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EXHIBIT 10.24
LOAN AGREEMENT
THIS LOAN AGREEMENT, made and entered into this 4th day of February,
1998, by and between TRUST ONE BANK, a Tennessee banking corporation with its
principal office at 0000 Xxxxxxxx Xxxxx, Xxxxx # 000, Xxxxxxxxxx, Xxxxxxxxx
00000 ("Lender") and BACK YARD BURGERS, INC., 0000 Xxxxxx Xxxx Xxxxx, Xxxxxxx,
Xxxxxxxxx 00000 ("Borrower").
WITNESSETH:
WHEREAS, Borrower has requested that Lender extend financial
accommodations to it in order to provide funds for the purchase of certain real
property and to make improvements thereon; and
WHEREAS, Lender has agreed to extend financial accommodations for such
purposes to borrower in the form of a $765,000.00 construction loan to be
converted to a term loan, to be made in accordance with, and subject to, the
terms and conditions set forth below;
Now, THEREFORE, in consideration of the terms and conditions contained
herein, and of any loan or other financial accommodation heretofore, now or
hereafter made by Lender to or on behalf of Borrower, the parties hereto hereby
agree as follows:
SECTION 1. CONSTRUCTION LOAN, INTEREST, AND PROCEEDS OF LOAN.
1.1 Loan. Subject to all of the terms and conditions set forth in this
Agreement and another agreement, instrument or document executed by Borrower and
delivered to Lender (the "Loan Documents"), Lender shall lend Seven Hundred
Sixty-Five Thousand Dollars ($765,000.00) (the "Construction Loan") to Borrower
for the purchase by Borrower of that certain real property (the "Property")
described in Exhibit "A" attached hereto and for Borrower to thereafter complete
the construction of a restaurant thereon (the "Improvements").
1.2 Interest. Subject to the provisions of Section 11.3 below, Borrower
shall pay to lender interest on the Note (as defined in Section 1.4 below) and
any draw note at a rate per annum equal to one percent (1%) above Lender's
floating Prime Rate. As used herein the term "Prime Rate" shall mean the
interest rate announced from time to time by Lender to be its prime rate, which
may not necessarily be its best lending rate. In the event Lender shall abolish
or abandon the practice of announcing its Prime Rate or should the same be
unascertainable, Lender shall designate a comparable referenced rate which shall
be deemed to be the Prime Rate under this Agreement and the Loan Documents. All
changes in the rate of interest due to a change in the Prime Rate shall take
effect on the same day on which the Prime Rate changes. Interest will be
calculated on a daily basis (computed on the basis of actual days elapsed over a
year of 360 days) and shall be calculated and be due and payable monthly in
arrears on the first day of each month, commencing on the st day of December,
1998.
1.3 Loan Purposes. Borrower shall use the proceeds of the Construction
Loan to purchase of the Property and make the Improvements, which use shall be a
legal and proper corporate purpose of Borrower (duly authorized by Borrower's
Board of Directors) and consistent with all applicable laws and statutes.
1.4 Construction Note and Draw Notes. The Construction Loan shall be
evidenced by a note (the "Note") in the principal sum of Seven Hundred
Sixty-Five Thousand Dollars($765,000.00). Each draw under the Note may, if
required by Lender, be evidenced by a draw note. The terms of the Note and each
draw note shall be as set forth herein.
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SECTION 2. PAYMENTS.
2.1 Payments. All Payments of Borrower to Lender shall be repayable at
Lender's address set forth above or at such other place or places as Lender may
designate from time to time.
2.2 Term. Interest only shall be due under the Note, payable monthly
until its due date, which shall be the earlier of the date of completion of the
Improvements or nine months from the date of the Note, at which time (the
"Conversion Date") all interest on the Construction Loan shall be brought
current, and provided there exists no event of default under the terms of the
Note, this Agreement or any Loan Document and interest on the Construction Loan
is current, the Construction Loan shall convert to a term loan.
2.3 Completion. As used herein the terms "completion of the
Improvements or complete the Improvements" shall mean Borrower's having received
a certification from the architect that the Improvements are complete and a
Certificate of Occupancy from Shelby County, Tennessee.
SECTION 3. OBLIGATIONS UNDER CONSTRUCTION LOAN.
3.1 Requirements. As a condition of Lender to extending credit under
the Construction Loan, Borrower agrees to execute, procure, pay for and deliver
to Lender the following:
(a) Such documents and instruments as Lender may require to evidence
the status, organization or authority of Borrower and to evidence, govern or
secure payment of the Construction Loan.
(b) Deed of Trust and Security Agreement ("Mortgage") in a form
acceptable to Lender, evidencing a first lien on the real Property described in
Exhibit "A" and all improvements now or hereafter constructed thereon, as well
as a first lien on the furniture, fixtures and equipment on the Property.
(c) Title insurance policy or binder, as required by Lender, in form
and content and issued by a company or companies acceptable to Lender, insuring
or agreeing to insure Lender in the amount of the Loan that said Mortgage and
any other lien securing the payment of the Construction Note has the dignity and
priority required by Lender. If required by Lender, such policy or binder shall
be extended to cover each and every advance at the time of making such advance.
