees that service upon it as provided for
herein shall constitute valid and effective personal service upon such Borrower
and Unified and that the failure of any statutory or registered agent to give
any notice of such service to such Borrower or Unified shall not impair or
affect in any way the validity of such service or any judgment rendered in any
action or proceeding based thereon. Nothing herein shall, or shall be construed
so as to, limit the right of the Bank to bring actions, suits or proceedings
with respect to the obligations and liabilities of such Borrower or Unified
under, or any other matter arising out of or in connection with, this Loan
Agreement and/or the other Loan Documents, or for recognition or enforcement of
any judgment rendered in any such action, suit or proceeding, in the courts of
whatever jurisdiction in which property of such Borrower or Unified may be found
or as otherwise shall to the Bank seem appropriate, or to affect the rights to
service of
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process in any jurisdiction in any manner permitted by law. In addition, each
Borrower and Unified hereby irrevocably and unconditionally waives any objection
which such Borrower or Unified may now or hereafter have to the laying of venue
of any of the aforesaid actions, suits or proceedings arising out of or in
connection with this Loan Agreement and/or the other Loan Documents brought in
the Circuit Court of Jefferson County, Kentucky, and hereby further irrevocably
and unconditionally waives and agrees not to plead or claim that any such
action, suit or proceeding brought in such court has been brought in an
inconvenient forum.
13.13 Waiver of Jury Trial. EACH BORROWER, UNIFIED AND THE BANK HEREBY
AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS LOAN AGREEMENT OR THE OTHER LOAN
DOCUMENTS. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY
AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT THAT RELATE TO THE SUBJECT
MATTER OF THE TRANSACTIONS CONTEMPLATED UNDER THIS LOAN AGREEMENT AND THE OTHER
LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH
BORROWER, UNIFIED AND THE BANK ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL
INDUCEMENT FOR EACH SUCH PARTY TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH
BORROWER, UNIFIED AND THE BANK HAVE ALREADY RELIED ON THE WAIVER IN ITS RELATED
DEALINGS WITH THE OTHERS. EACH BORROWER, UNIFIED AND THE BANK FURTHER WARRANT
AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND
THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS LOAN
AGREEMENT OR THE OTHER LOAN DOCUMENTS. IN THE EVENT OF LITIGATION, THIS LOAN
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
IN WITNESS WHEREOF, the KFC Cooperative, the Pizza Hut Cooperative, the
Taco Xxxx Cooperative, Unified and the Bank have caused this Loan Agreement to
be duly authorized and delivered by their proper and duly authorized officers as
of the day and year first above written.
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KFC NATIONAL PURCHASING COOPERATIVE, INC.
By:
--------------------------------------
Its:
-------------------------------------
(the "KFC Cooperative")
TACO XXXX NATIONAL PURCHASING COOP, INC:
By:
--------------------------------------
Its:
-------------------------------------
(the "Taco Xxxx Coop")
PIZZA HUT NATIONAL PURCHASING UNIFIED FOODSERVICE PURCHASING
COOP, INC. COOP, INC.
By: By:
-------------------------------------- -------------------------------
Its: Its:
------------------------------------- ------------------------------
(the "Pizza Hut Cooperative") ("Unified")
FIFTH THIRD BANK, KENTUCKY, INC.
By:
--------------------------------------
Its:
-------------------------------------
(the "Bank")
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List of
-------
1. A: KFC Borrowing Base Report
2. B: Pizza Hut Borrowing Base Report
3. C: Taco Xxxx Borrowing Base Report
4. D: KFC Accounts Receivable Aging Report
5. E: Pizza Hut Accounts Receivable Aging Report
6. F: Taco Xxxx Accounts Receivable Aging Report
7. G: Opinion Letter of Xxxxx, Xxxx & Heyburn PLLC
8. H: Compliance Certificate
9. I: Schedule of Pending Litigation
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A FIFTH THIRD BANCORP BANK
Officer No. Note No.
---------- --------------
$15,000,000.00 March 1, 1999
-------------- ---------------
(Effective Date)
City Louisville State Kentucky
---------- --------
On or before the Due Date below, the undersigned, a (check one)
[ ] corporation [ ] partnership [ ] individual [ ] limited liability company for
value received if more than one, jointly and severally, promise to pay to the
order of Fifth Third Bank, Kentucky, Inc., 000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxx 00000 hereinafter referred to as "Bank" the sum of Fifteen Million
Dollars (hereinafter referred to as the "Borrowing") plus interest as provided
herein, less such amounts as shall have been repaid in accordance with this
note. The outstanding balance of this note will appear on a supplemental bank
record and is not necessarily the face amount of this note. Such record shall be
conclusive as to the balance due of this note at time.
The principal sum outstanding shall bear interest as provided in the First
Addendum to Revolving Note referred to below interest shall be computed based on
a year of 360 days and charged for the actual number of days elapsed.
Prior to the Due Date, Bank may (but is not obligated to) lend to the
undersigned such amounts as may from time to time be requested by the
undersigned provided that the principal amount borrowed shall not at any time
exceed the Borrowing and further provided that no Event of Default as defined
herein shall exist.
Principal shall be due and payable: X At Maturity [ ] In Installments;
Installments in the amount of $_______ shall be due on the ______ day of each
[ ] MONTH [ ] QUARTER beginning ______, 19__ with a final payment on ________,
19__ of the principal amount then owing plus all interest due therein. Principal
and interest payments shall be made at Bank's address above unless otherwise
designed to Bank in writing. Interest shall be due and payable: [ ] At Maturity
X On the 1st day of each X Month [ ] Quarter beginning April 1, 1999.
