AMENDMENT
AMENDMENT, dated as of August 30, 1999 (this "Amendment"), among CNL
FINANCIAL V, LP, a Delaware limited partnership (the "Borrower"), CNL APF
PARTNERS, LP, a Delaware limited partnership ("APF"), [CNL AMERICAN PROPERTIES
FUND, INC., a Maryland corporation (the "Parent")], CNL FINANCIAL SERVICES, LP,
a Delaware limited partnership ("CFS"; together with APF, the Parent and the
Borrower, the "Credit Parties"), CNL FINANCIAL SERVICES, INC., a Delaware
corporation ("Old CFS"), CNL FINANCIAL CORPORATION, a Delaware corporation
("CFC") and CNL GROUP, INC. ("Group"; together with CFC and Old CFS, the
"Original Credit Parties") and PRUDENTIAL SECURITIES CREDIT CORPORATION (the
"Lender"), to the Interim Wholesale Mortgage Warehouse and Security Agreement,
dated as of September 18, 1998 (as amended, supplemented or otherwise modified
prior to the date hereof, the "Existing Loan Agreement" as modified hereby, the
"Loan Agreement"), among the Borrower, CEC, CFS, Group and the Lender.
RECITALS
The Borrower has requested the Lender to agree to amend certain
provisions of the Existing Loan Agreement as set forth in this Amendment as of
the date of the merger of CNL Financial Corporation with a subsidiary of the
parent of APF. The Lender is willing to agree to such amendments, but only on
the terms and subject to the conditions set forth in this amendment.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, including, without limitation, the assumption by the
Credit Parties of the Original Credit Parties' agreement that Prudential
Securities Incorporated shall be the lead underwriter or lead placement agent in
the next securitization of Franchise Loans by the Credit Parties, the receipt
and sufficiency of which is hereby acknowledged, the Borrower, the Credit
Parties and the Original Credit Parties and the Lender hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein, terms
defined in the Loan Agreement are used herein as therein defined.
2. Amendments.
(a) The Heading of the Existing Loan Agreement is hereby
amended by deleting clause (ii) thereof and substituting in lieu
thereof a new clause (ii) to read in its entirety as follows:
"(ii) solely for the purposes of Section 7.22 and
Section 11 (excluding Sections 11.03 and 11.15) hereof, CNL
APE Partners, LP, a Delaware limited partnership ("APF"), [CNL
American Properties Fund, Inc., a Maryland corporation (the
"Parent")] and CNL FINANCIAL SERVICES, LP, a Delaware limited
partnership and successor by merger to CNL Financial Services,
Inc. ("CFS"); and"
(b) Section 1.01 of the Existing Loan Agreement is hereby
amended by deleting the name "CFS" wherever it appears in the
definition of "Administrative Agreement" thereof and substituting in
lieu thereof the name "CNL Financial Services, Inc."
(c) Section 1.01 of the Existing Loan Agreement is hereby
amended by deleting the last sentence of the definition of "Affiliate"
thereof and substituting in lieu thereof a new sentence to read in its
entirety as follows:
"Affiliates of the Borrower shall include, without
limitation, APF and CFS."
(d) Section 1.01 of the Existing Loan Agreement is hereby
amended by deleting the definition of "Credit Party" thereof and
substituting in lieu thereof a new definition to read in its entirety
as follows:
"'Credit Party' shall mean any of the (i) Borrower,
(ii) APF, [(iii) the Parent,] (iv) CFS, [(v) each Subsidiary
of the foregoing], (vi) any Affiliate of any of the foregoing
which services or originates Franchise Loans, and (vii)
successors and assigns of each of the foregoing."
(e) Section 1.01 of the Existing Loan Agreement is hereby
amended by deleting clause (ii) of the definition of "Franchise Loan
Transfer Documents" thereof and substituting in lieu thereof a new
clause (ii) to read in its entirety as follows:
"(ii) require that such Originator, CFS and APF make
certain representations and warranties relating to such
Franchise Loans substantially comparable to those
representations and warranties made by the Borrower to the
Lender under Schedule 1 of this Agreement,"
(f) Section 1.01 of the Existing Loan Agreement is hereby
amended by deleting the definition of "Originator" thereof and
substituting in lieu thereof a new definition to read in its entirety
as follows:
"'Originator' shall mean APF and each other Credit
Party that has been approved by the Lender in writing, which
originates Franchise Loans."
(g) Section 1.01 of the Existing Loan Agreement is hereby
amended by deleting the definition of "Space Lease Franchise Loan"
thereof and substituting in lieu thereof a new definition to read in
its entirety as follows:
"'Space Lease Franchise Loan' shall mean a Franchise
Loan which is any of (a) secured by a Mortgage on or a
collateral assignment of a space lease interest in real
property relating to the operation of one or more Franchise
Units; provided that (i) the related Mortgage has been or will
be duly filed to be recorded with all appropriate governmental
authorities in all jurisdictions in which such Mortgage is
required to be filed and recorded to create a valid, binding
and enforceable collateral assignment or mortgage of the
Obligor's interest in the related Property, (ii) the owner of
the related Property has consented to such collateral
assignment or mortgage and has executed a landlord's estoppel
and consent in connection with such assignment and (iii) all
necessary subordination, attornment and non-disturbance
agreements have been obtained with respect to such property;
provided, that, in accordance with paragraph (iv) of the
definition of "Borrowing Base", certain Space Lease Franchise
Loans may fail to satisfy items (ii) and (iii) above; (b) a
Franchise Loan for which the related Franchise Units are
Burger King units subject to Burger King Corporation's
standard Intercreditor Agreement; or (c) a Franchise Loan for
which the related Franchise Units are either Taco Xxxx or KFC
units subject to Tricon Global Restaurants standard tn-party
agreement."
(h) Section 1.01 of the Existing Loan Agreement is hereby
amended by deleting the definition of "Termination Date" thereof and
substituting in lieu thereof a new definition to read in its entirety
as follows:
"'Termination Date' shall mean September 19, 2000 or
such earlier date on which this Loan Agreement shall terminate
in accordance with the provisions hereof or by operation of
law, as same may be extended in accordance with Section 2.11
hereof."
(i) Section 2.06 of the Existing Loan Agreement is hereby
amended by adding the following clause at the end of Section (a)
thereof:
"; provided, that no such prepayment or pledge of
additional Eligible Franchise Loans shall be required pursuant
to this Section 2.06(a) unless the Borrowing Base Deficiency
is greater than or equal to $250,000."
(j) Section 6.01 of the Existing Loan Agreement is hereby
amended by deleting Section (a) thereof and substituting in lieu
thereof the following new Section (a) to read in its entirety as
follows:
"(a) (i) The audited consolidated and consolidating
balance sheet of CNL Financial Services, Inc. and its
consolidated Subsidiaries as at June 30, 1999,
reported thereon by Xxxxxx Xxxxxxxx, LLP and the
audited consolidated and consolidating balance sheet
of the Parent and its consolidated Subsidiaries as at
June 30, 1999, reported thereon by
PricewaterhouseCoopers, LLP, a copy of which has
heretofore been furnished to or reviewed by the
Lender, is complete and correct and presents fairly
the consolidated financial condition of CNL Financial
Services, Inc., the Parent and their consolidated
Subsidiaries as at such dates and the consolidated
results of their operations and their consolidated
cash flows for the fiscal year then ended.
(ii) The unaudited pro forma consolidated
and consolidating balance sheet of the Parent and its
consolidated Subsidiaries as at the August __, 1999,
a copy of which has heretofore been furnished to or
reviewed by the Lender, is complete and correct and
presents fairly the consolidated financial condition
of the Parent and its consolidated Subsidiaries as of
August __, 1999 after giving effect to the
acquisition by APF of assets, liabilities and
entities relating to CNL Group, Inc. and the
corporate restructuring to be performed in connection
therewith."
(k) Section 6.01 of the Existing Loan Agreement is hereby
amended by deleting from Section (c) thereof the parenthetical that
reads "(other than CNL)".
(1) Section 6.02 of the Existing Loan Agreement is hereby
amended by deleting the date "June 30, 1997" and substituting in lieu
thereof the date "June 30, 1999".
(m) Section 7.01 of the Existing Loan Agreement is hereby
amended by deleting such Section in its entirety and substituting in
lieu thereof the following new Section 7.01 to read in its entirety as
follows:
"7.01 Financial Statements. The Credit Parties shall
deliver to the Lender:
(a) as soon as available and in any event within
forty-five (45) days after the end of each of the first three
quarterly fiscal periods of each fiscal year of the Credit
Parties, the consolidated and consolidating balance sheets of
the Credit Parties and their consolidated Subsidiaries as at
the end of such period and the related unaudited consolidated
and consolidating statements of income and of cash flows for
the Credit Parties and their consolidated Subsidiaries for
such period and the portion of the fiscal year through the end
of such period, setting forth in each case in comparative form
the figures for the previous year, accompanied by a
certificate of a Responsible Officer of such Credit Parties,
which certificate shall state that said consolidated financial
statements fairly present the consolidated and consolidating
financial condition and results of operations of the Credit
Parties and their Subsidiaries in accordance with GAAP,
consistently applied, as at the end of, and for, such period
(subject to normal year-end audit adjustments);
(b) as soon as available and in any event within
ninety (90) days after the end of each fiscal year of each
Credit Party, the audited consolidated and consolidating
balance sheets of the Credit Parties and their consolidated
Subsidiaries as at the end of such fiscal year and the related
consolidated and consolidating statements of income and
retained earnings and of cash flows for the Credit Parties and
their consolidated Subsidiaries for such year, setting forth
in each case in comparative form the figures for the previous
year, accompanied by an opinion thereon of independent
certified public accountants of recognized national standing,
which opinion shall not be qualified as to scope of audit or
going concern and shall state that said consolidated and
consolidating financial statements fairly present the
consolidated and consolidating financial condition and results
of operations of the Credit Parties and their consolidated
Subsidiaries as at the end of, and for, such fiscal year in
accordance with GAAP; and
(c) from time to time such other information
regarding the financial condition, operations, or business of
the Credit Parties and their Subsidiaries as the Lender may
reasonably request."
(n) Section 7.03 of the Existing Loan Agreement is hereby
amended by deleting the reference to "CFC" in the third line thereof
and substituting in lieu thereof "APF".
(o) Section 8 of the Existing Loan Agreement is hereby amended
by deleting Section (in) thereof and substituting in lieu thereof the
following new Section (in) to read in its entirety as follows:
"(m) Changing of Control. APF and CNL Financial GP
Holding Corp., a Delaware corporation and an Affiliate of APF,
shall cease to own collectively, directly or indirectly 100%
of the issued and outstanding partnership interests of the
Borrower without the written consent of the Lender (determined
in good faith); or"
(p) Section 11.16 of the Existing Loan Agreement is hereby
amended by deleting the last sentence thereof.
(q) Schedule 1 of the Existing Loan Agreement is hereby
amended by adding the following sentence at the end of Section (xi)
thereof:
"Notwithstanding anything to the contrary contained
herein, in the event that environmental reports were not
delivered in connection with any Franchise Loan, the
Originator shall have received a lender's environmental
indemnity insurance policy from an environmental insurer
acceptable to the Lender in respect of the related Franchise
Units."
(r) Schedule 1 of the Existing Loan Agreement is hereby
amended by adding the following sentence at the end of Section (xv)
thereof:
"Notwithstanding anything to the contrary contained
herein, any Franchise Loan for which the related Obligor is an
Obligor approved by the Lender shall be permitted to exclude
from the collateral for such Franchise Loan any equipment at
the related Franchise Units, so long as such equipment was
excluded from the valuation of such Franchise Units in the
underwriting of such Franchise Loan."
(s) Schedule 1 of the Existing Loan Agreement is hereby
amended by adding the following sentence at the end of Section (xxvii)
thereof:
"Notwithstanding anything to the contrary contained
herein, no actual survey shall be required so long as (A) the
related real property is being refinanced and is not being
newly acquired and (B) the related title insurance policy
deletes the standard survey exception."
(t) Schedule 1 of the Existing Loan Agreement is hereby
amended by adding the following new Section at the end thereof:
"(liii) In the case of any Space Lease Franchise Loan
made pursuant to clause (b) of the definition thereof, each of
the related Franchise Units shall be subject to a Burger King
Corporation standard Intercreditor Agreement which shall be in
full force and effect."
(u) Schedule 4 of the Existing Loan Agreement is hereby
deleted and the new Schedule 4 attached hereto is substituted in lieu
therof.
3. Release of Certain Original Credit Parties: Assumption by
APF. From and after the Amendment Effective Date (as hereinafter defined), CNL
Group, Inc. and CNL Financial Corporation shall be released of all rights,
duties and obligations under the Loan Agreement and the other Loan Documents and
APF shall succeed to and assume all such rights, duties and obligations. CNL
Financial Corporation shall be dissolved substantially concurrently with the
Amendment Effective Date.
4. Effectiveness. This Amendment shall become effective on the
date upon which the following conditions precedent have been satisfied (the
"Amendment Effective Date"):
(a) the receipt by the Lender of this Amendment, duly executed
and delivered by the Credit Parties and the Lender;
(b) the receipt by the Lender of an amended and restated
Franchise Loan Purchase Agreement, giving effect to the change in
Credit Parties contemplated hereby and otherwise in form and substance
acceptable to the Lender;
(c) the receipt by the Lender of an amended and restated
Interim Servicing Agreement, giving effect to the change in Credit
Parties contemplated hereby and otherwise in form and substance
acceptable to the Lender;
(d) the merger of CNL Financial Corporation with a subsidiary
of APF and the merger of Old CFS into CFS shall have been consummated
in accordance with the descriptions of such mergers delivered to the
Lender; and
(e) any other conditions precedent reasonably requested by the
Lender.
5. Representations and Warranties. To induce the Lender to
enter into this Amendment, the Borrower hereby represents and warrants to the
Lender and the Lenders that after giving effect to the amendments provided for
herein, the representations and warranties contained in the Loan Agreement and
the other Loan Documents will be true and correct in all material respects as if
made on and as of the date hereof and that no Default or Event of Default will
have occurred and be continuing.
6. No Other Amendments. Except as expressly amended hereby,
the Loan Agreement, the Note and the other Loan Documents shall remain in full
force and effect in accordance with their respective terms, without any waiver,
amendment or modification of any provision thereof.
7. Counterparts. This Amendment may be executed by one or more
of the parties hereto on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
8. Expenses. The Credit Parties jointly and severally agree to
pay and reimburse the Lender for all of the reasonable out-of-pocket costs and
expenses incurred by the Lender in connection with the preparation, execution
and delivery of this Amendment, including, without limitation, the reasonable
fees and disbursements of Cadwalader, Xxxxxxxxxx & Xxxx, counsel to the Lender.
9. Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered as of the day and year first above
written.
CNL FINANCIAL V, LP,
By: CNL FINANCIAL V. INC.
its general partner
By:___________________
Name: Xxxxx X. Xxxxx
Title: Executive Vice President
CNL APF PARTNERS, LP
By: CNL APF GP CORP.
its general partner
By:___________________
Name: Xxxxxx X. Xxxxxxxxxxx
Title: Chief Financial Officer
CNL AMERICAN PROPERTIES FUND, INC.,
By:___________________
Name: Xxxxxx X. Xxxxxxxxxxx
Title: Chief Financial Officer
CNL FINANCIAL SERVICES, LP
By: CFS GP CORP.
its general partner
By:__________________________
Name: Xxxxx X. Xxxxx
Title: Executive Vice President
CNL FINANCIAL SERVICES, INC.
By:__________________________
Name: Xxxxx X. Xxxxx
Title: Executive Vice President
CNL FINANCIAL CORPORATION
By:__________________________
Name: Xxxxx X. Xxxxx
Title: Executive Vice President
CNL GROUP, INC.
By:_________________________
Name: Xxxxxx X. XxXxxxxxxx
Title: Executive Vice President
The Amendment, dated as of August 30, 1999, among CNL FINANCIAL V, LP, a
Delaware limited partnership. CNL APF PARTNERS, LP, a Delaware limited
partnership. CNL AMERICAN PROPERTIES FUND. INC., a Maryland corporation, CNL
FINANCIAL SERVICES, LP, a Delaware 1imited partnership, CNL FINANCIAL SERVICES,
INC., a Delaware corporation, CNL FINANCIAL CORPORATION, a Delaware corporation,
and CNL GROUP, INC. and PRUDENTIAL SECURITIES CREDIT CORPORATION to the Interim
Wholesale Mortgage Warehouse and Security Agreement, dared as of September 18,
1998 is hereby acknowledged and consented to:
PRUDENTIAL GLOBAL FUNDING, INC.
By:_____________________________
Name: Xxxxx Xxxxxx
Title: Vice President
INTERIM WHOLESALE MORTGAGE WAREHOUSE
AND SECURITY AGREEMENT
DATED AS OF SEPTEMBER 18, 1998
by and among
CNL FINANCIAL V, LP
as Borrower,
CNL FINANCIAL CORPORATION,
CNL FINANCIAL SERVICES, INC., and
CNL GROUP, INC.
as Credit Parties,
and
PRUDENTIAL SECURITIES CREDIT CORPORATION
as Lender
TABLE OF CONTENTS
1. Interim Wholesale Mortgage Warehouse and Security Agreement
2. Note
3. Custodial Agreement
4. Blocked Account Agreement
5. Servicing Agreement
6. Franchise Loan Purchase Agreement
7. Administration Agreement
8. UCC-l Financing Statement
9. Closing Certificate of CNL Financial V, LP
10. Closing Certificate of CNL Financial LP Holding Corp.
11. Closing Certificate of CNL Financial Services, Inc.
12. Closing Certificate of CNL Financial Corporation
13. Closing Certificate of CNL Group, Inc.
14. Corporate Legal Opinion of Lowndes, Drosdick, Doster, Xxxxxx & Xxxx,
P.A.
15. True Sa1e/Non-Consolidation Legal Opinion of Lowndes, Drosdick, Doster,
Xxxxxx & Xxxx, P.A.
16. Insurance Certificates
17. Certificates of Out-of-State Delivery
INTERIM WHOLESALE MORTGAGE WAREHOUSE AND SECURITY AGREEMENT
Dated as of September 18, 1998
CNL FINANCIAL V, LP
as Borrower
and
CNL FINANCIAL CORPORATION
CNL FINANCIAL SERVICES, INC.
CNL GROUP, INC.
as Credit Parties
and
PRUDENTIAL SECURITIES CREDIT CORPORATION
as Lender
TABLE OF CONTENTS
RECITALS 1
SECTION 1 Definitions and Accounting Matters 1
1.01 Certain Defined Terms 1
1.02 Accounting Terms and Determinations 14
SECTION 2 Advances, Note and Prepayments 14
2.01 Advances 14
2.02 Note 14
2.03 Procedure for Borrowing 15
2.04 Repayment of Advances; Interest 16
2.05 Limitation on Advances; Illegality 16
2.06 Determination of Borrowing Base; Mandatory Prepayments or Pledge 17
2.07 Optional Prepayments 17
2.08 Requirements of Law 18
2.09 Purpose of Advances 19
2.10 Taxes 19
2.11 Extension of Termination Date 20
2.12 Commitment Fee 20
SECTION 3 Payments; Computations; Etc 20
3.01 Payments 20
3.02 Computations 20
3.03 Blocked Account 21
SECTION 4 Collateral Security 21
4.01 Collateral; Security Interest 21
4.02 Further Documentation 22
4.03 Changes in Locations, Name, etc 23
4.04 Lender's Appointment as Attorney-in-Fact 23
4.05 Performance by Lender of Borrower's Obligations 24
4.06 Proceeds 24
4.07 Remedies 25
4.08 Limitation on Duties Regarding Presentation of Collateral 25
4.09 Powers Coupled with an Interest 26
4.10 Release of Security Interest 26
SECTION 5 Conditions Precedent 26
5.01 Initial Advance 26
5.02 Initial and Subsequent Advances 28
SECTION 6 Representations and Warranties 30
6.01 Financial Condition 30
6.02 No Change 30
6.03 Existence; Compliance with Law 30
6.04 Corporate Power; Authorization Enforceable Obligations 31
6.05 No Legal Bar 31
6.06 No Material Litigation 31
6.07 No Default 31
6.08 Collateral; Collateral Security 31
6.09 Chief Executive Office 32
6.10 Location of Books and Records 32
6.11 No Burdensome Restrictions 32
6.12 Taxes 32
6.13 Margin Regulations 32
6.14 Investment Company Act; Other Regulations 32
6.15 Subsidiaries 33
6.16 Origination and Acquisition of Franchise Loans 33
6.17 No Adverse Selection 33
6.18 Borrower Solvent; Fraudulent Conveyance 33
6.19 ERISA 33
6.20 True and Complete Disclosure 33
6.21 Licenses 34
6.22 True Sales 34
6.23 Lines of Business 35
6.24 Year 2000 35
SECTION 7 Covenants of the Borrower 35
7.01 Financial Statements 35
7.02 Existence, Etc 36
7.03 Maintenance of Property; Insurance 36
7.04 Notices 36
7.05 Other Information 37
7.06 Further Identification of Collateral 37
7.07 Franchise Loan Determined to be Defective 37
7.08 Reports 38
7.09 Borrowing Base Deficiency 38
7.10 Prohibition of Fundamental Changes 38
7.11 Limitation on Liens on Collateral 38
7.12 Limitation on Sale or Other Disposition of Collateral 38
7.13 Limitation on Transactions with Affiliates 38
7.14 Underwriting Guidelines 39
7.15 Limitations on Modifications, Waivers and Extensions of Franchise Loans 39
7.16 Servicing
7.17 Limitation on Distributions 39
7.18 Use of Proceeds 39
7.19 Selection of Collateral 39
7.20 Interest Rate Protection Agreements 40
7.21 Lines of Business 40
7.22 Securitization of Franchise Loans 40
7.23 Year 2000 Procedures 41
SECTION 8 Events of Default 41
SECTION 9 Remedies Upon Default 44
SECTION 10 No Duty of Lender 44
SECTION 11 Miscellaneous
11.01 Waiver 45
11.02 Notices 45
11.03 Indemnification and Expenses 45
11.04 Amendments 46
11.05 Successors and Assigns 46
11.06 Survival 46
11.07 Captions 46
11.08 Counterparts 46
11.09 Governing Law; etc 46
11.10 Submission to Jurisdiction; Waivers 47
11.11 Waiver of Jury Trial 47
11.12 Acknowledgments 48
11.13 Hypothecation and Pledge of Collateral 48
11.14 Assignments Participations 48
11.15 Servicing 48
11.16 Periodic Due Diligence Review 49
11.17 Set-Off 50
11.18 Confidentiality 50
11.19 No Proceedings 50
SCHEDULES
SCHEDULE 1 Representations and Warranties re: Franchise Loans
SCHEDULE 2 Filing Jurisdictions and Offices
SCHEDULE 3 Subsidiaries
SCHEDULE 4 Franchise Concepts
EXHIBITS
EXHIBIT A Form of Note
EXHIBIT B Form of Custodial Agreement
EXHIBIT C Form of Opinion of Counsel to Borrower
EXHIBIT D Form of Notice of Borrowing and Pledge
EXHIBIT E Underwriting Guidelines
EXHIBIT F Form of Blocked Account Agreement
EXHIBIT G Eligibility Violation Notice
EXHIBIT H Form of Confidentiality Agreement
INTERIM WHOLESALE MORTGAGE WAREHOUSE AND SECURITY
AGREEMENT
INTERIM WHOLESALE MORTGAGE WAREHOUSE AND SECURITY AGREEMENT, dated as
of September 18, 1998, among
(i) CNL FINANCIAL V, LP, a Delaware limited partnership (the
"Borrower"); and
(ii) solely for purposes of Section 7.22 and Section 11
(excluding Sections 11.03 and 11.15) hereof, CNL Financial Corporation
("CFC"), CNL Financial Services, Inc. ("CFS") and CNL Group, Inc.
("CNL"), each a Florida corporation; and
(iii) PRUDENTIAL SECURITIES CREDIT CORPORATION, a Delaware
corporation (the "Lender").
RECITALS
The Borrower wishes to obtain financing from time to time to
provide interim funding for the origination and acquisition of certain Franchise
Loans some of which Franchise Loans are to be sold or contributed by the
Borrower to one or more trusts or other entities to be sponsored by the Borrower
or an Affiliate (as defined herein) thereof, or to third-parties with the
consent of the Lender, and which Franchise Loans shall secure Advances (as
defined herein) to be made by the Lender hereunder.
The Lender has agreed, subject to the terms and conditions of
this Loan Agreement (as defined herein), in consideration of an agreement by the
Borrower to make PSI (as defined herein) the underwriter or placement agent in
connection with certain securitizations, to provide such financing to the
Borrower, with a portion of the proceeds of the sale of all asset-backed
securities issued by any such trust or other entity, together with a portion of
the proceeds of any permitted whole loan sales, together with other funds and
Franchise Loans of the Borrower, if necessary, being used to repay any Advances
made hereunder and any Interest Rate Protection Agreements as more particularly
described herein.
Accordingly, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:
SECTION 1 Definitions and Accounting Matters.
1.01 Certain Defined Terms. As used herein, the following
terms shall have the following meanings (all terms defined in this Section 1.01
or in other provisions of this Loan Agreement in the singular to have the same
meanings when used in the plural and vice versa):
"Accepted Servicing Practices" shall have the meaning assigned
thereto in Section 11.15(a) hereof.