(d) Hazard insurance policy or policies, in form and content and issued
by a company or companies and with loss payable endorsements acceptable to
Lender, insuring said improvements and all materials and supplies on the
Property against loss or damage by fire and the risks and hazards insured
against by the standard form of extended coverage, and against vandalism and
malicious mischief, and such other risks and hazards as Lender may request, in
an amount not less than the amount of the Loan.
(e) Such certificates, approvals and evidence of completion of work in
place, in whole or in part, bills and invoices as Lender may request prior to
making any disbursement hereunder.
(f) Payment and performance bonds, in form and content issued by a
company or companies acceptable to Lender, insuring the performance and payments
by the general contractor, with dual obliger riders, and in such amounts as
shall be acceptable to Lender.
(g) The items indicated below:
(1.) Original or fully executed copy of the contract for the
construction of the Improvements.
(2) Copy of the plans and specifications for the Improvements,
approved by lender.
(3) At the option of Lender, waiver of liens executed by the
contractor and/or subcontractors at each request for disbursement and at
completion of contract and notice of completion of the Improvements.
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(4) Survey of Property.
(5) Building permits.
(6) Evidence that all applicable zoning ordinances and
restrictive covenants affecting the Property permit the use for which the
improvements are intended.
(7) Certificate from an Engineer acceptable to the Lender
stating that construction has not commenced prior to recording of the Mortgage.
(8) At the option of Lender, independent AIA appraisals
sufficient to support the loan amounts acceptable to the Lender.
(h) General liability policy or policies, in form and content and
issued by a company or companies acceptable to Lender, insuring against the
negligence acts of Borrower or its agents in connection with the construction of
the Improvements, in such amounts as shall be acceptable to Lender.
(i) Workmen's compensation policy or policies, in form and content and
issued by a company or companies acceptable to Lender, insuring against injuries
incurred in connection with the construction of the Property, in such amounts as
shall be acceptable to Lender.
(j) A construction loan fee, due upon the execution of the Note, of
$3,825.00.
3.2 Funding. By Lender. Upon Borrower's compliance with the provisions
of Section 3.1 hereof, and provided that Borrower is not in default, and subject
to all other provisions of this Agreement, Lender will advance and disburse the
Construction Loan in monthly installments at the times and amounts in accordance
with Schedule "A" attached hereto. Such advances as provided by this Section 3.2
shall be in addition to any prior advance necessary to complete the purchase of
Property. However, in no event shall the total loan disbursement be greater than
$765,000.00.
3.3 Additional Funds From Borrower. Should the Lender determine that
the amount of money remaining to be disbursed under the Construction Loan is
insufficient to complete the Improvements, Borrower shall upon demand by Lender
immediately deposit with Lender such sums (which are hereinafter referred to as
"Borrower's Deposit") as Lender shall deem necessary in addition to the amount
of the Construction Loan for the completion of the Improvements and payment of
all costs in connection with the construction of such Improvements and for the
performance of any obligation of Borrower to Lender.
SECTION 4. BORROWER'S REPRESENTATIONS WITH RESPECT TO CONSTRUCTION LOAN
4.1 Warranties. Representations. Covenants and Agreements of Borrower.
(a) Prior to recordation of the Mortgage, no work of any kind
(including that of destruction or removal of any existing improvements upon the
property, the drilling of test holes, or grading) has been or will be commenced
or performed upon the Property, and no materials or equipment have been or will
be delivered to or upon the Property.
(b) Within thirty (30) days after recording of the Mortgage, Borrower
will promptly commence construction of the Improvements, and within nine (9)
months from the date hereof, will complete the same in accordance with the plans
and specifications submitted to Lender and in accordance with good building
practice and all applicable laws, ordinances, rules, regulations and
restrictions. After construction of the improvements has been commenced,
Borrower shall diligently proceed with said construction and will not permit
cessation of the work of construction for a period in excess of fifteen (15)
consecutive days without the written consent of Lender.
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(c) Without the prior written consent of Lender, Borrower will make no
change in the plans and specifications submitted to the Lender.
(d) Lender is authorized to hold, use and disburse the proceeds of the
Construction Loan and/or Borrower's Deposit to pay and provide any and all
costs, charges, expenses and deposits, whatsoever and howsoever incurred or
required, in connection with the Construction Loan, the construction and
completion of the Improvements, or in the payment or performance of any
obligation of Borrower to Lender; and at Lender's election to pay the same, or
any part thereof, to Borrower or to the contractor or any other persons
furnishing labor, supplies or services for or in connection with the
construction or completion of the Improvements, and to the holder of any lien,
charge or encumbrance on any security for the payment of the loan; and the whole
of the Construction Loan proceeds are hereby assigned, transferred and pledged
to Lender for such purposes. Lender may advance and incur such expenses as it
may deem necessary to preserve the security for the Construction Loan, which
shall be secured by said Mortgage and any other security for the Construction
Loan, and Borrower will pay the same upon demand. In the event Lender, for the
purposes specified in this subparagraph (d), shall elect to pay any of the
proceeds of the Construction Loan to parties other than Borrower, Lender may
make advances upon the Construction Loan, at any time and from time to time, to
provide funds for such purposes, irrespective of the provisions of the
applicable schedule of advances attached hereto; and the amount of advances to
which Borrower shall thereafter be entitled under this Agreement shall be
correspondingly reduced.
(e) All advances and disbursements under the Construction Loan and/or
Borrower's Deposit are subject to inspection of the improvements by Lender's
appraiser; and Lender, at its election, may require ten (10) days notice in
writing before making any advance or payment, for the purpose of making an
inspection or other determination.