To secure repayment of this note and all modifications, extensions and renewals
thereof, and all other Obligations (as herein defined) of the undersigned to
Bank the undersigned grants Bank a security interest in all of the undersigned's
now owned or hereafter acquired interests in all property in which Bank is, at
any time, granted a lien for any Obligation and all property in possession of
Bank including, without limitation, money, securities, instruments, documents,
letters of credit, chattel paper, or other property delivered to Bank in transit
for safekeeping, or for collection or exchange for other property, all
distributions, dividends, warrants, securities or other rights in addition to
such property, all rights payment from and claims against Bank and all proceeds
thereof, and all real and personal property described below ("Collateral"). The
undersigned agrees to immediately deliver such additional dividends warrants,
securities or other property or rights thereto to Bank immediately upon receipt
as additional Collateral and until delivery to hold in trust for Bank. The
undersigned agrees that the Bank may, at any time, call for additional
Collateral satisfactory to it. All documents executed in connection with this
note and all Collateral, including without limitation the following, further
secure the Obligations:
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The KFC Pledge Agreement and the Unified KFC Security Agreement, as such terms
are defined in the Loan Agreement referred to in the First Addendum to Revolving
Note of even date herewith, between the undersigned and the Bank.
The obligations secured by the Collateral (herein, the "Obligations") shall
include this note and each and every liability of the undersigned jointly and
severally to Bank and the affiliates of Fifth Third Bancorp however created,
direct or contingent, due or to become due whether now existing or hereafter
arising, participated in whole or in part, created trust agreement, lease,
overdraft, agreement, or otherwise, in any manner by the undersigned. The
undersigned also grants Bank a security interest in all of the Collateral as for
all affiliates of Fifth Third Bancorp for all obligations of the undersigned to
such affiliates. Said security interest shall not be enforced to the extent
prohibited by the Truth Lending Act as implemented by Federal Reserve
Regulation Z.
The undersigned certifies that the proceeds of this loan are to be used for
business purposes. If this note is a renewal, in whole or in part, of a previous
Obligation, the acceptance by Bank of this note shall not effectuate a payment
but rather a continuation of the previous Obligation.
Events of Default:
This Note, and all other obligations of the undersigned Bank, shall be and
become immediately due and payable at the option of the Bank, without demand or
notice whatsoever, upon the occurrence of any of the following described events,
each of which shall constitute an Event of Default:
Any failure to make any payment when due of the principal or interest on this
note, the occurrence of any event of default as therein defined on any other
Obligation of the undersigned, or a default in the obligations under any
security documents.
The death or dissolution of the undersigned, of any endorser or guarantor, or if
the undersigned is a partnership, the death or dissolution of a general partner.
Any failure to submit to Bank current financial information upon request.
The creation of any lien (except a lien to Bank) or the issuance of an
attachment against or seizure of any of the property of, or the entry of a
judgment against the undersigned.
In the judgment of Bank, any adverse change occurs in the ability of the
undersigned to repay the Obligations, or the Bank deems itself insecure.
An assignment for the benefit if the creditors of, or the commencement of any
bankruptcy, receivership, insolvency, reorganization, or liquidation proceedings
by or against the undersigned, or any endorser or guarantor hereof.
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The institution of any garnishment proceedings by attachment, levy, or
otherwise, against any Collateral, any deposit balance maintained or any
property deposited with the Bank by the undersigned or any endorser or guarantor
hereof.
Bank has called for additional security and the undersigned has not furnished
satisfactory additional security on demand.
Upon the occurrence of an Event in Default herein described Bank may, at its
option, cease making advances hereunder, declare this note and all other
Obligations of the undersigned, to be fully due and payable in their aggregate
amount together with accrued interest plus any applicable prepayment premiums,
fees and charges.
In addition to any other remedy permitted by law, the Bank may at any time,
without notice, apply the Collateral to this note or such other Obligations,
whether due or not, and Bank may, at its option, proceed to enforce and protect
its rights by an action at law or in equity or by any other appropriate
proceedings. Notwithstanding any other legal or equitable rights of Bank, Bank,
in the Event of Default, is (a) hereby irrevocably appointed and constituted
attorney-in-fact, with full power of substitution, to exercise all rights of
ownership with respect to Collateral including, but not limited to, the right to
collect all income of other distributions arising therefrom and to exercise all
voting rights connected with Collateral; and (b) is hereby given full power to
collect, sell, assign, transfer and deliver all of said Collateral or any part
thereof, or any substitutes therefor, or any additions thereto through any
private or public sale without either demand or notice to the undersigned, or
any advertisement, the same being hereby expressly waived, at which sale Bank is
authorized to purchase said property or any part thereof, free from any right of
redemption on the part of the undersigned, which is hereby expressly waived and
released. In case of sale for any cause, after deducting all costs and expenses
of every kind, Bank may apply, as it shall deem proper, the residue of the
proceeds of such sale toward the payment of any one or more or all of the
Obligations of the undersigned, whether due or not due, to Bank; after such
application and the return of any surplus, the undersigned agrees to be and
remains liable to Bank for any and every deficiency after application as
aforesaid upon this and any other Obligation. The undersigned shall pay all
costs of collection incurred by Bank, including its attorney's fees, if this
note is referred to an attorney for collection, whether or not payment is
obtained before entry of judgment, which costs and fees are Obligations secured
by the Collateral.
If any payment is not paid when due (whether by acceleration or otherwise) or
within 10 days thereafter, the undersigned agrees to pay to Bank a late payment
fee as in any loan agreement or 5% of the payment amount, whichever is greater,
with a minimum fee of $20.00. After an Event of Default, the undersigned agrees
to pay to charge of $25.00, or the undersigned agrees that Bank may, without
notice, increase the above stated interest rate by 6%, whichever is greater.
Under no circumstances interest rate be raised to a rate which shall be in
excess of the maximum rate of interest allowable under the state and/or federal
usury laws in force a the time of such change.
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The undersigned may prepay all or part of this note, which prepaid amounts shall
be applied to the amounts due in reverse order of their due dates. Partial shall
not excuse any subsequent payment due.