"Acquisition Loan" shall mean a Franchise Loan, the proceeds
of which are used to acquire additional Franchise Units.
"Administration Agreement" shall mean the Administration
Agreement as dated as of September 18, 1998, between the Borrower and CFS
providing for certain services to be performed by CFS for the Borrower, as it
may be amended, supplemented or otherwise modified from time to time with the
prior written consent of the Lender.
"Advance" shall have the meaning assigned to such term in
Section 2.01 hereof.
"Affiliate" means, with respect to any Person, any other
Person which, directly or indirectly, controls, is controlled by, or is under
common control with, such Person. For purposes of this definition, "control"
(together with the correlative meanings of "controlled by" and "undercommon
control with") means possession, directly or indirectly, of the power (a) to
vote 10% or more of the securities (on a fully diluted basis) having ordinary
voting power for the directors or managing general partners (or their
equivalent) of such Person, or (b) to direct or cause the direction of the
management or policies of such Person, whether through the ownership of voting
securities, by contract, or otherwise. Affiliates of the Borrower shall include,
without limitation, CFC, CFS and CNL.
"Applicable Collateral Percentage" shall mean:
(a) for each Franchise Loan, from time to time, the following:
----------------------------------------------- ---------------------------------------------
Principal Amount of Advances Outstanding Applicable Collateral
Percentage
----------------------------------------------- ---------------------------------------------
----------------------------------------------- ---------------------------------------------
$0 to $50 million 90%
----------------------------------------------- ---------------------------------------------
----------------------------------------------- ---------------------------------------------
Greater than $50 million, but less than $100
million 95%
----------------------------------------------- ---------------------------------------------
----------------------------------------------- ---------------------------------------------
Greater than $100 million, but less than $200
million 96%
----------------------------------------------- ---------------------------------------------
----------------------------------------------- ---------------------------------------------
Greater than $200 million 97%
----------------------------------------------- ---------------------------------------------
(b) for each Franchise Loan which is a Delinquent Franchise
Loan, from time to time, the following:
----------------------------------------------- ---------------------------------------------
Applicable Collateral
Days Delinquent Percentage
----------------------------------------------- ---------------------------------------------
----------------------------------------------- ---------------------------------------------
61 to 90 days 85%
----------------------------------------------- ---------------------------------------------
----------------------------------------------- ---------------------------------------------
91 to 120 days 75%
----------------------------------------------- ---------------------------------------------
----------------------------------------------- ---------------------------------------------
121 to 150 days 65%
----------------------------------------------- ---------------------------------------------
----------------------------------------------- ---------------------------------------------
151 to 180 days 50%
----------------------------------------------- ---------------------------------------------
"Applicable Margin" shall mean, for each Advance, .95%.
"Appraised Value" shall mean the value set forth in a
valuation performed by a valuation consultant in connection with the origination
of the related Franchise Loan as the value of the related Franchise Units
(determined on a going concern basis), such valuation shall be in form and
substance satisfactory to the Lender and performed by a valuation consultant
satisfactory to the Lender.
"Approved Hedge Counterparty" shall mean (i) Prudential Global
Funding and (ii) any other Hedge Counterparty mutually agreeable to the Lender
and the Borrower (to be negotiated in good faith).
"Asset-Backed Securities" or "ABS" shall mean securities
issued pursuant to a securitization of Franchise Loans.
"Bankruptcy Code" shall mean the United States Bankruptcy Code
of 1978, as amended from time to time.
"Basic Documents" shall mean, collectively, the Loan
Documents, the Administration Agreement, the Franchise Loan Purchase Agreement
and the Servicing Agreement.
"Blocked Account" shall mean any bank account subject to a
Blocked Account Agreement.
"Blocked Account Agreement" shall mean the agreement between
the Servicer and the Lender substantially in the form of Exhibit F, attached
hereto.
"Borrower" shall have the meaning provided in the heading
hereof.
"Borrowing Base" shall mean the aggregate Collateral Value of
all Eligible Franchise Loans, provided that:
(i) no more than $45,000,000 of the aggregate Collateral Value
included in the Borrowing Base may consist of Franchise Loans relating to a
single Obligor;
(ii) no more than $100,000,000 of the aggregate Collateral
Value included in the Borrowing Base may consist of Franchise Loans relating to
any four Obligors;
(iii) the aggregate Collateral Value of Ground Lease Franchise
Loans included in the Borrowing Base may not exceed 80% of the Maximum Committed
Credit;
(iv) the aggregate Collateral Value of Space Lease Franchise
Loans included in the Borrowing Base may not exceed 60% of the Maximum Committed
Credit; provided, that the aggregate Collateral Value of Space Lease Franchise
Loans included in the Borrowing Base which are missing an executed landlord
estoppel or executed subordination, non-disturbance and attornment agreement may
not exceed 10% of such Space Lease Franchise Loans;
(v) the aggregate Collateral Value of Equipment Franchise
Loans included in the Borrowing Base may not exceed 25% of the Maximum Committed
Credit;
(vi) the aggregate Collateral Value of Construction Franchise
Loans included in the Borrowing Base may not exceed 15% of the Maximum Committed
Credit;
(vii) the aggregate Collateral Value of Tier II Franchise
Loans included in the Borrowing Base may not exceed 55% of the Maximum Committed
Credit;
(viii) the aggregate Collateral Value of Tier III Franchise
Loans included in the Borrowing Base may not exceed 40% of the Maximum Committed
Credit;
(ix) the aggregate Collateral Value of Tier IV Franchise Loans
included in the Borrowing Base may not exceed 30% of the Maximum Committed
Credit;
(x) the aggregate Collateral Value of Franchise Loans included
in the Borrowing Base which relate to Franchise Units located in any one state
may not exceed 25% of the Maximum Committed Credit;
(xi) the aggregate Collateral Value of Acquisition Loans
included in the Borrowing Base may not exceed 65% of the Maximum Committed
Credit;
(xii) the aggregate Collateral Value of Franchise Loans
included in the Borrowing Base which relate to Franchise Units located outside
of the United States may not exceed 15% of the Maximum Committed Credit;
provided, that only Franchise Loans relating to Franchise Units located in
Canada may be permitted to be included in the Borrowing Base unless otherwise
consented to by the Lender, in its sole discretion; provided, further, that any
such Franchise Loan shall have Franchise Loan Documents which are acceptable to
the Lender and shall adequately hedge currency rate exposure to the satisfaction
of the Lender; and
(xiii) the Collateral Value shall be zero for each Eligible
Franchise Loan:
(A) in respect of which each of the Critical
Eligibility Criteria has not been met;
(B) which is a Delinquent Franchise Loan in respect
of which there is a delinquency in the payment of principal
and/or interest which continues for a period in excess of 180
days (without regard to any applicable grace periods);
(C) which has been released from the possession of
the Custodian under the Custodial Agreement to any Person
other than the Lender or its bailee for a period in excess of
ten (10) days; or
(D) for which the Custodian has not received the
Final Documentation within five (5) Business Days following
the related Funding Date (or such longer period as consented
to by the Lender).
"Borrowing Base Deficiency" shall have the meaning provided in
Section 2.06 hereof.
"Business Day" shall mean any day other than (i) a Saturday or
Sunday or (ii) a day on which the New York Stock Exchange, the Federal Reserve
Bank of New York or the Custodian is authorized or obligated by law or executive
order to be closed.
"Casual Dining Franchise" shall mean any Franchise designated
as a casual dining franchise on Schedule 4 hereto.
"Code" shall mean the Internal Revenue Code of 1986. as
amended from time to time.
"Collateral" shall have the meaning provided in Section
4.01(b) hereof.
"Collateral Value" shall mean, with respect to each Eligible
Franchise Loan, the Applicable Collateral Percentage times the Market Value of
such Franchise Loan; provided, that in the case of a Franchise Loan for which
the Borrower has received Payoff Proceeds, until such time that the related
Advance is prepaid, the Collateral Value of such Franchise Loan shall be the
amount of Payoff Proceeds being held in the Blocked Account.
"Collection Account" shall mean one or more accounts
established by the Servicer subject to a security interest in favor of the
Lender and to the Blocked Account Agreement, into which all Collections shall be
deposited by the Servicer.
"Collections" shall mean, collectively, all collections,
payments and recoveries on or in respect of the Franchise Loans, the Interest
Rate Protection Agreements, the Franchise Loan Transfer Documents and the other
Collateral (without limitation insurance proceeds. proceeds of the disposition
of assets securing or otherwise subject to the Franchise Loans), and recoveries
against the Credit Parties in respect of claims under the Franchise Loan
Transfer Documents, and all proceeds of the foregoing.
"Commonly Controlled Entity" shall mean an entity, whether or
not incorporated, which is under common control with the Borrower within the
meaning of Section 4001 of ERISA or is part of a group which includes the
Borrower and which is treated as a single employer under Section 414 of the
Code.
"Confidentiality Agreement" shall mean a confidentiality
agreement, substantially in the form of Exhibit H hereto.
"Construction Franchise Loan" shall mean a Franchise Loan
secured by an interest in property relating to one or more Franchise Units which
is being constructed or developed with the proceeds of the Franchise Loan.
"Contractual Obligation" shall mean as to any Person, any
provision of any agreement, instrument or other undertaking to which such Person
is a party or by which it or any of its property is bound or any provision of
any security issued by such Person.
"Credit Party" shall mean any of the (i) Borrower, (ii) CFC,
(iii) CFS, (iv) each Subsidiary of the foregoing, (v) CNL, (vi) any Affiliate of
any of the foregoing which services or originates Franchise Loans, and (vii)
successors and assigns of each of the foregoing.
"Critical Eligibility Criteria" shall mean the eligibility
criteria set forth in any of paragraphs (xiii), (xv), (xvii), (xix), (xxi),
(xxii), (xxvii), (xxviii), (xxxi), (xxxv), (xxxvi), (xli), (xlii), (xliii),
(xliv)(A), (xliv)(B), (xliv)(E), (xlv), (xlvi) or (xlvii) of Schedule 1 hereto.
"Custodial Agreement" shall mean the Custodial Agreement,
dated as of the date hereof, among the Borrower, the Custodian and the Lender,
substantially in the form of Exhibit B hereto, as the same shall be modified and
supplemented and in effect from time to time.
"Custodian" shall mean Norwest Bank Minnesota, National
Association, as custodian under the Custodial Agreement. and its successors and
permitted assigns thereunder.
"Default" shall mean an Event of Default or an event that with
notice or lapse of time or both would become an Event of Default.
"Delinquent Franchise Loan" shall mean a Franchise Loan for
which the related Obligor is delinquent in the regularly scheduled payments of
principal and/or interest (without giving effect to any applicable grace
periods).
"Dollars" and "$" shall mean lawful money of the United States
of America.
"Due Diligence Review" shall mean the performance by the
Lender of any or all of the reviews permitted under Section 11.16 hereof with
respect to any or all of the Franchise Loans, as desired by the Lender from time
to time.
"Effective Date" shall mean the date upon which the conditions
precedent set forth in Section 5.01 shall have been satisfied.
"Eligibility Violation Notice" shall mean a written report
detailing any violations of the eligibility criteria listed on Schedule 1
hereto, substantially in the form of Exhibit G hereto.
"Eligible Franchise Loan" shall mean a Franchise Loan which
satisfies the eligibility characteristics set forth on Schedule 1 hereto on and
as of the applicable Funding Date, and continues to satisfy the Critical
Eligibility Criteria at all times thereafter while such Franchise Loan is
included in the Borrowing Base.
"Equipment Franchise Loan" shall mean a Franchise Loan secured
exclusively by an interest in equipment relating to the operation of one or more
Franchise Units.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"ERISA Affiliate" shall mean any corporation or trade or
business that is a member of any group of organizations (i) described in Section
4 14(b) or (c) of the Code of which the Borrower is a member and (ii) solely for
purposes of potential liability under Section 302(c)(11) of ERISA and Section
412(c)(11) of the Code and the lien created under Section 302(1) of ERISA and
Section 4 12(n) of the Code, described in Section 4 14(m) or (o) of the Code of
which the Borrower is a member.
"Event of Default" shall have the meaning provided in Section
8 hereof.
"Facility Delinquency Rate" shall mean, at any time, the
aggregate principal amount of Delinquent Franchise Loans which are greater than
thirty (30) days delinquent included in the Borrowing Base as a percentage of
the Maximum Committed Credit.
"Fee Franchise Loan" shall mean a Franchise Loan secured by a
Mortgage on a fee interest in real property relating to the operation of one or
more Franchise Units.
"Final Documentation" shall have the meaning assigned thereto
in the Custodial Agreement.
"Franchise" shall mean each Tier I Franchise, Tier II
Franchise, Tier Ill Franchise and Tier IV Franchise.
"Franchise Loan" shall mean a performing restaurant franchise
loan relating to one or more Franchise Units which are originated by an
Affiliate of the Borrower and purchased by the Borrower with the intention to
securitize them in an asset-backed securities offering, and which Franchise Loan
includes, without limitation (i) a Promissory Note and related Mortgage and/or
Franchise Loan Security Agreement and (ii) all right, title and interest of the
Borrower in and to the Secured Property covered by such Mortgage and/or
Franchise Loan Security Agreement. The Obligor of such Franchise Loan may be the
Franchisor.
"Franchise Loan Documents" shall mean, with respect to any
Franchise Loan, (i) the documents comprising the Franchise Loan File for such
Franchise Loan (regardless of whether such document has been delivered to the
Custodian under the Custodial Agreement), (ii) all Servicing Records, servicing
agreements (including without limitation the Servicing Agreement), servicing
rights, pledge agreements (including without limitation the Servicing
Agreement), and any other collateral pledged or otherwise relating to such
Franchise Loan, and (iii) all files, documents, instruments, surveys,
certificates, correspondence, appraisals, computer programs, computer storage
media, accounting records and other books and records relating thereto.
"Franchise Loan File" shall have the meaning assigned thereto
in the Custodial Agreement, it being understood that for purposes of determining
whether the portion of the Franchise Loan File held by the Custodian and
relating to any Franchise Loan is complete, the Final Documentation related to
such Franchise Loan shall not be required to be delivered to the Custodian until
five Business Days after the related Funding Date for such Franchise Loan, or
such longer or shorter period as agreed to by the Borrower and the Lender from
time to time.
"Franchise Loan Interest Rate" shall mean the annual rate of
interest borne on a Promissory Note, which shall be adjusted from time to time
with respect to adjustable rate Franchise Loans.
"Franchise Loan Purchase Agreement" shall mean the Franchise
Loan Purchase Agreement, dated as of September 18. 1998, between the Originators
and the Borrower, pursuant to which the Originators transfer the Franchise Loans
to the Borrower from time to time, as amended, supplemented or otherwise
modified from time to time with the prior written consent of the Lender.
"Franchise Loan Schedule" shall have the meaning assigned
thereto in the Custodial Agreement.
"Franchise Loan Schedule and Exception Report" shall mean the
Franchise Loan Schedule and Exception Report prepared by the Custodian pursuant
to the Custodial Agreement.
"Franchise Loan Security Agreement" shall mean the security
agreement or similar document evidencing the security interest of the Borrower
in the assets of the Obligor pursuant to a Franchise Loan, which security
agreement may be contained within a Mortgage.
"Franchise Loan Tape" shall mean a computer-readable magnetic
tape ,containing the information with respect to each Franchise Loan, to be
delivered by the Borrower to the Lender pursuant to the Franchise Loan Schedule.
"Franchise Loan Transfer Documents" shall mean the Franchise
Loan Purchase Agreement and any other agreements by which an Originator shall
sell or contribute Franchise Loans to the Borrower; provided, that such
agreements shall be in form and substance satisfactory to the Lender. Such
agreements shall (i) contain provisions reasonably intended to effect a "true
sale" or "true contribution" of such Franchise Loans to the Borrower, (ii)
require that such Originator, CFS, CFC and CNL make certain representations and
warranties relating to such Franchise Loans substantially comparable to those
representations and warranties made by the Borrower to the Lender under Schedule
1 of this Agreement, and (iii) be accompanied by such supporting documentation
with respect to such sale or contribution (including without limitation opinions
of counsel, evidence of lien filings and lien searches) as the Lender shall
reasonably require.
"Franchise Unit" shall mean the individual business location
on which a business relating to a Franchise is operated.
"Funding Date" shall mean the date on which an Advance is made
hereunder.
"Funding Date Documentation" shall have the meaning assigned
to such term in the Custodial Agreement.
"GAAP" shall mean generally accepted accounting principles as
in effect from time to time in the United States of America.
"Governmental Authority" shall mean any nation or governments
any state or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and any court or arbitrator having jurisdiction over
the Borrower, any of its Subsidiaries or any of its properties.
"Ground Lease Franchise Loan" shall mean a Franchise Loan
secured by a Mortgage on a ground lease interest in real property relating to
the operation of one or more Franchise Units.
"Guarantee Obligation" shall mean, as to any Person, any
obligation of such Person directly or indirectly guaranteeing any Indebtedness
of any other Person or in any manner providing for the payment of any
Indebtedness of any other Person or otherwise protecting the holder of such
Indebtedness against loss (whether by virtue of partnership arrangements, by
agreement to keep-well, U) purchase Franchise Loan, goods, securities or
services, or to take-or-pay or otherwise). The amount of any Guarantee of a
Person shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Guarantee is made or,
if not stated or determinable, the maximum reasonably anticipated liability in
respect thereof as determined by such Person in good faith. The terms
"Guarantee" and "Guaranteed" used as verbs shall have correlative meanings.
"Hedge Counterparty" shall mean the counterparty under any
Interest Rate Protection Agreement.
"Hedge Payment" shall mean any amount payable to a Hedge
Counterparty pursuant to an Interest Rate Protection Agreement.
"Indebtedness" shall mean, of any Person at any date, without
duplication, (a) all indebtedness of such Person for borrowed money (whether by
loan or the issuance and sale of debt securities) or for the deferred purchase
price of property or services (other than current trade liabilities incurred in
the ordinary course of business and payable in accordance with customary
practices), (b) any other indebtedness of such Person which is evidenced by a
note, bond, debenture or similar instrument, (c) all obligations of such Person
under financing leases, (d) all obligations of such Person in respect of letters
of credit, acceptances or similar instruments issued or created for the account
of such Person and (e) all liabilities secured by any Lien on any property owned
by such Person even though such Person has not assumed or otherwise become
liable for the payment thereof.
"Indemnified Party" shall have the meaning provided in Section
11.03 hereof.
"Interest Rate Protection Agreement" shall mean, with respect
to any or all of the Franchise Loans, any interest rate swap, cap or collar
agreement or similar arrangements providing for protection against fluctuations
in interest rates or the exchange of nominal interest obligations, either
generally or under specific contingencies, entered into by the Borrower and
reasonably acceptable to the Lender.
"Investment Company Act" shall mean the Investment Company Act
of 1940, as amended.
"Lender" shall have the meaning provided in the heading
hereof.
"LIBO Rate" shall mean, with respect to any Advance, the rate
per annum equal to the rate appearing at page 3750 of the Telerate Screen as
one-month LIBOR on the each Business Day, of is such day is not a Business Day,
the immediately preceding Business Day, and if such rate shall not be so quoted,
the rate per annum at which the Lender is offered Dollar deposits at or about
11:00 a.m., New York City time, on such date by prime banks in the interbank
eurodollar market where the eurodollar and foreign currency exchange operations
in respect of its Advances are then being conducted for delivery on such day for
a period of one month, and in an amount comparable to the amount of the Advances
to be outstanding on such day.
"Lien" shall mean any mortgage, lien, pledge, charge, security
interest or similar encumbrance.
"Loan Agreement" shall mean this Interim Wholesale Mortgage
Warehouse and Security Agreement, as the same may be amended, supplemented or
otherwise modified from time to time.
"Loan Documents" shall mean, collectively, this Loan
Agreement, the Note, the Blocked Account Agreement and the Custodial Agreement.
"Market Value" shall mean, with respect to any Franchise Loan,
the market value of such Franchise Loan (not to exceed the Par Amount of such
Franchise Loan), as determined by the Lender in its sole discretion (exercised
in good faith), which Market Value may be determined to be zero, reflecting,
among other things, without limitation (a) the effect of changes in interest
rates on the value of the Franchise Loan, (b) changes in financial operating
performance for each underlying Franchise Unit, (c) information contained in
quarterly financial statements relating to the Obligors and the Franchise Units,
(d) delinquencies and defaults on such Franchise Loan, (e) seasoning of such
Franchise Loan and (f) the value of any Interest Rate Protection Agreement
relating to such Franchise Loan, (g) developments in the general franchise
industry or with respect to any Franchise and (h) rating agency requirements for
securitization.
"Material Adverse Effect" shall mean, with respect to each
Credit Party, a material adverse effect on (a) the business, Franchise Loans,
property, business, condition (financial or otherwise) or prospects of any
Credit Party, (b) the ability of any Credit Party to perform its obligations
under any of the Loan Documents to which it is a party, (c) the validity or
enforceability of any of the Loan Documents, (d) the rights and remedies of the
Lender under any of the Loan Documents, (e) the timely payment of the principal
of or interest on the Advances or other amounts payable in connection therewith
or (f) the Collateral.
"Maximum Committed Credit" shall mean $300,000,000.
"Monthly Payment" means the scheduled monthly payment of
principal and interest on a Franchise Loan as adjusted in accordance with
changes in the Franchise Loan Interest Rate pursuant to the provisions of the
Promissory Note for an adjustable rate Franchise Loan.
"Mortgage" shall mean the mortgage, deed of trust or other
instrument securing a Promissory Note, which creates a first lien on the fee or
leasehold interest in real property securing the Promissory Note.
"Multiemployer Plan" shall mean a Plan which is a
multiemployer plan as defined in Section 400 1(a)(3) of ERISA.
"Non-Excluded Taxes" shall have the meaning provided in
Section 2.10 hereof.
"Note" shall have the meaning assigned to such term in Section
2.02 hereof.
"Notice of Borrowing and Pledge" shall have the meaning
provided in Section 2.03(a) hereof.
"Obligor" shall mean the obligor under a Promissory Note.
"Originator" shall mean CFS and each other Credit Party that
has been approved by the Lender in writing, which originates Franchise Loans.
"Par Amount" shall mean, in respect of a Franchise Loan at any
time, the outstanding principal balance of such Franchise Loan at such time.
"Payment Date" shall have the meaning set forth in Section
2.06(c) hereof.
"Payoff" shall mean, with respect to any Franchise Loan
repayment by the applicable Obligor of all outstanding principal thereunder
together with all interest accrued thereon to the date of such repayment and any
penalty or premium thereon.
"Payoff Proceeds" shall mean, with respect to any Franchise
Loan, all funds received from the applicable Obligor in connection with a
Payoff.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any entity succeeding to any or all of its functions under ERISA.
"Person" shall mean any individual., corporation, company,
voluntary association, partnership, joint venture, limited liability company,
trust, unincorporated association, government (or any agency, instrumentality or
political subdivision thereof) or any other entity of whatever nature.
"Plan" shall mean at a particular time, any employee benefit
plan which is covered by ERISA and in respect of which the Borrower or a
Commonly Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Post-Default Rate" shall mean, in respect of any principal of
any Advance or any other amount under this Loan Agreement, the Note or any other
Loan Document that is not paid when due to the Lender (whether at stated
maturity, by acceleration, by optional or mandatory prepayment or otherwise), a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to the LIBO Rate
plus 5.00% per annum.
"Promissory Note" shall mean the original executed promissory
note or other evidence of the indebtedness of a Obligor/borrower with respect to
a Franchise Loan.
"Property" shall mean any right or interest in or to property
of any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"PSI" shall mean Prudential Securities Incorporated, a
Delaware corporation.
"Quick Service Franchise" shall mean any Franchise designated
as a quick service franchise on Schedule 4 hereto.
"Regulations T. U and X" shall mean Regulations T, U and X of
the Board of Governors of the Federal Reserve System (or any successor), as the
same may be modified and supplemented and in effect from time to time.
"Reportable Event": any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the notice period is
waived under Sections .21, .22, .23, .26, .27 or .28 of PBGC Reg. ss. 4043.
"Responsible Officer" shall mean, as to any Person, the chief
executive officer or, with respect to financial matters, the chief financial
officer of such Person; provided, that in the event any such officer is
unavailable at any time he or she is required to take any action hereunder or if
a document is required in connection with a funding request pursuant to Section
2.03 hereof, Responsible Officer shall mean any officer authorized to act on
such officer's behalf as demonstrated to the Lender to its reasonable
satisfaction.
"Requirement of Law" shall mean as to any Person, the
certificate of incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Secured Obligations" shall mean the unpaid principal amount
of, and interest on the Advances, and all other obligations and liabilities of
the Borrower to the Lender, whether direct or indirect, absolute or contingent,
due or to become due, or now existing or hereafter incurred, which may arise
under, out of or in connection with this Loan Agreement, the Note, any other
Loan Document and any other document made, delivered or given in connection
herewith or therewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses (including, without limitation,
all fees and disbursements of counsel to the Lender that are required to be paid
by the Borrower pursuant to the terms hereof or thereof) or otherwise. For
purposes hereof, "interest" shall include, without limitation, interest accruing
after the maturity of the Advances and interest accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to the Borrower, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding.