(f) Borrower will accept disbursements in accordance with the
provisions hereof and, if made to Borrower, will use or cause each such
disbursement to be used solely for the payment of materials, labor, services,
costs and expenses incurred in connection with the construction of the
Improvements or for such additional costs and expenses as may be approved in
writing by Lender, and in payment or performance of any obligation of Borrower
to Lender, and for no other purpose.
(g) Borrower will permit Lender or any person designated by Lender, at
any and all times, to inspect said construction and improvements and to examine
and copy all of Borrower's books and records and all contracts and bills
pertaining to said construction and improvements .
(h) Lender has no liability or obligation whatsoever or howsoever in
connection with the construction of the Improvements or work performed thereon,
and has no obligation except to advance the Construction Loan as herein agreed,
and is not obligated to inspect the Improvements; nor is it liable for the
performance or default of any contractor or subcontractor, or for any failure to
construct, complete, protect or insure said improvements, or for the payment of
any cost or expense incurred in connection therewith, or for the performance or
nonperformance of any obligation of Borrower to Lender; and nothing, including
without limitation, any disbursement hereunder or acceptance of any document or
instrument shall be construed as a representation or warranty, express or
implied, on Lender's part.
(i) In the event of any default hereunder by Borrower, Lender may, but
shall not be obligated to, advance such of its own funds as may be necessary to
remedy such default, including the completion of the Improvements; and in such
event all such advances shall be secured by said Mortgage and any other security
for the Construction Loan and Borrower will pay same upon demand.
(j) Without the prior written consent of Lender, no materials,
equipment, fixtures or any other part of the Improvements shall be purchased or
installed under conditional sale contracts or lease agreements, or any other
arrangement wherein title to said property is retained or the right is reserved
or accrues to anyone to remove or repossess any such item or to consider same as
personal property.
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(k) Lender may, but shall not be obligated to, commence, appear in or
defend any action or proceeding purporting to affect the Property or
improvements thereon or the rights or duties of Lender or Borrower or the
payment of any funds hereunder, and in connection therewith may pay all
necessary expenses, including attorneys' fees which Borrower agrees to pay to
Lender upon demand. Borrower hereby irrevocably appoints and authorizes Lender,
as Borrower's agent, to execute, file and record any notice or any other
document which Lender deems necessary or advisable to protect its interest
hereunder or the security of the Mortgage. Lender may file and record this
Agreement.
(1) Borrower shall promptly pay or caused to be paid, when due, all
costs, charges and expenses incurred in connection with the construction and
completion of the Improvements, and shall keep the hereinabove described
Property free and clear of any and all liens other than the lien of the
Mortgage. Within seven (7) days after written demand from Lender, Borrower will
cause any lien claim filed against the Property to be released of record or, in
lieu thereof, Borrower will furnish Lender with a bond, in form and with
sureties satisfactory to Lender, indemnifying Lender against any loss, cost,
damage or expense on account of any such lien claim.
(m) Borrower will protect every part of the hereinabove described
Property, the improvements erected thereon and the materials stored thereon,
from removal, destruction and damage, and will not do or suffer to be done any
action whereby the value of any part of such Property may be lessened.
SECTION 5. FAILURE TO COMPLETE IMPROVEMENTS.
In the event that Borrower fails to complete the Improvements at the
end of nine months from the date of the execution of the Note, Lender may place
any funds due under the Note and not previously drawn by Borrower pursuant to
the Construction Loan in an escrow account with Lender to be disbursed by Lender
as and when the Improvements are completed. In such an event, the Conversion
Date shall not be extended and interest on the Note shall accrue as set forth
therein from and after the Conversion Date.
SECTION 6. TERM LOAN, INTEREST, PAYMENT
6. 1 Term Loan. Subject to all of the terms and conditions set forth in
this Agreement and the Loan Documents, Lender shall on the Conversion Date
convert the Construction Loan to a term loan in the amount of Seven Hundred
Sixty-Five Thousand Dollars & No/100 ($765,000.00) (the "Term Loan"). The Term
Loan shall be amortized over ten (10) years and be due and payable in full at
the end of five (5) years from the Conversion Date, and shall be evidenced by
the Note.
6.2 Interest on Term Loan. Subject to the provisions of Section 1 1.3
below, Borrower shall pay to Lender interest on the Term Loan at the rate of
Lender' s Prime Rate plus one percent (1%) per annum fixed as of the Conversion
Date.
6.3 Payment. All payments of Borrower to Lender under the Note after
the Conversion Date shall be repayable at Lender's address set forth above or at
such other place or places as Lender may designate from time to time. Principal
and interest shall be payable monthly, with the first payment due thirty days
from the Conversion Date, with each successive payment due on the same day of
each month thereafter until the sixtieth (60th) month, at which time the entire
remaining principal balance and all accrued interest shall be due and payable in
full.
SECTION 7. SECURITY FOR THE OBLIGATIONS.
7.1 Collateral. The Construction Loan and Term Loan (the "Obligation"
and/or "Loan(s)") shall be secured by the Mortgage (which, upon the Conversion
Date shall remain in place to secure the Term Loan).