ENTIRE AGREEMENT: The undersigned agrees that there are no conditions or
understandings which are not expressed in this note and the documents referred
to herein.
WAIVER: No failure on the part of Bank to exercise any of its rights hereunder
shall be deemed a waiver of any such rights or of any default. Demand,
presentment of dishonor, notice of protest, and notice of default are hereby
waived. Each of the undersigned, including but not limited to all co-makers and
accommodation makers of this note. _____ hereby waives all suretyship defenses
including but not limited to all defenses based upon impairment of collateral
and all suretyship defenses described in Section 3-605 of the Uniform
Commercial Code, as revised in 1990 (the "UCC"). Such waiver is entered to the
full extent permitted by Section 3-605(I) of the UCC.
JURY WAIVER: THE UNDERSIGNED, AND ANY ENDORSER OR GUARANTOR HEREOF, WAIVE THE
RIGHT TO A TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS NOTE OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
The declaration of invalidity of any provision of this note shall not affect any
part of the remainder of the provisions.
X This note is supplemented by the terms and conditions of a loan agreement
dated March 1, 1999, between the undersigned and Bank.
DUE DATE April 1, 2000 KFC National Purchasing Cooperative, Inc.
--------------------- -----------------------------------------
ADDRESS 000 Xxxxxxxxxxxx Xxxx By: Xxxxxxx X. Xxxxxx
--------------------- -----------------------------------------
Xxxxxxxxxx, XX 00000 Title: Vice President and CFO
--------------------- -----------------------------------------
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FIRST ADDENDUM TO $15,000,000 REVOLVING NOTE
DATED MARCH 1, 1999, EXECUTED AND DELIVERED BY
KFC NATIONAL PURCHASING COOPERATIVE, INC.
d/b/a FOOD SERVICE PURCHASING COOPERATIVE, INC.
IN FAVOR OF FIFTH THIRD BANK, KENTUCKY, INC.
THIS FIRST ADDENDUM TO REVOLVING NOTE (the "First Addendum") is made
and entered into on this 1st day of March, 1999, by and between (i) KFC NATIONAL
PURCHASING COOPERATIVE, INC., a Delaware corporation d/b/a FoodService
Purchasing Cooperative, Inc. (the "KFC Cooperative"), and (ii) FIFTH THIRD BANK,
KENTUCKY, INC., a Kentucky banking corporation (the "Bank").
P R E L I M I N A R Y S T A T E M E N T:
A. Pursuant to that certain Loan Agreement of even date herewith, among
the KFC Cooperative, Pizza Hut National Purchasing Coop, Inc., Taco Xxxx
National Purchasing Coop, Inc., Unified FoodService Purchasing Coop, LLC and the
Bank (the "Loan Agreement"), the Bank has, among other things, established a
revolving line of credit in the original principal amount of Fifteen Million
Dollars ($15,000,000.00) in favor of the KFC Cooperative (the "KFC Line of
Credit").
B. The obligation of the KFC Cooperative to repay all advances under
the KFC Line of Credit together with accrued interest thereon is evidenced by
that certain Revolving Note of even date herewith, made by the KFC Cooperative,
payable to the order of the Bank, and in the face principal amount of Fifteen
Million Dollars ($15,000,000.00) (the "KFC Promissory Note").
C. The KFC Cooperative and the Bank desire to amend and supplement the
terms and provisions of the KFC Promissory Note in the manner set forth
herein.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements set forth in the Loan Agreement, and for other
good and valuable consideration, the mutuality, receipt and sufficiency of which
are hereby acknowledged, the KFC Cooperative and the Bank hereby agree as
follows:
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1. Interest Rate. The entire unpaid principal balance of the KFC
Promissory Note, as the same shall exist from time to time, shall bear interest
at a variable rate equal to .80% per annum (80 basis points) plus the LIBOR
Rate, as such term is defined below (the "Base Rate"). The Base Rate is the
interest rate applicable to the KFC Promissory Note so long as no KFC Event of
Default, as such term is defined in the Loan Agreement, has occurred and is
continuing. As used herein, the term "LIBOR Rate" means the offered rate for
U.S. Dollar deposits for a period of time equal to thirty (30) days as shown on
the Telerate System ("Telerate"). Provided, however, that if such rate is not
available on Telerate then the LIBOR Rate shall be otherwise independently
determined by the Bank from an alternate, substantially similar independent
source available to the Bank or shall be calculated by the Bank by a
substantially similar methodology as that theretofore used to determine such
offered rate on Telerate. The LIBOR Rate shall be determined daily by the Bank
for purposes of determining the Base Rate applicable to the KFC Promissory Note
on each day during the term of the KFC Line of Credit. In the event of any
change in the LIBOR Rate, the interest rate applicable to the KFC Promissory
Note shall be changed immediately. Each determination of the LIBOR Rate by the
Bank shall be binding upon the KFC Cooperative in the absence of manifest error
on the part of the Bank.
2. Ratification and Reaffirmation. Except to the extent as expressly
amended or modified pursuant to this First Addendum, the KFC Cooperative hereby
ratifies and reaffirms all of its covenants, agreements, obligations,
representations and warranties set forth in the Loan Agreement and the KFC
Promissory Note.
IN WITNESS WHEREOF, the KFC Cooperative and the Bank have caused this
First Addendum to Revolving Note to be duly authorized and delivered by their
proper and duly authorized officers as of the day and year first above written.
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KFC NATIONAL PURCHASING COOPERATIVE, INC.
By: /s/
--------------------------------------
Title:
------------------------------------
(the "KFC Cooperative")
FIFTH THIRD BANK, KENTUCKY, INC.