"Secured Property" shall mean the real property (including all
improvements, buildings, fixtures, building equipment and personal property
thereon and all additions, alterations and replacements made at any time with
respect to the foregoing) and all other collateral securing repayment of the
debt evidenced by a Promissory Note.
"Servicer" shall mean CFS, its successors and assigns, or such
other servicer designated by the Borrower and acceptable to the Lender.
"Servicing Agreement" shall mean a servicing agreement between
the Borrower and the Servicer for the servicing of Franchise Loans.
"Servicing Records" shall have the meaning provided in Section
11.15(b) hereof.
"Single Employer Plan" shall mean any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan.
"Space Lease Franchise Loan" shall mean a Franchise Loan
secured by a Mortgage on or a collateral assignment of a space lease interest in
real property relating to the operation of one or more Franchise Units; provided
that (i) the related Mortgage has been or will be duly filed to be recorded with
all appropriate governmental authorities in all jurisdictions in which such
Mortgage is required to be filed and recorded to create a valid, binding and
enforceable collateral assignment or mortgage of the Obligors interest in the
related Property, (ii) the owner of the related Property has consented to such
collateral assignment or mortgage and has executed a landlord's estoppel and
consent in connection with such assignment and (iii) all necessary
subordination, attornment and nondisturbance agreements have been obtained with
respect to such property; provided, that, in accordance with paragraph (iv) of
the definition of "Borrowing Base", certain Space Lease Franchise Loans may tail
to satisfy items (ii) and (iii) above.
"Subsidiary" shall mean, with respect to any Person, any other
Person of which at least a majority of the securities or other ownership
interests having by the terms thereof ordinary voting power to elect a majority
of the board of directors or other persons performing similar functions of such
corporation partnership or other entity (irrespective of whether or not at the
time securities or other ownership interests of any other class or classes of
such corporation, partnership or other entity shall have or might have voting
power by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by such Person or one or more Subsidiaries of
such Person or by such Person and one or more Subsidiaries of such Person.
"Termination Date" shall mean September 18. 1999 or such
earlier date on which this Loan Agreement shall terminate in accordance with the
provisions hereof or by operation of law, as same may be extended in accordance
with Section 2.11 hereof.
"Tier I Franchise" shall mean a Franchise listed as a Tier I
Franchise on Schedule 4, Part A.
"Tier II Franchise" shall mean a Franchise listed as a Tier U
Franchise on Schedule 4, Part B.
"Tier III Franchise" shall mean a Franchise listed as a Tier
Ill Franchise on Schedule 4, Part C.
"Tier IV Franchise" shall mean a Franchise listed as a Tier IV
Franchise on Schedule 4, Part D.
"Tier I Franchise Loan" shall mean a Franchise Loan relating
to a Tier I Franchise.
"Tier II Franchise Loan" shall mean a Franchise Loan relating
to a Tier II Franchise.
"Tier Ill Franchise Loan" shall mean a Franchise Loan relating
to a Tier III Franchise.
"Tier IV Franchise Loan" shall mean a Franchise Loan relating
to a Tier IV Franchise.
"Underwriting Guidelines" shall mean the underwriting
guidelines of the Borrower for Franchise Loans a copy of each of which has been
delivered to the Lender.
"Underwriting Package" shall mean, with respect to each
Franchise Loan, a file which includes, without limitation, the following
information pertaining to such Franchise Loan (i) detailed loan characteristics,
(ii) use of proceeds and (iii) detailed financial and credit reports of the
related Obligor.
"Uniform Commercial Code" shall mean the Uniform Commercial
Code as in effect on the date hereof in the State of New York; provided that if
by reason of mandatory provisions of law, the perfection or the effect of
perfection or non-perfection of the security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than New York, "Uniform Commercial Code" shall mean the Uniform Commercial Code
as in effect in such other jurisdiction for purposes of the provisions hereof
relating to such perfection or effect of perfection or non-perfection.
"Year 2000 Problem" shall have the meaning assigned to such
term in Section 6.24 hereof.
1.02 Accounting Terms and Determinations. Except as otherwise
expressly provided herein, all accounting terms used herein shall be interpreted
and all financial statements and certificates and reports as to financial
matters required to be delivered to the Lender hereunder shall be prepared, in
accordance with GAAP.
SECTION 2 Advances. Note and Prepayments.
2.01 Advances.
(a) Subject to the terms and conditions of this Loan
Agreements the Lender agrees to make loans (individually, an "Advance"
collectively, the "Advances") to the Borrower, from time to time on any Business
Day from and including the Effective Date to but excluding the Termination Date,
in an aggregate principal amount at any one time outstanding up to but not
exceeding the lesser of (i) the Maximum Committed Credit, and (ii) the Borrowing
Base at such time.
(b) Subject to the terms and conditions of this Loan
Agreements during such period the Borrower may borrow, repay and reborrow
hereunder.
(c) In no event shall an Advance be made when any Default or
Event of Default has occurred and is continuing.
(d) The Lender shall have no obligation to make Advances at
any time in which the Facility Delinquency Rate exceeds 6%.
(e) All Advances relating to Construction Franchise Loans must
be requested in accordance with a construction schedule satisfactory to the
Lender. The full amount of Advances relating to any Construction Franchise Loan
must be made no later than one hundred and eighty (180) days following the first
Funding Date relating to such Construction Franchise Loan.
(f) Notwithstanding anything to the contrary herein, the
Borrower does not need to make a pledge of Franchise Loans in connection with an
Advance, so long as the then existing Borrowing Base will not be exceeded after
giving effect to such Advance.
(g) The Lender shall have no obligation to make new Advances
at any time in which the Final Documentation relating to Franchise Loans pledged
in connection with any Advance have not been delivered to the Custodian within
five (5) Business Days (or such longer time period as consented to by the
Lender) following the related Funding Date for such Advance until such time as
the Final Documentation, complete and free of exceptions, is delivered to the
Custodian.
2.02 Note
(a) The Advances made by the Lender shall be evidenced by a
single promissory note of the Borrower substantially in the form of ~h1bILA
hereto (the "NI~")~ dated the date hereof, payable to the Lender in a principal
amount equal to the amount of the Maximum Committed Credit and otherwise duly
completed. The Lender shall have the right to have its Note subdivided, by
exchange for promissory notes of lesser denominations or otherwise.
(b) The date, amount and interest rate of each Advance made by
the Lender to the Borrower, and each payment made on account of the principal
and interest thereof, shall be recorded by the Lender on its books and, prior to
any transfer of the Note, endorsed by the Lender on the schedule attached to the
Note or any continuation thereof; provided that the failure of the Lender to
make any such recordation or endorsement shall not affect the obligations of the
Borrower to make a payment when due of any amount owing hereunder or under the
Note in respect of the Advances.
2.03 Procedure for Borrowing.
(a) The Borrower may request an Advance hereunder, on any
Business Day during the period from and including the Effective Date to but
excluding the Termination Date) by delivering to the Lender, with a copy to the
Custodian, an irrevocable written Notice of Borrowing and Pledge substantially
in the form of Exhibit D hereto (a "Notice of Borrowing and Pledge"),
appropriately completed which Notice of Borrowing and Pledge must be received by
the Lender, with a copy to the Custodian, prior to 5 p.m., New York City time,
two (2) Business Days prior to the requested Funding Date of such Advance;
provided, that if the requested Funding Date is during the last seven (7) days
of March, June, September or December, such Notice of Borrowing and Pledge must
be received by the Lender, with a copy to the Custodian, prior to 5 p.m., New
York City time, four (4) Business Days prior to the requested Funding Date of
such Advance. The Borrower shall have the right to cancel a Notice of Borrowing
and Pledge by giving notice to the Lender of such cancellation prior to 11 a.m.,
New York City time, one (1) Business Day prior to the requested Funding Date.
Such Notice of Borrowing and Pledge shall (i) attach a schedule identifying the
Eligible Franchise Loan that the Borrower proposes to pledge to the Lender and
to be included in the Borrowing Base in connection with such Advance, (ii)
contain the amount of the requested Advance, which shall in all events be at
least equal to $500,000 (or in the case of an Advance relating to a Construction
Franchise Loan, $100,000) to be made on such Funding Date, (iii) specify the
requested Funding Date, (iv) attach an officer's certificate signed by a
Responsible Officer of the Borrower, and (v) contain (by attachment) such other
information reasonably requested by the Lender from time to time.
(b) The Borrower shall deliver (or cause to be delivered) to
the Lender no later than 5 p.m., New York City time, seven (7) Business Days
prior to the requested Funding Date, a complete Underwriting Package relating to
each Eligible Franchise Loan to be pledged to the Lender and included in the
Borrowing Base on such requested Funding Date. Within seven (7) Business Days
following the receipt by the Lender of the complete Underwriting Package
relating to each Eligible Franchise Loan, the Lender shall deliver to the
Borrower notice of whether or not such Franchise Loan is rejected and deemed
ineligible to be pledged or is acceptable to be pledged; provided, that the
failure to give notice within the allotted time period shall be deemed to be
notice by the Lender of its rejection of such Franchise Loan; provided, further,
that notice that such Franchise Loan is not rejected shall not be construed to
be a waiver of the requirement to satisfy all conditions precedent prior to
making Advances hereunder.
(c) The Borrower shall deliver (or cause to be delivered) and
release to the Custodian no later than 12:00 noon, New York City time, two (2)
Business Days prior to the requested Funding Date (in the case of Franchise
Loans involving less than twenty (20) Franchise Units) or three (3) Business
Days prior to the requested Funding Date (in the case of Franchise Loans
involving twenty (20) or more Franchise Units), the Funding Date Documentation
pertaining to each Eligible Franchise Loan to be pledged to the Lender and
included in the Borrowing Base on such requested Funding Date, in accordance
with the terms and conditions of the Custodial Agreement.
(d) Pursuant to the Custodial Agreement, the Custodian shall
deliver to the Lender and the Borrower,. no later than 12:00 noon, New York City
time, one Business Day prior to the Funding Date, a Funding Date Certification
in respect of the Funding Date Documentation relating to all Franchise Loans
pledged to the Lender on such Funding Date and an Franchise Loan Schedule and
Exception Report in respect of all Franchise Loan so pledged to the Lender.
(e) The Borrower shall deliver or cause to be delivered to'
the Custodian the Final Documentation relating to any Advance no later than five
(5) Business Days following the Funding Date for such Advance, or such longer
period as reasonably requested by Borrower and consented to by the Lender, such
consent not to be unreasonably withheld.
2.04 Repayment of Advances: Interest.
(a) The Borrower hereby promises to repay in full on the
Termination Date the then aggregate outstanding principal amount of the
Advances.
(b) The Borrower hereby promises to pay to the Lender interest
on the unpaid principal amount of each Advance for the period from and including
the Funding Date of such Advance to but excluding the date such Advance shall be
paid in full, at a rate per annum equal to the LIBO Rate plus the Applicable
Margin; calculated such that interest shall accrue each day on the outstanding
principal amount of all Advances as of 11:00 a.m., New York City time, on such
day. Notwithstanding the foregoing, the Borrower hereby promises to pay to the
Lender interest at the applicable Post-Default Rate on any principal of any
Advance and on any other amount payable by the Borrower hereunder or under the
Note that shall not be paid in full when due (whether at stated maturity, by
acceleration or by mandatory prepayment or otherwise) for the period from and
including the due date thereof to but excluding the date the same is paid in
full. Accrued interest on each Advance shall be payable monthly on each Payment
Date and on the Termination Date. Notwithstanding the foregoing, interest
accruing at the Post-Default Rate shall be payable to the Lender on demand.
2.05 Limitation on Advances: Illegality. Anything herein to
the contrary notwithstanding, if, on or prior to the determination of any LIBO
Rate:
(a) the Lender determines, which determination shall be
conclusive, that quotations of interest rates for the relevant deposits referred
to in the definition of "LIBO Rate" in Section 1.01 hereof are not being
provided in the relevant amounts or for the relevant maturities for purposes of
determining rates of interest for Advances as provided herein; or
(b) the Lender determines, which determination shall be conclusive, that the
relevant rate of interest referred to in the definition of "LIBO Rate" in
Section 1.01 hereof upon the basis of which the rate of interest for Advances is
to be determined is not likely adequately to cover the cost to the Lender of
making or maintaining Advances; or
(c) it becomes unlawful for the Lender to honor its obligation to make or
maintain Advances hereunder using the LIBO Rate; then the Lender shall give the
Borrower prompt notice thereof and, so long as such condition remains in effect,
the Lender shall be under no obligation to make additional Advances, and the
Borrower shall, a~ its option, either prepay all such Advances as may be
outstanding or such Advances shall accrue interest based on an alternative
comparable methodology, determined by the Lender it is sole discretion
(exercised in good faith).
2.06 Determination of Borrowing Base: Mandatory Prepayments or
Pledge.
(a) If at any time the aggregate outstanding principal amount
of Advances exceeds the Borrowing Base (a "Borrowing Base Deficiency"), as
determined by the Lender and notified to the Borrower on or before 11:00 a.m. on
any Business Day, the Borrower shall no later than three (3) Business Days after
receipt of such notice, at the option of the Borrower, either prepay the
Advances in part or in whole or pledge additional Eligible Franchise Loans to
the Lender (which shall be in all respects acceptable to the Lender), such that
after giving effect to such prepayment or pledge the aggregate outstanding
principal amount of the Advances does not exceed the Borrowing Base.
(b) All proceeds of a securitization relating to the Franchise
Loans pledged hereunder shall be used to prepay the outstanding principal amount
of Advances relating to such Franchise Loans in such securitization, and to
prepay an amount equal to any Borrowing Base Deficiency that results from a
change m the Applicable Collateral Percentage that occurs as a result of
repayment of Advances in connection with such securitization.
(c) On the fifteenth (15th) day of each month (each a "Payment
Date"), the Borrower shall be required to prepay the Advances in an amount equal
to the amount of Collections received since the preceding Payment Date and
allocable to principal on the Franchise Loans in accordance with the terms of
such Franchise Loans.
2.07 Optional Prepayments.
(a) The Borrower may prepay, in whole or in part, Advances at
any time without premium or penalty, except as contained in paragraph (b) of
this Section 2.07. Any amounts prepaid shall be applied to repay the outstanding
principal amount of any Advances (together with interest thereon) until paid in
full. Amounts repaid may be reborrowed in accordance with the terms of this Loan
Agreement. If the Borrower intends to prepay an Advance in whole or in part from
any source, the Borrower shall give two (2) Business Days' prior written notice
thereof to the Lender, specifying the date and amount of prepayment. If such
notice is given, the amount specified in such notice shall be due and payable on
the date specified therein, together with accrued interest to such date on the
amount prepaid. Partial prepayments shall be in an aggregate principal amount of
at least $100,000.
(b) The Borrower shall indemnify the Lender and hold the
Lender harmless from any actual loss or expense which the Lender may sustain or
incur arising from a prepayment of any Advance (other than prepayments
associated with (i) a securitization or (ii) any Collateral withdrawn from the
Borrowing Base with sixty (60) days prior written notice to the Lender), which
actual loss or expense shall be equal to an amount equal to the excess, as
reasonably determined by the Lender, of (x) its cost of obtaining funds for such
Advances for the period from the date of such payment over (y) the amount of
interest likely to be realized by such Lender in redeploying the funds not
utilized by reason of such payment for such period. For the purposes of
calculating any actual loss or expense, the cost of obtaining funds shall be
limited to costs incurred for a maximum period of sixty (60) days. This Section
2.07 shall survive termination of this Loan Agreement and payment of the Note.
2.08 Requirements of Law.
(a) If any Requirement of Law (other than with respect to any
amendment made to the Lender's certificate of incorporation and by-laws or other
organizational or governing documents) or any change in die interpretation or
application thereof or compliance by the Lender with any request or directive
(whether or not having the force of law) from any central bank or other
Governmental Authority made subsequent to the date hereof:
(i) shall subject the Lender to any tax of any kind whatsoever
with respect to this Loan Agreement, the Note or any Advance made by it
(excluding net income taxes) or change the basis of taxation of payments to the
Lender in respect thereof:
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory Advance or similar requirement against Franchise
Loan held by, deposits or other liabilities in or for the account of, advances,
Advances or other extensions of credit by, or any other acquisition of funds by,
any office of the Lender which is not otherwise included in the determination of
the LIBO Rate hereunder;
(iii) shall impose on the Lender any other condition; and the
result of any of the foregoing is to increase the cost to the Lender, by an
amount which the Lender deems to be material, of making or maintaining any
Advance or to reduce any amount receivable hereunder in respect thereof, then,
in any such case, the Borrower shall promptly pay the Lender such additional
amount or amounts as will compensate the Lender for such increased cost or
reduced amount receivable.
(b) If the Lender shall have determined that the adoption of
or any change in any Requirement of Law (other than with respect to any
amendment made to the Lender's certificate of incorporation and by-laws or other
organizational or governing documents) regarding capital adequacy or in the
interpretation or application thereof or compliance by the Lender or any
corporation controlling the Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on the Lender's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which the Lender
or such corporation (taking into consideration the Lender's or such
corporation's policies with respect to capital adequacy) by an amount deemed by
the Lender to be material, then from time to time, the Borrower shall promptly
pay to the Lender such additional amount or amounts as will compensate the
Lender for such reduction.
(c) If the Lender becomes entitled to claim any additional
amounts pursuant to this subsection, it shall promptly notify the
Borrower of the event by reason of which it has become so entitled. A
certificate as to any additional amounts payable pursuant to this
subsection submitted by the Lender to the Borrower shall be conclusive
in the absence of manifest error.
2.09 Purpose of Advances. Each Advance shall be used to
finance the origination or acquisition of Eligible Franchise Loans
identified to the Lender in writing on each Franchise Loan Schedule, as
such Franchise Loan Schedule may be amended from time to time.
2.10 Taxes.
(a) All payments made by the Borrower under this Loan
Agreement and the Note shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding net income taxes and franchise taxes (imposed
in lieu of net income taxes) imposed on the Lender as a result of a present or
former connection between the Lender and the jurisdiction of the Governmental
Authority imposing such tax or any political subdivision or taxing authority
thereof or therein (other than any such connection arising solely from the
Lender having executed, delivered or performed its obligations or received a
payment under, or enforced, this Loan Agreement or any Note). If any such
non-excluded taxes, levies. imposts, duties, charges, fees deductions or
withholdings ("Non-Excluded Taxes") are required to be withheld from any amounts
payable to the Lender hereunder or under the Note, the amounts so payable to the
Lender shall be increased to the extent necessary to yield to the Lender (after
payment of all Non-Excluded Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Loan Agreement;
provided, however, that the Borrower shall not be required to increase any such
amounts payable to the Lender that is not organized under the laws of the United
States of America or a state thereof if the Lender fails to comply with the
requirements of clause (b) of this Section. Whenever any Non-Excluded Taxes are
payable by the Borrower, as promptly as possible thereafter the Borrower shall
send to the Lender, as the case may be, a certified copy of an original official
receipt received by the Borrower showing payment thereof. If the Borrower fails
to pay any Non-Excluded Taxes when due to the appropriate taxing authority or
fails to remit to the Lender the required receipts or other required documentary
evidence, the Borrower shall indemnify the Lender for any incremental taxes,
interest or penalties that may become payable by the Lender as a result of any
such failure. The agreements in this Section shall survive the termination of
this Loan Agreement and the payment of the Advances and all other amounts
payable hereunder.
(b) If the Lender hereunder (or an assignee or participant
that acquires an interest hereunder in accordance with Section 11.14 hereof)
that is not incorporated under the laws of the United States of America or a
state thereof shall:
(i) deliver to the Borrower (A) two duly completed copies of
United States Internal Revenue Service Form 1001 or 4224, or successor
applicable form, as the case may be, and (B) an Internal Revenue
Service Form W-8 or W-9, or successor applicable form, as the case
maybe;
(ii) deliver to the Borrower two further copies of any such
form or certification on or before the date that any such form or
certification expires or becomes obsolete and after the occurrence of
any event requiring a change in the most recent form previously
delivered by it to the Borrower; and
(iii) obtain such extensions of time for filing and complete
such forms or certifications as may reasonably be requested by the
Borrower; unless in any such case an event (including, without
limitation, any change in treaty, law or regulation) has occurred prior
to the date on which any such delivery would otherwise be required
which renders all such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form with respect
to it and such Lender so advises the Borrower. Such Lender shall
certify (i) in the case of a Form 1001 or 4224, that it is entitled to
receive payments under this Loan Agreement without deduction or
withholding of any United States federal income taxes and (ii) in the
case of a Form W-8 or W-9, that it is entitled to an exemption from
United States backup withholding tax. Each Person that shall become a
Lender or a participant pursuant to Section 11.14 hereof shall, upon
the effectiveness of the related transfer, be required to provide all
of the forms and statements required pursuant to this Section, provided
that in the case of a participant, such participant shall furnish all
such required forms and statements to the Lender from which the related
participation shall have been purchased.
2.11 Extension of Termination Date. Upon the written request
of the Borrower, at least ninety (90) days prior to then current Termination
Date, the Lender may in its sole discretion extend the Termination Date for a
period of 364 days, by giving written notice of such extension to the Borrower
no later than thirty (30) days following receipt of such request from the
Borrower.
2.12 Commitment Fees. On or prior to the Effective Date, the
Borrower shall pay to the Lender a facility commitment fee in an amount equal to
.25% of the Maximum Committed Credit. Upon each extension of the Termination
Date pursuant to Section 2.11 hereof, the Borrower shall pay to the Lender a
renewal fee in an amount equal to .10% of the Maximum Committed Credit.
SECTION 3 Payments: Computations: Etc.
3.01 Payments.
(a) Except to the extent otherwise provided herein, a"
payments of principal, interest and other amounts to be made by the Borrower
under this Loan Agreement and the Note, shall be made in Dollars, in immediately
available funds, without deduction, set-off or counterclaim, to the Lender at
the following account maintained by the Lender with the Bank of New York:
Account No. "GLAl11569PPC" For the A/C of Prudential Securities Credit
Corporation, ABA# "000000000" not later than 1:00 p.m., New York City time, on
the date on which such payment shall become due (and each such payment made
after such time on such due date shall be deemed to have been made on the next
succeeding Business Day). The Borrower acknowledges that it has no rights of
withdrawal from the foregoing account.
(b) Except to the extent otherwise expressly provided herein,
if the due date of any payment under this Loan Agreement or the Note would
otherwise fall on a day that is not a Business Day, such date shall be extended
to the next succeeding Business Day, and interest shall be payable for any
principal so extended for the period of such extension.
3.02 Computations. Interest on the Advances shall be computed
on the basis of a 360-day year for the actual days elapsed (including the first
day but excluding the last day) occurring in the period for which payable.
3.03 Blocked Account.
(a) The Borrower shall (or shall cause the Servicer to)
instruct all Obligors to remit payments in respect of the Franchise Loans to the
Collection Account. The Borrower shall (and shall cause the Servicer to) use all
reasonable efforts to prevent the deposit of any funds other than proceeds of
Collateral into the Collection Account. If the Borrower or the Servicer receives
any Collections, the Borrower shall (or cause the Servicer to) deposit such
Collections into the Collection Account no later than the Business Day following
such receipt. Pending such deposit, such funds shall be held in trust for the
benefit of the Lender.
(b) Funds deposited in the Collection Account during any month
shall be held therein, in trust for the Lender, until the next Payment Date. On
each Payment Date, funds shall be withdrawn from the Collection Account and
applied as follows:
(i) first, ratably to Hedge Counterparties for the payment of
Hedge Payments,
(ii) second, to the Lender for the payment of interest on the
Advances then accrued;
(iii) third, to the payment of other Secured Obligations
(other than the payments in respect of principal on the Advances) then
due;
(i':) fourth, to the payment of any principal of the Advances
then due (whether pursuant to Section 2.06, by acceleration or
otherwise);
(v) fifth, to the payment of servicing fees and the
reimbursement of expenses under the Servicing Agreement; and
(vi) sixth, to the payment of amounts payable under the
Administration Agreement. Any funds remaining in the Collection Account
following the application set forth above shall be remitted to the
Borrower; provided, that such funds shall not be remitted to the
Borrower or to the Borrower's Affiliates pursuant to subsections (v) or
(vi) above or otherwise if a Default or Event of Default is continuing
and shall instead be held in the Collection Account as security for the
Secured Obligations.
SECTION 4 Collateral Security.
4.01 Collateral: Security Interest.
(a) Pursuant to the Custodial Agreement, the Custodian shall
hold the Franchise Loan Documents as exclusive bailee and agent for the Lender
pursuant to terms of the Custodial Agreement and shall deliver certifications to
the Lender each to the effect that it has reviewed such Franchise Loan Documents
in the manner and to the extent required by the Custodial Agreement and
identifying any exceptions in such Franchise Loan Documents as so reviewed in
the Franchise Loan Schedule and Exception Reports.