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7.2 Inspection. Lender (by any of its officer, employees and agents)
shall have the right, at any time or times during Borrower's usual business
hours, to inspect the Property. Lender may, at any time upon and after the
occurrence of an Event of Default and during the continuance thereof, employ and
maintain on Borrower's premises custodians selected by Lender who shall have
full authority to do all acts necessary to protect Lender's interest. All
expenses incurred by Lender by reason of the employment of such custodians shall
be paid by Borrower, added to the Obligation and secured by the Mortgage.
7.3 Cross-Collateralization. The Mortgage and all other collateral
which Lender may at any time acquire from any other source in connection with
the Obligation of Borrower to Lender shall constitute cross-collateral for all
indebtedness of Borrower without apportionment or designation as to particular
indebtedness, and all indebtedness, howsoever and whensoever incurred, shall be
secured by the Mortgage.
SECTION 8. CONDITIONS OF LENDING
8.1 Conditions of Loans. The obligation of Lender to make any advance
under the Construction Loan or to convert the Construction Loan to the Term Loan
is subject to: (a) the accuracy and correctness of the representations and
warranties of Borrower contained herein and in the other Loan Documents and in
any certificate delivered pursuant to this Agreement or the Loan Documents; (b)
the performance by Borrower of its agreements contained herein and in the Loan
Documents; and (C) prior to the execution of the Note and, if required as
applicable by Lender, any draw note under the Construction Loan, the
satisfaction and continued satisfaction of each of the following conditions:
8.2 Note. The Note, in form and substance satisfactory to Lender and
its counsel, shall have been duly authorized, executed and delivered by
Borrower, shall be in full force and effect and no default shall exist
thereunder, and Lender shall have received fully executed copies thereof.
8.3 Uniform Commercial Code Financing Statements. All filings of
Uniform Commercial Code financing statements and all other filings or
recordation necessary to perfect the security interest of Lender in the
Collateral shall have been filed and confirmation thereof received in a form
acceptable to Lender that such security interest constitutes a valid and
perfected first priority security interest therein subject only to liens
excepted to by Lender.
8.4 Mortgage. The Mortgage shall have been filed and a title insurance
policy commitment shall have been issued, insuring that Lender holds an first
mortgage on the Property, and the same is unencumbered except for liens excepted
to by Lender.
8.5 Taxes. All taxes, fees and other charges in connection with the
execution, delivery, recording, filing and registration of any financing
statement, the Mortgage or any of the Loan Documents shall have been paid.
8.6 No Injunction. Etc. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any court, governmental agency or legislative body to enjoin, restrain,
or prohibit, or to obtain substantial damages in respect of, or which is related
to or arises out of this Agreement or the consummation of the transactions
contemplated hereby, or which, in Lender's sole discretion, would make it
inadvisable to consummate the transactions contemplated by this Agreement.
8.7 No Material Adverse Change. There shall not have occurred any
material adverse change in the business or financial condition of Borrower, or
any event, condition or state of facts which would be expected materially and
adversely to affect the business or financial condition of Borrower.
8.8 Availability. The amounts which Lender is willing to lend to
Borrower hereunder, in Lender's sole discretion, shall be adequate in Lender's
judgment, for the purposes referred to herein.
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8.9 Proceedings and Documents. All certificates and other instruments
and all proceedings in connection with the transactions contemplated by this
Agreement shall be satisfactory in form and substance to Lender and its counsel.
Lender shall have received copies of all other instruments and other evidence as
Lender may reasonably request, in form and substance satisfactory to Lender and
its counsel, with respect to the transactions contemplated by this Agreement and
the taking of all actions in connection therewith.
8.10 Event of Default. No Event of default, nor any event or condition
which, with notice, lapse of time or the making of any Loan, would constitute an
Event of Default, shall have occurred and be continuing.
8.11 Waiver of Conditions Precedent. If Lender makes any Loan hereunder
prior to the fulfillment of any of the conditions precedent set forth in this
Section 8, hereof, the making of such Loan shall constitute only an extension of
time for the fulfillment of such condition and not a waiver thereof, and
Borrower shall thereafter use its best efforts to fulfill each such condition
promptly.
SECTION 9. REPRESENTATIONS AND WARRANTIES.
In order to induce Lender to enter into this Agreement and to make the
Loans, Borrower to the best of its knowledge, information and belief makes the
following warranties and representations to Lender:
9.1 Litigation: Government Regulation. There are no actions, suits or
proceedings pending or, to the knowledge of Borrower, threatened against or
affecting Borrower at law or in equity before any court or administrative
officer or agency which might result in a material adverse change in the
business or financial condition of Borrower or impair Borrower's ability to
perform its obligations under the Loan Documents. Borrower is not in violation
of or in default under any applicable statute, rule, order, decree, writ,
injunction or regulation of any governmental body (including any court) where
such violation would have a materially adverse effect upon the Property,
Improvements or Borrower's business, personal property, assets, operations or
condition, financial or otherwise.
9.2 Taxes. Borrower is not delinquent in the payment of any taxes which
have been levied or assessed by any governmental authority against it or its
assets. Borrower has timely filed all tax returns which are required by law to
be filed, and has paid all taxes shown on said returns and all other assessments
or fees levied upon Borrower or upon its properties to the extent that such
taxes, assessments or fees have become due. To the knowledge of Borrower, no
material controversy in respect of income taxes is pending or threatened.