By: /s/
--------------------------------------
Title:
------------------------------------
(the "Bank")
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A FIFTH THIRD BANCORP BANK
SECURITY AGREEMENT
City Louisville State Kentucky March 1, 1999
---------------------- ----------------- ---------------------
KFC National Purchasing Cooperative, Inc. whose principal place of business is
located at 000 Xxxxxxxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxxx Xxxxxx, Xxxxxxxx
(hereinafter the "Debtor") and whose registered agent for service of process is
C. T. Corp, Sys. located at Kentucky Home Life Bldg., Room 1102, 000 Xxxxx 0xx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxx, hereby assign(s) to Secured Party for itself as
agent for any affiliate of Fifth Third Bancorp as collateral and grant(s) to
Fifth Third Bank, Kentucky, Inc. (hereinafter the "Secured Party"), a security
interest in and to all items of property described in paragraph 2 of this
Agreement (all of which shall hereinafter be the "Collateral").
1. OBLIGATIONS: The security interest hereby granted shall secure the
following (collectively, the "Obligations"): all loans, advances, indebtedness
and other obligations of each of Debtor and n/a (if different from Debtor,
hereinafter referred to as the "Borrower") owed to Secured Party and/or any
affiliate of Fifth Third Bancorp, of every kind and description whether now
existing or hereafter arising including without limitation those owed to others
and acquired by Secured Party (by purchase, assignment or otherwise) and whether
direct or indirect, primary or as guarantor or surety, absolute or contingent,
liquidated or unliquidated, matured or unmatured, whether or not secured by
additional collateral, and all liabilities, obligations and indebtedness arising
under this Agreement and all other instruments and agreements evidencing,
guarantying or securing any of the foregoing, and all obligations to perform or
forbear from performing acts, all amounts represented by letters of credit now
or hereafter issued by Secured Party for the benefit of or at the request of
Debtor or Borrower and all expenses and attorneys' fees incurred by Secured
Party under this Agreement or any other document or instrument related thereto
or related to any of the Obligations, including but not limited to the
following:
The $15,000,000.00 Revolving Note of even date herewith, made by the Debtor,
payable to the order of the Secured Party, as amended pursuant to First Addendum
to Revolving Note of even date herewith, between the Debtor and the Secured
Party.
2. COLLATERAL: The Collateral in which a security interest is hereby
granted includes that Collateral now existing and hereafter arising or acquired
by Debtor, regardless of where it is located, and is defined as follows:
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(a) all Accounts, all Inventory, all Equipment, all General Intangibles
(each as defined in paragraph 3 of this Agreement);
(b) all instruments, chattel paper, documents, securities, moneys, cash,
letters of credit, warrants, dividends, distributions, contracts, agreements,
contract rights or other property, owned by Debtor or in which Debtor has an
interest, including but not limited to, those which are now or hereafter in the
possession or control of Secured Party or in transit by mail or carrier to or in
the possession of any third party acting on behalf of Secured Party, without
regard to whether Secured Party received the same in pledge, for safekeeping, as
agent for collection or transmission or otherwise or whether Secured Party had
conditionally released the same, and the proceeds thereof, all rights to payment
from, and all claims against Secured Party, and any deposit accounts of Debtor
with Secured Party, including all demand time, savings, passbook or other
accounts and all deposits therein;
(c) other Collateral: see First Addendum to Security Agreement of even
date herewith, between the Debtor and the Secured Party.
(d) all proceeds and products of the Collateral and all additions and
accessions to, replacements of, insurance or condemnation proceeds of, and
documents covering Collateral, all tort or other claims against third parties
arising out of damage or destruction of Collateral, all property received wholly
or partly in trade or exchange for Collateral, all fixtures, all leases of
Collateral and all rents, revenues, issues, profits and proceeds arising from
the sale, lease, license, encumbrance, collection, or any other temporary or
permanent disposition, of the Collateral or any interest therein.
3. DEFINITIONS: As used herein the following capitalized terms will have
the following meanings:
(a) "Accounts" means all accounts, accounts receivable, contract rights,
instruments, documents, chattel paper, tax refunds from federal, state or local
governments and all obligations in any form including without limitation those
arising out of the sale or lease of goods or the rendition of services by
Debtor; all guaranties, letters of credit and other security for any of the
above; all merchandise returned to or reclaimed by Debtor; and all books and
records (including computer programs, tapes and data processing software)
evidencing an interest in or relating to the above.
(b) "Equipment" means all machinery, machine tools, equipment, fixtures,
office equipment, furniture, furnishings, motors, motor vehicles, tools, dies,
parts, jigs, goods (including, without limitation, each of the items of
equipment set forth on any schedule which is either now or in the future
attached to Secured Party's copy of this Agreement), and all attachments,
accessories, accessions, replacements, substitutions, additions and improvements
thereto, and all supplies used or useful in connection therewith.
(c) "General Intangibles" means all general intangibles, chooses in
action, cause of action, obligations or indebtedness owed to Borrower from any
source whatsoever, and all other intangible personal property of every kind and
nature (other than Accounts) including without limitation patents, trademarks,
trade names, service marks, copyrights and applications for any of the above,
and good will, trade secrets, licenses, franchises, rights under agreements, tax
refund claims, and all books and records including all computer programs, disks,
tapes, printouts, customer lists, credit files and other business and financial
records, and the equipment containing any such information.
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(d) "Inventory" means all goods, supplies, wares, merchandise and other
tangible personal property, including raw materials, work in process, supplies
and components, and finished goods, whether held for sale or lease, or furnished
or to be furnished under any contract for service, or used or consumed in
business, and also including products of and accessions to inventory, packing
and shipping materials, and all documents of title, whether negotiable or
non-negotiable, representing any of the foregoing.
In addition to the foregoing, each of the above defined terms and certain other
terms set forth in paragraph 2 of this Agreement will have the meanings
attributed thereto in the applicable version of the Uniform Commercial Code
adopted in the jurisdiction where Secured Party's principal place of business is
located, as such definitions may be enlarged or expanded from time to time by
amendment or judicial decision.