(b) Each of the following items of property is hereinafter
referred to as the "Collateral":
(i) all Franchise Loans identified on a Notice of
Borrowing and Pledge delivered by the Borrower to the
Lender and the Custodian from time to time;
(ii) all Franchise Loan Documents, including without
limitation all promissory notes, and all Servicing
Records, Servicing Agreements, servicing rights,
pledge agreements, Purchase and Sale Agreements and
any other collateral pledged or otherwise relating to
the Franchise Loan, together with all files,
documents, instruments, surveys, certificates,
correspondence, appraisals, computer programs,
computer storage media, accounting records and other
books and records relating thereto;
(iii) all mortgage guaranties and insurance relating to
such Franchise Loans (issued by governmental agencies
or otherwise) and any mortgage insurance certificate
or other document evidencing such mortgage guaranties
or insurance relating to such Franchise Loans and all
claims and payments thereunder;
(iv) all other insurance policies and insurance proceeds
relating to any Franchise Loan or the related Secured
Property;
(v) all purchase or take-out commitments relating to or
constituting any or all of the foregoing;
(vi) all Interest Rate Protection Agreements relating to
any Franchise Loan;
(vii) all Blocked Accounts and the balance from time to
time standing to the credit of Blocked Accounts and
all rights with respect thereto;
(viii) all collateral, however defined, under any other
agreement between the Borrower or any of its
Affiliates on the one hand and the Lender or any of
its Affiliates on the other hand;
(ix) all "accounts", "chattel paper", "instruments" and
"general intangibles" as defined in the Uniform
Commercial Code relating to or constituting any and
all of the foregoing; and
(x) any and all replacements, substitutions,
distributions on or proceeds of any and all of the
foregoing.
(c) The Borrower hereby pledges to the Lender, and grants a
security interest in favor of the Lender in, all of the Borrowers right, title
and interest in, to and under the Collateral, whether now owned or hereafter
acquired, now existing or hereafter created and wherever located, to secure the
Secured Obligations. The Borrower agrees to xxxx its computer records and tapes
to evidence the interests granted to the Lender hereunder.
4.02 Further Documentation. At any time and from time to time,
upon the written request of the Lender, and at the sole expense of the Borrower,
the Borrower will promptly and duly execute and deliver, or will promptly cause
to be executed and delivered, such further instruments and documents and take
such further action as the Lender may reasonably request for the purpose of
obtaining or preserving the full benefits of this Loan Agreement and of the
rights and powers herein granted, including, without limitation, the filing of
any financing or continuation statements under the Uniform Commercial Code in
effect in any jurisdiction with respect to the Liens created hereby or the
taking of any other action necessary to preserve the status of the Lender's
Liens on the Collateral as first priority perfected liens. The Borrower also
hereby authorizes the Lender to file any such financing or continuation
statement without the signature of the Borrower to the extent permitted by
applicable law. A photographic or other reproduction of this Loan Agreement
shall be sufficient as a financing statement for filing in any jurisdiction.
4.03 Changes in Locations. Name. etc. The Borrower shall not
(i) change the location of its chief executive office/chief place of business
from that specified in Section 6 hereof or (ii) change its name, identity or
corporate structure (or the equivalent) or change the location where it
maintains its records with respect to the Collateral unless it shall have given
the Lender at least 30 days prior written notice thereof and shall have
delivered to the Lender all Uniform Commercial Code financing statements and
amendments thereto as the Lender shall request and taken all other actions
deemed necessary by the Lender to continue its perfected status in the
Collateral with the same or better priority.
4.04 Lender's Appointment as Attorney-in-Fact.
(a) The Borrower hereby irrevocably constitutes and appoints
the Lender and any officer or agent thereof, with full power of substitution, as
its true and lawful attorney-in-fact with full irrevocable power and authority
in the place and stead of the Borrower and in the name of the Borrower or in its
own name, from time to time in the Lender's discretion, for the purpose of
carrying out the terms of this Loan Agreement, to take any and all appropriate
action and to execute any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this Loan Agreement, and,
without limiting the generality of the foregoing, the Borrower hereby gives the
Lender the power and right, on behalf of the Borrower, without assent by, but
with notice to, the Borrower, if an Event of Default shall have occurred and be
continuing, to do the following:
(i) in the name of the Borrower or its own name, or otherwise,
to take possession of and endorse and collect any checks, drafts,
notes, acceptances or other instruments for the payment of moneys due
under any mortgage insurance or with respect to any other Collateral
and to file any claim or to take any other action or proceeding in any
court of law or equity or otherwise deemed appropriate by the Lender
for the purpose of collecting any and all such moneys due under any
such mortgage insurance or with respect to any other Collateral
whenever payable;
(ii) to pay or discharge taxes and Liens levied or placed on
or threatened against the Collateral; and
(iii) (A) to direct any party liable for any payment under any
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Lender or as the Lender shall direct; (B) to
ask or demand for, collect, receive payment of and receipt for, any and
all moneys, claims and other amounts due or to become due at any time
in respect of or arising out of any Collateral; (C) to sign and endorse
any invoices, assignments, verifications, notices and other documents
in connection with any of the Collateral; (D) to commence and prosecute
any suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any thereof and to
enforce any other right in respect of any Collateral; (E) to defend any
suit, action or proceeding brought against the Borrower with respect to
any Collateral; (F) to settle, compromise or adjust any suit, action or
proceeding described in clause (E) above and, in connection therewith,
to give such discharges or releases as the Lender may deem appropriate;
and (G) generally, to sell, transfer, pledge and make any agreement
with respect to or otherwise deal with any of the Collateral as fully
and completely as though the Lender were the absolute owner thereof for
all purposes, and to do, at the Lender's option and the Borrower's
expense, at any time, and from time to time, all acts and things which
the Lender deems necessary to protect, preserve or realize upon the
Collateral and the Lender's Liens thereon and to effect the intent of
this Loan Agreement, all as fully and effectively as the Borrower might
do.
The Borrower hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.
(b) The Borrower also authorizes the Lender, at any time and
from time to time, to execute, in connection with any sale provided for in
Section 4.07 hereof, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral.
(c) The powers conferred on the Lender are solely to protect
the Lender's interests in the Collateral and shall not impose any duty upon the
Lender to exercise any such powers. The Lender shall be accountable only for
amounts that it actually receives as a result of the exercise of such powers,
and neither the Lender nor any of its officers, directors, or employees shall be
.responsible to the Borrower for any act or failure to act hereunder, except for
its own gross negligence or willful misconduct.
4.05 Performance by Lender of Borrower's Obligations. If the
Borrower fails to perform or comply with any of its agreements contained in the
Loan Documents and the Lender may itself perform or comply, or otherwise cause
performance or compliance, with such agreement, the expenses of the Lender
incurred in connection with such performance or compliance, together with
interest thereon at a rate per annum equal to the Post-Default Rate, shall be
payable by the Borrower to the Lender on demand and shall constitute Secured
Obligations.
4.06 Proceeds. If an Event of Default shall occur and be
continuing, (a) all proceeds of Collateral received by the Borrower consisting
of cash, checks and other near-cash items shall be held by the Borrower in trust
for the Lender, segregated from other funds of the Borrower, and shall forthwith
upon receipt by the Borrower be turned over to the Lender in the exact form
received by the Borrower (duly endorsed by the Borrower to the Lender, if
required) and (b) any and all such proceeds received by the Lender (whether from
the Borrower or otherwise) may, in the sole discretion of the Lender, be held by
the Lender as collateral security for, and/or then, at any time thereafter and
subject to the priorities of payments outlined in Section 3.03(b), shall be
applied by the Lender against the Secured Obligations (whether matured or
unmatured) and the Hedge Payments. Any balance of such proceeds remaining after
the Secured Obligations and the Hedge Payments shall have been paid in full and
this Loan Agreement shall have been terminated shall be paid over to the
Borrower or to whomsoever may be lawfully entitled to receive the same. For
purposes hereof, proceeds shall include, but not be limited to, all principal
and interest payments, all prepayments and payoffs, insurance claims,
condemnation awards, sale proceeds, real estate owned rents and any other income
and all other amounts received with respect to the Collateral.
4.07 Remedies. If an Event of Default shall occur and be
continuing, the Lender may exercise, in addition to all other rights and
remedies granted to it in this Loan Agreement and in any other instrument or
agreement securing, evidencing or relating to the Secured Obligations, all
rights and remedies of a secured party under the Uniform Commercial Code.
Without limiting the generality of the foregoing, the Lender without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon the
Borrower or any other Person (each and all of which demands, presentments,
protests, advertisements and notices are hereby waived), may in such
circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell (on a servicing
released basis, at the Lender's option), lease, assign, give option or options
to purchase, or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more parcels or as
an entirety at public or private sale or sales, at any exchange, broker's board
or office of the Lender or elsewhere upon such terms and conditions as it may
deem advisable and at such prices as it may deem best, for cash or on credit or
for future delivery without assumption of any credit risk. The Lender shall have
the right upon any such public sale or sales, and, to the extent permitted by
law, upon any such private sale or sales, to purchase the whole or any part of
the Collateral so sold, free of any right or equity of redemption in the
Borrower, which right or equity is hereby waived or released. The Borrower
further agrees, at the Lender's request, to assemble the Collateral and make it
available to the Lender at places which the Lender shall reasonably select,
whether at the Borrower's premises or elsewhere. The Lender shall apply the net
proceeds of any such collection, recovery, receipt, appropriation, realization
or sale, after deducting all reasonable costs and expenses of every kind
incurred therein or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of the Lender
hereunder, including without limitation reasonable attorneys' fees and
disbursements, to the payment in whole or in part of the Secured Obligations, in
such order as the Lender may elect, and only after such application and after
the payment by the Lender of any other amount required or permitted by any
provision of law, including without limitation Section 9-504(1)(c) of the
Uniform Commercial Code, need the Lender account for the surplus, if any, to the
Borrower. To the extent permitted by applicable law, the Borrower waives all
claims, damages and demands it may acquire against the Lender arising out of the
exercise by the Lender of any of its rights hereunder, other than those claims,
damages and demands arising from the gross negligence or willful misconduct of
the Lender. If any notice of a proposed sale or other disposition of Collateral
shall be required by law, such notice shall be deemed reasonable and proper if
given at least 10 days before such sale or other disposition. The Borrower shall
remain liable for any deficiency (plus accrued interest thereon as contemplated
pursuant to Section 2.04(b) hereof) if the proceeds of any sale or other
disposition of the Collateral are insufficient to pay the Secured Obligations
and the fees and disbursements of any attorneys employed by the Lender to
collect such deficiency.
4.08 Limitation on Duties Regarding Presentation of
Collateral. The Lender's duty with respect to the custody, safekeeping and
physical preservation of the Collateral in its possession, under Section 9-207
of the Uniform Commercial Code or otherwise, shall be to deal with it in the
same manner as the Lender deals with similar property for its own account.
Neither the Lender nor any of its directors, officers or employees shall be
liable for failure to demand, collect or realize upon all or any part of the
Collateral or for any delay in doing so or shall be under any obligation to sell
or otherwise dispose of any Collateral upon the request of the Borrower or
otherwise.
4.09 Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.
4.10 Release of Security Interest. Upon termination of this
Loan Agreement and repayment to the Lender of all Secured Obligations and the
performance of all obligations under the Loan Documents the Lender shall release
its security interest in any remaining Collateral; provided that if any payment,
or any part thereof, of any of the Secured Obligations is rescinded or must
otherwise be restored or returned by the Lender upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower, or upon or as a
result of the appointment of a receiver, intervenor or conservator of, or a
trustee or similar officer for, the Borrower or any substantial part of its
Property, or otherwise, this Loan Agreement, all rights hereunder and the Liens
created hereby shall continue to be effective, or be reinstated, as though such
payments had not been made.
SECTION 5 Conditions Precedent.
5.01 Initial Advance. The agreement of the Lender to make the
initial Advance requested to be made by it hereunder is subject to the
satisfaction, immediately prior to or concurrently with the making of such
Advance, of the following conditions precedent:
(a) Loan Agreement. The Lender shall have received this Loan
Agreement, executed and delivered by a duly authorized officer of the Borrower.
(b) Note. The Lender shall have received the Note, conforming
to the requirements hereof and executed by a duly authorized officer of the
Borrower.
(c) Custodial Agreement. The Lender shall have received the
Custodial Agreement, conforming to the requirements hereof and executed by a
duly authorized officer of the Borrower and the Custodian.
(d) Blocked Account. The Lender shall have received evidence
satisfactory to the Lender of the existence of the Blocked Account.
(e) Blocked Account Agreement. The Lender shall have received
the Blocked Account Agreement, in form and substance satisfactory to the Lender
and executed by a duly authorized officer of the Borrower and any other party
thereto.
(t) Servicing Agreement(s). The Lender shall have received any
Servicing Agreement(s), each certified as a true, correct and complete copy of
the original.
(g) Franchise Loan Purchase Agreement. The Lender shall have
received a Franchise Loan Purchase Agreement, in form and substance satisfactory
to the Lender and executed by a duly authorized officer of each Originator.
(h) Administration Agreement. The Lender shall have received
the Administration Agreement, in form and substance acceptable to the Lender,
and executed by a duly authorized officer of each of the parties thereto.
(i) Filings. Registrations. Recordings. Any documents
(including, without limitation, financing statements) required to be filed,
registered or recorded in order to create, in favor of the Lender, a perfected,
first-priority security interest in the Collateral, subject to no Liens other
than those created hereunder, shall have been properly prepared and executed for
filing (including the applicable county(ies) if the Lender determines such
filings are necessary in its sole discretion), registration or recording in each
office in each jurisdiction in which such filings, registrations and
recordations are required to perfect such first-priority security interest.
(j) Closing Certificates. The Lender shall have received a
certificate of the Secretary or Assistant Secretary of the Borrower, dated as of
the date hereof, and certifying (A) that attached thereto is a true, complete
and correct copy of (i) the certificate of formation of limited partnership of
the Borrower, (ii) the limited partnership agreement of the Borrower containing
appropriate restrictions making the Borrower a bankruptcy remote special purpose
entity, in form and substance acceptable to the Lender, and (iii) resolutions
duly adopted by the general partner of the Borrower authorizing the execution,
delivery and performance of this Loan Agreement, the Note and the other Loan
Documents to which it is a party, and the borrowings contemplated hereunder, and
that such resolutions have not been amended, modified, revoked or rescinded, and
(B) as to the incumbency and specimen signature of each officer executing any
Loan Documents on behalf of the Borrower and authorized to execute any Notice of
Borrowing, and such certificate and the resolutions attached thereto shall be in
form and substance satisfactory to the Lender.
(k) Good Standing Certificates. The Lender shall have received
copies of certificates evidencing the good standing of the Borrower, dated as of
a recent date, from the Secretary of State (or other appropriate authority) of
the jurisdiction under which the Borrower is organized and of each other
jurisdiction where the ownership, lease or operation of property, or the conduct
of business, requires the Borrower to qualify as a foreign corporation, except
where the failure to qualify would not have a Material Adverse Effect.
(l) Legal Opinions. The Lender shall have received the
executed legal opinions of Lowndes, Drosdick, Doster, Xxxxxx & Xxxx, P.A., legal
counsel of the Borrower, addressing the matters set forth in the form attached
hereto as Exhibit C, dated the initial Funding Date and otherwise in form and
substance acceptable to the Lender and covering such other matters incident to
the transactions contemplated by this Loan Agreement as the Lender shall
reasonably request.
(m) Fees and Expenses. The Lender shall have received all fees
and expenses required to be paid by the Borrower on or prior to the initial
Funding Date pursuant to Sections 2.12 and 11.03.
(n) Financial Statements. The Lender shall have received the
financial statements referenced in Section 6.01(a).
(o) Underwriting Guidelines. The Lender and the Credit Parties
shall have agreed upon the underwriting guidelines for Franchise Loans (the
"Underwriting Guidelines") and the Lender shall have received a certified copy
thereof.
(p) Consents. Licenses. Approvals. etc. The Lender shall have
received copies certified by the Borrower of all consents, licenses and
approvals, if any, required in connection with the execution, delivery and
performance by the Borrower of, and the validity and enforceability of, the Loan
Documents, which consents, licenses and approvals shall be in full force and
effect.
(q) Insurance. The Lender shall have received evidence in form
and substance satisfactory to the Lender showing compliance by the Borrower as
of such initial Funding Date with Section 7.03 hereof.
(r) Termination Letter. The Lender shall have received a
letter from the Borrower and the Servicer consenting to the termination of the
Servicer as servicer of the Franchise Loans in the event that an Event of
Default shall have occurred and be continuing (this provision may be contained
in the Servicing Agreement itself).
(s) Credit Party Due Diligence Review. The Lender shall have
completed its standard and customary due diligence review of each Credit Party
and be satisfied that as to each Credit Party, the operations, financial
condition and standard loan documents of such Credit Party are acceptable to the
Lender, in its sole discretion, and that each Credit Party is qualified as a
lender and securitization issuer with the relevant rating agencies as necessary
to consummate the transactions contemplated hereby. Such due diligence review
shall have been approved by the Credit and Legal Departments of the Lender and
PSI, as well as the Lender's Business Review
(t) Other Documents. The Lender shall have received such other
documents as the Lender or its counsel may reasonably request.
5.02 Initial and Subsequent Advances. The making of each
Advance to the Borrower (including the initial Advance) on any Business Day is
subject to the satisfaction of the following further conditions precedent, both
immediately prior to the making of such Advance and also after giving effect
thereto and to the intended use thereof:
(a) No Default. No Default or Event of Default shall have
occurred and be continuing.
(b) Representations and Warranties. Each representation and
warranty made by the Borrower in Section 6 hereof and elsewhere in each of the
Loan Documents, shall be true and correct on and as of the date of the making of
such Advance (in the case of the representations and warranties in Schedule 1,
solely with respect to the pledged Franchise Loan included in the Borrowing Base
on such date) with the same force and effect as if made on and as of such date
(or, if any such representation or warranty is expressly stated to have been
made as of a specific date, as of such specific date). The Borrower shall also
be in compliance with all governmental licenses and authorizations and qualified
to do business and in good standing in all required jurisdictions where the
failure to be so qualified should reasonably be expected to have a Material
Adverse Effect.
(c) Borrowing Base. The aggregate outstanding principal amount
of the Advances shall not exceed the Borrowing Base.
(d) Notice of Borrowing and Pledge. The Lender shall have
received a Notice of Borrowing and Pledge, Franchise Loan Schedule and
Underwriting Package in accordance with Section 2.03 hereof, appropriately
completed.
(e) Certifications: Franchise Loan Schedule and Exception
Report.The Custodian shall have received all Franchise Loan Files (subject only
to the absence of the Final Documentation) relating to the pledged Franchise
Loan, and the Lender shall have received from the Custodian a Funding Date
Certification in respect of all Franchise Loans to be pledged hereunder on such
Business Day and a corresponding Franchise Loan Schedule and Exception Report,
with exceptions in respect of such Franchise Loan acceptable to the Lender in
its sole discretion, in each case dated such Business Day and duly completed.
(f) Reports. The Lender shall have received any reports
required to be delivered to the Lender under Section 7.08.
(g) Additional Documents. The Lender shall have received with
regard to all Franchise Loans, such title insurance or marked up title
commitments, surveys, appraisals and other information, documents, agreement or
instruments as the Lender deems advisable with respect to Franchise Loans to be
pledged hereunder on such Business Day, each in form and substance satisfactory
to the Lender.
(h) Additional Matters. All corporate and other proceedings,
and all documents, instruments and other legal matters in connection with the
transactions contemplated by this Loan Agreement and the other Loan Documents
shall be reasonably satisfactory in form and substance to the Lender, and the
Lender shall have received such other documents and legal opinions in respect of
any aspect or consequence of the transactions contemplated hereby or thereby as
it shall reasonably request.
(i) No Material Adverse Effect. There shall not have occurred
one or more events that, in the reasonable judgment of the Lender, constitutes
or should reasonably be expected to constitute a Material Adverse Effect.
(j) Franchise Loan Due Diligence Review. Subject to the
Lender's right to perform one or more Due Diligence Reviews pursuant to Section
11.16 hereof, the Lender shall have completed its due diligence review of the
Franchise Loan Documents for each Advance and such other documents, records,
agreements, instruments, mortgaged properties or information relating to such
Advances as the Lender in its sole discretion deems appropriate to review and
such review shall be satisfactory to the Lender in its sole discretion.
(k) True Sale Opinion. With respect to any Franchise Loan that
was originated by an Affiliate of the Borrower (and which is not covered by a
true sale opinion previously delivered to the Lender), the Lender may, in its
sole discretion, require the Borrower to provide evidence sufficient to satis1~r
the Lender that such Franchise Loan was acquired in a legal sale, including
without limitation, an opinion, in form and substance and from an attorney, in
both cases, acceptable to the Lender in its sole discretion, that such Franchise
Loan was acquired in a legal sale and the Borrower shall not be consolidated
with the originator of the Franchise Loans for bankruptcy purposes.
(l) Other Conditions.The Borrower shall have satisfied all
other conditions that the Lender may reasonably request.
SECTION 6 Representations and Warranties. As of the Effective
Date and each Funding Date, the Borrower represents and warrants to the Lender
that:
6.01 Financial Condition.
(a) The audited consolidated balance sheet of CFS and its
consolidated Subsidiaries as at June 30, 1997, reported thereon by McDirmit,
Davis, Lauteria, Puckett, Xxxxx & Company, P.A. and the audited consolidated
balance sheet of CFC and its consolidated Subsidiaries as at June 30, 1997,
reported thereon by Xxxxxx Xxxxxxxx, LLP, a copy of which has heretofore been
furnished to or reviewed by the Lender, is complete and correct and presents
fairly the consolidated financial condition of the Credit Parties (other than
CNL) and their consolidated Subsidiaries as at such dates and the consolidated
results of their operations and their consolidated cash flows for the fiscal
year then ended.
(b) Such financial statement, including the related schedules
and notes thereto, has been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by such
accountants or Responsible Officer, as the case may be, and as disclosed
therein).
(c) Neither the Credit Parties (other than CNL) nor any of
their consolidated Subsidiaries had, at the date of the financial statement
referred to above, any material Guarantee Obligation, contingent liability or
liability for taxes, or any long-term lease or unusual forward or long term
commitment, including, without limitation, any interest rate or foreign currency
swap or exchange transaction, or other financial derivative, which is not
reflected in the foregoing statements or in the notes thereto.
6.02 No Change. Since June 30, 1997, there has been no
development or event nor any prospective development or event which has had or
should reasonably be expected to have a Material Adverse Effect.
6.03 Existence: Compliance with Law. The Borrower (a) is a
limited partnership duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization, (b) has the power and authority,
and has all governmental licenses, authorizations, consents and approvals
necessary, to own and operate its property, to lease the property it operates as
lessee and to carry on its business as now being or as proposed to be conducted,
(c) is duly qualified to do business and is in good standing under the laws of
each jurisdiction in which the nature of the business conducted by it makes such
qualification necessary and where failure so to qualify should be reasonably
expected (either individually or in the aggregate) to have a Material Adverse
Effect, and (d) is in compliance in all material respects with all Requirements
of Law.
6.04 Power: Authorization: Enforceable Obligations.
(a) The Borrower has the power and authority, and the legal
right, to make, deliver and perform this Loan Agreement, the Note, and each
other Loan Document to which it is a party, and to borrow and to grant Liens
hereunder, and has taken all necessary corporate action to authorize the
borrowings and the granting of Liens on the terms and conditions of this Loan
Agreement, the Note, and each other Loan Document to which it is a party, and
the execution, delivery and performance of this Loan Agreement, the Note, and
each other Loan Document to which it is a party.
(b) No consent or authorization of, approval by, notice to,
filing with or other act by or in respect of, any Governmental Authority or any
other Person is required or necessary in connection with the borrowings
hereunder or with the execution, delivery, performance, validity or
enforceability of this Loan Agreement or the Note or any other Loan Document,
except (i) for filings and recordings in respect of the Liens created pursuant
to this Loan Agreement, and (ii) as previously obtained and currently in full
force and effect.
(c) Each Loan Document has been duly and validly executed and
delivered by the Borrower and constitutes, a legal, valid and binding obligation
of the Borrower, enforceable against the Borrower in accordance with their
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
6.05 No Legal Bar. The execution, delivery and performance of
this Loan Agreement and the Note, the borrowings hereunder and the use of the
proceeds thereof will not violate any Requirement of Law or Contractual
Obligation of the Borrower or of any of its Subsidiaries and will not result in,
or require, the creation or imposition of any Lien (other than the Liens created
hereunder) on any of its or their respective properties or revenues pursuant to
any such Requirement of Law or Contractual Obligation.
6.06 No Material Litigation. There are no actions, suits,
arbitrations, investigations or proceedings of or before any arbitrator or
Governmental Authority pending or, to the knowledge of the Borrower, threatened
against the Borrower or any of its Subsidiaries or against any of its or their
respective properties or revenues of which should reasonably be expected to have
a Material Adverse Effect.
6.07 No Default. None of the Borrower nor any of its
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect which should reasonably be expected to have a
Material Adverse Effect. No Default or Event of Default has occurred and is
continuing.
6.08 Collateral: Collateral Security.
(a) The Borrower has not assigned, pledged, or otherwise
conveyed or encumbered any of the Collateral to any Person other than the
Lender, and immediately prior to the pledge of such Collateral, the Borrower was
the sole owner of the Collateral and had good and marketable title thereto, free
and clear of all Liens, in each case except for Liens that have been released or
are to be released simultaneously with the Liens granted in favor of the Lender
hereunder.
(b) The provisions of this Loan Agreement are effective to
create in favor of the Lender a valid security interest in all right, title and
interest of the Borrower in, to and under the Collateral.