9.3 Enforceability of Loan Documents: Compliance with Other
Instruments. The documents to be executed in accordance with this Agreement and
the Loan Documents are the legal, valid and binding obligations of borrower,
enforceable against Borrower in accordance with their respective terms. Borrower
is not in default with respect to any indenture, loan agreement, mortgage,
lease, deed or similar agreement related to the borrowing of monies to which
Borrower is a party or by which it is bound.
9.4 Full Disclosure. None of the documents herein contemplated, nor any
statements furnished by or on behalf of Borrower to Lender in connection with
the 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. To the best of Borrower's knowledge, there is no fact which Borrower
has not disclosed to Lender in writing which materially affects adversely or, to
the best of Borrower's knowledge, will materially affect adversely the Property,
Improvements, other assets, business, profits or conditions (financial or
otherwise) of Borrower or the ability of Borrower to perform the Obligations.
9.5 Use of Proceeds. Borrower's use of the proceeds of any Loan made by
Lender to Borrower pursuant to this Agreement are, and continue to be, legal and
proper, and such uses are and will be consistent with all applicable laws and
statutes, as in effect from time to time.
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SECTION 10. AFFIRMATIVE COVENANTS.
Until payment in full of the Obligation of Borrower to Lender, Borrower
covenants and agrees that, unless Lender consents in writing:
10.1 Repayment of Obligation. Borrower will repay the Loans according
to the terms of this Agreement, the Note and the Loan Documents.
10.2 Performance Under Loan Documents. Borrower will perform the
obligations required to be performed by it under the terms of this Agreement and
the other Loan Documents and any other agreements now or hereafter existing or
entered into between Borrower and Lender.
10.3 Payment of Indebtedness: Performance of Other Obligations.
Borrower shall pay all indebtedness for borrowed money at maturity, all taxes,
assessments and other governmental charges which may be levied or assessed upon
Borrower, the Property or Improvements when due, and comply with all acts,
rules, regulations and orders of any legislative, administrative or judicial
body or official applicable to the Property, Improvements or any part thereof;
provided, however, that Borrower may, by appropriate proceedings in good faith
and with due diligence, contest any such taxes, assessments, governmental
charges, acts, rules, regulations, orders and directions that do not in Lender's
judgment materially adversely affect the value of the Property, Improvements or
the priority of Lender's lien on the Property and Improvements, and if requested
by Lender, shall establish reserves reasonably satisfactory to Lender. Borrower
shall also observe and remain in compliance with all laws, ordinances,
governmental rules and regulations to which it is subject.
10.4 Financial Information. Borrower will provide Lender with copies of
Borrower's quarterly reports (10Q's) filed with the Securities and Exchange
Commission within ten (10) days of any such filing. Borrower will provide Lender
with copies of borrower's annual audited financial statements prepared by
Borrower's independent certified accountants within one hundred twenty (120)
days of Borrower' s fiscal year end.
10.5 Deposit Account. Borrower shall maintain its operating accounts
with Lender.
SECTION 11. NEGATIVE COVENANTS.
Until payment in full of all Obligations of Borrower to Lender,
Borrower covenants and agrees that, unless Lender consents in writing within
thirty (30) days from the date of the request of the Borrower (if no written
response is received within thirty (30) days, the Lender does not consent to the
request), Borrower will not:
11.1 Liens and Encumbrances. Create, assume or suffer to exist any deed
of trust, mortgage, encumbrance or other lien (including a lien of attachment,
judgment or execution) or security interest (including the interest of a
conditional seller of goods), securing a charge or obligation, on the property
and any personal property located thereon, except for the Mortgage and security
interest in favor of Lender.
11.2 Disposition of Assets. Sell, lease, transfer, convey or otherwise
dispose of any of its assets or property.
11.3 Debt Service Ratio. Fail to maintain a debt service coverage ratio
of at least 2.0 to 1.0. This covenant shall be measured quarterly by dividing
net income, plus depreciation and interest by total bank and leasing debt
service requirements.
SECTION 12. TERMINATION OF AGREEMENT.
12.1 Term. Subject to Lender's right to cease making advances under the
Construction Loan or to accelerate the Note upon the occurrence of an Event of
Default or any event or condition which, with notice, lapse of time, would
constitute an Event of Default, the provisions of this Agreement shall continue
in full force and effect until five (5) years from the Conversion Date.
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12.2 Lender's Right to Terminate. Lender may terminate the financing
arrangements under this Agreement and the other Loan Documents at any time,
without demand, notice or legal process of any kind, upon the occurrence of an
Event of Default; provided, however, that Lender shall retain the right to
payment of the Loans; and provided further that all of Lender's rights and
remedies under this Agreement and the Loan Documents shall survive such
termination until the Loans have been paid in full. On or before the termination
date, Borrower shall pay the Loans to Lender in full in immediately available
funds.
12.3 Effect of Termination. Notwithstanding ally termination, until the
Obligation to Lender shall have been fully paid and satisfied, Lender shall be
entitled to retain its Mortgage; Borrower shall continue to comply fully with
the terms of this Agreement; and Lender shall retain all of its other rights and
remedies hereunder.
SECTION 13. EVENTS OF DEFAULT.
13.1 Event of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default:"
(a) Borrower fails to pay any portion of the Obligations when due and
payable or declared due and payable and failure continues for fifteen (15) days
after receipt of notice by Lender specifying such default;
(b) Failure of Borrower to complete the Improvements within nine (9)
months of the date of the Note;
(c) Failure of Borrower to repay the promissory note evidencing the
Line of Credit on a timely basis.