4. WARRANTIES AS TO COLLATERAL: Debtor warrants that:
(a) Except for the security interest hereby granted, Debtor is, and as
to any property which at any time forms a part of the Collateral, shall be, the
owner of each and every item of the Collateral, free from any lien, security
interest or encumbrance;
(b) That Debtor has full right to grant such security interest there;
and that Debtor shall defend such Collateral and each and every part thereof
against all claims of all person at any time claiming such Collateral or
claiming any interest therein adverse to Secured Party;
(c) That as to any accounts receivable which are or become part of the
Collateral, each such account is a valid account receivable and that no such
account shall be sold, assigned, transferred, discounted, hypothecated, or
otherwise subject to any lien, encumbrance or security interest, and that
Debtors shall defend such accounts against all claims of any person whosoever.
(d) That if any of the Collateral is or will be attached to real estate
in such a manner as to become a fixture under applicable state law, that said
real estate is not encumbered in any way, or if said real estate is encumbered,
Debtor will secure from the lien holder or the party in whose favor it is or
will become so encumbered a written consent and subordination to the security
interest hereby granted or written disclaimer of any interest in the Collateral,
in such form as is acceptable to Secured Party.
(e) The financial statements of Debtor dated _______________________ and
heretofore submitted, to the Secured Party are true and correct and there are no
material adverse changes in the condition, financial or otherwise, of Debtor
since the date of said financial statements.
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95
THIS AGREEMENT IS SUBJECT TO, AND DEBTOR AGREES TO BE BOUND BY, THE
ADDITIONAL PROVISIONS SET FORTH ON THE REVERSE SIDE HEREOF, THE SAME BEING
INCORPORATED HEREIN BY REFERENCE.
SECURED PARTY: DEBTOR:
Fifth Third Bank, Kentucky, Inc. KFC National Purchasing Cooperative, Inc.
By: /s/ By: /s/
---------------------------- -------------------------------------
Its: Its:
---------------------------- -------------------------------------
5. DEBTOR'S RESPONSIBILITIES:
(a) Furnish to Secured Party in writing a current list of all Collateral
for the purpose of identifying the Collateral and, further, execute and deliver
such supplemental instruments, in the form of assignments or otherwise, as
Secured Party shall require for the purpose of confirming and perfecting Secured
Party's security interest in any or all of such Collateral;
(b) At its expense and upon request of Secured Party, furnish copies
of invoices issued by Debtor in connection with the Collateral, furnish
certificates of insurance evidencing insurance on Collateral, furnish proof of
payment of taxes and assessments on Collateral, make available to Secured Party
any and all of Debtor's books, records, written memoranda, correspondence,
purchase orders, invoices and other instruments or writings that in a way
evidence or relate to the Collateral;
(c) Keep the Collateral insured at all times against risks of loss or
damage by fire (including so-called extended coverage), theft and such other
casualties including collision in the case any motor vehicle, all in such
amounts, under such forms of policies, upon such terms, for such periods as
written by such companies or underwriters as is satisfactory to Secured Party.
In all cases losses shall be payable to Secured Party and any surpluses shall be
paid to Debtor. All policies of insurance shall provide for at least ten (10)
days prior written notice of cancellation to Secured Party. Should Debtor at any
time fail to purchase or maintain insurance, Secured Party may, but is not
obligated to, pay taxes, or pay for any expense, incident or such insurance, pay
such taxes, order and pay for such necessary items of preservation, maintenance
or protection of the Collateral, and Debtor agrees to reimburse Secured Party
for all expenses incurred under this paragraph;
(d) Pay all taxes or assessments imposed on or with respect to the
Collateral;
(e) Keep all of the Collateral in good condition and repair, protecting
it from weather and other contingencies which might adversely affect it as
secured hereunder;
(f) Notify Secured Party immediately in writing of any information which
Debtor has or may receive which might in any way adversely affect the value of
the Collateral or the rights of Secured Party with respect thereto;
(g) Notify Secured Party promptly, in writing, of any change in the
location of the Collateral or of any place of business or mailing addresses the
establishment of any new place of business or mailing address;
(h) Pay all costs of filing any financing, continuation or termination
statements with respect to the security interest created hereby;
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96
(i) Upon the occurrence of an Event of Default or breach of any
provision of this Security Agreement, pay all expenses and reasonable attorney
fees of Secured Party; and Debtor agrees that said expenses and fees shall be
secured under this Agreement;
(j) Maintain possession of all Collateral at the location disclosed to
Secured Party and not to remove the Collateral from that location;
(k) Not sell, contract to sell, lease, encumber, or otherwise transfer
the Collateral (other than sales of inventory in the ordinary course of business
until the Obligations have been paid and performed, Debtor acknowledging
nonetheless that Secured Party has a security interest in the proceeds of such
Collateral.
6. ACCOUNTS RECEIVABLE:
(a) Debtor hereby agrees that Secured Party may serve written notice on
Debtor instructing Debtor to deliver to Secured Party all subsequent payments on
accounts receivable which Debtor shall do until notified otherwise;
(b) Secured Party may notify the account debtor(s) of its security
interest and instruct such account debtor(s) to make further payments on
accounts to Secured Party instead of to Debtor; and
(c) Secured Party may serve written notice upon Debtor that all
subsequent xxxxxxxx or statements of account rendered to any account Debtor
shall bear a notion directing the account debtor(s) to make payment directly to
Secured Party. Any payment received by Secured Party pursuant to the paragraph
shall be retained in a separate non-interest bearing account as security for the
payment and performance of all Obligations of Debtor. Debtor hereby agrees that
Secured Party shall have the absolute right to take any one or all of the
actions set forth in this paragraph 6 notwithstanding the fact that all or any
part of the Obligations is not matured and Debtor is current in payment
according to the tenor of the Obligations.