(c) Upon (i) receipt by the Custodian of each Promissory Note,
(ii) the filing (to the extent such interest can be perfected by filing under
the Uniform Commercial Code) of financing statements on Form UCC-l naming the
Lender as "Secured Party" and the Borrower as "Debtor", and describing the
Collateral, in the jurisdictions and recording offices listed on Schedule 2
attached hereto, (iii) the taking of such other actions with respect to the
Franchise Loans as the Borrower shall have notified the Lender, the security
interests and Liens granted hereunder will constitute fully perfected
first-priority security interests under the Uniform Commercial Code or
applicable state real property law, as the case may be, in all right, title and
interest of the Borrower in, to and under such Collateral.
6.09 Chief Executive Office. The Borrower's chief executive
office on the Effective Date is located at 000 Xxxxx Xxxx, Xxxxx #000,
Xxxxxxxxxx, Xxxxxxxx 00000.
6.10 Location of Books and Records. The location where the
Borrower keeps its books and records, including all computer tapes and records
relating to the Collateral is its chief executive office.
6.11 No Burdensome Restrictions. No Requirement of Law or
Contractual Obligation of the Borrower or any of its Subsidiaries has a Material
Adverse Effect.
6.12 Taxes. Each of the Borrower and its Subsidiaries has
filed all Federal and state income tax returns and all other material tax
returns that are required to be filed by them and has paid all taxes due
pursuant to such returns or pursuant to any assessment received by any of them,
except for any such taxes or assessments, if any, that are being appropriately
contested in good faith by appropriate proceedings diligently conducted and with
respect to which adequate reserves in conformity with GAAP have been provided.
No tax Lien has been filed, and, to the knowledge of
6.13 Margin Regulations. No part of the proceeds of any
Advances will be used for "purchasing" or "carrying" any "margin stock"
within the respective meanings of each of the quoted terms under, or
for any other purpose which violates or would be inconsistent with the
provisions of, Regulation T, U or X.
6.14 Investment Company Act: Other Regulations. The Borrower
is not an investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
The Borrower is not subject to regulation under any Federal or state statute or
regulation which limits its ability to incur Indebtedness.
6.15 Subsidiaries. All of the Subsidiaries of the Borrower at
the date hereof are listed on Schedule 3 to this Loan Agreement.
6.16 Origination and Acquisition of Franchise Loans. The
Franchise Loans to be pledged as collateral were originated by a Credit Party
and acquired by the Borrower, and the origination and collection practices used
by the Credit Parties or such other originator with respect to the Franchise
Loans have been, in all respects legal, proper, prudent and customary in the
commercial Franchise Loan servicing business, and in accordance with the
criteria 1i~ed on Schedule 1. The closing or escrow agent for each such
Franchise Loan is a nationally recognized title insurance company or an agent
thereof approved by the Lender.
6.17 No Adverse Selection. The Credit Parties have not
systematically selected Franchise Loans to be pledged to the Lender through a
process that is adverse to the Lender or which results in the Lender receiving
pledged Franchise Loans that are of lesser quality, determined in the sole
discretion of the Lender (exercised in good faith), than those Franchise Loans
pledged to other lenders pursuant to any other facility to which the Credit
Parties may be a party.
6.18 Borrower Solvent:Fraudulent Conveyance. As of the date
hereof and immediately after giving effect to each Advance, the fair value of
the Franchise Loans of the Borrower is greater than the fair value of the
liabilities (including, without limitation, contingent liabilities if and to the
extent required to be recorded as a liability on the financial statements of the
Borrower in accordance with GAAP) of the Borrower and the Borrower is and will
be solvent, is and will be able to pay its debts as they mature and does not and
will not have an unreasonably small capital to engage in the business in which
it is engaged and proposes to engage. Borrower does not intend to incur, or
believe that it has incurred, debts beyond its ability to pay such debts as they
mature. Borrower is not contemplating the commencement of insolvency,
bankruptcy, liquidation or consolidation proceedings or the appointment of a
receiver, liquidator, conservator, trustee or similar official in respect of
Borrower or any of its Franchise Loan. Borrower is not transferring any
Franchise Loan with any intent to hinder, delay or defraud any of its creditors.
6.19 ERISA. Each Plan to which the Borrower or its
Subsidiaries make direct contributions, and, to the knowledge of the Borrower,
each other Plan and each Multiemployer Plan, is in compliance in all material
respects with, and has been administered in all material respects in compliance
with, the applicable provisions of ERISA, the Code and any other Federal or
state law.
6.20 True and Complete Disclosure. The information, reports,
financial statements, exhibits and schedules furnished in writing by or on
behalf of the Borrower to the Lender in connection with the negotiation,
preparation or delivery of this Loan Agreement and the other Loan Documents or
included herein or therein or delivered pursuant hereto or thereto, do not
contain any untrue statement of material fact or omit to state any material fact
necessary to make the statements herein or therein not misleading. All written
information furnished after the date hereof by or on behalf of the Borrower to
the Lender in connection with this Loan Agreement and the other Loan Documents
and the transactions contemplated hereby and thereby will be true, correct and
accurate in every material respect, or (in the case of projections) based on
reasonable estimates, on the date as of which such information is stated or
certified. There is no fact known to a Responsible Officer of the Borrower that,
after due inquiry, should reasonably be expected to have a Material Adverse
Effect that has not been disclosed herein, in the other Loan Documents or in a
report, financial statement, exhibit, schedule, disclosure letter or other
writing furnished to the Lender for use in connection with the transactions
contemplated hereby or thereby.
6.21 Licenses. The Lender will not be required as a result of
financing or taking a pledge of the Franchise Loan to be licensed, registered or
approved or to obtain permits or otherwise qualify (i) to do business in any
state in which it currently so required or (ii) under any state consumer
lending, fair debt collection or other applicable state statute or regulation.
6.22 True Sales. Any Franchise Loan originated by an
Originator other than the Borrower has been conveyed to the Borrower pursuant to
a legal sale. The Borrower is operated in such a manner that it would not be
substantively consolidated in the trust estate of the Originator (that is, such
that the separate corporate existence of the Borrower and the Originator would
be disregarded), in the event of a bankruptcy or insolvency of the Originator
and in such regard:
(i) the Borrower is a special purpose limited
partnership whose activities are restricted in its certificate of partnership
and partnership agreement;
(ii) neither the Originator nor any Affiliate of the
Originator is involved in the day-to-day management of the Borrower;
(iii) other than the purchase of Franchise Loans and
other transactions contemplated by
the Franchise Loan Purchase Agreement, transactions contemplated by other
securitizations and the underlying facilities thereto, the payment of dividends
and the return of capital, any lease or sublease of office space or equipment,
and the payment of Servicing Fees to the Servicer under this Facility, the
Borrower engages in no intercorporate transactions with the Originator or any
Affiliate of the Originator;
(iv) the Borrower maintains separate records and
books of account from the Originator, holds regular meetings, and otherwise
observes limited partnership formalities and has a separate business office from
the Originator;
(v) the financial statements and books and records of
the Borrower and Originator prepared after the Closing Date reflect the separate
existence of the Borrower;
(vi) the Borrower maintains its assets separately
from the assets of the Originator and any other Affiliate of the Originator
(including through the maintenance of separate bank accounts), the Borrower's
funds and assets, and records relating thereto, have not been and are not
commingled with those of the Originator or any other Affiliate of the Originator
and the separate creditors of the Borrower will be entitled to be satisfied out
of the Borrower's assets prior to any value in the Borrower becoming available
to the Borrower's equity holders;
(vii) neither the Originator nor any Affiliate of the
Originator (A) pays the Borrower's expenses; or (b) advances funds to the
Borrower for the payment of expenses or otherwise;
(viii) all business correspondence of the Borrower
and other communications are conducted in the Borrower's own name, on its own
stationery and through a separately-listed telephone number.
6.23 Lines of Business. The Borrower engages in no other
business activities other than the acquisition of Franchise Loans from its
Affiliates, pledging such Franchise Loans hereunder and transferring such
Franchise Loans in connection with a securitization, and entering into Interest
Rate Protection Agreements, as required hereunder.
6.24 Year 2000. The Borrower has reviewed the areas within its
business and operations which could be adversely affected by, and have developed
or are developing a program to address on a timely basis the risk that computer
applications used by the Borrower may be unable to recognize and perform
properly date-sensitive functions involving certain dates prior to and any date
on or after December 31, 1999 (the "Year 2000 Problem"), and has made related
appropriate inquiry of material suppliers and vendors. Based on such review,
program and inquiry, the Borrower believes that the Year 2000 Problem will not
have a Material Adverse Effect.
SECTION 7 Covenants of the Borrower.The Borrower covenants and
agrees with the Lender that, so long as any Advance is outstanding and until the
later to occur of the payment in full of all Secured Obligations and the
termination of this Loan Agreement:
7.01 Financial Statements. The Credit Parties shall deliver to
the Lender:
(a) as soon as available and in any event within forty-five
(45) days after the end of each of the first three quarterly fiscal periods of
each fiscal year of the Credit Parties (other than CNL), the consolidated and
consolidating balance sheets of the Credit Parties (other than CNL) and their
consolidated Subsidiaries as at the end of such period and the related unaudited
consolidated and consolidating statements of income and of cash flows for the
Credit Parties (other than CNL) and their consolidated Subsidiaries for such
period and the portion of the fiscal year through the end of such period,
setting forth in each case in comparative form the figures for the previous
year, accompanied by a certificate of a Responsible Officer of such Credit
Parties, which certificate shall state that said consolidated financial
statements fairly present the consolidated and consolidating financial condition
and results of operations of the Credit Parties (other than CNL) and their
Subsidiaries in accordance with GAAP, consistently applied, as at the end of,
and for, such period (subject to normal year-end audit adjustments);
(b) as soon as available and in any event within ninety (90)
days after the end of each fiscal year of each Credit Party, the audited
consolidated and consolidating balance sheets of the Credit Parties (other than
CNL) and their consolidated Subsidiaries as at the end of such fiscal year and
the related consolidated and consolidating statements of income and retained
earnings and of cash flows for the Credit Parties (other than CNL) and their
consolidated Subsidiaries for such year, setting forth in each case in
comparative form the figures for the previous year, accompanied by an opinion
thereon of independent certified public accountants of recognized national
standing, which opinion shall not be qualified as to scope of audit or going
concern and shall state that said consolidated and consolidating financial
statements fairly present the consolidated and consolidating financial condition
and results of operations of the Credit Parties (other than CNL) and their
consolidated Subsidiaries as at the end of, and for, such fiscal year in
accordance with GAAP;
(c) from time to Lime such other information regarding the
financial condition, operations, or business of the Credit Parties and their
Subsidiaries as the Lender may reasonably request; and
(d) (i) at the same time as information is delivered to the
Lender in accordance with Sections 7.01(a) and (b) hereof, a statement of the
tangible net worth of CNL, certified as true and correct by a Responsible
Officer of CNL and (ii) at the same time as information is delivered to the
Lender in accordance with Sections 7.01(b) hereof a copy of an auditor's letter
with respect to the most recent audit of CNL which states that CNL is a going
concern and that such auditor has delivered an unqualified opinion with respect
to CNL.
7.02 Existence. Etc. The Borrower will:
(a) preserve and maintain its legal existence as a
limited partnership;
(b) preserve and maintain all of its material rights,
privileges, licenses and franchises;
(c) comply with the requirements of all applicable
Requirements of Law (including, without limitation, the Truth in
Lending Act, the Real Estate Settlement Procedures Act and all
environmental laws) if failure to comply with such requirements should
reasonably be expected (either individually or in the aggregate) to
have a Material Adverse Effect;
(d) keep adequate records and books of account, in which
complete entries will be made in accordance with GAAP consistently
applied; and
(e) not amend, supplement or otherwise modify its operating
agreement or other organizational documents without the prior written
consent of the Lender.
7.03 Maintenance of Property: Insurance. The Borrower shall
keep all property useful and necessary in its business in good working order and
condition. The Borrower shall maintain, on behalf of itself, CFC and CFS, errors
and omissions insurance and director and officer insurance in an aggregate
amount of at least $10,000,000, in substance satisfactory to the Lender. The
above described coverages shall not be reduced without the written consent of
the Lender. The Borrower shall also maintain such other insurance with
financially sound and reputable insurance companies, and with respect to
property and risks of a character usually maintained by entities engaged in the
same or similar business similarly situated, against loss, damage and liability
of the kinds and in the amounts customarily maintained by such entities. All
insurance companies issuing insurance pursuant to this section shall be
acceptable to the Lender in its sole discretion and shall have no less than an
"A2" rating by Xxxxx'x Investors Service, Inc. and "A" by Standard & Poor's
Rating Group.
7.04 Notices.
(a) The Borrower shall give notice to the Lender promptly:
(i) upon the Borrower becoming aware of, and in any
event within one (1) Business Day after, the occurrence of any Default
or Event of Default (unless such Default or Event of Default has been
waived in writing by the Lender) or any event of default or default
which with the lapse of time or notice or both would become an event of
default under any other material agreement of the Borrower;
(ii) upon, and in any event within five (5) Business
Days after, service of process on the Borrower or any of its
Subsidiaries, or any agent thereof for service of process, in respect
of any legal or arbitrable proceedings affecting the Borrower or any of
its Subsidiaries (a) that questions or challenges the validity or
enforceability of any of the Loan Documents or (b) in which the amount
in controversy exceeds S 100,000;
(iii) upon the Borrower becoming aware of any
material default related to any Franchise Loan, any Material Adverse
Effect and any event or change in circumstances which should reasonably
be expected to have a Material Adverse Effect;
(iv) upon the Borrower becoming aware that the
Secured Property in respect of any Franchise Loan has been damaged by
waste, fire, earthquake or earth movement, windstorm, flood, tornado or
other casualty, or otherwise damaged so as to materially and adversely
affect the Collateral Value of such Franchise Loan;
(v) upon the Borrower's receipt of any Payoff
Proceeds of any Franchise Loan, and in any event within one (1)
Business Day after receipt thereof;
(vi) of entry of a judgment or decree against any
Credit Party in an amount in excess of $100,000.
Each notice pursuant to this Section 7.04(a) (other than 7.04(a)(v)) shall be
accompanied by a statement of a Responsible Officer of the Borrower setting
forth details of the occurrence referred to therein and stating what action the
Borrower has taken or proposes to take with respect thereto.
7.05 Other Information. The Borrower shall furnish to the
Lender, as soon as available, copies of any and all proxy statements, financial
statements and reports which the Borrower sends to its stockholders, and copies
of all regular, periodic and special reports, and all registration statements
filed with the Securities and Exchange Commission or any Governmental Authority
which supervises the issuance of securities by the Borrower and any press
releases concerning the Borrower.
7.06 Further Identification of Collateral. The Borrower will
furnish to the Lender from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as the Lender or any Lender may reasonably request, all in
reasonable detail.
7.07 Franchise Loan Determined to be Defective. Upon discovery
by the Borrower or the Lender of any breach of any representation or warranty
listed on Schedule I hereto applicable to any Franchise Loan, the party
discovering such breach shall promptly give written notice of such discovery to
the other, together with a completed Eligibility Violation Notice.
7.08 Reports.
(a) The Borrower shall deliver or cause to be delivered to the
Lender, (i) by 12:00 noon, New York City time on Monday of each week, (ii) two
Business Days prior to each Funding Date, and (iii) at any time upon the request
of the Lender, a servicing report and Franchise Loan Tape in a computer-readable
format reasonably acceptable to the Lender, listing and setting forth such
information in respect of, all Franchise Loans as the Lender may reasonably
request, including, without limitation, the outstanding principal balance, any
prepayments and delinquency status of each Franchise Loan. The Borrower shall
deliver to the Lender a hard copy of any such report upon request of the Lender.
(b) The Borrower shall notify the Lender within forty-eight
(48) hours of the Borrower gaining knowledge of any event or circumstance which
could reasonably ~e expected to become a default under any Franchise Loan
Document or any actual default under any Franchise Loan Document, which report
shall be in the form of an Eligibility Violation Notice. The Borrower shall
deliver to the Lender a hard copy of any such report.
(c) The Borrower shall deliver to the Lender and/or permit the
Lender to inspect any property, books, valuations, records, audits or other
information as the Lender may reasonably request.
7.09 Borrowing Base Deficiency.If at any time there exists a
Borrowing Base Deficiency the Borrower shall cure same in accordance with
Section 2.06 hereof.
7.10 Prohibition of Fundamental Changes. Neither the Borrower
nor any of its Subsidiaries shall enter into any transaction of merger or
consolidation or amalgamation (other than among Affiliates), or liquidate, wind
up or dissolve itself (or suffer any liquidation, winding up or dissolution) or
sell all or substantially all of its assets (other than to Affiliates), without
the prior written consent of the Lender (determined in good faith).
7.11 Limitation on Liens on Collateral. The Borrower will
defend the Collateral against, and will take such other action as is necessary
to remove, any Lien, security interest or claim on or to the Collateral, other
than the security interests created or permitted under this Loan Agreement, and
the Borrower will defend the right, title and interest of the Lender in and to
any of the Collateral against the claims and demands of all persons whomsoever.
7.12 Limitation on Sale or Other Disposition of Collateral.
The Borrower will not lease, transfer, assign, sell or otherwise dispose of any
Collateral (other than in the ordinary course of business) without the prior
written consent of the Lender, unless the proceeds of such sale are applied to
repay the Advances, and after giving effect to such transaction, any Advances
then outstanding do not exceed the Borrowing Base.
7.13 Limitation on Transactions with Affiliates. Neither the
Borrower nor any of its Subsidiaries shall enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of property
or the rendering of any service, with any Affiliate unless such transaction is
(a) not otherwise prohibited under this Loan Agreement, (b) in the ordinary
course of the Borrower's business and (c) upon fair and reasonable terms no less
favorable to the Borrower, as the case may be, than it would obtain in a
comparable arm's length transaction with a Person which is not an Affiliate.
7.14 Underwriting Guidelines. Without prior written consent of
the Lender, the Borrower shall not permit another Credit Party to amend or
otherwise modify its Underwriting Guidelines.
7.15 Limitations on Modifications, Waivers and Extensions of
Franchise Loan Documents. The Borrower will not, nor will it permit or allow
others to, amend, modify, terminate or waive any provision of any Franchise Loan
Document or Franchise Loan Transfer Document to which the Borrower is a party in
any manner which should reasonably be expected to materially and adversely
affect the value of such Franchise Loan as Collateral. The Borrower shall take
such actions as the Lender shall request to enforce the Borrower's rights under
the Franchise Loan Documents and Franchise Loan Transfer Documents, and shall
take such actions as are necessary to enable the Lender to exercise such rights
in the Lender's own name.
7.16 Servicing. The Borrower shall not permit any Person other
than the Servicer to service Franchise Loans without the prior written consent
of the Lender.
7.17 Limitation on Distributions.
(a) The Borrower shall not declare, pay or make any
distribution (in cash, property or obligations) on any beneficial interest (now
or hereafter outstanding) of the Borrower on any warrants, options or other
rights with respect to any beneficial interest (now or hereafter outstanding) of
the Borrower or apply any of its funds, property or assets to the purchase,
redemption, sinking fund or other retirement of any beneficial interest (now or
hereafter outstanding) of the Borrower, or warrants, options or other rights
with respect to any beneficial interest (now or hereafter outstanding) of the
Borrower; and
(b) the Borrower shall not make any deposit for any of the
foregoing purposes; except that the Borrower may declare, pay or make
distributions (in cash or property) on any beneficial interest or on warrants,
options or other rights with respect to any beneficial interest or make loans to
any holder of a beneficial interest if immediately prior and after giving effect
to any proposed action described above, (i) no Default or Event of Default shall
have occurred and be continuing, and (ii) after giving effect to such
distribution, the Borrower shall have a positive net worth calculated in
accordance with GAAP.
7.18 Use of Proceeds. The Borrower will use the proceeds of
the Advances solely for the purposes set forth in Section 2.09 hereof.
7.19 Selection of Collateral. The Borrower shall not
systematically select Franchise Loans to be pledged to the Lender through a
process that is adverse to the Lender or which results in the Lender receiving
pledged Franchise Loans that are of lesser quality, determined in the sole
discretion of the Lender (exercised in good faith), than those Franchise Loans
pledged to other lenders pursuant to any other facility to which the Borrower
may be a party.
7.20 Interest Rate Protection Agreements. The Borrower shall
purchase Interest Rate Protection Agreements from Approved Hedge Counterparties,
in form and substance acceptable to the Lender, for each Franchise Loan pledged
under this Loan Agreement which bears interest at a fixed rate. The Borrower
shall maintain such Interest Rate Protection Agreements so long as the related
Franchise Loan is included in the Borrowing Base.
7.21 Lines of Business. The Borrower shall not engage in any
other business activities other than the acquisition of Franchise Loans from its
Affiliates, pledging such Franchise Loans hereunder and transferring such
Franchise Loans in connection with a securitization.
7.22 Securitization of Franchise Loans.
(a) Each securitization of Franchise Loans by the Credit
Parties or their Affiliates after the Effective Date shall include Franchise
Loans pledged to the Lender under this Loan Agreement in an aggregate principal
amount of not less than the product of (a) the aggregate principal amount of all
Advances outstanding under this Loan Agreement divided by the aggregate
principal amount of all loans outstanding under all warehouse financing
arrangements of the Credit Parties and/or their Affiliates and (b) the aggregate
principal amount of all Franchise Loans, Collateralizing such securitization
(the "Minimum Amount"). If the Lender determines that the Minimum Amount is not
appropriate for securitizations due to prevailing market conditions, the
Borrower and the Lender shall jointly arrive at an optimum amount of Franchise
Loans to be securitized from this Loan Agreement.
(b) The Credit Parties agree that PSI shall have the right of
first refusal to be either the lead underwriter or lead placement agent or
co-underwriter or co-placement agent for all securitizations of Franchise Loans
by a Credit Party while this Loan Agreement remains outstanding. The Borrower
further agrees that PSI shall have the right of first refusal to act as the lead
underwriter or lead placement agent for at least one of the next two
securitizations relating to Franchise Loans consummated after the Effective Date
and while this Loan Agreement remains outstanding. The underwriting/placement
fee of PSI shall be based on the current market conditions at the time of the
related securitization.
(c) Notwithstanding anything to the contrary contained herein,
nothing set forth in this Section 7.22 is intended to be and does not constitute
a commitment or obligation by PSI or any of its Affiliates to act as an
underwriter or placement agent in connection with any offering or sale of
securities or arrange any financing by the Borrower, any other Credit Party or
their Affiliates; and no liability or obligation on the part of PSI or any of
its Affiliates to proceed with or participate in an offering of securities or
arrangement of financing by the Borrower, any other Credit Party or their
Affiliates shall be created or exist unless or until PSI or such Affiliate, as
the case may be, has executed and delivered a purchase agreement, placement
agency or similar agreement containing PSI's or such Affiliate's customary
provisions (including provisions with respect to indemnification and
contribution) and then only in accordance with the terms and conditions set
forth therein.
7.23 Year 2000 Procedures. The Borrower shall (i) review the
areas within its business and operations which could be adversely affected by,
and will develop and implement a program to address on a timely basis the Year
2000 Problem, and will make related appropriate inquiry of material suppliers
and vendors and (ii) notify the Lender if any auditor, regulator or third party
consultant has issued a management letter or other communication regarding the
Year 2000 Problem, program or progress of the Borrower.