(d) Borrower fails or neglects to observe, perform or comply with any
other term, provision, condition, covenant, warranty or representation contained
in this Agreement, the Mortgage, the Loan Documents or in any other agreement
now existing or hereafter executed evidencing, securing or relating in any way
to the Obligations of borrower, which is required to be observed, performed or
complied with by Borrower;
(e) If any representation or warranty made in writing by or on behalf
of Borrower in this Agreement, the Mortgage, or in the Loan Documents or in any
other agreement now existing or hereafter executed between Borrower and Lender,
or in connection with the transactions contemplated hereby or thereby, shall
prove to have been false or incorrect in any material respect at the time as of
which such representation or warranty was made;
(f) The occurrence of any default or Event of Default on the part of
Borrower (including specifically, but without limitation, due to non-payment)
under the terms of any agreement, document or instrument pursuant to which
Borrower has incurred any indebtedness (other than the Obligation), which
default is not cured within the time, if any, permitted therefor in the
agreement governing such indebtedness;
(g) The filing by Borrower of any voluntary petition seeking
liquidation, reorganization, arrangement, readjustment of debts or for any other
relief under the Bankruptcy Code or under any other act or law pertaining to
insolvency or debtor relief, whether state, federal or foreign, now or hereafter
existing;
(h) The filing against Borrower of any involuntary petition seeking
liquidation, reorganization, arrangement, readjustment of debts or for any other
relief under the Bankruptcy Code or under any other act or law pertaining to
insolvency or debtor relief, whether state, federal or foreign, now or hereafter
existing, and such petition is not dismissed within thirty (30) days of the
filing thereof or within such thirty (30) day period an order for relief under
the Bankruptcy Code or any other applicable act or law shall be entered;
(i) Borrower ceases to be solvent, or Borrower ceases to conduct its
business as now conducted or is enjoined, restrained or in any way prevented by
court order from conducting all or any material part of its business affairs;
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(j) A notice of lien, levy or assessment is filed of record as to all
or any portion of Borrower's assets by the United States, or any department,
agency or instrumentality thereof, or by any state, county, municipal or other
governmental agency, or if any taxes or debts owing at any time or times
hereafter to any one of them becomes a lien or encumbrance upon the Collateral
or any other asset of Borrower and the same is not dismissed, released or
discharged within thirty (30) days after the same becomes a lien or encumbrance
or, in the case of ad valorem taxes, prior to the last day when payment may be
made without penalty; provided however, the foregoing shall not apply to any
lien, levy or assessment being contested in good faith by the borrower;
(k) The entry of a final judgment or the issuance of a warrant of
attachment (other than as a part of a permitted lien), execution or similar
process against Borrower or any of its assets in excess of $5,000.00, which
shall not be dismissed, discharged or bonded within thirty (30) days; Or
(j) If a custodian, trustee, receiver or assignee for the benefit of
creditors is appointed or takes possession of the Collateral or any of
Borrower's other assets.
13.2 Acceleration of the Obligations. Without in any way limiting the
right of Lender to demand payment of any portion of the Obligation, upon and
after an Event of Default, all of the Obligation may, at the option of Lender,
and without demand, notice or legal process of any kind, be declared, and
immediately shall become, due and payable, anything in the Note or other
contract evidencing any such Obligation or in the Loan Documents or in any other
agreement to the contrary notwithstanding.
13.3 Default Rate of Interest. Upon the occurrence and during the
continuance of an Event of Default, the Note shall continue to bear interest at
the highest rate permitted by applicable law.
SECTION 14. RIGHTS AND REMEDIES AFTER EVENT OF DEFAULT.
14.1 Rights and Remedies. Upon and after the occurrence of any Event
of Default, Lender shall have all those rights and remedies set forth in this
Agreement, the Note and the Mortgage.
14.2 Rights and Remedies Cumulative: Non-Waiver. Etc. The enumeration
of Lender's rights and remedies set forth in this Agreement is not intended to
be exhaustive and the exercise by Lender of any right or remedy shall not
preclude the exercise of any other rights or remedies, all of which shall be
cumulative, and shall be in addition to any other right or remedy given
hereunder, under the Loan Documents or under any other agreement between
Borrower or Lender or which may now or hereafter exist in law or in equity or by
suit or otherwise. No delay or failure to take action on the part of Lender in
exercising any right, power or privilege shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or privilege
preclude other or further exercise thereof or the exercise of any other right,
power or privilege or shall be construed to be a waiver of any Event of Default.
No course of dealing between Borrower and Lender or its agents or employees
shall be effective to change, modify or discharge any provision of this
Agreement or to constitute a waiver of any Event of Default. Lender shall not,
under any circumstances or in any event whatsoever, have any liability for any
error, omission or delay of any kind occurring in the foreclosure of the
Mortgage or for any damages resulting therefrom.
14.3 Set-Off. The Lender shall have a right of set-off, in the full
amount of the Borrower's Obligation to the Lender hereunder, against any
deposits, assets held by, or other amounts owed by the Lender to, or held by the
Lender for the Borrower, as well as a lien on any and all property of the
Borrower which is or may be in the Lender's possession, at any time or from time
to time, without notice to the Borrower or to any other person, any such notice
being hereby expressly waived.