7. POWER OF ATTORNEY: Debtor hereby makes, constitutes and appoints Secured
Party its true and lawful attorney in fact to act with respect to the Collateral
in any transaction, legal proceeding, or other matter in which Secured Party is
acting pursuant to this Agreement.
5
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8. DEFAULT: In the event of (herein "Events of Default"): (a) the default
in the payment or performance of the Obligations or any part thereof; (b) the
occurrence of a default or an Event of Default under any instrument or agreement
evidencing, guarantying or securing any of the Obligation; (c) the failure of
Debtor to perform or observe any of the provisions of this Agreement; (d) any
misrepresentation by Debtor or Borrower to Secure Party for the purpose of
obtaining credit or an extension of credit; (e) the issuance of a court order,
lien or attachment against the any part of the Collateral; (f) the entry of a
decree or order for relief by a court having jurisdiction in the premises in
respect of Debtor or Borrower in an involuntary or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or other similar official) of Debtor or Borrower or for
any substantial part of either of their properties, or ordering the wind-up or
liquidation of either of their affairs, or the filing and pendency for 60 days
without dismissal of a petition initiating an involuntary case under any such
bankruptcy, insolvency or other similar law; or (g) the commencement by Debtor
or Borrower of a voluntary case under any applicable bankruptcy, insolvency or
other similarly law now or hereafter in effect, or the consent by either of them
to the entry of an order for relief in an involuntary case under any such law or
to the appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar official) of Debtor or
Borrower or of any substantial part of either of their properties, or the making
by either of them of any general assignment for the benefit of creditors, or the
failure of Debtor or Borrower generally to pay either of their debts as such
debts become due, or the taking of corporate action by either Debtor or Borrower
in furtherance of any of the foregoing; (h) the death or dissolution of
Borrower, Debtor or any endorser or guarantor of the Obligations; (i) the
occurrence of any adverse change in the condition or affairs (financially or
otherwise) of Debtor, Borrower or of any endorser, guarantor or surety for any
of the Obligations, which in the opinion of Secured Party impairs Secured
Party's security or the ability of Secured Party to recover repayment or
performance of any Obligations or the Secured Party deems itself insecure; then,
in any such event, Secured Party may, without further notice to Debtor, at
Secured Party's option, declare any note and all of the Obligations to become
due and payable in its aggregate amount. Secured Party may resort to the rights
and remedies of a secured party under the Uniform Commercial Code including the
right to enter any premises of Debtor with or without legal process and take
possession of the Collateral and remove it and any records pertaining thereto
and/or remain on such premises and use it for the purpose of collecting,
preparing and disposing of the Collateral; ship, reclaim, recover, store,
finish, maintain and repair the Collateral; and sell the Collateral at public or
private sale, and Debtor will be credited with the net proceeds of such sale
only when they are actually received by Secured Party, any requirement of
reasonable notice of any disposition of the Collateral will be satisfied if such
notice is sent to Debtor 10 days prior to such disposition. Debtor will, upon
request, assemble the Collateral and any records pertaining thereto and make
them available at a place designated by Secured Party. Secured party may use, in
connection with any assembly or disposition of the Collateral, any trademark,
trade name, tradestyle, copyright, patent right, trade secret or technical
process used or utilized by Debtor. No remedy set forth herein is exclusive of
any other available remedy or remedies, but each is cumulative and in addition
to every other remedy given under this Agreement or now hereafter existing at
law or in equity or by statute. Secured Party may proceed to protect and enforce
its rights by an action at law, in equity or by any other appropriate
proceedings. No failure on the part of Secured Party to enforce any of the
rights hereunder shall be deemed a waiver of such
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rights or of any Event of Default and no waiver of any Event of Default will be
deemed to be a waiver of any subsequent Event of Default.
9. MISCELLANEOUS PROVISIONS:
(a) All rights of Secured Party shall inure to the benefit of its
successors and assigns and all obligations of Debtor shall bind the heirs,
executor, administrators, successors and assigns of Debtor.
(b) Debtor acknowledges and agrees that, in addition to the security
interests set granted herein, Secured Party has a banker's lien and common law
right of set-off in and to Debtor's deposits, accounts and credits held by
Secured Party and Secured Party may apply or set-off such deposits or other sums
against the Obligations upon the occurrence of an Event Default as set forth in
paragraph 8 of this Agreement.
(c) This Agreement contains the entire Agreement of the parties and no
oral Agreement whatsoever, whether made contemporaneously herewith or hereafter
shall amend, modify or otherwise affect the terms of this Agreement.
(d) All rights and liabilities hereunder shall be governed and limited
by and construed in accordance with the laws of the state where Secured Party
principal place of business is located; unless otherwise defined, words used
herein have the meanings given them in Article Nine of the Uniform Commercial
Code as adopted in the state where Secured Party's principal place of business
is located.
(e) Any provision herein which may prove limited or unenforceable under
any law or judicial ruling shall not affect the validity or enforceability of
the remainder of this Agreement.
(f) Debtor hereby authorizes Secured Party to file a copy of this
Agreement as a Financing Statement with appropriate county and state government
authorities necessary to perfect Secured Party's security interest in the
Collateral as set forth herein.
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99
FIRST ADDENDUM TO SECURITY AGREEMENT DATED MARCH 1, 1999,
BETWEEN KFC NATIONAL PURCHASING COOPERATIVE, INC.
D/B/A FOODSERVICE PURCHASING COOPERATIVE, INC.
AND FIFTH THIRD BANK, KENTUCKY, INC.
THIS FIRST ADDENDUM TO SECURITY AGREEMENT (the "First Addendum") is
made and entered into on this 1st day of March, 1999, by and between (i) KFC
NATIONAL PURCHASING COOPERATIVE, INC., a Delaware corporation d/b/a FoodService
Purchasing Cooperative, Inc. (the "KFC Cooperative"), and (ii) FIFTH THIRD BANK,
KENTUCKY, INC., a Kentucky banking corporation (the "Bank").