SECTION 8 Events of Default. Each of the following events
shall constitute an event of default (an "Event of Default") hereunder:
(a) Borrower Default in the Payment of any Advance. The
Borrower shall default in the payment of any principal of or interest on any
Advance when due (whether at stated maturity, upon acceleration or at mandatory
or optional prepayment); or
(b) Borrower Default in the Payment of Other Amount. The
Borrower shall default in the payment of any other amount payable by it
hereunder or under any other Loan Document and such default shall continue for a
period of five (5) Business Days following written demand from the Lender for
payment of such amounts; or
(c) Failure of Representation or Warranty. Any representation,
warranty or certification (excluding representations, warranties or
certifications contained in Schedule 1 or otherwise relating to a Franchise Loan
pledged hereunder for which the remedy for such breach is the removal of such
Franchise Loan from the Borrowing Base or an appropriate adjustment in the
Collateral Value of such Franchise Loan) made or deemed made by the Borrower
herein or by the Borrower in any other Loan Document or any certificate
furnished to the Lender pursuant to the provisions thereof, shall prove to have
been false or misleading in any material respect as of the time made or
furnished; or
(d) Default of Covenant. Any Credit Party shall:
(i) in the case of the Borrower, fail to comply with
the requirements of Section 7 hereof (other than Sections 7.01,
7.02(b), 7.02(d), 7.03, or 7.08),
(ii) in the case of the Borrower, fail to comply with
the requirements of Sections 7.01, 7.02(b), 7.02(d), 7.03, or 7.08
and such default shall continue unremedied for a period of five (5)
Business Days,
(iii) in the case of any Credit Party, fail to
observe or perform any other covenant, condition or agreement
contained in this Loan Agreement or any other Basic Document to
which it is a party and such failure to observe or perform shall
continue unremedied for a period of fifteen (15) Business Days; or
(e) Cross Default. Any Credit Party shall:
(i) in the case of the Borrower, default in any
payment of principal of or interest on any Indebtedness (other than
the Advances) or in the payment of any Guarantee Obligation, beyond
the period of grace (not to exceed 30 days), if any, provided in
the instrument or agreement under which such Indebtedness or
Guarantee Obligation was created; or
(ii) in the case of any other Credit Party, default
in any payment of principal of or interest on any Indebtedness
(other than the Advances) or in the payment of any Guarantee
Obligation, beyond the period of grace (not to exceed 30 days), if
any, provided in the instrument or agreement under which such
Indebtedness or Guarantee Obligation was created, if the aggregate
amount of the Indebtedness and/or Guarantee Obligations in respect
of which such default or defaults shall have occurred is $500,000
or more; or
(iii) in the case of the Borrower, default in the
observance or performance of any other agreement or condition
relating to any Indebtedness (other than the Advances) or Guarantee
Obligation or contained in any instrument or agreement evidencing,
securing or relating thereto, in each case beyond the period of
grace (not to exceed 30 days), if any, provided in the instrument
or agreement under which such Indebtedness or Guarantee Obligation
was created; or
(iv) in the case of any other Credit Party, default
in the observance or performance of any other agreement or
condition relating to any Indebtedness (other than the Advances) or
Guarantee Obligation or contained in any instrument or agreement
evidencing, securing or relating thereto, in each case beyond the
period of grace (not to exceed 30 days), if any, provided in the
instrument or agreement under which such Indebtedness or Guarantee
Obligation was created, if the aggregate amount of the Indebtedness
and/or Guarantee Obligations in respect of which such default or
defaults shall have occurred is $500,000 or more; or
(v) a default of any other agreement between a Credit
Party, on the one hand, and Lender or any of its Affiliates on the
other hand, which has not been waived by the Lender, the effect of
which default or other event or condition is to cause, or give the
holder or holders of such Indebtedness or the beneficiary or
beneficiaries of such Guarantee Obligation (or a trustee or agent
on behalf of such holder or holders or beneficiary or
beneficiaries) the immediate right to cause, with the giving of
notice if required, such Indebtedness to become due prior to its
stated maturity or such Guarantee Obligation to become payable; or
(f) Unsatisfied Judgment. One or more judgments or decrees
shall be entered against. the Borrower or any of its Subsidiaries or any Credit
Party involving in the aggregate a liability (not paid or fully covered by
insurance) of $250,000 or more, and all such judgments or decrees shall not have
been vacated, discharged, stayed or bonded pending appeal within 60 days from
the entry thereof; or
(g) Inability to Pay Debts. The Borrower or any Credit Party
shall admit in writing its inability to pay its debts as such debts become due;
or
(h) Voluntary Bankruptcy Event. Any Credit Party or any of
their Subsidiaries shall (i) apply for or consent to the appointment of, or the
taking of possession by, a receiver, custodian, trustee, examiner or liquidator
of itself or of all or a substantial part of its property, (ii) make a general
assignment for the benefit of its creditors, (iii) commence a voluntary case
under the Bankruptcy Code, (iv) file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, reorganization, liquidation,
dissolution, arrangement or winding-up, or composition or readjustment of debts,
(v) fail to controvert in a timely and appropriate manner, or acquiesce in
writing to, any petition filed against it in an involuntary case under the
Bankruptcy Code or (vi) take any corporate or other action for the purpose of
effecting any of the foregoing; or
(i) Involuntary Bankruptcy Event. A proceeding or case shall
be commenced, without the application or consent of a Credit Party or any of
their Subsidiaries, in any court of competent jurisdiction, seeking (i) its
reorganization, liquidation, dissolution, arrangement or winding-up, or the
composition or readjustment of its debts, (ii) the appointment of a receiver,
custodian, trustee, examiner, liquidator or the like of the Borrower or any such
Subsidiary or of all or any substantial part of its property, or (iii) similar
relief in respect of the Borrower or any such Subsidiary under any law relating
to bankruptcy, insolvency, reorganization, winding-up, or composition or
adjustment of debts, and such proceeding or case shall continue undismissed, or
an order, judgment or decree approving or ordering any of the foregoing shall be
entered and continue unstayed and in effect, for a period of 60 or more days; or
an order for relief against the Borrower or any such Subsidiary shall be entered
in an involuntary case under the Bankruptcy Code; or
(j) Termination of Loan Documents. The Custodial Agreement, or
any other Loan Document or Basic Document, shall for whatever reason be
terminated or cease to be in full force and effect, or the enforceability
thereof shall be contested by any party thereto; or
(k) ERISA Default. (i) any Person shall engage in any
"prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of
the Code) involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA). whether or nor waived, shall exist with
respect to any Plan or any Lien in favor of the PBGC or a Plan shall arise on,
the Franchise Loan of the Borrower or any Commonly Controlled Entity, (iii) a
Reportable Event shall occur with respect to, or proceedings shall commence to
have a trustee appointed, or a trustee shall be appointed, to administer or to
terminate, any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of the
Lender, likely to result in the termination of such Plan for purposes of Title
IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title
IV of ERISA, (v) the Borrower or any Commonly Controlled Entity shall, or in the
reasonable opinion of the Lender is likely to, incur any liability in connection
with a withdrawal from, or the insolvency or reorganization of, a Multiemployer
Plan or (vi) any other event or condition shall occur or exist with respect to a
Plan; and in each case in clauses (i) through (vi) above, such event or
condition, together with all other such events or conditions, if any, could
reasonably be expected to have a Material Adverse Effect; or
(1) Material Adverse Effect. Any other event shall occur
which, in the sole good faith discretion of the Lender, may have a Material
Adverse Effect; or
(m) Change of Control. CFC or an Affiliate shall cease to own
a majority of the issued and outstanding shares of voting capital stock of the
general partner of the Borrower without the written consent of the Lender
(determined in good faith); or
(n) Pre-Existing Condition. The discovery by the Lender during
its continuing due diligence of the Borrower of a condition or event which
existed at or prior to the execution hereof which was not previously disclosed
to the Lender and which the Lender, in its sole reasonable discretion,
determines materially and adversely affects: (i) the condition (financial or
otherwise) of the Borrower, its Subsidiaries or Affiliates; or (ii) the ability
of either the Borrower or the Lender to fulfill its respective obligations under
this Agreement; or
(o) Other Liens. The Borrower shall grant, or suffer to exist,
any Lien on any Collateral except the Liens contemplated hereby; or the Liens
contemplated hereby shall cease to be first priority perfected Liens on the
Collateral in favor of the Lender or shall be Liens in favor of any Person other
than the Lender; or
(p) Failure to Answer. The Lender shall reasonably request,
specifying the reasons for such request, information, and/or written responses
to such requests, regarding the financial well-being of the Borrower and such
information and/or responses shall not have been provided within three Business
Days of such request.
(q) Perfection of Collateral. The Lender shall cease to have a
valid, fully perfected and enforceable first priority security interest in the
Collateral.
SECTION 9 Remedies Upon Default.
(a) Upon the occurrence of one or more Events of Default other
than those referred to in Sections 8(h) or (i), and in addition to the remedies
provided in Section 4.07 hereof and otherwise provided in this Loan Agreement,
the Lender may immediately declare the principal amount of the Advances then
outstanding under the Note to be immediately due and payable, together with all
interest thereon and fees and expenses accruing under this Loan Agreement. Upon
the occurrence of an Event of Default referred to in Sections 8(h) or (i), and
in addition to the remedies provided in Section 4.07 hereof and otherwise
provided in this Loan Agreement, such amounts shall immediately and
automatically become due and payable without any further action by any Person.
Upon such declaration or such automatic acceleration, the balance then
outstanding on the Note shall become immediately due and payable, without
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by the Borrower.
(b) Upon the occurrence of one or more Events of Default, and
in addition to the remedies provided in Section 4.07 hereof and otherwise
provided in this Loan Agreement, the Lender shall have the right to obtain
physical possession of the Servicing Records and all other files of the Borrower
relating to the Collateral and all documents relating to the Collateral which
are then or may thereafter come in to the possession of the Borrower or any
third party acting for the Borrower and the Borrower shall deliver to the Lender
such assignments as the Lender shall request. The Borrower shall be responsible
for paying any fees of any Servicer resulting from the termination of a Servicer
due to an Event of Default. The Lender shall have the right to demand transfer
of all servicing rights and obligations to a new servicer acceptable to the
Lender (such new servicer shall receive a servicing fee or any other amounts
necessary to assure the ability of the Lender to find an appropriate successor
servicer). The Lender shall be entitled to specific performance of all
agreements of the Borrower contained in this Loan Agreement.
SECTION 10 No Duty of Lender. The powers conferred on the
Lender hereunder are solely to protect the Lender's interests in the Collateral
and shall not impose any duty upon it to exercise any such powers. The Lender
shall be accountable only for amounts that it actually receives as a result of
the exercise of such powers, and neither it nor any of its officers, directors,
employees or agents shall be responsible to the Borrower for any act or failure
to act hereunder, except for its or their own gross negligence or willful
misconduct.
SECTION 11 Miscellaneous.
11.01 Waiver. No failure on the part of the Lender to exercise
and no delay in exercising, and no course of dealing with respect to, any right,
power or privilege under any Loan Document shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or privilege under
any Loan Document preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
11.02 Notices. Except as otherwise expressly permitted by this
Loan Agreement, all notices, requests and other communications provided for
herein and under the Custodial Agreement (including without limitation any
modifications of, or waivers, requests or consents under, this Loan Agreement)
shall be given or made in writing (including without limitation by telex or
telecopy) delivered to the intended recipient at the "Address for Notices"
specified below its name on the signature pages hereof or thereof); or, as to
any party, at such other address as shall be designated by such party in a
written notice to each other party. Except as otherwise provided in this Loan
Agreement and except for notices given under Section 2 (which shall be effective
only on receipt), all such communications shall be deemed to have been duly
given when transmitted by telex or telecopy or personally delivered or, in the
case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.
11.03. Indemnification and Expenses.
(a) The Borrower agrees to hold the Lender and each of its officers,
directors, agents and employees (each, an "Indemnified Party") harmless from and
indemnify each Indemnified Party against all liabilities, losses, damages,
judgments, costs and expenses of any kind which may be imposed on, incurred by
or asserted against such Indemnified Party in any suit, action, claim or
proceeding relating to or arising out of this Loan Agreement, the Note, any
other Loan Document or any transaction contemplated hereby or thereby, or any
amendment, supplement or modification of, or any waiver or consent under or in
respect of, this Loan Agreement, the Note, any other Loan Document or any
transaction contemplated hereby or thereby, except, in each case, to the extent
arising from such Indemnified Party's gross negligence or willful misconduct. In
any suit, proceeding or action brought by the Lender in connection with any
Franchise Loan for any sum owing thereunder, or to enforce any provisions of any
such Franchise Loan, the Borrower will save, indemnify and hold the Lender
harmless from and against all expense, loss or damage suffered by reason of any
defense, set-off, counterclaim, recoupment or reduction or liability whatsoever
of the account debtor or obligor thereunder, arising out of a breach by the
Borrower of any obligation thereunder or arising out of any other agreement,
indebtedness or liability at any time owing to or in favor of such account
debtor or obligor or its successors from the Borrower. The Borrower also agrees
to reimburse the Lender as and when billed by the Lender for all the Lender's
costs and expenses incurred in connection with the good faith enforcement or the
preservation of the Lender's rights under this Loan Agreement, the Note, any
other Loan Document or any transaction contemplated hereby or thereby, including
without limitation the fees and disbursements of its counsel (including all fees
and disbursements incurred in any action or proceeding between the Borrower and
an Indemnified Party or between an Indemnified Party and any third party
relating hereto). The Borrower hereby acknowledges that, notwithstanding the
fact that the Note is secured by the Collateral, the obligation of the Borrower
under the Note is a recourse obligation of the Borrower.
(b) The Borrower agrees to pay as and when billed by the
Lender all of the reasonable out-of-pocket costs and expenses incurred by the
Lender in connection with the development, preparation and execution of, and any
amendment, supplement or modification to, this Loan Agreement, the Note, any
other Loan Document or any other documents prepared in connection herewith or
therewith, and the consummation and administration of the transactions
contemplated hereby and thereby, including without limitation (i) all the
reasonable fees, disbursements and expenses of counsel to the Lender; provided,
that in no event shall the Borrower be liable for the fees of the Lender's
counsel in excess of $75,000 and (ii) all the due diligence, inspection, testing
and review costs and expenses incurred by the Lender with respect to Collateral
under this Loan Agreement; provided that in no event shall the Borrower be
liable for fees and expenses of a third-party underwriter who is hired to review
the Franchise Loans in excess of $50,000 over the term of this Loan Agreement.
11.04 Amendments Except as otherwise expressly provided in
this Loan Agreement, any provision of this Loan Agreement may be modified or
supplemented only by an instrument in writing signed by the Borrower and the
Lender and any provision of this Loan Agreement may be waived by the Lender;
pr~yi4~4, that the Lender and the Borrower shall not amend the provisions of
Section 3.03(b) or Section 4.06 hereof without the prior written consent of any
Hedge Counterparty adversely affected thereby.
11.05 Successors and Assigns. This Loan Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
11.06 Survival. The obligations of the Borrower under Section
11.03 hereof shall survive the repayment of the Advances and the termination of
this Loan Agreement. In addition, each representation and warranty made or
deemed to be made by a request for a borrowing herein or pursuant hereto shall
survive the making of such representation and warranty, and the Lender shall not
be deemed to have waived, by reason of making any Advance, any Default that may
arise because any such representation or warranty shall have proved to be false
or misleading, notwithstanding that the Lender may have had notice or knowledge
or reason to believe that such representation or warranty was false or
misleading at the time such Advance was made.
11.07 Captions. The table of contents and captions and section
headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this Loan
Agreement.
11.08 Counterparts. This Loan Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute this Loan Agreement
by signing any such counterpart.
11.09 GOVERNING LAW: ETC. THIS LOAN AGREEMENT SHALL BE
GOVERNED BY THE LAW OF THE STATE OF NEW YORK WITHOUT REFERENCE TO CHOICE OF LAW
DOCTRINE (BUT WITH REFERENCE TO SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW, WHICH BY ITS TERMS APPLIES TO THIS LOAN AGREEMENT), AND SHALL
CONSTITUTE A SECURITY AGREEMENT WITHIN THE MEANING OF THE UNIFORM COMMERCIAL
CODE.
11.10 SUBMISSION TO JURISDICTION: WAIVERS. THE BORROWER HEREBY
IRREVOCABLY AND UNCONDITIONALLY:
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS LOAN AGREEMENT, THE NOTE AND THE OTHER LOAN
DOCUMENTS, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT
THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF
NEW YORK, THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;
(B) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT
IN SUCH COURTS AND, TO THE EXTENT PERMITI~ED BY LAW, WAIVES ANY OBJECTION THAT
IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN
ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT
COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
CW&T/JADOCS\NCLIB1\PWERTZ\0041891 .14 -45-
(C) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED
MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS
ADDRESS SET FORTH UNDER lTS SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF WHICH
THE LENDER SHALL HAVE BEEN NOTIFIED; AND
(D) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO
EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT
THE RIGHT TO XXX IN ANY OTHER JURISDICTION.
11.11 WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE
LENDER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS LOAN AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
11.12 Acknowledgments. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Loan Agreement, the Note and the other
Loan Documents;
(b) the Lender has no fiduciary relationship to the Borrower,
and the relationship between the Borrower and the Lender is solely that
of debtor and creditor; and
(c) no joint venture exists between the Lender and the
Borrower.
11.13 Hypothecation and Pledge of Collateral. The Lender shall
have free and unrestricted use of all Collateral and nothing in this Loan
Agreement shall preclude the Lender from engaging in repurchase transactions
with the Collateral or evidence of the Lender's interest in the Collateral
relating thereto or otherwise pledging, repledging, transferring, hypothecating,
or rehypothecating the Collateral. Nothing contained in this Loan Agreement
shall obligate the Lender to segregate any Collateral delivered to the Lender by
the Borrower. Nothing contained in this section shall impair or affect any
rights of the Borrower under the Loan Documents, including the right to have any
Franchise Loan released from any lien of the Lender upon payment to the Lender
of the principal balance of the Advance relating to such Franchise Loan.
11.14 Assignments: Participations.
(a) The Borrower may not assign any of its rights or
obligations hereunder or under the Note without the prior written consent of the
Lender. The Lender may assign or transfer to any Affiliate of the Lender or
(following an Event of Default) any other Person all or any of its rights or
obligations under this Loan Agreement and the other Loan Documents.
Notwithstanding the foregoing, the Lender shall have the right, without the
consent of the Borrower, to pledge, assign or otherwise transfer its interest in
the Note (without assigning its obligations under the Loan Agreement or any
other Loan Documents) to any other Person.
(b) The Lender may, without the prior written consent of the
Borrower, at any time sell to any other Person participating interests in any
Advance owing to the Lender hereunder, any commitment of the Lender to make
Advances hereunder, its interest in the Collateral, or any other interest of the
Lender hereunder or under any other Loan Document.
(c) The Borrower agrees to cooperate with the Lender in
connection with any such assignment or transfer, to execute and deliver such
replacement notes, and to enter into such restatements of, and amendments,
supplements and other modifications to, this Loan Agreement and the other Loan
Documents in order to give effect to such assignment or transfer.
11.15 Servicing.
(a) The Borrower covenants to maintain or cause the servicing
of the Franchise Loans to be maintained in conformity with accepted customary
and prudent servicing practices in the industry for the same type of Franchise
Loans as the Franchise Loans and in a manner at least equal in quality to the
servicing the Borrower provides for Franchise Loans which it owns ("Accepted
Servicing Practices"). In the event that the preceding language is interpreted
as constituting one or more servicing contracts, each such servicing contract
shall terminate automatically upon the earlier of (i) an Event of Default, or
(ii) the Termination Date.
(b) The Borrower agrees that the Lender is the collateral
assignee of all servicing records, including but not limited to any and all
servicing agreements, files, documents, records, data bases, computer tapes,
copies of computer tapes, proof of insurance coverage, insurance policies,
appraisals, other closing documentation, payment history records, and any other
records relating to or evidencing the servicing of Franchise Loans (the
"Servicing Records"), and (ii) the Borrower grants the Lender a security
interest in all of the Borrower's rights relating to the Franchise Loans and all
Servicing Records to secure the obligation of the Borrower or its designee to
service in conformity with this Section and any other obligation of the Borrower
to the Lender. The Borrower covenants to safeguard such Servicing Records and to
deliver them promptly to the Lender or its designee (including the Custodian) at
the Lender's request.
(c) After the Funding Date, until the pledge of any Franchise
Loan is relinquished by the Custodian, the Borrower will have no right to modify
or alter the terms of such Franchise Loan Documents except with the prior
written consent of the Lender, and the Borrower will have no obligation or right
to repossess such Franchise Loan or substitute another Franchise Loan, except as
provided in the Custodial Agreement; provided, that the Borrower may enter into
forbearance agreements or plans with Obligors consistent with its collection
activities as servicer of the Franchise Loans and in conformity with Accepted
Servicing Practices.
(d) The Borrower shall permit the Lender to inspect the
Borrower's or its Affiliate's servicing facilities, as the case may be, for the
purpose of satisfying the Lender that the Borrower or its Affiliate, as the case
may be, has the ability to service the Franchise Loans as provided in this Loan
Agreement.
11.16 Periodic Due Diligence Review. The Borrower acknowledges
that the Lender has the right to perform continuing due diligence reviews with
respect to the Franchise Loans, for purposes of verifying compliance with the
representations, warranties and specifications made hereunder, or otherwise, and
the Borrower agrees that upon reasonable (but no less than two (2) Business
Day's) prior notice to the Borrower (which prior notice shall not be required
after the occurrence and during the continuation of a Default), the Lender or
its authorized representatives will be permitted during normal business hours to
examine, inspect, and make copies and extracts of, the Franchise Loan Files and
any and all documents, records, agreements, instruments or information relating
to such Franchise Loans in the possession or under the control of the Borrower
and/or the Custodian. The Borrower also shall make available to the Lender a
knowledgeable credit, financial or accounting officer for the purpose of
answering questions respecting the Franchise Loan Files and the Franchise Loans.
Without limiting the generality of the foregoing, the Borrower acknowledges that
the Lender may make Advances to the Borrower based solely upon the information
provided by the Borrower to the Lender and the representations, warranties and
covenants contained herein, and that the Lender, at its option, has the right at
any time to conduct a partial or complete due diligence review on some or all of
the Franchise Loans securing such Advance, including without limitation ordering
new credit reports and new appraisals on the related Mortgaged Properties and
otherwise re-generating the information used to originate such Franchise Loans.
The Lender may underwrite such Franchise Loans itself or engage a mutually
agreed upon third party underwriter to perform such underwriting. The Borrower
agrees to cooperate with the Lender and any third party underwriter in
connection with such underwriting, including, but not limited to, providing the
Lender and any third party underwriter with access to any and all documents,
records, agreements, instruments or information relating to such Franchise Loans
in the possession, or under the control, of the Borrower. The Borrower further
agrees that the Borrower shall reimburse the Lender for all reasonable
out-of-pocket costs and expenses incurred by the Lender in connection with the
Lender's activities pursuant to this Section 11.16; provided, that the
obligation of the Borrower to pay such costs and expenses shall be limited to no
more than two such diligence reviews during each year. Notwithstanding anything
to the contrary in this Section 11.16, this section shall not be implied to
authorize the Lender to perform due diligence with respect to CNL, other than as
permitted in Section 7.01(d).
11.17 Set-Off. In addition to any rights and remedies of the
Lender provided by this Loan Agreement and by law, the Lender shall have the
right, without prior notice to the Borrower, any such notice being expressly
waived by the Borrower to the extent permitted by applicable law, upon any
amount becoming due and payable by the Borrower hereunder (whether at the stated
maturity, by acceleration or otherwise) to set-off and appropriate and apply
against such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by the Lender or any
Affiliate thereof to or for the credit or the account of the Borrower. The
Lender agrees promptly to notify the Borrower after any such set-off and
application made by the Lender; provided that the failure to give such notice
shall not affect the validity of such set-off and application.
11.18 Confidentiality. The Lender and the Credit Parties agree
to keep the terms of this Loan Agreement and the other Loan Documents
confidential; provided, that the Lender and the Credit Parties shall have the
right to disseminate such information (i) to the Custodian, the Servicer, any
outside accounting firm performing analyses in connection with this Loan
Agreement or the transactions contemplated hereunder which agrees to comply with
the provisions of this Section 11.18 (ii) to any proposed assignee of the Lender
which agrees to comply with the provisions of this Section 11.18, (iii) to their
respective employees, directors, agents, attorneys, accountants and other
professional advisors (other than competitors of the Lender) who agree to comply
with the provisions of this Section 11.18, (iv) upon the request or demand of
any examiner or other Governmental Authority having jurisdiction over the such
party, (v) in response to any order of any court or other Governmental
Authority, (vi) as may otherwise be required pursuant to any Requirement of Law,
(vii) in connection with the exercise of any remedy hereunder, and (viii) to any
other Person which agrees to comply with the provisions of this Section 11.18 if
such dissemination is necessary in connection with this Loan Agreement or the
transactions contemplated hereunder, in the good faith determination of the
Lender. Under no circumstances shall any Credit Party make any statement which
directly or indirectly indicates or implies to any Obligor that the Lender is
involved in a joint venture with the Borrower or that the Lender has any
obligation or responsibility, direct or indirect, with respect to such Obligor.
The Borrower may disseminate copies of this Loan Agreement (which shall have
information redacted as deemed appropriate by the Lender in its sole discretion
(exercised in good faith)) to Approved Hedge Counterparties; provided, that each
such Approved Hedge Counterparty execute and deliver to the Lender a
Confidentiality Agreement.
11.19 No Proceedings. Each of the Lender, PSI and each of the
Credit Parties, and heir respective assignees and successors hereby agrees that
it will not institute against, or join any their Person in instituting against,
the Borrower, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceeding under any federal or state
bankruptcy or similar law, for one year and one day after payment in full of all
Advances under this Loan Agreement.
11.20 Credit Parties. Notwithstanding the references to the
Credit Parties set forth in this Loan Agreement and the obligations of the
Borrower under provisions referencing or relating to the Credit Parties, the
liabilities and obligations of each of the Credit Parties under this Loan
Agreement to the Lender or any other party (including the Borrower) are limited
solely to the covenants applicable to such Credit Party under sub-section 7.22
of this Loan Agreement, and the "Miscellaneous" terms and conditions of this
Section 11 (other than sub-sections 11.03 and 11.15) as they relate to each such
Credit Party.
[SIGNATURE PAGE FOLLOWS]
LENDER
PRUDENTIAL SECURITIES CREDIT
CORPORATION
By:_________________________________
Name:
Title:
Address for Notices:
One Seaport Plaza
27th Floor
Credit Department
New York, New York 10292
Attention: Xxxxx Xxxxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
One New York Plaza
14th Floor
New York, New York 10292
Attention: Xxxxxxx X. Xxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
One Seaport Plaza
27th Floor
Credit Department
New York, New York 10292
Attention: Xxxxxx Xxxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
IN WITNESS WHEREOF, the parties hereto have caused this Loan
Agreement to be duly executed and delivered as of the day and year first above
written.