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SECTION 15. PAYMENT OF EXPENSES.
Whether or not the transactions contemplated by this Agreement shall be
consummated, Borrower will:
15.1 Fees and Expenses. Pay or reimburse Lender upon demand for all
expenses (including, without limitation, reasonable attorneys' and paralegal'
expenses) incurred or paid by Lender in connection with: (a) the preparation,
execution, delivery, interpretation, modification or amendment of this
Agreement, the Note, the Mortgage or the other Loan Documents; (b) any
litigation, contest, dispute, suit, proceeding or action (whether instituted by
Lender, Borrower or any other person or entity) in any way relating to the
Property or Improvements, this Agreement or the Loan Documents, or Borrower's
affairs; (C) any attempt to enforce any rights of Lender against Borrower or any
other person or entity who may be obligated to Lender by virtue of this
Agreement or the other Loan Documents; (d) any attempt to inspect, verify,
protect, collect, sell, liquidate or otherwise dispose of the Property or
Improvements; or (f) the filing and recording of all documents required by
Lender to perfect Lender's liens in the Property and Improvements, including
without limitation, any taxes incurred because of such filing or recording.
SECTION 16. MISCELLANEOUS.
16.1 Governing Law. This Agreement has been executed, delivered and
accepted, and shall be deemed to have been made, in the State of Tennessee, and
shall be interpreted, and the rights and liabilities of the parties hereto
determined, in accordance with the internal laws (as opposed to conflicts of law
provisions) of the State of Tennessee. The Loans contemplated by this Agreement
are to be funded to Borrower and this Agreement is otherwise to be performed in
the State of Tennessee. Borrower consents to the jurisdiction and venue of the
courts sitting in Shelby County, Tennessee to hear any and all disputes arising
hereunder.
16.2 Notice. Any notices or other communication hereunder shall be in
writing and shall be made by telegram, telex or electronic transmitter or
certified or registered mail, return receipt requested, and shall be deemed
received by the addressee one (1) business day after sending, if sent by
telegram, telex or electronic transmitter, and deemed to have been validly
served, given or delivered three (3) business days after mailing, if sent by
certified or registered mail. Notices shall be addressed as provided below:
If to Borrower: Back Yard Burgers, Inc.
0000 Xxxxxx Xxxx Xxxxx
Xxxxxxx, Xxxxxxxxx 00000
If to Lender at: Trust One Bank
0000 Xxxxxxxx Xxxxx, Xxxxx # 000
Xxxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxx Xxxxxx
or to such other address as each party may designate for itself by like notice.
16.3 Waivers by Borrower. Except as otherwise provided for in this
Agreement, Borrower waives (a) presentment, demand and protest and notice of
presentment, protest, default, nonpayment, maturity and all other notices; (b)
notice prior to taking possession or control of the Property or Improvements or
any bond or security which might be required by any court prior to allowing
Lender to exercise any of Lender's remedies; and (C) the benefit of all
valuation, appraisement and exemption laws.
16.4 Lawful Charges. It being the intent of the parties that the rate
of interest and all other charges due from Borrower be lawful, if for any reason
payment of a portion of interest or charges as required by this Agreement would
exceed the limit established by applicable law, then the obligation to pay
interest or charges shall automatically be reduced to such limit and if any
amounts in excess of such limit shall have been paid, then such amounts shall be
applied to the unpaid principal amount of the Obligations of Borrower to Lender
or refunded so that under no circumstances shall interest or charges required
hereunder exceed the maximum rate allowed by law.
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16.5 Amendment. This Agreement and the other Loan Documents cannot be
amended, changed, discharged or terminated orally, but only by an instrument in
writing signed by Lender and Borrower.
16.6 Severability. To the extent any provision of this Agreement is
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
16.7 Entire Agreement. This Agreement and the other documents,
certificates and instruments referred to herein constitute the entire agreement
between the parties and supersede and rescind any prior agreements relating to
the subject matter hereof.
16.8 Binding Effect. All of the terms of this Agreement and Loan
Documents, as the same may from time to time be amended, shall be binding upon,
inure to the benefit of and be enforceable by the respective successors and
permitted assigns of Borrower and Lender.
16.9 Tense and Borrower. In this Agreement the singular shall include
the plural and vice versa. As used herein the term "Borrower" shall mean all or
any one of the borrowers, as the case may be.
16.10 Captions. The captions, section headings, and section references
to the various sections and subsections of this Agreement have been inserted for
convenience and reference only and shall not limit or affect any of the terms
hereof.
16.11 Disbursement of Loan Proceeds. Borrower hereby authorizes and
directs Lender to disburse, for and on behalf of Borrower and for Borrower's
account, the proceeds of the Loans made by Lender to Borrower pursuant to this
Agreement.
16.12 Conflict of Terms. The provisions of the Note, Mortgage and other
Loan Documents are incorporated in this Agreement by this reference thereto.
Except as otherwise provided in this Agreement and except as otherwise provided
in the Note, Mortgage or other Loan Documents, if any provision contained in
this Agreement is in conflict with, or inconsistent with, any such provision,
the provision contained in this Agreement shall control.
16.13 Injunctive Relief. Borrower recognizes that in the event any
Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy of law may prove to be inadequate
relief to Lender. Borrower therefore agrees that Lender, if Lender so requests,
shall be entitled to temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages.
16.14 General conditions. The following conditions shall be applicable
throughout the term of this Agreement:
(a) Lender has no obligation except to advance the sums upon the terms
as herein set forth, and is not obligated to inspect the Property or
Improvements; nor is it liable to protect or insure the Property or Improvements
or for the payment of any cost or expense incurred in connection therewith, or
for the performance or non- performance of any obligation of Borrower to Lender;
and nothing, including without limitation any disbursement hereunder or
acceptance of any document or instrument, shall be construed as a representation
or warranty, express or implied, on Lender's part.
(b) The relationship between Borrower and Lender is, and shall at all
times remain, solely that of borrower and lender, and Lender neither undertakes
nor assumes any responsibility or duty to Borrower to select, review, inspect,
supervise, pass judgment upon or inform Borrower of the quality, adequacy or
suitability of any of the collateral for the Loans.
13
(c) In no event shall the Lender's rights hereunder be deemed to
indicate that the Lender is in control of the business, management or properties
of the Borrower or has power over the daily management functions and operating
decisions made by the Borrower.
16.5 Line of Credit. The existing Two Hundred Fifty Thousand Dollars
($250,000.00) line of credit of Borrower with Lender shall be reduced to One
Hundred Fifty Thousand Dollars ($150,000.00) (the "Line of Credit"). The Line of
Credit shall be evidenced by a promissory note bearing interest at Lender s
prime plus one percent (1%) per annum. A certificate of deposit in the principal
sum of $50,000 shall secure the Line of Credit. The Line of Credit shall mature
February 3, 1999
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and sealed in their corporate names by their duly authorized corporate
officers as of the date first above written.
BACK YARD BURGERS, INC.
By:
Title:
By:
Title:
TRUST ONE BANK
By:
Title:
00
XXXXX XX XXXXXXXXX
XXXXXX XX XXXXXX
Xxxxxx me,______, of the state and county aforesaid, personally
appeared _______, with whom I personally acquainted, and, who, upon oath,
acknowledged himself to be _____of BACK YARD BURGERS, INC:, the within named
bargainor, a corporation, and that he as such _______,executed the foregoing
instrument for the purpose therein contained, by signing the name of the
corporation by himself as _______
WITNESS my hand and seal at office on this ____ day of February, 1998
Notary Public
My Commission Expires: 12/12/2001
STATE OF TENNESSEE
COUNTY OF SHELBY
Before me,______, of the state and county aforesaid, personally appeared
_______, with whom I personally acquainted, and, who, upon oath, acknowledged
himself to be _____of BACK YARD BURGERS, INC:, the within named bargainor, a
corporation, and that he as such _______,executed the foregoing instrument for
the purpose therein contained, by signing the name of the corporation by himself
as _______
WITNESS my hand and seal at office on this _24 day of February, 1998.
Notary Public
My Commission Expires:12/12/2001
STATE OF TENNESSEE
COUNTY OF SHELBY
Before me,______, of the state and county aforesaid, personally appeared
_______, with whom I personally acquainted, and, who, upon oath, acknowledged
himself to be _____of BACK YARD BURGERS, INC:, the within named bargainor, a
corporation, and that he as such _______,executed the foregoing instrument for
the purpose therein contained, by signing the name of the corporation by himself
as _______
WITNESS my hand and seal at office on this 4th day of February, 1998.
Notary Public
My Commission Expires:12/12/2001
SCHEDULE "A"
Progress Payment Plan Advances under this Agreement are to be made by Lender to
Borrower every thirty (30) days after commencement of work hereunder, for work
done during the preceding period or part thereof. As to all construction
advances, such applications shall be in writing, certified to by the contractor
and the Borrower, and shall contain such information as Lender may request. The
advance to which Borrower shall be entitled with respect to construction items
shall be the cost of the portions of work acceptably completed as approved by
Lender. Application for each advance shall be in form approved by Lender and
shall be filed a reasonable time before the date upon which the advance is
desired. Borrower shall only be entitled to payment in the amount approved by
Lender. Lender shall advance to Borrower out of the proceeds of the Loan,
provided the Construction Note is in an amount sufficient to cover such sums. If
requested by Lender, Borrower shall furnish proper receipts showing payment of
said items.
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EXHIBIT "A"
LEGAL DESCRIPTION
Land situated in Shelby County, Tennessee, to wit:
Commencing at a point in the west right-of-way of Germantown Parkway
(160 feet R.O.W.), said point being in the west right-of-way line of
Dexter Road Cutoff (60 feet R.O.W.); thence southwardly on a bearing of
South 03 degrees 34 minutes 24 seconds West a distance of 240.94 feet
to a point; thence westwardly on a bearing of North 86 degrees 02
minutes 14 seconds West a distance of 45.30 feet to the POINT OF
BEGINNING; thence southwardly on a bearing of South 03 degrees 57
minutes 46 seconds West a distance of 223.00 feet to a point; thence
westwardly on a bearing of North 86 degrees 02 minutes 14 seconds West
a distance of 132.50 feet to a point; thence northwardly on a bearing
of North 03 degrees 57 minutes 46 seconds East a distance of 223.00
feet to a point; thence eastwardly on a bearing of South 86 degrees 02
minutes 1-1 seconds East a distance of 132.50 feet to the POINT OF
BEGINNING and containing 29.548 square feet or 0.678 acres, more or
less.