P R E L I M I N A R Y S T A T E M E N T:
A. Pursuant to that certain Loan Agreement of even date herewith, among
the KFC Cooperative, Pizza Hut National Purchasing Coop, Inc. (the "Pizza Hut
Cooperative"), Taco Xxxx National Purchasing Coop, Inc. (the "Taco Xxxx
Cooperative"), Unified FoodService Purchasing Coop, LLC ("Unified") and the Bank
(the "Loan Agreement"), the Bank has, among other things, established a
revolving line of credit in the original principal amount of Fifteen Million
Dollars ($15,000,000.00) in favor of the KFC Cooperative (the "KFC Line of
Credit").
B. The obligation of the KFC Cooperative to repay all advances under
the KFC Line of Credit together with accrued interest thereon is evidenced by
that certain Revolving Note of even date herewith, made by the KFC Cooperative,
payable to the order of the Bank, and in the face principal amount of Fifteen
Million Dollars ($15,000,000.00), as amended and supplemented pursuant to that
certain First Addendum to Revolving Note of even date herewith, between the KFC
Cooperative and the Bank (collectively, the "KFC Promissory Note").
C. Pursuant to that certain Security Agreement of even date herewith,
between the KFC Cooperative and the Bank (the "KFC Security Agreement"), the KFC
Cooperative has granted to the Bank a first priority security interest in all of
its assets to secure the payment of the KFC Promissory Note and the other
Secured Obligations, as such term is defined in the Loan Agreement, now or
hereafter owed by the KFC Cooperative to the Bank.
100
D. The KFC Cooperative and the Bank now desire to amend and supplement
the terms and provisions of the KFC Security Agreement in the manner set forth
herein.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements set forth in the Loan Agreement and in the KFC
Security Agreement, and for other good and valuable consideration, the
mutuality, receipt and sufficiency of which are hereby acknowledged, the KFC
Cooperative and the Bank hereby agree as follows:
1. Capitalized Terms. Capitalized terms used herein, unless otherwise
defined herein, shall have the meanings ascribed thereto in the KFC Security
Agreement.
2. Collateral. The term "Collateral", as defined in the KFC Security
Agreement, expressly includes all right, title and interest of the KFC
Cooperative in and to (a) that certain Loan Agreement of even date herewith,
between the KFC Cooperative and Unified (the "Unified Loan Agreement"), (b) that
certain Revolving Credit Note of even date herewith, made by Unified, payable to
the order of the KFC Cooperative, and in the face principal amount of One
Million Dollars ($1,000,000.00) (the "Unified Note"), (c) that certain Security
Agreement of even date herewith, between Unified and the KFC Cooperative (the
"Unified Security Agreement"), together with all accompanying Uniform Commercial
Code Financing Statements (the "Financing Statements"), (d) the Promissory Note
(the "Taco Xxxx Note") and the Security Agreement (the "Taco Xxxx Security
Agreement") executed by the Taco Xxxx Cooperative in favor of the KFC
Cooperative to evidence and secure the Intercompany Liability (as such term is
defined in that certain Agreement and Plan of Corporate Separation of even date
herewith, adopted by the KFC Cooperative) owed by the Taco Xxxx Cooperative to
the KFC Cooperative, and (e) the Promissory Note executed and delivered by the
Pizza Hut Cooperative in favor of the KFC Cooperative to evidence the loan in
the principal amount of Five Hundred Thousand Dollars ($500,000.00) made by the
KFC Cooperative to the Pizza Hut Cooperative (the "Pizza Hut Note"). The KFC
Cooperative hereby specifically pledges to the Bank, and hereby grants to the
Bank a first priority security interest in, (i) the Unified Loan Agreement, the
Unified Note and the Unified Security Agreement (collectively, the "Unified Loan
Documents"), (ii) the Taco Xxxx Note and the Taco Xxxx Security Agreement
(collectively, the "Taco Xxxx Documents"), and (iii) the Pizza
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Hut Note, in each case to secure the payment of the KFC Promissory Note and the
other Secured Obligations now or hereafter owed by the KFC Cooperative to the
Bank. In furtherance thereof, the KFC Cooperative hereby endorses each of the
Unified Note, the Taco Xxxx Note and the Pizza Hut Note to the order of the Bank
and hereby assigns the security interest created pursuant to each of the Unified
Security Agreement and the Taco Xxxx Security Agreement to the Bank pursuant to
duly executed Uniform Commercial Code Assignments.
3. Special Covenants. The KFC Cooperative hereby covenants and agrees
with the Bank that the KFC Cooperative will perform and observe the following
covenants with respect to the Unified Loan Documents, the Taco Xxxx Documents
and the Pizza Hut Note until the KFC Promissory Note and all other Secured
Obligations now or hereafter owed by the KFC Cooperative to the Bank have been
paid in full and the Loan Agreement has been terminated by the Bank with respect
to the KFC Cooperative:
(a) The KFC Cooperative will do all acts and execute all documents
and instruments that may be necessary or as may be reasonably requested by the
Bank to maintain, preserve and protect the Unified Loan Documents, the Taco Xxxx
Documents and the Pizza Hut Note and the Bank's first priority security interest
therein.
(b) The KFC Cooperative will use the payments of principal of and
accrued interest now or hereafter paid to the KFC Cooperative pursuant to the
Unified Note, the Taco Xxxx Note and the Pizza Hut Note to pay the principal of
and the accrued interest on the KFC Promissory Note as well as other valid
operating expenses of the KFC Cooperative.
(c) The KFC Cooperative will immediately notify the Bank in writing
of the occurrence of any default by Unified under the Unified Loan Documents
and/or the assertion by Unified of any defense to or right of offset with
respect to the obligations of Unified under the Unified Loan Documents.
(d) The KFC Cooperative will enforce the Unified Loan Documents
against Unified in accordance with their respective terms.
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(e) Unless otherwise notified in writing by the Bank, upon the
occurrence of any default by Unified under the Unified Loan Documents, the KFC
Cooperative will, as the agent of the Bank, exercise all of its rights and
remedies under the Unified Loan Documents and/or at law or in equity against
Unified.
(f) The KFC Cooperative will not agree to any amendment or
modification of any of the Unified Loan Documents without the prior written
consent of the Bank.
(g) The KFC Cooperative will not grant any extension or renewal of
the due dates of the principal of and/or accrued interest on the Unified Note
without the prior written consent of the Bank.
(h) The KFC Cooperative will not waive any of its rights and
remedies under the Unified Loan Documents and/or at law or in equity without the
prior written consent of the Bank.
(i) The KFC Cooperative will not discharge or release Unified from
any of its obligations under the Unified Loan Documents without the prior
written consent of the Bank.
(j) The KFC Cooperative will not release any of the collateral
subject to the Unified Security Agreement or terminate or subordinate to any
other security interest, lien or other encumbrance the security interest created
in favor of the KFC Cooperative pursuant to the Unified Security Agreement
without the prior written consent of the Bank.
(k) The KFC Cooperative will not subordinate the payment of the
Unified Note to any other indebtedness of Unified without the prior written
consent of the Bank.
(l) The KFC Cooperative will immediately notify the Bank in
writing of the occurrence of any default by the Taco Xxxx Cooperative under the
Taco Xxxx Documents and/or the assertion by the Taco Xxxx Cooperative of any
defense to or right of offset with respect to the obligations of the Taco Xxxx
Cooperative under the Taco Xxxx Documents.
(m) The KFC Cooperative will enforce the Taco Xxxx Documents
against the Taco Xxxx Cooperative in accordance with their respective terms.
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(n) Unless otherwise notified in writing by the Bank, upon the
occurrence of any default by the Taco Xxxx Cooperative under the Taco Xxxx
Documents, the KFC Cooperative will, as the agent of the Bank, exercise all of
its rights and remedies under the Taco Xxxx Documents and/or at law or in equity
against the Taco Xxxx Cooperative.
(o) The KFC Cooperative will not agree to any amendment or
modification of any of the Taco Xxxx Documents without the prior written consent
of the Bank.
(p) The KFC Cooperative will not grant any extension or renewal of
the due dates of the principal of and/or accrued interest on the Taco Xxxx Note
without the prior written consent of the Bank.
(q) The KFC Cooperative will not waive any of its rights and
remedies under the Taco Xxxx Documents and/or at law or in equity without the
prior written consent of the Bank.
(r) The KFC Cooperative will not discharge or release the Taco Xxxx
Cooperative from any of its obligations under the Taco Xxxx Documents without
the prior written consent of the Bank.
(s) The KFC Cooperative will not release any of the collateral
subject to the Taco Xxxx Security Agreement or terminate or subordinate to any
other security interest, lien or other encumbrance the security interest created
in favor of the KFC Cooperative pursuant to the Taco Xxxx Security Agreement
without the prior written consent of the Bank.
(t) The KFC Cooperative will not subordinate the payment of the Taco
Xxxx Note to any other indebtedness of the Taco Xxxx Cooperative without the
prior written consent of the Bank.
(u) The KFC Cooperative will immediately notify the Bank in writing
of the occurrence of any default by the Pizza Hut Cooperative under the Pizza
Hut Note and/or the assertion by the Pizza Hut Cooperative of any defense to or
right of offset with respect to the obligations of the Pizza Hut Cooperative
under the Pizza Hut Note.
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(v) The KFC Cooperative will enforce the Pizza Hut Note against the
Pizza Hut Cooperative in accordance with its terms.
(w) Unless otherwise notified in writing by the Bank, upon the
occurrence of any default by the Pizza Hut Cooperative under the Pizza Hut Note,
the KFC Cooperative will, as the agent of the Bank, exercise all of its rights
and remedies under the Pizza Hut Note and/or at law or in equity against the
Pizza Hut Cooperative.
(x) The KFC Cooperative will not agree to any amendment or
modification of the Pizza Hut Note without the prior written consent of the
Bank.
(y) The KFC Cooperative will not grant any extension or renewal of
the due dates of the principal of and/or accrued interest on the Pizza Hut Note
without the prior written consent of the Bank.
(z) The KFC Cooperative will not waive any of its rights and
remedies under the Pizza Hut Note and/or at law or in equity without the prior
written consent of the Bank.
(aa) The KFC Cooperative will not discharge or release the Pizza Hut
Cooperative from any of its obligations under the Pizza Hut Note without the
prior written consent of the Bank.
(bb) The KFC Cooperative will not subordinate the payment of the
Pizza Hut Note to any other indebtedness of the Pizza Hut Cooperative without
the prior written consent of the Bank.
4. Ratification and Reaffirmation. Except to the extent as expressly
amended or modified pursuant to this First Addendum, the KFC Cooperative hereby
ratifies and reaffirms all of its covenants, agreements, obligations,
representations and warranties set forth in the Loan Agreement and the KFC
Security Agreement.
IN WITNESS WHEREOF, the KFC Cooperative and the Bank have caused this
First Addendum to Security Agreement to be duly authorized and delivered by
their proper and duly authorized
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officers as of the day and year first above written.
KFC NATIONAL PURCHASING COOPERATIVE, INC.
D/B/A FOODSERVICE PURCHASING COOPERATIVE, INC.
By: /s/
------------------------------------------
Title:
----------------------------------------
(the "KFC Cooperative")
FIFTH THIRD BANK, KENTUCKY, INC.
By: /s/
------------------------------------------
Title:
----------------------------------------
(the "Bank")
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