BORROWER
CNL FINANCIAL V, LP, a Delaware limited partnership
By: CNL FINANCIAL V, INC., a Delaware corporation,
its general partner
By: ___________________________
Name:
Title:
Address for Notices:
000 Xxxxx Xxxx
Xxxxx #000
Xxxxxxxxxx, Xxxxxxxx 00000.
Attention: Xxxxx Xxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
CNL Financial Services, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxx Xxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
CREDIT PARTIES (solely for purposes of
Section 7.22 and Section 11
(excluding 11.03 and 11.15)
hereof)
CNL FINANCIAL CORPORATION
By:______________________________
Name:
Tide:
CNL FINANCIAL SERVICES, INC.
By:_______________________________
Name:
Title:
CNL GROUP, INC.
By:_______________________________
Name:
Title:
Address for Notices:
000 Xxxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxx Xxxxx
Telecopier No.: (000) 000-0000
Telephone No.; (000) 000-0000
Schedule 1
Schedule 1
ELIGIBILITY CRITERIA RE: FRANCHISE LOANS
Part 1. Eligible Franchise Loans
To be an Eligible Franchise Loan, a Franchise Loan (and the
related Franchise Loan Documents and related Secured Property) must satisfy the
following eligibility characteristics as of the applicable Funding Date and
maintain at all times the Critical Eligibility Criteria, subject to any
exceptions thereto approved in writing by the Lender in its sole discretion
(terms not otherwise defined herein shall have the meaning assigned to such
terms on Part II of this Schedule 1:
(i) As of the date of origination, such Franchise Loan relates to a
Franchise concept that is listed on Schedule 4 hereto, as well as
concepts that are added from time to time to CFS's approved franchise
list with the consent of the Lender, such consent not to be
unreasonably withheld; provided, that the Lender shall have the right
to remove any concept previously listed on Schedule 4 hereto or
otherwise previously approved, if the Lender determines in its sole
discretion (exercised in good faith) that such concept should no longer
be considered an approved concept hereunder.
(ii) The proceeds of such Franchise Loan were used for the purpose of
(A) refinancing existing indebtedness relating to the Franchise Units,
(B) remodeling existing Franchise Units, (C) acquisition of new
Franchise Units, (D) purchase of leased equipment to be used in
connection with the operation of the Franchise Units or (E)
construction of new Franchise Units.
(iii) Such Franchise Loan is a fully amortizing term loan with terms
not greater than (A) 20 years, in the case of Fee Franchise Loans and
Ground Lease Franchise Loans (B) 15 years, in the case of Space Lease
Franchise Loans, (C) 10 years, in the case of Equipment Franchise
Loans.
(iv) The Obligor, or its management, under such Franchise Loan is a
seasoned operator of Franchise Units. Such Obligor, or its management,
must have a minimum of three years of operating experience with
Franchise Units and such Obligor or its Affiliates must operate a
minimum of five Franchise Units.
(v) Such Franchise Loan contains provisions, acceptable to the Lender
in its sole discretion, which provide that such Franchise Loan may be
prepaid in full only upon payment of yield maintenance or similar
prepayment fee which is designed to compensate the Lender for the
present value of interest that would have accrued over the term of such
Franchise Loan had it not been prepaid; provided, that if such
Franchise Loan bears interest at a variable interest rate, the
prepayment fee shall be mutually acceptable to the Lender and the
Borrower.
(vi) Such Franchise Loan shall be with full recourse to the Obligor
under such Franchise Loan.
(vii) The FCCR of the Obligor and its consolidated Subsidiaries under
such Franchise Loan shall not be less than 1.10 to 1.00. The FCCR of
each Franchise Unit relating to such Franchise Loan shall not be less
than 1.20 to 1.00; provided, that in the case of any Franchise Unit
that are pledged as additional collateral for such Franchise Loan and
were not deemed necessary for the credit approval of such Franchise
Loan (such that the Franchise Loan would have been approved for the
same principal amount in the absence of such Franchise Unit), the
foregoing restriction shall not apply.
(viii) As of the date of origination, the LTV of such Franchise Loan
shall not be greater than (A) 70%, in the case of Fee Franchise Loans,
(B) 60%, in the case of Ground Lease Franchise Loans and Space Lease
Franchise Loans, and (C) 60% in the case of Equipment Franchise Loans.
(ix) If such Franchise Loan is a Construction Franchise Loan, the
principal amount of such Construction Franchise Loan shall not exceed
100% of the actual construction costs, including the costs of land,
buildings, franchise fees and construction period interest, paid as
incurred. Such Construction Franchise Loan must be eligible for
securitization one year (or such earlier time as determined by the
Lender in its sole discretion based upon prevailing market conditions)
after such Construction Franchise Loan converts to an ordinary
Franchise Loan.
(x) The Franchise Units and Secured Property relating to such Franchise
Loan shall have been valued by Deloitte and Touche or another qualified
industry expert acceptable to the Lender in its sole discretion.
(xi) The originator of such Franchise Loan shall have received
environmental reports relating to the related Franchise Units which
shall comply with CFS's environmental review process, such process to
comply with the secured creditor lender exemption provision of the
Asset Conservation, Lender Liability, and Deposit Insurance Protection
Act of 1996.
(xii) Such Franchise Loan, the Borrower and all other parties involved
in the origination and servicing of the Franchise Loan complied in all
material respects, as of the date of origination and as of the Closing
Date, with all applicable federal, state and local laws, rules and
regulations, including, without limitation, those relating to usury,
truth-in-lending, real estate settlement procedure, land sales, the
offer and sale of securities, consumer credit protection and equal
credit opportunity or disclosure.
(xiii) Each related Mortgage has been or will be duly filed to be
recorded with all appropriate governmental authorities in all
jurisdictions in which such Mortgage is required to be filed and
recorded to create a valid, binding and enforceable lien on the related
Secured Property, and such Mortgage creates a valid, binding and
enforceable first priority lien on the related Secured Property (except
as such enforceability may be limited by the insolvency laws or other
laws of general application relating to or affecting the enforcement of
creditors' rights generally or by general principles of equity,
regardless of whether such enforceability is considered in a proceeding
in equity or at law), which interest is free and clear of all other
encumbrances and liens, except for (a) liens for real estate taxes and
special assessments not yet due and payable, (b) covenants, conditions
and restrictions, rights of way, easements and other matters that (i)
are of public record as of the date of recording of such Mortgage
and/or (ii) are referred to in the related lender's title insurance
policy, such exceptions being acceptable to mortgage lending
institutions generally, (c) mechanics or materialmen's liens and other
matters to which like properties are commonly subject, provided, that
such liens and other matters (i) do not, individually or in the
aggregate, materially interfere with the benefits of the security
intended to be provided by such Mortgage and (ii) do not constitute
liens securing debt for borrowed money or other obligations incurred
outside of the ordinary course of the Obligor's business and (d) liens
on equipment which relate to indebtedness not in excess of (i) $50,000
in the case of a fee Franchise Unit or (ii) $35,000 in the case of a
ground lease Franchise Unit or space lease Franchise Unit. The Mortgage
Assignments being executed in connection herewith are in form and
substance acceptable for recording in the jurisdiction where the
related Secured Property is located and in a form sufficient to assign
the Mortgage purported to be assigned thereby.
(xiv) With respect to each Mortgage that is a deed of trust, a trustee,
duly qualified under applicable law to serve as such, has either been
properly designated and currently so serves or may be substituted in
accordance with applicable law. Except in connection with a trustee's
sale after default by the Borrower, no fees or expenses are payable by
the Lender to such trustee.
(xv) The Franchise Loan Security Agreement related to and delivered in
connection with such Franchise Loan, together with any related Uniform
Commercial Code financing statements, establishes and creates a valid
and enforceable lien and security interest on the personal property
described therein, to the extent such lien or security interest may be
perfected by the filing of a Uniform Commercial Code financing
statement, except as enforceability may be limited by bankruptcy or
other laws affecting creditor's rights generally or by the application
of the rules of equity. All furniture, fixtures and equipment and all
other personal property covered by the Franchise Loan Security
Agreement related to or delivered in connection with the Franchise Loan
is subject to a Uniform Commercial Code financing statement filed
and/or recorded in all places necessary to perfect a valid lien
thereon, to the extent such lien may be perfected by the filing of a
Uniform Commercial Code financing statement.
(xvi) The Borrower owns full legal and equitable title to such
Franchise Loan, free and clear of any lien or participation or
ownership interest in favor of any other Person, and had full right and
authority to pledge, assign and transfer such Franchise Loan; and the
form of this Agreement and the related instruments of transfer are in
form sufficient to transfer all right, title and interest in, to and
under the Secured Property to the Lender. The Borrower has given or
caused to be given or will give or cause to be given all notices
legally necessary to be given by the Borrower to effect the pledge of
the Secured Property pursuant hereto.
(xvii) Each Promissory Note and related Franchise Loan Security
Agreement, Mortgage, if any, and guarantee, if any, is genuine, has not
been impaired, amended, satisfied, canceled, altered or modified in any
respect (other than pursuant to written instruments included on the
related Franchise Loan Documents) and is the legal, valid and binding
obligation of the maker, Borrower, guarantor or other party executing
such document or agreement, enforceable in accordance with its terms
(except as such enforceability may be limited by the insolvency laws or
other laws of general application relating to or affecting the
enforcement of creditors' rights generally or by general principles of
equity, regardless of whether such enforceability shall be considered
in a proceeding in equity or at law), and is not subject to any
dispute, counterclaim, right to rescission, right of setoff,
counterclaim or defense of any kind. The endorsement of each Promissory
Note constitutes the legal, valid and binding assignment of such
Promissory Note and, together with this Loan Agreement and the delivery
hereof and thereof, legally and validly conveys all right, title and
interest in, to and under the related Franchise Loan to the Issuer.
Such Promissory Note is an instrument under Article 9 of the New York
Uniform Commercial Code.
(xviii) All parties to each Promissory Note and related Franchise Loan
Security Agreement, Mortgage, if any, and guarantee, if any, had the
legal capacity to enter into such Franchise Loan Documents and to
execute and deliver such Franchise Loan Documents, and such Franchise
Loan Documents have been duly and properly executed by such parties.
(xix) Each Mortgage, Franchise Loan Security Agreement and guarantee,
if any, contains customary and enforceable provisions so as to render
the rights and remedies of the holder thereof adequate for the
practical realization of the benefits of the security interests
intended to be provided thereby, including by judicial foreclosure,
subject to the limitations described in the next succeeding sentence.
There is no exemption under existing law available to the related
Borrower which would interfere with the mortgagee's or secured party's
right to foreclose or to realize upon such related Mortgage, Franchise
Loan Security Agreement or guarantee, if any, as applicable, other than
which may be available under the ins3lvency laws, other laws of general
application relating to or affecting the enforcement of creditors'
rights generally, applicable debt relief or homestead statutes or
general principles of equity.
(xx) The Obligor under such Franchise Loan was at the time of
origination in possession of all material licenses, permits, approvals
and other authorizations necessary and required by applicable law for
the conduct of its business; all such licenses, permits and
authorizations are valid and in full force and effect; and all material
conditions on the Obligor's part to be fulfilled under the terms of any
lease of the Secured Property have been satisfied.
(xxi) The Secured Property is in compliance with and lawfully used and
occupied under any applicable zoning, and environmental laws or
regulations, and all laws, rules, regulations, judgments, orders,
permits, licenses, authorizations and other requirements of and
agreements with all governments, department agencies, courts and
officials, which relate to or are made or issued with respect to the
Secured Property. The Obligor has not received notification from any
governmental authority that the Secured Property is in material
non-compliance with such laws or regulations, is being used, operated
or occupied unlawfully or has failed to have or obtain such inspection,
licenses or certificates, as the case may be. The Obligor has not
received notice of any violation or failure to conform with any such
law, ordinance, regulations, standard, license or certificate.
(xxii) Other than payment delinquencies and violations of FCCR
maintenance covenants, there is no material default, breach, violation
or event of acceleration existing under the related Franchise Loan
Documents and no event (other than payments due but not yet delinquent)
that, with the passage of time or with notice and the expiration of any
grace or cure period, would constitute such a material default, breach,
violation or event of acceleration thereunder; such materiality to be
determined by the Lender in its sole discretion (exercised in good
faith). To the best of the Borrower's knowledge, the Obligor is not
otherwise in default in complying with the terms of its Franchise Loan
Documents. The Borrower has not waived any default, breach, violation
or event of acceleration of any of the foregoing, and, pursuant to the
terms of the Franchise Loan, the related Franchise Loan Documents, no
person other than the holder of such Promissory Note may declare an
event of default or accelerate the related indebtedness under any such
Franchise Loan, Mortgage or Promissory Note. To the best of the
Borrower's knowledge, the Obligor is not in default on any other debt
obligation owed or owing to the Borrower or any Affiliate of the
Borrower. The related Franchise Loan Documents permit acceleration of
such Franchise Loan if any Obligor thereunder is in default of its
other debt or lease obligations owing to the Borrower or any Affiliate
of the Borrower.
(xxiii) The Borrower has inspected or has caused to be inspected each
related Secured Property in connection with the origination thereof.
(xxiv) The related Obligor owns or has a leasehold interest in the
related Secured Property, including good and marketable title to any
Secured Property (subject to exceptions contained in the title
insurance policy, if any, relating to such Secured Property).
(xxv) At the time such Franchise Loan was made, the related Secured
Property pledged by the Borrower under the Franchise Loan was free and
clear of any mechanics' and materialmen's liens or liens in the nature
thereof, and no rights are outstanding that under law could give rise
to any such liens which are or may be prior to, or equal with, the lien
of the Mortgage, except those which are insured against by the title
insurance policy.
(xxvi) None of the improvements which were included for the purpose of
determining the value of the related Secured Property at the time of
the origination of the Franchise Loan lies outside of the boundaries
and building restriction lines of such Secured Property, and no
improvements on adjoining properties materially encroach upon such
Secured Property such that it would have a material adverse effect on
the operation or value of the restaurant or the Secured Property. No
improvement located on or forming part of the related Secured Property
is in material violation of any applicable zoning and building laws or
ordinances.
(xxvii) With respect to such Franchise Loan (other than Equipment
Franchise Loans), the lien of the related Mortgage is insured by a
title insurance policy or marked up commitment for title insurance,
insuring (subject to the exceptions referred to in subparagraph (xiii)
above) for the benefit of the Borrower, its successors and assigns that
the related Mortgage is a valid first lien on the fee or leasehold
estate, as applicable, of the related Obligor in the Secured Property.
Such title insurance policy is in full force and effect, is freely
assignable and will inure to the benefit of the owner of the Franchise
Loan without payment of additional premium. Such title insurance policy
is an ALTA lender's policy or other generally accepted form of policy,
and each such policy is issued by a title insurer acceptable to the
Lender and qualified to do business in the jurisdiction where the
Secured Property is located. Where required by state law or regulation,
the Obligor has been give the opportunity to choose the carrier of the
required title insurance. Except in the case of Space Lease Franchise
Loans, the title insurance policy does not contain any special
exceptions (other than the standard exclusions) for zoning and uses and
has been marked to delete the standard survey exception or to replace
the standard survey exception with a specific survey reading; provided,
that if the jurisdiction does not permit the removal of such
exceptions, the Borrower shall have obtained a certification from a
surveyor or a letter from the relevant municipality regarding the
zoning of the Secured Property. To the best of the Borrower's
knowledge, no Person has done, by act or omission, anything, or has
knowledge of any fact, that would materially impair the coverage of any
such title insurance policy.
(xxviii) The related Secured Property is insured by a fire and extended
perils Insurance Policy, and to the extent required as of the date of
origination by the Borrower consistent with its normal franchise
lending practices, against risks insured against by persons operating
like properties, in an amount not less than the value of the Secured
Property relating to such Franchise Loan. All such insurance policies
contain a standard "New York" mortgagee clause (or similar clause)
naming the Borrower, its successors and assigns (including, without
limitation, subsequent owners of the Franchise Loan), as mortgagee, and
may not be reduced, terminated or canceled without thirty (30) days'
prior written notice to the mortgagee. No such notice has been received
by the insured. The Obligor is also required to maintain business
interruption and rental continuation coverage sufficient to protect
against loss for a period of up to 12 months. If any portion of the
real property securing a Mortgage is in an area identified by any
federal governmental department, agency or authority as having special
flood hazards, and flood insurance is available, a flood insurance
policy meeting the current guidelines of the Federal Insurance
Administration is in effect with a generally acceptable insurance
carrier, in an amount representing the lesser of the maximum coverage
available and the full insurable value of the Secured Property. All
premiums on such insurance policies are no more than fourteen (14) days
past due. The related Mortgage obligates the related Obligor to
maintain such insurance and, at such Obligor's failure to do so,
authorizes the mortgagee to maintain such insurance at the Obligor's
cost and expense and to seek reimbursement therefor from such Obligor.
To the best of the Borrower's knowledge, there have been no acts or
omissions that would impair the coverage of any such insurance policy
or the benefits of the mortgage endorsement. All insurance contemplated
in this section shall be maintained with insurance companies which are
"A3" rated by Xxxxx'x Investors Service, Inc. and "A-" rated byStandard
and Poor's Rating Group.
(xxix) All applicable intangible taxes and documentary stamp taxes were
paid as to such Franchise Loan, Promissory Note and each related
Mortgage and Franchise Loan Security Agreement.
(xxx) Except as contemplated by the Franchise Loan Documents therefor
and subject to Permitted Encumbrances with respect thereto, each
Mortgage (subject to the terms of the applicable lease in the case of a
leasehold Mortgage) and Franchise Loan Security Agreement gives the
mortgagee or the secured party, subject to applicable law, the right to
receive and direct the application of insurance proceeds and
condemnation proceeds received in respect of the related Franchise
Loan, subject to the terms of the underlying lease if the loan is a
Ground Lease Franchise Loan or a Space Lease Franchise Loan.
Notwithstanding this provision, proceeds may be paid directly to the
Obligors if such proceeds do not exceed $25,000 per loss.
(xxxi) To the Borrower's knowledge, there are no delinquent taxes,
ground rents, water charges, sewer rents, levies, fees, claims,
assessments or other charges by a governmental authority outstanding
with respect to any of the Secured Property for such Franchise Loan
other than those that are Permitted Encumbrances for a period in excess
of fourteen (14) days. Notwithstanding this representation, in the case
of a Space Lease Franchise Loan, the Obligor shall be deemed to be in
compliance with its lease and the Borrower shall have satisfied this
representation if the Obligor has paid its tax obligations as required
by the lease.
(xxxii) At the time such Franchise Loan was made, the collateral for
such Franchise Loan was in good repair and free and clear of material
damage, defective condition or waste and there is no proceeding pending
or, to the best knowledge of the Borrower, threatened for the total or
partial condemnation or taking of any of the collateral by eminent
domain.
(xxxiii) Such Franchise Loan that was originated by a Credit Party was
originated in accordance with the Underwriting Guidelines, and the
Promissory Note, Franchise Loan Security Agreement, Mortgage and
guarantee, if any, for each Franchise Loan are in substantially the
form of the Standard Form Documents with the exceptions, if any, listed
on the Notice of Borrowing and Pledge. Each Franchise Loan that was
originated by a third party was originated in a manner consistent, in
all material respects, with the Underwriting Guidelines.
(xxxiv) No Obligor or any officer, director, employee, shareholder,
member, partner or Affiliate thereof is an officer, director, employee,
shareholder, member, partner or Affiliate of any Credit Party.
(xxxv) No instrument of release or waiver has been executed in
connection with such Franchise Loan (other than in connection with the
waiver of a payment delinquency or failure to meet an FCCR maintenance
covenant; provided that such waiver shall not forgive the obligations
of the Obligor to pay any amounts due under the Franchise Loan
Documents), and no Obligor has been released in whole or in part.
(xxxvi) The related Mortgage has not been waived, modified, altered,
satisfied or canceled in any respect or rescinded, and the related
Secured Property has not been released, in whole or in part, from the
lien or other encumbrance of, nor has the Obligor been released from
its obligations under, the Mortgage, in whole or in any part, nor has
any instrument been executed that would effect any such cancellation,
subordination, rescission or release.
(xxxvii) The Borrower has not advanced funds, or induced, solicited or
knowingly received any advance of funds by a party other than an
Obligor, directly or indirectly, for the payment of any amount required
by such Obligor's Franchise Loan.
(xxxviii) The related Franchise Loan File for such Franchise Loan
contains the documents and instruments specified to be included therein
in the form specified in the definition of "Franchise Loan File."
(xxxix) Unless the Franchise Loan is a Construction Franchise Loan, the
proceeds of such Franchise Loan have been fully disbursed, there is no
obligation or requirement for future advances thereunder, and all
costs, fees and expenses incurred in making, closing or recording such
Franchise Loan have been paid. The originator of such Franchise Loan
has duly fulfilled in all material respects all obligations on its part
to be fulfilled under or in connection with the related Franchise Loan
Documents and has done nothing to impair the rights of the Borrower or
the Lender in such Franchise Loan, Franchise Loan Documents or payments
with respect thereto.
(xl) There exist no deficiencies with respect to escrow deposits and
payments, if such are required, for which customary arrangements for
repayment thereof have not been made, and no escrow deposits or
payments of other charges or payments due the Borrower have been
capitalized under any Promissory Note (except if such Franchise Loan is
a Construction Franchise Loan). All such escrow deposits and payments
have been deposited in a segregated trust account pursuant to
arrangements satisfactory to the Lender, and are not commingled with
other funds of the Credit Parties.
(xli) The Borrower has caused to be performed any and all acts required
to be performed to preserve the rights and remedies of the secured
party in any insurance policies in respect of such Franchise Loan.
(xlii) The Franchise Loan is not subject to a bankruptcy plan. The
Borrower has no knowledge nor has it received any notice that any
Obligor is a debtor in any state or federal bankruptcy or insolvency
proceeding.
(xliii) To the Borrower's knowledge, there exists no material violation
of federal or state environmental law or regulation with respect to
such Secured Property; provided, however, that notwithstanding the
foregoing, the term hazardous substances shall not include materials
normally used in the operation and maintenance of properties such as
the Secured Property and properties subject to Mortgages (e.g.,
cleaning agents and used motor oil).
(xliv) If such Franchise Loan is a Ground Lease Franchise Loan:
(A) The ground lease or memorandum thereof has been recorded
(when necessary for issuance of a mortgagee title insurance
policy), and either (1) such ground lease does not prohibit the
leasehold estate to be mortgaged or (2) the ground lessor's
consent to allow the mortgage of the leasehold estate has been
obtained and does not restrict the use of the related Secured
Property by the Obligor, its successors or assigns in a manner
that would materially adversely affect the security provided by
the related Mortgage; the lessee's interest in the ground lease
may be assigned at foreclosure or by the mortgagee subsequent to
foreclosure (subject in certain cases to the ground lessor's
reasonable consent or other requirements that would not be viewed
as commercially unreasonably by an institutional franchise loan
lender); and there has been no material change in the terms of
such ground lease since its recordation, except by written
instruments all of which have been reviewed and copies of which
are a part of the Franchise Loan File;
(B) The lessor under such ground lease has agreed in such
ground lease or in another writing contained in the Franchise
Loan File, or the related Mortgage provides for Obligor's
agreement, that such ground lease may not be amended, modified,
surrendered, canceled or terminated in any manner that would be
materially adverse to the mortgagee without the prior written
consent of the mortgagee;
(C) Such Franchise Loan's related lease has a remaining term,
or option to extend, beyond the scheduled maturity date of the
Franchise Loan;
(D) The Borrower is permitted a reasonable opportunity to cure
any default under such ground lease which is curable after the
receipt of notice of any such default before the lessor thereunder
may terminate such ground lease; and in the case of any such
lessee under default which is not curable by the mortgagee, or in
the event of bankruptcy or insolvency of the lessee under such
ground lease, the Borrower has the right, following termination of
the existing ground lease or rejection thereof by a bankruptcy
trustee or similar party, to enter into a new ground lease with
the lessor on identical financial terms and substantially
identical other terms;
(E) Such ground lease is in full force and effect and, to the
Borrower's knowledge, no default has occurred under such ground
lease, nor is there any existing condition which, but for the
passage of time or the giving of notice, would result in a default
under the terms of such ground lease.
(xlv) The Obligor has entered into a legal, valid, and binding
franchise agreement (or in the case of a Construction Franchise Loan, a
pre-franchise/site approval agreement). The Obligor has represented in
the Franchise Loan Documents that, as of the date of origination of the
Franchise Loan, there were no defaults under the franchise agreement.
To the best of the Borrower's knowledge, there are no defaults by any
party under the franchise agreement and the franchise agreement is in
full force and effect.
(xlvi) The information set forth in each Franchise Loan Schedule and
Franchise Loan Tape with respect to such Franchise Loan is complete,
true and correct in all material respects.
(xlvii) To the best of the Borrower's knowledge, there are no material
proceedings or investigations pending or, to the Borrower's knowledge,
threatened, before any court, regulatory body, administrative agency,
or other tribunal or governmental instrumentality (a) asserting the
invalidity of the related Franchise Loan Documents, (b) seeking to
prevent payment and performance of such Franchise Loan Documents, or
(c) seeking any determination or ruling that might materially and
adversely affect the validity, enforceability or collectability of such
Franchise Loan or the related Franchise Loan Documents.
(xlviii) The Borrower's computer records have been marked to indicate
that such Franchise Loan has been pledged to the Lender pursuant to
this Loan Agreement.
(xlix) The Borrower has no knowledge of any circumstance or condition
with respect to such Franchise Loan, the Secured Property, or the
related Obligor's credit standing that could reasonably be expected to
cause the Lender to regard such Franchise Loan as unacceptable
security, cause such Franchise Loan to become delinquent or adversely
affect the value or marketability of such Franchise Loan.
(1) The term of the franchise agreement under which the related
Franchise Units operate (assuming that the franchisee exercises all
available options set forth therein to extend the term thereof) exceeds
the full term of such Franchise Loan.
(Ii) [Reserved]
(lii) As of the Funding Date, such Franchise Loan is not a
Delinquent Franchise Loan.
For purposes of the representations made herein, the phrase
"to the best knowledge of the Borrower" or "to the Borrower's knowledge" means
to the actual knowledge of the Borrower without inquiry.
Part II: Definitions
"Closing Date" shall mean, with respect to any Franchise Loan,
the date on which such Franchise Loan was advanced.
"FCCR" shall mean the fixed charge coverage ratio of an
Obligor or Franchise Unit with respect to a Franchise Loan, as such term (or
equivalent term) is defined in the relevant Franchise Loan Documents, or as
otherwise agreed upon by the Lender and the Borrower.
"Loan-to-Value Ratio" or "LTV" shall mean with respect to any
Franchise Loan, the ratio of the Par Amount of the Franchise Loan as of the date
of origination (unless otherwise indicated) to the Appraised Value of the
Secured Property.
"Mortgage Assignment" shall mean an instrument evidencing the
assignment of a Mortgage, in form and substance satisfactory to the Lender.
"Permitted Encumbrances" shall with respect to any Franchise
Loan, have the meaning assigned to such term in the Franchise Loan Documents
relating thereto.
Schedule 2
FILING JURISDICTIONS AND OFFICES
Florida, Secretary of State
Delaware, Secretary of State
Minnesota, Secretary of State
Schedule 3
SUBSIDIARIES
None
Schedule 4
FRANCHISE CONCEPTS
PART A: TIER I FRANCHISES
Tier I Chain Segment Type Parent Company
---------------- ----------------------------- ----------------------- ------------ ----------------------------------
1 McDonald's Sandwich QSR XxXxxxxx'x Corp.
2 Burger king Sandwich QSR Diageo PLC
3 Pizza Hut Pizza QSR Tricon Global Restaurants
4 Taco Xxxx Sandwich QSR Tricon Global Restaurant's
5 Wendy's Sandwich QSR Wendy's Int'l Inc.
6 KFC Chicken QSR Tricon Global Restaurants
7 Applebee's Restaurant Dinner House CD** Applebee's Int'l
8 T.G.I. Friday's Dinner House XX Xxxxxxx Hospitality
---------------- ----------------------------- ----------------------- ------------ ----------------------------------
Part B: TIER II FRANCHISES
Tier II Chain Segment Type Parent Company
---------------- ----------------------------- ----------------------- ------------ ----------------------------------
9 Arby's Sandwich QSR TriArc Corp.
10 Xxxx in the Box Sandwich QSR Foodmaker, Inc.
11 Papa John's Pizza Pizza QSR Papa John's Int'l
12 Ruby Tuesday Dinner house CD Ruby Tuesday, Inc.
13 IHOP Family CD IHOP Corp.
---------------- ----------------------------- ----------------------- ------------ ----------------------------------
PART C: TIER III FRANCHISES
Tier III Chain Segment Type Parent Company
---------------- ----------------------------- ----------------------- ------------ ----------------------------------
14 Bennigan's/S&A Restaurants
Dinner House
15 Steak and Ale/S&A Dinner House
16 Restaurants Grill/Buffet
17 Golden Corral Chicken
18 Popeye's Sandwich
19 Del Taco Sandwich
Xxxxxx'x of Chicago Fine Dining
---------------- ----------------------------- ----------------------- ------------ ----------------------------------
PART D: TIER IV FRANCHISES
Tier IV Chain Segment Type Parent Company
---------------- ----------------------------- ----------------------- ------------- ---------------------------------
20 Denny's Family CD Flagstar Cos. Inc.
21 Captain D's Seafood QSR Shoney's Inc.
Xxxx Xxxx'x Famous for Ribs
22 Dinner House CD NPC International, Inc.
23 Shoney's Family CD Shoney's, Inc.
24 Sonny's Real Pit BBQ Family CD Sonny's Franchise Co.
25 Chevy's
26 Fazoli's Sandwich QSR Seed Restaurant Group
50 Houlihan's Dinner House CD The Xxxxxx Group
---------------- ----------------------------- ----------------------- ------------- ---------------------------------
*"QSR: Quick Service Restaurant.
**"CD" Casual Dining
EXHIBIT A
[FORM OF NOTE]
$300,000,000 September 18, 0000
Xxx Xxxx, Xxx Xxxx
FOR VALUE RECEIVED, CNL FINANCIAL V, LP, a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of PRUDENTIAL
SECURITIES CREDIT CORPORATION a Delaware corporation (the "Lender"), at the
principal office of the Lender at ______________________________________ in
lawful money of the United States, and in immediately available funds, the
principal sum of THREE HUNDRED MILLION AND 00/100 DOLLARS ($300,000,000.00) (or
such lesser amount as shall equal the aggregate unpaid principal amount of the
Advances made by the Lender to the Borrower under the Loan Agreement as defined
below), on the dates and in the principal amounts provided in the Loan
Agreement, and to pay interest on the unpaid principal amount of each such
Advance, at such office, in like money and funds, for the period commencing on
the date of such Advance until such Advance shall be paid in full, at the rates
per annum and on the dates provided in the Loan Agreement.
The date, amount and interest rate of each Advance made by the
Lender to the Borrower, and each payment made on account of the principal and
interest thereof, shall be recorded by the Lender on its books and, prior to any
transfer of this Note, endorsed by the Lender on the schedule attached hereto or
any continuation thereof; provided, that the failure of the Lender to make any
such recordation or endorsement shall not affect the obligations of the Borrower
to make a payment when due of any amount owing under the Loan Agreement or
hereunder in respect of the Advances made by the Lender.
This Note is the Note referred to in the Interim Wholesale
Mortgage Warehouse and Security Agreement dated as of September 18, 1998 (as
amended, supplemented or otherwise modified and in effect from time to time, the
"Loan Agreement") between the Borrower and the Lender, and evidences Advances
made by the Lender thereunder. Terms used but not defined in this Note have the
respective meanings assigned to them in the Loan Agreement.
The Borrower agrees to pay all the Lender's costs of
collection and enforcement (including attorneys' fees and disbursements of
Lender's counsel) in respect of this Note when incurred, including, without
limitation, attorneys' fees through appellate proceedings.
Notwithstanding the pledge of the Collateral, the Borrower
hereby acknowledges, admits and agrees that the Borrower's obligations under
this Note are recourse obligations of the Borrower to which the Borrower pledges
its full faith and credit.
The Borrower, and any endorsers hereof, (a) severally waive
diligence, presentment, protest and demand and also notice of protest, demand,
dishonor and nonpayments of this Note, (b) expressly agree that this Note, or
any payment hereunder, may be extended from time to time, and consent to the
acceptance of further Collateral, the release of any Collateral for this Note,
the release of any party primarily or secondarily liable hereon, and (c)
expressly agree that it will not be necessary for the Lender, in order to
enforce payment of this Note, to first institute or exhaust the Lender's
remedies against the Borrower or any other party liable hereon or against any
Collateral for this Note. No extension of time for the payment of this Note, or
any installment hereof, made by agreement by the Lender with any person now or
hereafter liable for the payment of this Note, shall affect the liability under
this Note of the Borrower, even if the Borrower is not a party to such
agreement; provided, however, that the Lender and the Borrower, by written
agreement between them, may affect the liability of the Borrower.
Any reference herein to the Lender shall be deemed to include
and apply to every subsequent holder of this Note. Reference is made to the Loan
Agreement for provisions concerning optional and mandatory prepayments,
Collateral, acceleration and other material affecting this Note.
Any enforcement action relating to this Note may be brought by
motion for summary judgment in lieu of a complaint pursuant to Section 3213 of
the New York Civil Practice Law and Rules. The Borrower hereby submits to New
York jurisdiction with respect to any action brought with respect to this Note
and waives any right with respect to the doctrine of forum non conveniens with
respect to such transactions.
This Note shall be governed by and construed under the laws of
the State of New York (without reference to choice of law doctrine but with
reference to Section 5-1401 of the New York General Obligations Law, which by
its terms applies to this Note) whose laws the Borrower expressly elects to
apply to this Note. The Borrower agrees that any action or proceeding brought to
enforce or arising out of this Note may be commenced in the Supreme Court of the
State of New York, Borough of Manhattan, or in the District Court of the United
States for the Southern District of New York.
CNL FINANCIAL V, LP
By:___________________
Name:
Title:
SCHEDULE OF ADVANCES
This Note evidences Advances made under the within-described
Loan Agreement to the Borrower, on the dates, in the principal amounts and
bearing interest at the rates set forth below, and subject to the payments and
prepayments of principal set forth below:
Principal Amount Unpaid Pricipal
of Advance Amount paid or Amount Notation Made by
Date Made Interest Rate Prepaid
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(FORM OF CUSTODIAL AGREEMENT]
[distributed separately]
EXHIBIT C
[FORM OF OPINION OF COUNSEL TO BORROWER]
[to be provided]
EXHIBIT D
FORM OF NOTICE OF BORROWING AND PLEDGE
[insert date]
Prudential Securities Credit Corporation Prudential Securities Incorporated
One Xxxxxxx Xxxxx, 00xx Xxxxx Xxx Xxx Xxxx Plaza, 14th Floor
Credit Department New York, New York 10292
Xxx Xxxx, Xxx Xxxx 00000 Attention: Xx. Xxxxx Xxxxx
Attn: Xx. Xxxxx Xxxxxxxx Phone Number: (000) 000-0000
Phone Number: (000) 000-0000 Fax Number: (000) 000-0000
Fax Number: (000) 000-0000
Prudential Securities Credit Corporation
Xxx Xxx Xxxx Xxxxx, 00xx Xxxxx
Operations Department
New York, New York 10292
Attention: Xx. Xxxxxxx X. Xxxxx
Phone Number: (000) 000-0000
Fax Number: (000) 000-0000
Notice of Borrowing and Pledge No.:____________________
Ladies/Gentlemen:
Reference is made to the Interim Wholesale Mortgage Warehouse
and Security Agreement, dated as of September 18, 1998 (the "Loan Agreement";
capitalized terms used but not otherwise defined herein shall have the meaning
given them in the Loan Agreement), between (the "Borrower") and Prudential
Securities Credit Corporation (the "Lender").
In accordance with Section 2.03(a) of the Loan Agreement, the
undersigned Borrower hereby requests that you, the Lender, make Advances to us
based on the following criteria:
1) Requested Advance Amount: $____________________
2) Requested Funding Date: ________________,199_
3) Franchise Tier: _________________________.
4) In connection with this Advance we shall pledge to you as Collateral
the Franchise Loan set forth on the Franchise Loan Schedule attached hereto.
The Borrower hereby certifies, as of such Funding Date, that:
(a) no Default or Event of Default has occurred and is continuing on
the date hereof nor will occur after giving effect to such Advance as a result
of such Advance;
(b) each of the representations and warranties made by the Borrower in or
pursuant to the Loan Documents is true and correct in all material respects on
and as of such date (in the case of the representations and warranties in
respect of Franchise Loans, solely with respect to Franchise Loans being
included the Borrowing Base on the Funding Date) as if made on and as of the
date hereof (or, if any such representation or warranty is expressly stated to
have been made as of a specific date, as of such specific date); and
(c) the Borrower is in compliance with all governmental licenses and
authorizations and is qualified to do business and is in good standing in all
required jurisdictions.
Very truly yours,
CNL FINANCIAL V, LP
By:__________________
Name:
Title:
Schedule I
to Notice of Borrowing and Pledge
Franchise Loan PROPOSED TO BE PLEDGED
TO LENDER ON FUNDING DATE
[attach Franchise Loan Schedule]
EXHIBIT E
UNDERWRITING GUIDELINES
EXHIBIT F
FORM OF BLOCKED ACCOUNT AGREEMENT
September 18, 1998
FIRST UNION NATIONAL BANK
Re: CNL Financial V. LP
Ladies and Gentlemen:
CNL Financial V, LP (the "Borrower") hereby notifies you that it has
transferred exclusive ownership, dominion and control of deposit account [No.
_____________] maintained with you (the "Deposit Account") to Prudential
Securities Credit Corporation (the "Lender"), located at Xxx Xxx Xxxx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, under the terms of an Interim Wholesale Mortgage Warehouse
and Security Agreement, dated as of September 18, 1998, among the Borrower and
the Lender (as the same may be amended, supplemented or otherwise modified from
time to time, the "Loan Agreement"). The Borrower has granted to the Lender a
security interest in the Deposit Account, and all cash, checks, drafts and other
similar writings for the payment of money from time to time held in or credited
to the Deposit Account.
The Borrower hereby irrevocably instructs you to make all payments to
be made by you out of or in connection with the Deposit Account in accordance
with the instructions of the Lender. In this regard, the Borrower wishes to note
that the Lender in the accompanying Acknowledgment and Instructions has
authorized you to continue to accept instructions from the Borrower until
receipt by you of contrary and/or terminating instructions in writing from the
Lender.
The Borrower also hereby notifies you that the Lender, subject to the
immediately preceding paragraph, shall be irrevocably entitled to exercise any
and all rights in respect of or in connection with the Deposit Account,
including, without limitation, the right to specify when payments are to be made
out of or in connection with the Deposit Account.
By executing this letter agreement you acknowledge that you have not
heretofore received a notice, writ, order or any form of legal process from any
other person asserting, claiming or exercising, any right of set-off, banker's
lien or other purported form of claim with respect to the items collected from
the Deposit Account or any funds from time to time therein or in transit
thereto, and agree to inform the Lender in writing of any such action in the
future.
All funds deposited into the Deposit Account will not be subject to
deduction, set-off, banker's lien or any other right in favor of any other
person other than the Lender, except (i) that you may set off against the
Deposit Account the face amount of any check deposited in and credited to the
Deposit Account which is subsequently returned for any reason and (ii) for your
statutory security interest in items and their proceeds to the extent of deposit
credits posted therefore. Your compensation for providing the services
contemplated herein shall be as mutually agreed between the Borrower and you
from time to time and the Borrower will continue to pay such compensation. The
Lender shall have no liability to you or the Borrower for any compensation to
you for providing the services contemplated herein.
You agree not to terminate the Deposit Account without giving the
Lender at least 30 days' prior written notice. Upon the termination of this
letter agreement, you will close the Deposit Account and, subject to your rights
to charge the Deposit Account as set forth herein, transfer any monies remaining
therein at the direction of the Lender. You agree that you shall forward all
incoming mail addressed to the Deposit Account and all wire transfers and
deposits to the Deposit Account that you receive after such termination in the
form received at the direction of the Lender, promptly after you discover that
you have received any such mail or transfers.
By signing this letter below, you agree that this letter and the
accompanying Acknowledgment and Instructions constitute notice in writing of the
security interest of the Lender in the Deposit Account and all cash, checks,
drafts and similar writings for the payment of money from time to time therein,
and you hereby consent to such notice. This Agreement may not be changed except
pursuant to a writing signed by us and the Lender.
All notices and other communications provided for hereunder shall,
unless otherwise stated herein, be in writing (including facsimile
communication) and shall be personally delivered or sent by certified mail,
postage prepaid, by facsimile or by overnight courier, to the intended person at
the address or facsimile number of such person set forth under its name on the
signature pages hereof or at such other address or facsimile number as shall be
designated by such person in a written notice to the other parties hereto given
in accordance with the requirements of this paragraph.
All notices and communications provided for hereunder shall be
effective when received or if transmitted by facsimile, when receipt is
confirmed by telephone.
This letter agreement shall be binding upon you and your successors and
assigns and shall inure to the benefit of the Borrower and the Lender and their
respective successors, transferees and, assigns; provided, however, that you may
not assign your rights and duties under this letter agreement without thirty
(30) days prior written notice of such assignment to the Lender.
This letter agreement shall be governed by and construed in accordance
with the laws of the State of New York, not including the choice of law rules
thereof.
You shall be entitled to rely conclusively upon any notice or
instruction that you receive from the Lender and shall have no obligation to
investigate or verify the authenticity or correctness of any such notice or
instruction. You shall have no liability for the honoring of any instructions or
directions regarding the Deposit Account which you receive from the Lender
during the term of the Loan Agreement, and you shall be fully discharged from
liability with respect to any funds on deposit in the Deposit Account to the
extent that you honor such instructions and transfer the same to or at the
direction of the Lender.
The Borrower hereby agrees to indemnify you and hold you harmless
against any loss, damage or expense, including but not limited to unpaid
charges, fees and returned items for which the Lender and/or the Borrower
originally received the benefit (including reasonable attorney's fees, court
costs and other litigation expenses) which you may suffer as a direct result of
entering into this letter agreement, honoring any instructions or directions you
receive from the Lender with respect to the Deposit Account during the term of
this letter agreement or, to the extent required by this letter agreement, not
honoring any instructions you receive from the Borrower with respect to the
Deposit Account during the term of this letter agreement, except in the event of
your gross negligence or willful misconduct. In no event shall you be liable for
special, indirect, exemplary, consequential or punitive damages.
Please agree to the terms of, and acknowledge receipt of, this letter
by signing in the space provided below on four of the enclosed copies.
Very truly yours,
CNL FINANCIAL V, LP
By: _____________________
Name:
Title:
Address for Notice:
CNL Financial V, LP
000 Xxxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Acknowledged and agreed to as of this ___ day of September, 1998 by:
FIRST UNION NATIONAL BANK
By: _____________________
Name:
Title:
Address for Notice:
[Deposit Account Bank]
==============================
Attention: ___________________
------------------------------
Phone Number: ________________
Fax Number: __________________
PRUDENTIAL SECURITIES CREDIT
CORPORATION
By: _____________________
Name:
Title:
Address for Notice:
Prudential Securities Credit Corporation
One Seaport Plaza
27th Floor
Credit Department
New York, New York 10292
Attention: Xxxxx Xxxxxxxx
Phone Number: (000) 000-0000
Fax Number: (000) 000-0000
With a copy to:
Prudential Securities Incorporated
One Xxx Xxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx
Phone Number: (000) 000-0000
Fax Number: (000) 000-0000
ACKNOWLEDGMENT AND INSTRUCTIONS
Prudential Securities Credit Corporation (the "Lender") under the terms
of the Interim Wholesale Mortgage Warehouse and Security Agreement (as amended,
supplemented or otherwise modified from time to time, (the "Loan Agreement"),
dated as of September 18, 1998, among the Lender and CNL Financial V, LP (the
"Borrower") hereby acknowledges the transfer to the Lender of exclusive
ownership, dominion and control of the Deposit Account (as defined in, and
pursuant to the terms of, the foregoing letter (the "Letter Agreement") executed
by the Borrower and acknowledged by the Lender and ________________________ (the
"Bank"). Pursuant to the second paragraph of the Letter Agreement, the Bank may
continue to accept instructions from the Borrower in connection with the Deposit
Account until such time as the Bank receives contrary and/or terminating
instructions from the Lender. Any such written notice shall be effective on the
business day received by the Bank if received before 12:00 P.M. (New York time)
and, if not received by such time, on the next succeeding business day. This
Acknowledgment and Instructions may not be changed except pursuant to a writing
signed by us and the Borrower.
PRUDENTIAL SECURITIES CREDIT
CORPORATION, as Lender
By: _____________________________
Name ___________________________
Title ____________________________
Acknowledged and agreed to as of this ___ day of September, 1998 by:
[Deposit Account Bank]
By: _________________________
Name: _______________________
Title: ________________________
CNL FINANCIAL V, LP
By: _________________________
Name: _______________________
Title: ________________________
EXHIBIT G
FORM OF ELIGIBILITY VIOLATION NOTICE
Prudential Securities Credit Corporation Prudential Securities Incorporated
One Xxxxxxx Xxxxx, 00xx Xxxxx Xxx Xxx Xxxx Plaza, 14th Floor
Credit Department New York, New York 10292
Xxx Xxxx, Xxx Xxxx 00000 Attention: Xx. Xxxxxxx Xxxxx
Attn: Xx. Xxxxx Xxxxxxxx Phone Number: (000) 000-0000
Phone Number: (000) 000-0000 Fax Number: (000) 000-0000
Fax Number: (000) 000-0000
Ladies/Gentlemen:
Reference is made to the Interim Wholesale Mortgage Warehouse
and Security Agreement, dated as of September 18, 1998 (the "Loan Agreement";
capitalized terms used but not otherwise defined herein shall have the meaning
given them in the Loan Agreement), between (the "Borrower") and Prudential
Securities Credit Corporation (the "Lender").
In accordance with Section 7.07 of the Loan Agreement, the
undersigned Borrower hereby notifies you that the certain franchise loans listed
below (the "Franchise Loans") no longer satisfy each of the eligibility criteria
listed on Schedule 1 of the Loan Agreement. A description of each such violation
is as follows:
1) Franchise Loan #: _______________________.
2) Date originally pledged to the Lender: ____________________.
3) Original principal amount of such Franchise Loan:
$________________.
4) Outstanding principal amount of such Franchise Loan:
$_____________.
5) Paragraph number(s) of violated eligibility criteria: ____________.
(6) Description of the violation of eligibility criteria:
Very truly yours,
CNL FINANCIAL V, LP
By:___________________
Name:
Title:
EXHIBIT H
FORM OF CONFIDENTIALITY AGREEMENT
[Letterhead of Counterparty]
Date:
Prudential Securities Credit Corporation Prudential Securities Incorporated
One Xxxxxxx Xxxxx, 00xx Xxxxx Xxx Xxx Xxxx Plaza, 14th Floor
Operations Department New York, New York 10292
Xxx Xxxx, Xxx Xxxx 00000 Attention: Xx. Xxxxxxx Xxxxx
Attn: Xx. Xxxxx Xxxxxxxx Phone Number: (000) 000-0000
Phone Number: (000) 000-0000 Fax Number: (000) 000-0000
Fax Number: (000) 000-0000
Gentlemen:
We understand that CNL Financial V LP (the "CNL") or its Affiliate is
prepared to furnish us with certain information relating to the Interim
Wholesale Mortgage Warehouse and Security Agreement, dated as of September 18,
1998 (the "Warehouse Agreement"), between CNL and Prudential Securities Credit
Corporation (the "Lender") to assist us in making an evaluation of the business
and prospects of CNL in connection with a possible transaction or series of
transactions relating to hedging arrangements involving CNL (a "Transaction").
As a condition to CNL furnishing such information to us, we agree, as set forth
below, to treat confidentiality such information and any other information you
or your agents furnish to us, together with analyses, compilations, studies or
other documents or records prepared by us, our directors, officers, employees,
agents, advisors, subsidiaries or representatives (collectively,
"Representatives"), which contain or otherwise reflect or are generated from
such information (collectively, the "Material").
We agree that the Material will not be used other than in connection
with the purpose described above, and that such information will be kept
confidential by us and our Representatives; provided, however, that (1) any of
such information may be disclosed to our Representatives who need to know such
information in connection with the Transaction (it being understood that such
Representatives shall be informed by us of the confidential nature of such
information and shall agree to be bound by the terms of this agreement) and (2)
any disclosure of such information may be made if required by law or requested
by a regulatory authority or if CNL and the Lender consent to such disclosure.
We agree to make all necessary and appropriate efforts to safeguard the Material
from disclosure to anyone other than as permitted hereby, provided that after
notice to CNL and the Lender, we will be free to correct any false or misleading
information which may become public concerning our relationship to CNL and the
Lender or the Transaction.
Without the prior consent of CNL and the Lender, we will not, and will
direct our Representatives not to, unless advised by counsel that disclosure is
required, disclose to any person the fact that the Material has been made
available to us or that we have inspected any portion of the Material, the fact
that discussions between CNL, the Lender and us are taking place or other facts
with respect to these discussions, including the status thereof.
The term "Material" does not include information which (i) becomes
generally available to the public other than as a result of disclosure by us or
our Representative in violation of this Agreement, (ii) was available to us on a
non-confidential basis prior to its disclosure to us by CNL or its
Representatives or (iii) becomes available to us on a non-confidential basis
from a source other than CNL or its Representatives, provided that such source
is not actually known by us to be in breach of a confidentiality agreement with
CNL, the Lender or its representatives by making such disclosure.
Upon the termination of our consideration of the Transaction, the
written Material, except for that portion of the Material that may be found in
analyses, compilations, studies or other documents prepared by or for us, will
be returned to CNL or the Lender promptly upon its request. That portion of the
Material that may be found in analyses, compilations, studies or other documents
prepared by or for us, will be held by us and keep subject to the terms of this
agreement or destroyed.
This agreement shall be governed by and construed in accordance with
the laws of the State of New York, without regard to the principles of conflict
of laws.
This agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute the
same agreement.
Very truly yours,
[NAME OF COUNTERPARTY
By:________________________________
Name:
Title:
Agreed to and Accepted:
CNL FINANCIAL V LP
By:________________________________
Name:
Title:
PRUDENTIAL SECURITIES CREDIT CORPORATION
By:________________________________
Name:
Title:
