Exhibit 10.32
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of December 29, 1999, is between SYBRA, INC.,
a Michigan corporation ("Borrower"), and FINOVA CAPITAL CORPORATION, a Delaware
corporation (together with its successors and assigns, "FINOVA").
PRELIMINARY STATEMENT:
Borrower desires to borrow up to $8,500,000 which amount shall be used (i)
to pay transaction costs, (ii) for working capital and (iii) to provide funds
for the acquisition and development of Expansion Stores. FINOVA has agreed to
make the Loan upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, it is agreed as follows:
ARTICLE I
DEFINITIONS AND DETERMINATIONS
1.1 DEFINITIONS. As used in this Loan Agreement and in the other Loan
Instruments, unless otherwise expressly indicated herein or therein, the
following terms shall have the following meanings (such meanings to be
applicable equally to both the singular and plural forms of the terms defined):
ACCOUNTANTS: Deloitte & Touche, LLP or any other independent certified
public accounting firm selected by Borrower and reasonably satisfactory to
FINOVA.
ACCOUNTING CHANGES: as defined in Section 1.3.
ADA: the Americans with Disabilities Act of 1990, as amended, any
successor statute thereto, and the rules and regulations issued thereunder,
as in effect from time to time.
ADDITIONAL SUMS: as defined in subsection 2.2.4.
AFFILIATE: any Person that directly or indirectly, through one or more
intermediaries, controls or is controlled by or is under common control
with another Person. The term "control" means possession, direct or
indirect, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting
securities or equity interests, by contract or otherwise. For the purposes
hereof any Person which owns or controls, directly or
indirectly, 10% or more of the securities or equity interests, as
applicable, whether voting or non-voting, of any other Person shall be
deemed to "control" such Person.
ALLOCATED LOAN AMOUNT: for each Initial Store, the portion of the
Principal Balance allocated to such Initial Store as set forth on EXHIBIT
5.5.2. The Allocated Loan Amount for each Initial Store shall be reduced
concurrently with each payment of the Principal Balance by an amount equal
to the amount of such payment multiplied by the percentage that such
Allocated Loan Amount bears to $8,500,000.
BANKRUPTCY CODE: the United States Bankruptcy Code, any successor
statute thereto, and the rules, regulations and legally binding policies
promulgated thereunder, as amended and in effect from time to time.
BASIC FINANCIAL STATEMENTS: as defined in subsection 6.3.2.
BORROWER: as defined in the Preamble to this Loan Agreement.
BORROWER CAPITAL STOCK: all of the issued and outstanding capital
stock and all warrants, options and other rights to acquire capital stock
of Borrower.
BORROWER CASH FLOW: for any period, the net income of Borrower for
such period:
(i) PLUS the sum of the following (without duplication), to the
extent deducted in determining such net income for such period:
(A) losses from sales, exchanges and other dispositions of
Property, and other extraordinary and non-recurring losses, in
each case not in the ordinary course of business;
(B) interest, fees and other charges paid or accrued on
Indebtedness, including, without limitation, interest on
Capitalized Leases that is imputed in accordance with GAAP;
(C) income taxes paid or accrued;
(D) depreciation, amortization and all other non-cash items
deducted in determining such net income; and
(E) rent expense paid or accrued under all Operating Leases
of Borrower during such period, including all Leases and all
equipment leases of Borrower which are not Capitalized Leases;
and
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(ii) MINUS the sum of the following (without duplication), to the
extent included in determining such net income for such period:
(A) gains from sales, exchanges and other dispositions of
Property, and other extraordinary and non-recurring gains, in
each case not in the ordinary course of business;
(B) proceeds of any insurance other than business
interruption insurance; and
(C) any other non-cash item included in determining such net
income.
BORROWER FIXED CHARGE COVERAGE RATIO: for any period, the ratio of (i)
Borrower Cash Flow for such period to (ii) Borrower Fixed Charges for such
period.
BORROWER FIXED CHARGES: during any period as applicable, the sum of
(i) all payments of principal, interest, premium, loan fees and other
charges with respect to Indebtedness for Borrowed Money made or required to
be made by Borrower during such period plus (ii) rent expense paid or
accrued under all Operating Leases of Borrower during such period,
including all Leases and all equipment leases of Borrower which are not
Capitalized Leases.
BORROWER's Obligations: (i) any and all Indebtedness due or to become
due, now existing or hereafter arising, of Borrower to FINOVA pursuant to
the terms of this Loan Agreement or any other Loan Instrument, including,
without limitation, the Loan Fee, and (ii) the performance of the covenants
of Borrower contained in the Loan Instruments.
BUSINESS DAY: any day other than a Saturday, Sunday or other day on
which banks in Phoenix, Arizona or New York, New York are required to
close.
CAPITALIZED LEASE: any lease of Property, the obligations for the
rental of which are required to be capitalized in accordance with GAAP.
CLOSING: the disbursement of the Loan.
CLOSING DATE: the date the Closing occurs.
CODE: the Internal Revenue Code of 1986, any successor statute
thereto, and the rules, regulations and legally binding policies
promulgated thereunder, as amended and in effect from time to time.
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COLLATERAL: (i) all existing and after-acquired Property of Borrower
related to the Collateral Stores, including, without limitation, all
furniture, fixtures, equipment and inventory located at the Collateral
Stores, but excluding (A) the Development Agreement, (B) all intellectual
property, Franchise Agreements, Collateral Store Leases and Licenses of
Borrower and (B) all Property of Borrower subject to Permitted Senior
Indebtedness Liens and (ii) all proceeds of the foregoing.
COLLATERAL STORE LEASE: a Lease of a Collateral Store.
COLLATERAL STORES: collectively, the Initial Stores and each
Substitute Store.
COMPLIANCE CERTIFICATE: a compliance certificate executed by Borrower
in the form of Exhibit 1.1(A) attached hereto.
DEFAULT RATE: 12.88% per annum.
DEFAULT RATE PERIOD: a period of time commencing on the date an Event
of Default has occurred and ending on the date that such Event of Default
is cured or waived.
DEVELOPMENT AGREEMENT: that certain Development Agreement dated as of
May 12, 1998 between Franchisor and Borrower.
EMPLOYEE BENEFIT PLAN: any employee benefit plan within the meaning of
Section 3(3) of ERISA which (i) is maintained for employees of Borrower or
any of its ERISA Affiliates or (ii) has at any time within the preceding
six years been maintained for the employees of Borrower or any of its
current or former ERISA Affiliates.
ENVIRONMENTAL LAWS: any and all federal, state and local laws that
relate to or impose liability or standards of conduct concerning public or
occupational health and safety or protection of the environment, as now or
hereafter in effect and as have been or hereafter may be amended or
reauthorized, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. '9601 ET
SEQ.), the Hazardous Materials Transportation Act (42 U.S.C. '1802 ET
SEQ.), the Resource Conservation and Recovery Act (42 U.S.C. '6901 ET
SEQ.), the Federal Water Pollution Control Act (33 U.S.C. '1251 ET SEQ.),
the Toxic Substances Control Act (15 U.S.C. '2601 ET SEQ.), the Clean Air
Act (42 U.S.C. '7901 ET seq.), the National Environmental Policy Act (42
U.S.C. '4231, ET SEQ.), the Refuse Act (33 U.S.C. '407, ET SEQ.), the Safe
Drinking Water Act (42 U.S.C. '300(f) ET SEQ.), the Occupational Safety and
Health Act (29 U.S.C. '651 ET SEQ.), and all rules, regulations, codes,
ordinances and guidance documents promulgated or published thereunder, and
the provisions of any licenses, permits, orders and decrees issued pursuant
to any of the foregoing.
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ERISA: the Employee Retirement Income Security Act of 1974, and any
successor statute thereto, and the rules, regulations and legally binding
policies promulgated thereunder, as amended and in effect from time to
time.
ERISA AFFILIATE: any Person who is a member of a group which is under
common control with Borrower, who together with Borrower is treated as a
single employer within the meaning of Section 414(b), (c) and (m) of the
Code.
EVENT OF DEFAULT: any of the Events of Default set forth in Section
8.1.
EXCESS INTEREST: as defined in subsection 2.2.4.
EXPANSION STORES: new Stores to be acquired, constructed, renovated or
otherwise developed by Borrower after the Closing Date pursuant to the
Development Agreement.
FINOVA: as defined in the Preamble to this Loan Agreement.
FINOVA DEBT SERVICE: for any period, all payments of principal and
interest with respect to the Principal Balance or an Allocated Loan Amount,
as applicable, made or required to be made by Borrower during such period.
FRANCHISE AGREEMENT: a franchise agreement between Borrower and
Franchisor with respect to the operation of a Collateral Store, in form and
substance reasonably satisfactory to FINOVA.
FRANCHISOR: Arby's, Inc., a Delaware corporation.
GAAP: generally accepted accounting principles as in effect from time
to time, which shall include but shall not be limited to the official
interpretations thereof by the Financial Accounting Standards Board or any
successor thereto.
GOOD FUNDS: United States Dollars available in Federal funds to FINOVA
at or before 2:00 p.m., Phoenix time, on a Business Day.
GOVERNMENTAL BODY: any foreign, federal, state, municipal or other
government, or any department, commission, board, bureau, agency, public
authority or instrumentality thereof or any court or arbitrator.
GUARANTY: a guaranty of Borrower's Obligations executed by the
Guarantor in favor of FINOVA.
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GUARANTOR: I.C.H. Corporation, a Delaware corporation.
HAZARDOUS MATERIALS: any hazardous, toxic, dangerous or other waste,
substance or material defined as such in, regulated by or for purposes of
any Environmental Law.
INCIPIENT DEFAULT: any event or condition which, with the giving of
notice or the lapse of time, or both, would become an Event of Default.
INDEBTEDNESS: all liabilities, obligations and reserves, contingent or
otherwise, which, in accordance with GAAP, would be reflected as a
liability on a balance sheet or would be required to be disclosed in a
financial statement or the footnotes thereto, including, without
duplication: (i) Indebtedness for Borrowed Money, (ii) obligations secured
by any Lien upon Property, (iii) guaranties, letters of credit and other
contingent obligations and (iv) liabilities in respect of unfunded vested
benefits under any Pension Plan or in respect of withdrawal liabilities
incurred under ERISA by Borrower or any of its ERISA Affiliates to any
Multiemployer Plan.
INDEBTEDNESS FOR BORROWED MONEY: without duplication, all Indebtedness
(i) in respect of money borrowed, (ii) evidenced by a note, debenture or
other like written obligation to pay money (including, without limitation,
all of Borrower's Obligations and Permitted Senior Indebtedness), (iii) in
respect of rent or hire of Property under Capitalized Leases or for the
deferred purchase price of Property, (iv) in respect of obligations under
conditional sales or other title retention agreements and (v) all
guaranties of any or all of the foregoing.
INITIAL STORES: the existing Stores designated by the numbers and at
the locations described in EXHIBIT 5.5.2.
LANDLORD: a lessor under a Lease.
LANDLORD's Waiver: a landlord's waiver in form and substance
satisfactory to FINOVA.
LEASE: any lease of real estate under which Borrower is the lessee or
sublessee.
LEASEHOLD PROPERTY: any real estate which is the subject of a Lease.
LICENSES: all licenses (including liquor licenses, if any), permits,
consents, approvals and authority issued by any Governmental Body in
connection with the operation of the Collateral Stores.
LIEN: any mortgage, pledge, assignment, lien, charge, encumbrance or
security interest of any kind, or the interest of a vendor or lessor under
any conditional sale agreement, Capitalized Lease or other title retention
agreement.
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LOAN: the term loan to be made by FINOVA to Borrower pursuant to
Section 2.1.
LOAN AGREEMENT: this Loan Agreement and any amendments or supplements
hereto.
LOAN FEE: the fee payable to FINOVA pursuant to Section 2.5.
LOAN INSTRUMENTS:
(i) Loan Agreement;
(ii) Note;
(iii) Guaranty;
(iv) Security Agreement;
(v) Solvency Certificate;
(vi) such Uniform Commercial Code financing statements as FINOVA
may require in order to perfect the Security Interests; and
(vii) such other instruments and documents as FINOVA reasonably
may require in connection with the transactions
contemplated by this Loan Agreement.
LOAN YEAR: a period of time from the Closing Date or any anniversary
of the Closing Date to the immediately succeeding anniversary of the
Closing Date.
MATERIAL ADVERSE EFFECT: (i) a material adverse effect upon the
business, operations, Property, profits or condition (financial or
otherwise) of Borrower, (ii) a material adverse effect upon the validity,
enforceability or priority of the Security Interests or (iii) a material
impairment of the ability of Borrower to perform its obligations under any
Loan Instrument to which it is a party or of FINOVA to enforce or collect
any of Borrower's Obligations.
MATURITY DATE: the earlier to occur of (i) January 4, 2010 and (ii)
the date Borrower's Obligations are accelerated pursuant to Section 8.2.
MAXIMUM RATE: as defined in subsection 2.2.4.
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MULTIEMPLOYER PLAN: any multiemployer plan as defined pursuant to
Section 3(37) of ERISA to which Borrower or any of its ERISA Affiliates
makes, or accrues an obligation to make contributions, or has made, or been
obligated to make, contributions within the preceding six years.
NOTE: a promissory note in the principal amount of $8,500,000 executed
and delivered by Borrower to FINOVA to evidence the Loan.
OBLIGOR: any of the Obligors.
OBLIGORS: collectively, Borrower and Guarantor.
OPERATING AGREEMENTS: all right-of-entry agreements, supply
agreements, access agreements, advertising contracts, equipment leases,
service contracts and similar agreements relating to the operation of the
Collateral Stores, excluding the Development Agreement and the Collateral
Store Leases, the Franchise Agreements and Licenses.
OPERATING LEASE: any lease which, under GAAP, is not required to be
capitalized.
PBGC: the Pension Benefit Guaranty Corporation or any
Governmental Body succeeding to the functions thereof.
PENSION PLAN: any Employee Benefit Plan, other than a Multiemployer
Plan, which is subject to the provisions of Part 3 of Title I of ERISA,
Title IV of ERISA, or Section 412 of the Code and which (i) is maintained
for employees of Borrower or any of its ERISA Affiliates, or (ii) has at
any time within the preceding six years been maintained for the employees
of Borrower or any of its current or former ERISA Affiliates.
PERMITTED LIENS: any of the following Liens:
(i) the Security Interests;
(ii) Liens for taxes or assessments and similar charges, which
either are (A) not delinquent or (B) being contested
diligently and in good faith by appropriate proceedings, and
as to which Borrower has set aside reserves on its books
which are satisfactory to FINOVA;
(iii) statutory Liens, such as mechanic's, materialman's,
warehouseman's, carrier's or other like Liens, incurred in
good faith in the ordinary course of business, provided that
the underlying obligations relating to such Liens are paid
in the ordinary course of business, or are being contested
diligently and in good faith by appropriate proceedings and
as to which
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Borrower has set aside reserves on its books satisfactory
to FINOVA, or the payment of which obligations are
otherwise secured in a manner satisfactory to FINOVA;
(iv) zoning ordinances, easements, licenses, reservations,
provisions, covenants, conditions, waivers or restrictions
on the use of Property and other title exceptions, in each
case, that are acceptable to FINOVA, or that do not
interfere with the intended use of the Property as a
Collateral Store;
(v) Liens in respect of judgments or awards with respect to
which no Event of Default would exist pursuant to
subsection 8.1.6;
(vi) Liens to secure payment of insurance premiums (A) to be
paid in accordance with applicable laws in the ordinary
course of business relating to payment of worker's
compensation, or (B) that are required for the
participation in any fund in connection with worker's
compensation, unemployment insurance, old-age pensions or
other social security programs;
(vii) the Permitted Senior Indebtedness Liens; and
(viii) statutory liens in favor of Landlords under Collateral
Store Leases or contractual liens granted to Landlords
under Collateral Store Leases, in each case to secure the
obligations of Borrower under Collateral Store Leases.
PERMITTED PRIOR LIENS: any of the following Liens:
(i) the Permitted Liens described in clauses (ii) and (iii) of
the definition of Permitted Liens that are accorded
priority to the Security Interests by law;
(ii) the Permitted Liens described in clauses (iv) and (vi) of
the definition of Permitted Liens, subject to the
limitations set forth therein; and
(iii) the Permitted Senior Indebtedness Liens.
PERMITTED SENIOR INDEBTEDNESS: Indebtedness, other than Borrower's
Obligations, incurred to purchase tangible personal property or
Indebtedness incurred to lease tangible personal property pursuant to
Capitalized Leases, provided that (i) the amount of such Indebtedness
attributable to any Collateral Store at any one time outstanding during
any Loan Year shall not exceed $60,000,
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and (ii) no Event of Default exists at the time or will be caused as a
result of the incurrence of any Indebtedness described in clause (i).
PERMITTED SENIOR INDEBTEDNESS LIENS: Liens that secure Permitted
Senior Indebtedness, provided that each such Lien attaches only to the
Property purchased or leased with the proceeds of the Permitted Senior
Indebtedness incurred with respect to such Property.
PERSON: any individual, firm, corporation, business
enterprise, trust, association, joint venture, partnership,
Governmental Body or other entity, whether acting in an
individual, fiduciary or other capacity.
PRINCIPAL BALANCE: the aggregate unpaid principal balance of the Loan
or any specified portion thereof outstanding from time to time.
PROPERTY: all types of real, personal or mixed property and all types
of tangible or intangible property.
QUALIFIED DEPOSITORY: a member bank of the Federal Reserve System
having a combined capital and surplus of at least $100,000,000.
REAL ESTATE: any fee simple real estate now owned or hereafter
acquired, beneficially or otherwise, by Borrower.
RESTAURANT BUSINESS: the ownership and operation of restaurants,
taverns, banquet centers, related commissary/catering services and
ancillary activities.
SECURITIES ACT: the Securities Act of 1933, the Securities Exchange
Act of 1934, any successor statute thereto, and the rules, regulations and
legally binding policies of the Securities Exchange Commission promulgated
thereunder, as amended and in effect from time to time.
SECURITY AGREEMENT: a security agreements executed by Borrower in
favor of FINOVA.
SECURITY INTERESTS: the Liens in the Collateral granted to FINOVA
pursuant to the Security Agreement and any other document now or hereafter
executed by any Obligor which purports to xxxxx x Xxxx on the Property of
such Obligor in favor of FINOVA to secure Borrower's Obligations.
SOLVENCY CERTIFICATE: a solvency certificate executed by Borrower in
favor of FINOVA.
STATED RATE: as defined in subsection 2.2.4.
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STORE: an ARBY's restaurant owned and operated by Borrower.
STORE CASH FLOW: for any period, with respect to any designated Store,
the net income of Borrower derived from the operation of such Store for
such period:
(i) PLUS the sum of the following (without duplication), to the
extent deducted in determining such net income for such period and to
the extent attributable to such Store for such period:
(A) losses from sales, exchanges and other dispositions of
Property, and other extraordinary and non-recurring losses, in
each case not in the ordinary course of business;
(B) interest, fees and other charges paid or accrued on
Indebtedness, including, without limitation, interest on
Capitalized Leases that is imputed in accordance with GAAP;
(C) income taxes paid or accrued;
(D) depreciation, amortization and all other non-cash items
deducted in determining such net income; and
(E) rent expense paid or accrued under all Operating Leases
related to such Store, including the Collateral Store Lease of
such Store and all equipment leases which are not Capitalized
Leases pertaining to equipment located at such Store; and
(ii) MINUS the sum of the following (without duplication), to the
extent included in determining such net income for such period and to
the extent attributable to such Store for such period:
(A) gains from sales, exchanges and other dispositions of
Property, and other extraordinary and non-recurring gains, in
each case not in the ordinary course of business;
(B) proceeds of any insurance other than business
interruption insurance; and
(C) any other non-cash item included in determining such net
income.
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STORE FIXED CHARGES: during any period with respect to any designated
Store, as applicable, the sum of (i) all payments of principal, interest,
premium, loan fees and other charges with respect to Indebtedness for
Borrowed Money made or required to be made by Borrower which are allocable
to such Store plus (ii) rent expense paid or accrued under all Operating
Leases of Borrower related to such Store including the applicable
Collateral Store Lease and all equipment leases which are not Capitalized
Leases pertaining to equipment located at such Store.
SUBSTITUTE STORE: as defined in subsection 2.6.2(a).
TERMINATION EVENT: (i) a "Reportable Event" described in Section 4043
of ERISA and the regulations issued thereunder; or (ii) the withdrawal of
Borrower or any of its ERISA Affiliates from a Pension Plan during a plan
year in which it was a "substantial employer" as defined in Section
4001(a)(2); or (iii) the termination of a Pension Plan, the filing of a
notice of intent to terminate a Pension Plan or the treatment of a Pension
Plan amendment as a termination under Section 4041 of ERISA; or (iv) the
institution of proceedings to terminate, or the appointment of a trustee
with respect to, any Pension Plan by the PBGC; or (v) any other event or
condition which would constitute grounds under Section 4042(a) of ERISA for
the termination of, or the appointment of a trustee to administer, any
Pension Plan; or (vi) the partial or complete withdrawal of Borrower or any
of its ERISA Affiliates from a Multiemployer Plan; or (vii) the imposition
of a lien pursuant to Section 412 of the Code or Section 302 of ERISA; or
(viii) any event or condition which results in the reorganization or
insolvency of a Multiemployer Plan under Sections 4241 or 4245 of ERISA; or
(ix) any event or condition which results in the termination of a
Multiemployer Plan under Section 4041A of ERISA or the institution by the
PBGC of proceedings to terminate a Multiemployer Plan under Section 4042 of
ERISA.
1.2 TIME PERIODS. In this Loan Agreement and the other Loan Instruments, in
the computation of periods of time from a specified date to a later specified
date, (i) the word "from" means "from and including," (ii) the words "to" and
"until" each mean "to, but excluding" and (iii) the words "through," "end of"
and "expiration" each mean "through and including." Unless otherwise specified,
all references in this Loan Agreement and the other Loan Instruments to (i) a
"month" shall be deemed to refer to a calendar month, (ii) a "quarter" shall be
deemed to refer to a calendar quarter and (iii) a "year" shall be deemed to
refer to a calendar year.
1.3 ACCOUNTING TERMS AND DETERMINATIONS. All accounting terms not
specifically defined herein shall be construed, all accounting determinations
hereunder shall be made and all financial statements required to be delivered
pursuant hereto shall be prepared in accordance with GAAP as in effect at the
time of such interpretation, determination or preparation, as applicable. In the
event that any Accounting Changes (as hereinafter defined) occur and such
changes result in a change in the method of calculation of financial covenants,
standards or terms contained in this Loan Agreement, then Borrower and FINOVA
agree to enter into negotiations to amend such provisions of this Loan Agreement
so as to reflect such Accounting Changes with the desired result that the
criteria for evaluating the financial condition of
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Borrower shall be the same after such Accounting Changes as if such Accounting
Changes had not been made. For purposes hereof, "Accounting Changes" shall mean
(i) changes in generally accepted accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants (or any successor thereto) or other appropriate authoritative body
and (ii) changes in accounting principles as approved by the Accountants.
1.4 REFERENCES. All references in this Loan Agreement to "Article,"
"Section," "subsection," "subparagraph," "clause" or "Exhibit," unless otherwise
indicated, shall be deemed to refer to an Article, Section, subsection,
subparagraph, clause or Exhibit, as applicable, of this Loan Agreement.
1.5 FINOVA's Discretion. Whenever the terms "satisfactory to FINOVA,"
"determined by FINOVA," "acceptable to FINOVA," "FINOVA shall elect," "FINOVA
shall request," "at the option or election of FINOVA," or similar terms are used
in the Loan Instruments, except as otherwise specifically provided therein, such
terms shall mean satisfactory to, at the election or option of, determined by,
acceptable to or requested by FINOVA, in its sole and unlimited discretion.
1.6 BORROWER's Knowledge. Any statements, representations or warranties in
the Loan Instruments that are based upon the best knowledge of Borrower or an
officer thereof shall be deemed to have been made after due inquiry by Borrower
or an officer, as applicable, with respect to the matter in question.
ARTICLE II
LOAN AND TERMS OF PAYMENT
2.1 LOAN.
2.1.1 AMOUNT. The Loan shall consist of a term loan from FINOVA to
Borrower in the amount of $8,500,000.
2.1.2 DISBURSEMENT. FINOVA shall disburse the Loan to or as directed
by Borrower when all of the terms and conditions set forth in Article IV
have been satisfied.
2.1.3 USE OF PROCEEDS. The proceeds of the Loan shall be used (i) to
pay transaction costs, (ii) for the acquisition and development of
Expansion Stores and (iii) for working capital.
2.1.4 NOTE. The Loan shall be evidenced by the Note.
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2.1.5 REBORROWING. Borrower shall not be entitled to reborrow any
portion of the Loan which is repaid or prepaid.
2.2 INTEREST.
2.2.1 INTEREST RATE. Except as provided in subsection 2.2.2, the
Principal Balance shall bear interest at a fixed rate per annum equal to
10.88%.
2.2.2 DEFAULT RATE. During a Default Rate Period, Borrower's
Obligations shall bear interest at the Default Rate.
2.2.3 INTEREST COMPUTATION. Interest shall be computed on the basis of
a year consisting of 360 days and charged for the actual number of days
during the period for which interest is being charged. In computing
interest, the date of funding of the Loan shall be included and the date of
payment shall be excluded.
2.2.4 MAXIMUM INTEREST. Notwithstanding any provision to the contrary
contained herein or in any other Loan Instrument, FINOVA shall not collect
a rate of interest on any obligation or liability due and owing by Borrower
to FINOVA in excess of the maximum contract rate of interest permitted by
applicable law ("EXCESS Interest"). All fees, charges, goods, things in
action or any other sums or things of value (other than items (a), (b) and
(c) below) paid or payable by Borrower (collectively, the "ADDITIONAL
SUMS"), whether pursuant to the Note, this Loan Agreement, the other Loan
Instruments or any other document or instrument in any way pertaining to
the Loan, that, under the laws of the State of Arizona, may be deemed to be
interest with respect to the Loan, for the purpose of any laws of the State
of Arizona that may limit the maximum amount of interest to be charged with
respect to the Loan shall be payable by Borrower and shall be deemed to be
additional interest, and for such purposes only, the agreed upon and
"contracted for rate of interest" with respect to the Loan shall be deemed
to be increased by the rate of interest resulting from the Additional Sums.
FINOVA and Borrower agree that the interest laws of the State of Arizona
shall govern the relationship among them and understand and believe that
the transactions contemplated by the Loan Instruments comply with the usury
laws of the State of Arizona, but in the event of a final adjudication to
the contrary, Borrower shall be obligated to pay, NUNC PRO TUNC, to FINOVA
only such interest as then shall be permitted by the laws of the state
found to govern the contract relationship between FINOVA and Borrower. For
the purpose of any laws of the State of Arizona that may limit the maximum
amount of interest to be charged with respect to a loan, the "contracted
for rate of interest" for the Loan shall consist of the following: (a)
interest calculated in accordance with the provisions of subsections 2.2.1
and 2.2.2; (b) the late charges calculated in accordance with the
provisions of Section 2.4; (c) the Loan Fee; and (d) all Additional Sums,
if any. Borrower agrees to pay an effective "contracted for rate of
interest" which is the sum of items (a), (b), (c) and (d) above. If any
Excess Interest is provided for or determined by a court of competent
jurisdiction to have been provided for in this Loan
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Agreement or any other Loan Instrument, then in such event (i) no Obligor
shall be obligated to pay such Excess Interest, (ii) any Excess Interest
collected by FINOVA shall be, at FINOVA's option, (A) applied to the
Principal Balance of any Loan in such manner as FINOVA may elect or to
accrued and unpaid interest not in excess of the maximum rate permitted by
applicable law or (B) refunded to the payor thereof, (iii) the interest
rates provided for herein (collectively, including, without limitation, the
Loan Fee, the "STATED RATE") shall be automatically reduced to the maximum
rate allowed from time to time under applicable law (the "MAXIMUM RATE")
and this Loan Agreement and the other Loan Instruments, as applicable,
shall be deemed to have been, and shall be, modified to reflect such
reduction, and (iv) neither Borrower nor any other Obligor shall have any
action against FINOVA for any damages arising out of the payment or
collection of such Excess Interest.
2.3 PAYMENTS.
2.3.1 STUB PERIOD INTEREST. Interest which will accrue on the
Principal Balance from the Closing Date through the last day of the month
in which the Closing occurs shall be paid in advance on the Closing Date.
2.3.2 MONTHLY INSTALLMENTS. Commencing on the first Business Day of
February, 2000 and on the first Business Day of each month thereafter
through the first Business Day of December, 2009, the Principal Balance of
the Loan and all accrued and unpaid interest thereon shall be payable in
119 equal monthly installments of $116,510.88.
2.3.3 PAYMENT AT MATURITY. The remaining Principal Balance, together
with all accrued and unpaid interest thereon and all other amounts which
then are due and payable pursuant to the terms of the Loan Instruments,
shall be due and payable in full on the Maturity Date.
2.4 LATE CHARGES. If a payment of principal or interest to be made pursuant
to this Loan Agreement becomes past due for a period in excess of ten days,
Borrower shall pay on demand to FINOVA a late charge of 10% of the amount of
such overdue payment.
2.5 LOAN FEE. Borrower shall pay to FINOVA a loan fee of $85,000, which
shall be deemed to be fully earned and payable upon the Closing and against
which FINOVA shall credit the $25,000 deposit (net of FINOVA's expenses)
previously paid by Borrower to FINOVA.
2.6 PREPAYMENTS.
2.6.1 VOLUNTARY PREPAYMENT. Borrower may not prepay the Principal
Balance at any time during the first two Loan Years. Borrower voluntarily
may prepay the Principal Balance in whole, but not in part, at any time
after the second Loan Year subject to the following conditions:
15
(A) PREPAYMENT PREMIUM. Concurrently with any such voluntary
prepayment of the Principal Balance, Borrower shall pay to FINOVA a
prepayment premium equal to a percentage of the amount of the
Principal Balance prepaid, determined in accordance with the following
schedule:
Percentage of Principal
Period Of Prepayment Balance Prepaid
-------------------- -----------------------
Third Loan Year 5.0%
Fourth Loan Year 3.0%
Fifth Loan Year and Thereafter 1.0%
(B) NOTICE OF PREPAYMENT. Not less than 30 days prior to the date
upon which Borrower desires to prepay the Principal Balance, Borrower
shall deliver to FINOVA notice of its intention to prepay, which
notice shall state the prepayment date and the amount of the Principal
Balance as of the prepayment date. If Borrower delivers to FINOVA a
notice of prepayment and fails to make such prepayment, Borrower shall
reimburse FINOVA on demand in the amount of any loss, cost and/or
expense incurred by FINOVA as a result of FINOVA's reliance on such
notice, including without limitation, any loss, cost or expense
resulting from any contractual obligations of FINOVA in connection
with the reinvestment of the amount indicated in such notice of
prepayment.
(C) ADDITIONAL PAYMENTS. Concurrently with any prepayment of the
Principal Balance, Borrower shall pay to FINOVA accrued and unpaid
interest on the Principal Balance which is being prepaid to the date
on which FINOVA is in receipt of Good Funds, and any other sums which
are due and payable pursuant to the terms of any of the Loan
Instruments.
2.6.2 MANDATORY PREPAYMENTS.
(a) LEASE OR FRANCHISE EXPIRATION. In the event any Collateral
Store Lease or Franchise Agreement with respect to any Initial Store
terminates prior to January 4, 2010, and such Collateral Store Lease
or Franchise Agreement is not renewed or otherwise extended, Borrower
shall prepay the Principal Balance in an amount equal to the Allocated
Loan Amount with respect such Initial Store, unless at least 30 days
prior to such termination Borrower delivers to FINOVA (i) certified
copies of a Collateral Store Lease and a Franchise Agreement with
respect to a Substitute Store and (ii) such amendments to this Loan
Agreement and the Security Agreement as are necessary to reflect the
substitution of such Substitute Store for such Initial Store, together
with a UCC-1 financing statement naming Borrower, as debtor, and
FINOVA, as secured party,
16
covering the Collateral located at such Substitute Store. As used
herein, the term "SUBSTITUTE STORE" means any Store designated by
Borrower:
(i) which is the subject of a Collateral Store Lease and a
Franchise Agreement each having an expiration date not earlier
than January 4, 2010;
(ii) with respect to which Borrower demonstrates to the
satisfaction of FINOVA that the ratio of the Store Cash Flow for
the most recently ended twelve month period to the sum of Store
Fixed Charges for such period plus the projected FINOVA Debt
Service on the Allocated Loan Amount of the Initial Store being
replaced for the succeeding twelve month period is not less than
1.25:1.00; and
(iii) with respect to which the representations and
warranties contained in Section 5.5 are true and correct in all
material respects.
(b) ADDITIONAL PAYMENTS; PREPAYMENT PREMIUM. Concurrently with
any mandatory prepayment pursuant to subsection 2.6.2(a), Borrower
shall pay to FINOVA accrued and unpaid interest on the Principal
Balance which is being prepaid to the date on which FINOVA is in
receipt of Good Funds, any other sums which are due and payable
pursuant to the terms of any of the Loan Instruments and a prepayment
premium equal to a percentage of the Principal Balance prepaid,
determined in accordance with the following schedule:
Percentage of Principal
Period Of Prepayment Balance Prepaid
-------------------- -----------------------
Third Loan Year 5.0%
Fourth Loan Year 3.0%
Fifth Loan Year and Thereafter 1.0%
(c) APPLICATION OF MANDATORY PREPAYMENTS. Prepayments received by
FINOVA pursuant to this subsection 2.6.2 shall be applied in the
following order of priority to the payment of: (i) any and all sums
which are due and payable pursuant to the terms of the Loan
Instruments, except the Principal Balance and accrued and unpaid
interest thereon, (ii) accrued and unpaid interest on the portion of
the Principal Balance being prepaid and (iii) the installments of the
Principal Balance in the inverse order of maturity.
2.6.3 NO PREPAYMENT PREMIUM. No prepayment premium shall be payable
with respect to prepayments made from insurance proceeds.
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2.6.4 INVOLUNTARY PREPAYMENT. Concurrently with any payment of the
Principal Balance received by FINOVA resulting from the exercise by FINOVA
of any remedy available to FINOVA subsequent to the occurrence of an Event
of Default and the acceleration of Borrower's Obligations, Borrower shall
pay to FINOVA a prepayment premium in an amount equal to the prepayment
premium which would be payable if such payment was made pursuant to
subsection 2.6.1.
2.7 PAYMENTS AFTER EVENT OF DEFAULT. All payments received by FINOVA during
the existence of an Event of Default shall be applied in accordance with Section
8.4.
ARTICLE III
GUARANTY AND SECURITY
Borrower's Obligations shall be (i) guaranteed by the Guarantor pursuant to
the Guaranty and (iii) secured by a Lien upon all of the Collateral, which at
all times shall be superior and prior to all other Liens, except Permitted Prior
Liens.
ARTICLE IV
CONDITIONS OF CLOSING
4.1 REPRESENTATIONS AND WARRANTIES. On the Closing Date the representations
and warranties of each Obligor set forth in the Loan Instruments to which such
Person is a party shall be true and correct.
4.2 PERFORMANCE; NO DEFAULT. Each Obligor shall have performed and complied
with all agreements and conditions contained in the Loan Instruments to be
performed by or complied with by such Person prior to or at such disbursement
and no Event of Default or Incipient Default shall then exist or result from the
disbursement of the Loan.
4.3 APPRAISALS. FINOVA shall have received from the Accountants appraisals
of ten of the Initial Stores, in each case in form and substance satisfactory to
FINOVA, showing an aggregate business value of the Initial Stores of not less
than $8,630,000.
4.4 STORE FIXED CHARGE COVERAGE. Borrower shall demonstrate to the
satisfaction of FINOVA that the ratio of the combined Store Cash Flow of the
Initial Stores for the twelve month period ending closest to September 30, 1999
to the sum of the combined Store Fixed Charges of the Initial Stores
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for such twelve month period plus the projected FINOVA Debt Service on the
Principal Balance for the first Loan Year is not less than 1.25:1.00.
4.5 DELIVERY OF DOCUMENTS. The following shall have been delivered to
FINOVA, each duly authorized and executed, where applicable, and in form and
substance satisfactory to FINOVA:
(a) the Loan Instruments;
(b) good standing certificates for each Obligor from the State in
which each such Person is organized and for Borrower from each State in
which any Initial Store is located, each dated a recent date prior to the
Closing Date;
(c) copies of:
(1) the articles of incorporation of each Obligor, certified by
the Secretary of State of the State in which such Obligor is
organized, together with all current and proposed amendments thereto,
certified by the corporate secretary of such Obligor;
(2) the by-laws of each Obligor, together with all current and
proposed amendments thereto, certified by the corporate secretary of
such Obligor;
(3) resolutions adopted by the board of directors of each
Obligor, authorizing the execution and delivery by such Obligor of the
Loan Instruments to which such Obligor is a party and the consummation
of the transactions contemplated thereby, certified as of the Closing
Date by the corporate secretary of such Obligor;
(4) signature and incumbency certificates of the officers of each
Obligor;
(5) certified copies or executed originals of each of the
following:
(A) the Development Agreement as in effect on the Closing
Date;
(B) the Franchise Agreements for each of the Initial Stores
as in effect on the Closing Date;
(C) the Collateral Store Leases for each of the Initial
Stores as in effect on the Closing Date; and
(D) the certificate of occupancy for each of the Initial
Stores;
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(6) a Landlord's Waiver from the Landlord under at least seven of
the Collateral Store Leases; and
(7) such other instruments, documents, certificates, consents,
waivers and opinions as FINOVA reasonably may request.
4.6 OPINIONS OF COUNSEL; DIRECTION FOR DELIVERY. FINOVA shall have received
an opinion dated the Closing Date from Xxxxx Xxxxxxx Xxxxxxx and Xxxxx, counsel
to the Obligors, and any other law firm representing Obligors, addressed to
FINOVA, in such form and covering such matters as FINOVA may require.
4.7 SECURITY INTERESTS. All filings of Uniform Commercial Code financing
statements and all other filings and actions necessary to perfect and maintain
the Security Interests as first, valid and perfected Liens in the Collateral
covered thereby, subject only to Permitted Prior Liens, shall have been filed or
taken and FINOVA shall have received such UCC, state and federal tax Lien,
pending suit, judgment and other Lien searches as it deems necessary to confirm
the foregoing.
4.8 FINANCIAL STATEMENTS; INSPECTION. FINOVA shall have received the
financial statements described in EXHIBIT 5.7. Borrower shall have provided
FINOVA with an opportunity for representatives of FINOVA to visit and inspect
its offices and properties.
4.9 BUSINESS AND FLOOD INSURANCE. At least two Business Days prior to the
Closing Date Borrower shall have delivered to FINOVA evidence satisfactory to
FINOVA that all insurance coverage required pursuant to Section 6.6 is in full
force and effect and all premiums then due thereon have been paid in full.
4.10 APPROVAL OF INSTRUMENTS AND SECURITY INTERESTS. FINOVA shall have
received evidence that the approval or consent shall have been obtained from all
Governmental Bodies and all other Persons whose approval or consent is required
to enable Obligors to (i) enter into and perform their respective obligations
under the Loan Instruments to which each such Person is a party and (ii) grant
the Security Interests to FINOVA.
4.11 LICENSES. FINOVA shall have received evidence that (i) Borrower is the
licensee of all Licenses and Franchise Agreements necessary for the operation of
the Collateral Stores and (ii) such Licenses and Franchise Agreements are in
full force and effect as of the Closing Date and no event has occurred which
could result in the termination, revocation or non-renewal of any such License
or Franchise Agreement.
4.12 USE OF ASSETS. FINOVA shall be satisfied that Borrower at all times
shall be entitled to the use and quiet enjoyment of all Property necessary for
the continued ownership and operation of the
20
Collateral Stores, including, without limitation, the use of equipment,
fixtures, Licenses, offices and means of ingress and egress thereto, necessary
for the operation of the Collateral Stores.
4.13 NO MATERIAL ADVERSE EFFECT. No event or series of events shall have
occurred since October 2, 1999, and no litigation or governmental proceeding or
investigation shall be pending, which has had or could reasonably be expected to
have a Material Adverse Effect. No judgment, order, injunction or other
restraint prohibiting or imposing materially adverse conditions on the
transactions to be consummated on the Closing Date shall be in effect.
4.14 PAYMENT OF FEES AND EXPENSES. Borrower shall have paid the Loan Fee
and all fees and expenses described in subsection 10.1.1 incurred in connection
with the Loan.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to FINOVA as follows:
5.1 EXISTENCE AND POWER. Each Obligor is a corporation, duly formed,
validly existing and in good standing under the laws of the State of its
incorporation. Each Obligor is duly authorized to transact business in each
other State where such Obligor conducts business and has all requisite power and
authority to own its Property and to carry on its business as now conducted and
as proposed to be conducted.
5.2 AUTHORITY. Each Obligor has full power and authority to enter into,
execute, deliver and carry out the terms of the Loan Instruments to which it is
a party and to incur the obligations provided for therein, all of which have
been duly authorized by all proper and necessary action and are not prohibited
by its articles of incorporation, by-laws or other organizational instruments of
such Person.
5.3 BORROWER CAPITAL STOCK AND RELATED MATTERS.
5.3.1 BORROWER CAPITAL STOCK. As of the Closing Date, there is set
forth in EXHIBIT 5.3.1 a complete description of the Borrower Capital
Stock, all of which is validly issued, fully paid and non-assessable, and
has been issued and sold in compliance with all applicable federal and
state laws, rules and regulations, including, without limitation, all so-
called "Blue-Sky" laws. The Borrower Capital Stock is owned beneficially
and of record by Guarantor, free and clear of all Liens. Borrower has no
subsidiaries.
5.3.2 RESTRICTIONS. No Obligor (i) is a party to or has knowledge of
any agreements restricting the transfer of the Borrower Capital Stock,
except the Loan Instruments, (ii) has issued
21
any rights which can be convertible into or exchangeable or exercisable for
any of the Borrower Capital Stock, or any rights to subscribe for or to
purchase, or any options for the purchase of, or any agreements providing
for the issuance (contingent or otherwise) of, or any calls, commitments or
claims of any character relating to, any of the Borrower Capital Stock or
any securities convertible into or exchangeable or exercisable for any of
the Borrower Capital Stock and (iii) is not subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any
of the Borrower Capital Stock or any convertible rights or options.
5.4 BINDING AGREEMENTS. This Loan Agreement and the other Loan Instruments,
when executed and delivered, will constitute the valid and legally binding
obligations of each Obligor to the extent such Obligor is a party thereto,
enforceable against such Obligor in accordance with their respective terms,
except as such enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect affecting the enforcement of creditors' rights generally and (ii)
equitable principles (whether or not any action to enforce such document is
brought at law or in equity).
5.5 BUSINESS AND PROPERTY; COLLATERAL STORES.
5.5.1 BUSINESS AND PROPERTY. Borrower owns all Property and hold all
Collateral Store Leases, Licenses, Franchise Agreements and Operating
Agreements necessary to conduct its business as now conducted. Borrower
does not engage or propose to engage in any business or activity other than
the Restaurant Business.
5.5.2 COLLATERAL STORES; OTHER LOCATIONS. There is set forth in
EXHIBIT 5.5.2 (i) a complete and accurate address of each Collateral Store,
(ii) the chief executive office of each Obligor and (iii) all other
locations where any books and records of Borrower pertaining to the
Collateral Stores are located.
5.5.3 COLLATERAL STORE LEASES. There is set forth in EXHIBIT 5.5.3 a
description of each Collateral Store Lease, including the name and address
of the landlord thereunder, the commencement and expiration dates thereof,
a description of all renewal or extension options with respect thereto and
a complete and accurate legal description of each parcel of Leasehold
Property which is the subject of such Collateral Store Lease. Each such
Collateral Store Lease is in full force and effect, there has been no
material default in the performance of any of its terms or conditions by
Borrower, or, to the best of Borrower's knowledge, any other party thereto,
and no claims of default have been asserted with respect thereto. The
present and contemplated use of the Leasehold Property which is the subject
of such Collateral Store Lease is in compliance in all material respects
with all applicable zoning ordinances and regulations and other laws and
regulations.
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5.5.4 LICENSES AND FRANCHISE AGREEMENTS. All of Licenses and Franchise
Agreements which have been issued or assigned to Borrower are in full force
and effect and have been duly issued in the name of, or validly assigned
to, Borrower, no default or breach exists thereunder and Borrower has full
power and authority thereunder to conduct its Restaurant Business with
respect to the Collateral Stores.
5.5.5 OPERATING AGREEMENTS. There is set forth in EXHIBIT 5.5.5 a
description of all material Operating Agreements with respect to the
Collateral Stores. All of such Operating Agreements are in full force and
effect and no event has occurred which could result in the cancellation or
termination of any such Operating Agreement or the imposition thereunder of
any liability upon Borrower which could have a Material Adverse Effect.
5.5.6 REAL ESTATE. No Collateral Store is located upon any Real
Estate.
5.5.7 OPERATION AND MAINTENANCE OF EQUIPMENT. No equipment owned or
operated by Borrower which is necessary for the operation of any Collateral
Store has been used, operated or maintained in a manner which now or
hereafter could result in the cancellation or termination of the right of
Borrower to use or make use of the same or which could result in any
material liability of Borrower for damages in connection therewith. All of
the equipment and other tangible personal property owned by Borrower used
in the operation of the Collateral Stores is, in all material respects, in
good operating condition and repair (subject to normal wear and tear) and
has been used, operated and maintained in substantial compliance with all
material applicable laws, rules and regulations.
5.5.8 TITLE TO PROPERTY; LIENS. Each Obligor has (i) good and
marketable title to all of its Property used or useful in connection with
the operation of the Collateral Stores, except (A) any License or Franchise
Agreement which cannot be transferred without the consent of the applicable
Governmental Body or Franchisor and (B) the portion thereof consisting of a
leasehold estate and (ii) a valid leasehold estate in each portion of its
Property which consists of a leasehold estate. All of such Property is free
and clear of all Liens, except Permitted Liens. Upon the proper filing with
the appropriate Governmental Bodies of appropriate Uniform Commercial Code
financing statements, the applicable Loan Instruments will create valid and
perfected Liens in the Property described therein, subject only to
Permitted Liens, and subject in priority only to Permitted Prior Liens.
5.6 INDEBTEDNESS FOR BORROWED MONEY. There is set forth in EXHIBIT 5.6 a
description of all Indebtedness for Borrowed Money of Borrower existing as of
the Closing Date, including the principal amount thereof and the interest rate,
amortization schedule and maturity date applicable thereto.
5.7 FINANCIAL STATEMENTS. Borrower has delivered to FINOVA the financial
statements described in EXHIBIT 5.7 pertaining to the operations of the
Obligors. Such financial statements present
23
fairly in all material respects the results of operations of the Obligors for
the periods covered thereby and the financial condition of the Obligors as of
the dates indicated therein. All of such financial statements have been prepared
in conformity with GAAP. Since October 2, 1999, there has been no change which
has had a Material Adverse Effect. Borrower also has delivered to FINOVA a
pro-forma balance sheet as of the Closing Date. Such pro-forma balance sheet,
which assumes the consummation of the transactions contemplated by the Loan
Instruments, presents fairly in all material respects the anticipated financial
condition of Borrower as of the Closing Date.
5.8 LITIGATION. There are no actions, suits, arbitration proceedings and
claims pending or, to the best knowledge of Borrower, threatened against any
Obligor or maintained by any Obligor at law or in equity or before any
Governmental Body, which could reasonably be expected to be adversely determined
could have a Material Adverse Effect if adversely determined.
5.9 DEFAULTS IN OTHER AGREEMENTS; CONSENTS; CONFLICTING AGREEMENTS. No
Obligor is in default under any agreement to which it is a party or by which it
or any of its Property is bound, the effect of which default could have a
Material Adverse Effect. No authorization, consent, approval or other action by,
and no notice to or filing with, any Governmental Body or any other Person which
has not already been obtained, taken or filed, as applicable, is required (i)
for the due execution, delivery or performance by any Obligor of any of the Loan
Instruments to which it is a party or (ii) as a condition to the validity or
enforceability of any of the Loan Instruments to which it is a party or any of
the transactions contemplated thereby or the priority of the Security Interests,
except for certain filings to establish and perfect the Security Interests. No
provision of any mortgage, indenture, contract, agreement, statute, rule,
regulation, judgment, decree or order binding on any Obligor or affecting its
Property conflicts with, or requires any consent which has not already been
obtained under, or would in any way prevent the execution, delivery or
performance of the terms of any of the Loan Instruments or affect the validity
or priority of the Security Interests. The execution, delivery and performance
of the terms of the Loan Instruments will not constitute a default under, or
result in the creation or imposition of, or obligation to create, any Lien upon
the Property of any Obligor pursuant to the terms of any such mortgage,
indenture, contract or agreement.
5.10 TAXES. Each Obligor has filed all tax returns required to be filed,
and has paid, or made adequate provision for the payment of, all taxes shown to
be due and payable on such returns or in any assessments made against it, and no
tax liens have been filed except for tax liens which are (i) not delinquent or
(ii) being contested diligently and in good faith by appropriate proceedings,
and as to which Borrower has set aside reserves on its books which are
satisfactory to FINOVA and, to the best knowledge of Borrower, no claims are
being asserted in respect of such taxes which are required by GAAP to be
reflected in the financial statements of such Obligor and are not so reflected
therein. The charges, accruals and reserves on the books of each Obligor with
respect to all federal, state, local and other taxes are considered by the
management of Borrower to be adequate, and Borrower does not know of any unpaid
assessment which is or might be due and payable by any Obligor or create a Lien
against such Obligor's Property, except such assessments as are being contested
in good faith and by appropriate proceedings diligently conducted, and for which
adequate reserves have been set aside in accordance with GAAP.
24
Borrower has not received written notice that any of its tax returns are under
audit or that it is the subject or target of any investigation by the Internal
Revenue Service.
5.11 COMPLIANCE WITH APPLICABLE LAWS. No Obligor is in default in respect
of any judgment, order, writ, injunction, decree or decision of any Governmental
Body, which default could have a Material Adverse Effect. Each Obligor is in
compliance in all material respects with all applicable statutes and
regulations, including, without limitation, all Environmental Laws, ERISA, ADA
and all laws and regulations relating to unfair labor practices, equal
employment opportunity and employee safety, of all Governmental Bodies. No
material condemnation, eminent domain or expropriation has been commenced or, to
the best knowledge of Borrower, threatened against the Property which any
Obligor owns or will own upon the Closing.
5.12 PATENTS, TRADEMARKS, FRANCHISES, AGREEMENTS. Each Obligor owns,
possesses or has the right to use all patents, trademarks, service marks, trade
names, copyrights, franchises and rights with respect thereto which are
necessary for the conduct of its business, the failure to own, possess or have
the right to use could have a Material Adverse Effect, without any known
conflict with the rights of others.
5.13 REGULATORY MATTERS. Each Obligor (i) has duly and timely filed all
reports and other filings which are required to be filed by Borrower under any
applicable law, rule or regulation of any Governmental Body, the non-filing of
which could have a Material Adverse Effect, and (ii) is in compliance with all
such laws, rules and regulations, the noncompliance with which could have a
Material Adverse Effect.
5.14 ENVIRONMENTAL MATTERS. Each Obligor is in compliance in all material
respects with all applicable Environmental Laws and, to the best knowledge of
Borrower, no portion of any Real Estate or Leasehold Property has been used as a
land fill. There currently are not any known Hazardous Materials generated,
manufactured, released, stored, buried or deposited over, beneath, in or on (or
used in the construction and/or renovation of) the Real Estate or Leasehold
Property in violation of applicable Environmental Laws.
5.15 APPLICATION OF CERTAIN LAWS AND REGULATIONS.
Borrower is not and no Affiliate of Borrower is:
5.15.1 INVESTMENT COMPANY ACT. An "investment company," or a company
"controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
5.15.2 HOLDING COMPANY ACT. A "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding company"
or of a "subsidiary company" of a "holding company," as such terms are
defined in the Public Utility Holding Company Act of 1935, as amended.
25
5.15.3 FOREIGN OR ENEMY STATUS. (i) An "enemy" or an "ally of an
enemy" within the meaning of Section 2 of the Trading with the Enemy Act,
(ii) a "national" of a foreign country designated in Executive Order No.
8389, as amended, or of any "designated enemy country" as defined in
Executive Order No. 9095, as amended, of the President of the United States
of America, in each case within the meaning of such Executive Orders, as
amended, or of any regulation issued thereunder, (iii) a "national of any
designated foreign country" within the meaning of the Foreign Assets
Control Regulations or the Cuban Assets Control Regulations of the United
States of America (Code of Federal Regulations, Title 31, Chapter V, Part
515, Subpart B, as amended) or (iv) an alien or a representative of any
alien or foreign government within the meaning of Section 310 of Title 47
of the United States Code.
5.15.4 REGULATIONS AS TO BORROWING. Subject to any statute or
regulation which regulates the incurrence of any Indebtedness for Borrowed
Money, including, without limitation, statutes or regulations relative to
common or interstate carriers or to the sale of electricity, gas, steam,
water, telephone, telegraph or other public utility services.
5.16 MARGIN REGULATIONS. None of the transactions contemplated by this Loan
Agreement or any of the other Loan Instruments, including the use of the
proceeds of the Loan, will violate or result in a violation of Section 7 of the
Securities Exchange Act of 1934, as amended, or any regulations issued pursuant
thereto, including, without limitation, Regulations T, U and X, and no Obligor
owns or intends to carry or purchase any "margin security" within the meaning of
Regulation U.
5.17 NO MISREPRESENTATION. Neither this Loan Agreement nor any other Loan
Instrument, certificate or financial statement furnished or to be furnished by
or on behalf of any Obligor to FINOVA in connection with any of the transactions
contemplated hereby or thereby, contains or will contain a misstatement of
material fact, or omits or will omit to state a material fact required to be
stated in order to make the statements contained herein or therein, taken as a
whole, not misleading in the light of the circumstances under which such
statements were made. There is no fact, other than information known to the
public generally, known to Borrower after diligent inquiry, that could have a
Material Adverse Effect that has not expressly been disclosed to FINOVA in
writing.
5.18 EMPLOYEE BENEFIT PLANS.
5.18.1 ERISA AND CODE COMPLIANCE AND LIABILITY. Borrower and each
ERISA Affiliate are in compliance with all applicable provisions of ERISA
and the regulations and published interpretations thereunder with respect
to all Employee Benefit Plans except where failure to comply would not
result in a material liability to Borrower and except for any required
amendments for which the remedial amendment period as defined in Section
401(b) of the Code has not yet expired. Each Employee Benefit Plan that is
intended to be qualified under Section 401(a) of the Code has been
determined by the Internal Revenue Service to be so qualified, and each
trust related to such plan has been determined to be exempt under Section
401(a) of the
26
Code. No material liability has been incurred by Borrower or any ERISA
Affiliate which remains unsatisfied for any taxes or penalties with respect
to any Employee Benefit Plan or any Multiemployer Plan.
5.18.2 FUNDING. No Pension Plan has been terminated, nor has any
accumulated funding deficiency (as defined in Section 412 of the Code) been
insured (without regard to any waiver granted under Section 412 of the
Code), nor has any funding waiver from the Internal Revenue Service been
received or requested with respect to any Pension Plan, nor has Borrower or
any ERISA Affiliate failed to make any contributions or to pay any amounts
due and owing as required by Section 412 of the Code, Section 302 of ERISA
or the terms of any Pension Plan prior to the due dates of such
contributions under Section 412 of the Code or Section 302 of ERISA, nor
has there been any event requiring any disclosure under Section
4041(c)(3)(C), 4063(a) or 4068 of ERISA with respect to any Pension Plan.
5.18.3 PROHIBITED TRANSACTIONS AND PAYMENTS. Neither Borrower nor any
ERISA Affiliate has: (i) engaged in a nonexempt "prohibited transaction" as
such term is defined in Section 406 of ERISA or Section 4975 of the Code;
(ii) incurred any liability to the PBGC which remains outstanding other
than the payment of premiums and there are no premium payments which are
due and unpaid; (iii) failed to make a required contribution or payment to
a Multiemployer Plan; or (iv) failed to make a required installment or
other required payment under Section 412 of the Code.
5.18.4 NO TERMINATION EVENT. No Termination Event has occurred or is
reasonably expected to occur.
5.18.5 ERISA LITIGATION. No material proceeding, claim, lawsuit and/or
investigation is existing or, to the best knowledge of Borrower, threatened
concerning or involving any (i) employee welfare benefit plan (as defined
in Section 3(1) of ERISA) currently maintained or contributed to by
Borrower or any ERISA Affiliate, (ii) Pension Plan or (iii) Multiemployer
Plan.
5.19 EMPLOYEE MATTERS.
5.19.1 COLLECTIVE BARGAINING AGREEMENTS; Grievances. As of the Closing
Date and except as set forth in EXHIBIT 5.20.1, (i) none of the employees
of Borrower is subject to any collective bargaining agreement with
Borrower, (ii) no petition for certification or union election is pending
with respect to the employees of Borrower and no union or collective
bargaining unit has sought such certification or recognition with respect
to the employees of Borrower and (iii) there are no strikes, slowdowns,
work stoppages, unfair labor practice complaints, grievances, arbitration
proceedings or controversies pending or, to the best knowledge of Borrower,
threatened against Borrower by any of Borrower's employees, other than
employee grievances or controversies arising in the ordinary course of
business that could not in the aggregate be expected to have a Material
Adverse Effect.
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5.19.2 CLAIMS RELATING TO EMPLOYMENT. Neither Borrower nor, to
Borrower's best knowledge, any employee of Borrower, is subject to any
employment agreement or non-competition agreement with any former employer
or any other Person which agreement would have a Material Adverse Effect
due to (i) any information which Borrower would be prohibited from using
under the terms of such agreement or (ii) any legal considerations relating
to unfair competition, trade secrets or proprietary information.
5.20 BURDENSOME OBLIGATIONS. After giving effect to the transactions
contemplated by the Loan Instruments (i) no Obligor (A) will be a party to or be
bound by any franchise, agreement, deed, lease or other instrument, or be
subject to any restriction, which is so unusual or burdensome so as to cause, in
the foreseeable future, a Material Adverse Effect and (B) intends to incur, or
believes that it will incur, debts beyond its ability to pay such debts as they
become due, and (ii) each Obligor (A) owns and will own Property, the fair
saleable value of which is (I) greater than the total amount of its liabilities
(including contingent liabilities) and (II) greater than the amount that will be
required to pay the probable liabilities of its then existing debts as they
become absolute and matured, and (B) has and will have capital that is not
unreasonably small in relation to its business as presently conducted and as
proposed to be conducted. Borrower does not presently anticipate that future
expenditures needed to meet the provisions of federal or state statutes, orders,
rules or regulations will be so burdensome so as to have a Material Adverse
Effect.
5.21 BROKER FEES. The services of a broker or other similar agent have not
been used in connection with the Loan.
ARTICLE VI
AFFIRMATIVE COVENANTS
Until all of Borrower's Obligations are paid and performed in full Borrower
agrees that it will:
6.1 LEGAL EXISTENCE; GOOD STANDING. Maintain its existence and its good
standing in the jurisdiction of its formation and its qualification in each
jurisdiction in which the failure so to qualify could have a Material Adverse
Effect, and in any event in each jurisdiction in which any Store is operated by
it.
6.2 INSPECTION. Permit representatives of FINOVA at any reasonable time
during normal business hours and upon reasonable notice, provided, however, that
if an Event of Default or Incipient Default exists, the following activities may
be conducted at any time and without notice, to (i) visit its offices, (ii)
examine its books and records and Accountants' reports relating thereto, (iii)
make copies or extracts therefrom, (iv) discuss its affairs with its employees,
(v) examine and inspect the Collateral and (vi) meet and discuss its affairs
with the Accountants, and such Accountants, as a condition to their retention by
Borrower, are hereby irrevocably authorized by Borrower to fully discuss and
disclose all such affairs with
28
FINOVA. If no Event of Default or Incipient Default exists, FINOVA shall not
conduct any such inspections more than four times per calendar year.
6.3 FINANCIAL STATEMENTS AND OTHER INFORMATION. Maintain a standard system
of accounting in accordance with GAAP and furnish to FINOVA:
6.3.1 QUARTERLY STATEMENTS. As soon as available and in any event
within 45 days after the close of each quarter:
(a) a copy of the balance sheet of Borrower as
of the end of such quarter, and
(b) statements of operations and Borrower Cash Flow of Borrower
for such quarter and for the period from the beginning of the then
current year to the end of such quarter, setting forth in each case in
comparative form the corresponding figures for the corresponding
period in the preceding year,
all in reasonable detail, containing such information as FINOVA reasonably
may require, and certified by the chief financial officer of Borrower as
complete and correct, subject to normal year-end adjustments.
6.3.2 ANNUAL STATEMENTS. As soon as available and in any event within
90 days after the close of each year:
(a) the balance sheet of Guarantor as of the end of such year and
the statements of operations, cash flows, shareholders' equity of
Guarantor for such year (collectively, the "BASIC FINANCIAL
STATEMENTS") and a statement of Borrower Cash Flow for Borrower for
such year, setting forth in each case in comparative form the
corresponding figures for the preceding year, and
(b) an opinion of the Accountants which shall accompany the Basic
Financial Statements which opinion shall be unqualified as to going
concern and scope of audit, stating that (i) the examination by the
Accountants in connection with such Basic Financial Statements has
been made in accordance with generally accepted auditing standards,
(ii) such Basic Financial Statements have been prepared in conformity
with GAAP and in a manner consistent with prior periods, and (iii)
such Basic Financial Statements fairly present in all material
respects the financial position and results of operations of each
Obligor.
6.3.3 COMPLIANCE CERTIFICATE. The financial statements described in
subsection 6.3.1 and in subsection 6.3.2 shall be accompanied by a
Compliance Certificate.
29
6.3.4 ACCOUNTANTs' Certificate. Simultaneously with the delivery of
the certified Basic Financial Statements required by subsection 6.3.2,
copies of a certificate of the Accountants stating that (i) they have
checked the computations delivered by Borrower in compliance with
subsection 6.3.2, and (ii) in making the examination necessary for their
audit or review of the Basic Financial Statements for such year, nothing
came to their attention of a financial or accounting nature that caused
them to believe that (A) Borrower was not in compliance with the terms,
covenants, provisions or conditions of any of the Loan Instruments, or (B)
there shall have occurred any condition or event which would constitute an
Event of Default, or, if so, specifying in such certificate all such
instances of non-compliance and the nature and status thereof.
6.3.5 AUDIT REPORTS. Promptly upon receipt thereof, a copy of each
report, other than the reports referred to in subsection 6.3.2, including
any so-called "Management Letter" or similar report, submitted to any
Obligor by the Accountants in connection with any annual, interim or
special audit made by the Accountants of the books of such Obligor.
6.3.6 NOTICE OF DEFAULTS; LOSS. Prompt written notice if: (i) any
Indebtedness of any Obligor in the aggregate principal amount in excess of
$1,000,000 is declared or shall become due and payable prior to its
declared or stated maturity, or called and not paid when due, (ii) an event
has occurred that enables the holder of any note, or other evidence of such
Indebtedness, certificate or security evidencing any such Indebtedness of
any Obligor to declare such Indebtedness due and payable prior to its
stated maturity, (iii) there shall occur and be continuing an Event of
Default, accompanied by a statement of setting forth what action Borrower
proposes to take in respect thereof, or (iv) any event shall occur which
has a Material Adverse Effect, including the amount or the estimated amount
of any loss or adverse effect.
6.3.7 NOTICE OF SUITS; ADVERSE EVENTS. Prompt written notice of: (i)
any citation, summons, subpoena, order to show cause or other order naming
any Obligor a party to any proceeding before any Governmental Body which
could reasonably be expected to have a Material Adverse Effect, including
with such notice a copy of such citation, summons, subpoena, order to show
cause or other order, (ii) any lapse or other termination of any license,
permit, franchise, agreement or other authorization issued to Borrower by
any Governmental Body or any other Person that is material to the operation
of the business of Borrower, (iii) any refusal by any Governmental Body or
any other Person to renew or extend any such license, permit, franchise,
agreement or other authorization and (iv) any dispute between Borrower and
any Governmental Body or any other Person, which lapse, termination,
refusal or dispute referred to in clauses (ii) and (iii) above or in this
clause (iv) could have a Material Adverse Effect.
6.3.8 REPORTS TO SHAREHOLDERS, CREDITORS AND GOVERNMENTAL BODIES.
(a) Promptly upon becoming available, copies of all financial
statements, reports, notices and other statements sent or made
available generally by any Obligor to
30
its shareholders, of all regular and periodic reports and all
registration statements and prospectuses filed by any Obligor with any
securities exchange or with the Securities and Exchange Commission or
any Governmental Body succeeding to any of its functions, and of all
statements generally made available by any Obligor or others
concerning material developments in the business of such Obligor.
(b) Promptly upon becoming available, copies of any periodic or
special reports filed by any Obligor with any Governmental Body or
Person, if such reports indicate any material adverse change in the
business, operations, affairs or condition of such Obligor, or if
copies thereof are requested by FINOVA, and copies of any material
notices and other communications from any Governmental Body or Person
which specifically relate to any Obligor.
6.3.9 ERISA NOTICES AND REQUESTS.
(a) With reasonable promptness, and in any event within 30 days
after occurrence of any of the following, notice and/or copies of: (i)
the establishment of any new Employee Benefit Plan, Pension Plan or
Multiemployer Plan; (ii) the commencement of contributions to any
Employee Benefit Plan, Pension Plan or Multiemployer Plan to which
Borrower or any of its ERISA Affiliates was not previously
contributing or any increase in the benefits of any existing Employee
Benefit Plan, Pension Plan or Multiemployer Plan; (iii) each funding
waiver request filed with respect to any Employee Benefit Plan and all
communications received or sent by Borrower or any ERISA Affiliate
with respect to such request; and (iv) the failure of Borrower or any
of its ERISA Affiliates to make a required installment or payment
under Section 302 of ERISA or Section 412 of the Code by the due date.
(b) Promptly and in any event within 10 days of becoming aware of
the occurrence of or forthcoming occurrence of any (i) Termination
Event or (ii) "prohibited transaction," as such term is defined in
Section 406 of ERISA or Section 4975 of the Code, in connection with
any Pension Plan or any trust created thereunder, a notice specifying
the nature thereof, what action Borrower has taken, is taking or
proposes to take with respect thereto and, when known, any action
taken or threatened by the Internal Revenue Service, the Department of
Labor or the PBGC with respect thereto.
(c) With reasonable promptness but in any event within 10 days
after the occurrence of any of the following, copies of: (i) any
favorable or unfavorable determination letter from the Internal
Revenue Service regarding the qualification of an Employee Benefit
Plan under Section 401(a) of the Code; (ii) all notices received by
Borrower or any ERISA Affiliate of the PBGC's intent to terminate any
Pension Plan or to have a trustee appointed to administer any Pension
Plan; (iii) each Schedule B (Actuarial
31
Information) to the annual report (Form 5500 Series) filed by Borrower
or any ERISA Affiliate with the Internal Revenue Service with respect
to each Pension Plan; and (iv) all notices received by Borrower or any
ERISA Affiliate from a Multiemployer Plan sponsor concerning the
imposition or amount of withdrawal liability pursuant to Section 4202
of ERISA; and written notice within two Business Days of Borrower's or
any ERISA Affiliate's filing of or intention to file a notice of
intent to terminate any Pension Plan under a distress termination
within the meaning of Section 4041(c) of ERISA.
6.3.10 OTHER INFORMATION.
(a) Immediate notice of any change in the location of any
Property of Borrower located at any of the Collateral Stores, any
change in the name of Borrower, any sale or purchase of Property
located at the Collateral Stores or arising out of activities
conducted at the Collateral Stores outside the regular course of
business of Borrower or as otherwise permitted by Section 7.10, and
any change in the business or financial affairs of any Obligor, which
change could have a Material Adverse Effect.
(b) Promptly upon request therefor, such other information and
reports relating to the past, present or future financial condition,
operations, plans and projections of Borrower as FINOVA reasonably may
request from time to time.
6.4 REPORTS TO GOVERNMENTAL BODIES AND OTHER PERSONS. Timely file all
material reports, applications, documents, instruments and information required
to be filed pursuant to all rules, regulations or requests of any Governmental
Body or other Person having jurisdiction over the operation of the business of
Borrower, including, but not limited to, such of the Loan Instruments as are
required to be filed with any such Governmental Body or other Person pursuant to
applicable rules and regulations promulgated by such Governmental Body or other
Person, except where the failure to file such reports, applications, documents,
instruments and information could not reasonably be expected to have a Material
Adverse Effect.
6.5 MAINTENANCE OF LICENSES AND FRANCHISE AGREEMENTS. Maintain in full
force and effect at all times, and apply in a timely manner for renewal of, all
Licenses, Franchise Agreements, trademarks, tradenames and agreements necessary
for the operation of its Restaurant Business at the Collateral Stores, the loss
of any of which could have a Material Adverse Effect.
6.6 INSURANCE.
6.6.1 MAINTENANCE OF INSURANCE. (i) Maintain in full force and effect
at all times such property, casualty, business interruption and other
insurance with respect to the Collateral Stores required by FINOVA, all of
which shall be written by insurers, contain terms and be in amounts and
forms reasonably satisfactory to FINOVA (including, at a minimum (i)
comprehensive general
32
liability insurance (including bodily injury and property damage coverage)
with a broad form endorsement and combined single limit of at least
$2,000,000 and (ii) casualty insurance against fire and other "All Risk"
perils, including, if required by FINOVA, earthquake and flood, in the full
replacement value of the Collateral Stores), providing for deductibles of
not more than $30,000 for any single act or occurrence, with a standard
mortgagee clause endorsed thereon in favor of FINOVA which shall provide,
among other things, that the policies may not be canceled without 30 days'
prior notice to FINOVA and (ii) deliver to FINOVA, from time to time as
FINOVA reasonably may request, evidence of compliance with this subsection,
provided that Borrower will use its best efforts to provide such evidence
at least 15 days prior to the expiration date of any policy required
hereunder, but in any event at least 5 days prior to such expiration date,
each bearing notations evidencing prior payment of premiums.
6.6.2 CLAIMS AND PROCEEDS. Borrower hereby directs all insurers under
all policies of casualty and property insurance pertaining to the
furniture, fixtures, equipment and other contents located at the Collateral
Stores required to be maintained by Borrower pursuant to subsection 6.6.1
to pay all proceeds payable thereunder directly to FINOVA and Borrower
hereby authorizes FINOVA to collect such proceeds; provided that so long as
no Incipient Default or Event of Default exists and is continuing any
proceeds payable thereunder in an aggregate amount of $50,000 or less may
be paid directly to Borrower provided Borrower promptly uses such proceeds
to pay for the cost of repair or replacement of the Collateral subject to
the applicable loss, damage, destruction or other casualty to at least
equal value and substantially the same character as prior to such loss,
damage, destruction or other casualty. Borrower hereby irrevocably appoints
FINOVA (and all officers, employees or agents designated by FINOVA) as
Borrower's true and lawful attorney and agent in fact for the purpose of
and with power to make, settle and adjust claims under such policies of
insurance, endorse the name of Borrower on any check, draft, instrument or
other item of payment for the proceeds of such policies of insurance, and
to make all determinations and decisions with respect to such policies of
insurance. Borrower acknowledges that such appointment of FINOVA as its
attorney and agent in fact is a power coupled with an interest and
therefore is irrevocable. Borrower shall promptly notify FINOVA of any
loss, damage, destruction or other casualty to the Collateral. Subject to
the first sentence of this subsection 6.6.2, the insurance proceeds
received on account of any loss, damage, destruction or other casualty (i)
if any Incipient Default or Event of Default exists, at the option of
FINOVA shall be applied (A) as set forth in the following clause (ii) or
(B) in reduction of Borrower's Obligations in the following order of
priority: (1) first, to the payment of any and all sums which are then due
and payable pursuant to the terms of the Loan Instruments, other than the
Principal Balance and accrued and unpaid interest thereon, (2) next, to
accrued and unpaid interest on the Principal Balance and (3) next, to the
Principal Balance of the Loans in the inverse order of the maturity of the
installments thereof or (ii) if no Incipient Default or Event of Default
exists or if FINOVA so elects, shall be held by FINOVA and applied to pay
for the cost of repair or replacement of the Collateral subject to such
loss, damage, destruction or other casualty, in which event such proceeds
shall be made available in the manner and under such conditions as FINOVA
33
reasonably may require. In the event the proceeds are to be applied to the
repair or replacement of Collateral, the Collateral shall be so repaired or
replaced as to be of at least equal value and substantially the same
character as prior to such loss, damage, destruction or other casualty.
6.7 ENVIRONMENTAL MATTERS. At all times comply with, and be responsible
for, its obligations under all Environmental Laws applicable to the Real Estate
and Leasehold Property and any other Property owned by Borrower or used by
Borrower in the operation of the Collateral Stores. At its sole cost and
expense, Borrower shall (i) comply in all respects with (A) any notice of any
violation or administrative or judicial complaint or order having been filed
against Borrower, any portion of any Real Estate or Leasehold Property or any
other Property owned by Borrower or used by Borrower in the operation of its
business alleging violations of any law, ordinance and/or regulation requiring
Borrower to take any action in connection with the release, transportation
and/or clean-up of any Hazardous Materials, the violation of which could have a
Material Adverse Effect, and (B) any notice from any Governmental Body or any
other Person alleging that Borrower is or may be liable for costs associated
with a response or clean-up of any Hazardous Materials or any damages resulting
from such release or transportation, or (ii) diligently contest in good faith by
appropriate proceedings any demands set forth in such notices, provided (A)
reserves in an amount satisfactory to FINOVA to pay the costs associated with
complying with any such notice are established by Borrower and (B) no Lien would
or will attach to any Collateral which is the subject of any such notice as a
result of any compliance by Borrower which is delayed during any such contest.
Promptly upon receipt of any notice described in the foregoing clause (i),
Borrower shall deliver to FINOVA a copy thereof.
6.8 COMPLIANCE WITH LAWS. Comply with all federal, state and local laws,
ordinances, requirements and regulations and all judgments, orders, injunctions
and decrees applicable to Borrower and its operations, the failure to comply
with which could have a Material Adverse Effect.
6.9 TAXES AND CLAIMS. Pay and discharge all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any Collateral Store, prior to the date on which penalties attach thereto,
and all lawful claims which, if unpaid, might become a Lien (other than a
Permitted Lien) upon any Collateral Store, provided that Borrower shall not be
required by this Section 6.9 to pay any such amount if the same is being
contested diligently and in good faith by appropriate proceedings and as to
which Borrower has set aside reserves on its books satisfactory to FINOVA.
6.10 MAINTENANCE OF PROPERTIES. Maintain all of its Properties necessary in
the operation of the Collateral Stores in good working order and condition.
6.11 APPROVALS. Upon the exercise by FINOVA of any power, right or
privilege pursuant to the provisions of any of the Loan Instruments requiring
any consent, approval or authorization of any Governmental Body, Landlord,
Franchisor or other Person (including, without limitation, transfers of
Licenses, Collateral Store Leases and Franchise Agreements), promptly execute
and cause the execution
34
of all applications, certificates, instruments and other documents that FINOVA
may be required to obtain for such consent, approval or authorization.
6.12 PAYMENT OF INDEBTEDNESS. Except as to matters being contested in good
faith and by appropriate proceedings, promptly pay when due, or in conformance
with customary trade terms, all of its Indebtedness.
6.13 LANDLORD's Waivers. Deliver to FINOVA not later than January 31, 2000
a Landlord's Waiver from the Landlord under at least twelve of the Collateral
Store Leases.
ARTICLE VII
NEGATIVE COVENANTS
Until all of Borrower's Obligations are paid and performed in full,
Borrower shall not:
7.1 BORROWING. Create, incur, assume or suffer to exist any liability for
Indebtedness for Borrowed Money if the Borrower Fixed Charge Coverage Ratio for
the twelve month period most recently ended would be less than 1.10 assuming
such Indebtedness for Borrowed Money was incurred on the first day of such
period.
7.2 LIENS. Create, incur, assume or suffer to exist any Lien upon any of
the Collateral or the Collateral Store Leases, in each case whether now owned or
hereafter acquired, except Permitted Liens.
7.3 MERGER AND ACQUISITION. Consolidate with or merge with or into any
Person unless (i) Borrower is the surviving corporation and (ii) immediately
upon consummation of such consolidation or merger, Borrower would be permitted
to borrow at least $1.00 of additional Indebtedness for Borrowed Money under
Section 7.1.
7.4 CONTINGENT LIABILITIES. Assume, guarantee, endorse, contingently agree
to purchase, become liable in respect of any letter of credit, or otherwise
become liable upon the obligation of any Person, except for liabilities arising
from the endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business and except to the extent
permitted under Section 7.1.
7.5 DIVIDENDS AND DISTRIBUTIONS. Make any dividends or distributions with
respect to the Borrower Capital Stock or apply any of its Property to the
purchase, redemption or other retirement of, or set apart any sum for the
payment of, or make any other distribution by reduction of capital or otherwise
in respect of, any of the Borrower Capital Stock, if the ratio of (i) the
remainder of (A) Borrower Cash
35
Flow for the period from the Closing Date through the last day of the month most
recently ended minus (B) the sum of (x) the aggregate amount of all dividends,
distributions and other payments referred to above made during such period plus
(y) the aggregate amount of all dividends, distributions and other payments
referred to above to be made to (ii) the Borrower Fixed Charges for such period
would be less than 1.00.
7.6 EQUIPMENT LEASES. Enter into any (i) Operating Leases after the Closing
Date pertaining to equipment or other Property located at any of the Collateral
Stores if the aggregate rent expense payable under all such Operating Leases
would exceed $60,000 in any year or (ii) except to the extent permitted under
Section 7.1, Capitalized Leases.
7.7 FUNDAMENTAL BUSINESS CHANGES. Materially change the nature of its
business or engage in any business other than the Restaurant Business and
activities incidental thereto.
7.8 FACILITY SITES. Change the locations of its chief executive office or
other Property used in the operation of the Collateral Stores unless (i) FINOVA
shall have received at least 30 days' prior written notice thereof and (ii)
Borrower shall have executed and delivered to FINOVA any documents FINOVA may
reasonably require in order to maintain the validity and priority of the
Security Interests.
7.9 SALE OR TRANSFER OF ASSETS. Sell, lease, assign, transfer or otherwise
dispose of any of the Collateral or any of the Collateral Store Leases, except
for the sale or disposition of (i) inventory in the ordinary course of business
and (ii) obsolete, surplus or unusable items of equipment which promptly are
replaced with new items of equipment of like function and comparable value to
the unusable items of equipment when the same were new or not obsolete or
unusable, provided such replacement items of equipment shall become subject to
the Security Interests.
7.10 AMENDMENT OF CERTAIN AGREEMENTS. Amend, modify or waive any term or
provision of its articles of incorporation or by-laws or the Collateral Store
Leases or the Franchise Agreements, other than non-material amendments,
modifications or waivers that would not reasonable be expected to adversely
affect FINOVA.
7.11 FUNDAMENTAL BUSINESS CHANGES. Engage in any business other than the
Restaurant Business.
7.12 TRANSACTIONS WITH AFFILIATES. Sell, lease, assign, transfer or
otherwise dispose of any Property to any Obligor or any Affiliate of any
Obligor, lease Property, render or receive services or purchase assets from any
Obligor or any such Affiliate, or otherwise enter into any contractual
relationship with any Obligor or any Affiliate of any Obligor except to the
extent permitted by Section 7.5 or otherwise on terms and conditions no less
favorable to Borrower than could be obtained on an arm's length basis from a
third party who is not an Obligor or an Affiliate of an Obligor.
7.13 COMPLIANCE WITH ERISA.
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(i) Permit the occurrence of any Termination Event which would result
in a liability to Borrower or any ERISA Affiliate in excess of $50,000;
(ii) Permit the present value of all benefit liabilities under all
Pension Plans to exceed the current value of the assets of such Pension
Plans allocable to such benefit liabilities by more than $50,000;
(iii) Permit any accumulated funding deficiency in excess of $50,000 (as
defined in Section 302 of ERISA and Section 412 of the Code) with respect
to any Pension Plan, whether or not waived;
(iv) Fail to make any contribution or payment to any Multiemployer Plan
which Borrower or any ERISA Affiliate may be required to make under any
agreement relating to such Multiemployer Plan, or any law pertaining
thereto which results in or is likely to result in a liability in excess of
$50,000;
(v) Engage, or permit Borrower or any ERISA Affiliate to engage, in
any "prohibited transaction" as such term is defined in Section 406 of
ERISA or Section 4975 of the Code for which a civil penalty pursuant to
Section 502(i) of ERISA or a tax pursuant to Section 4975 of the Code in
excess of $50,000 is imposed;
(vi) Permit the establishment of any Employee Benefit Plan providing
post-retirement welfare benefits or establish or amend any Employee Benefit
Plan which establishment or amendment could result in liability to Borrower
or any ERISA Affiliate or increase the obligation of Borrower or any ERISA
Affiliate to a Multiemployer Plan which liability or increase, individually
or together with all similar liabilities and increases, is material to
Borrower or amu ERISA Affiliate; or
(vii) Fail, or permit Borrower or any ERISA Affiliate to fail, to
establish, maintain and operate each Employee Benefit Plan in compliance in
all material respects with ERISA, the Code and all other applicable laws
and regulations and interpretations thereof.
7.14 BORROWER FIXED CHARGE COVERAGE RATIO. Permit the Borrower Fixed Charge
Coverage Ratio for the twelve month period ending on the last day of any quarter
commencing with the quarter ending March 30, 2000 to be less than 1.10.
37
ARTICLE VIII
DEFAULT AND REMEDIES
8.1 EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an Event of Default under the Loan Instruments:
8.1.1 DEFAULT IN PAYMENT. If Borrower shall fail to pay all or any
portion of Borrower's Obligations the same become due and payable and such
failure shall continue for a period of 5 Business Days; or
8.1.2 BREACH OF COVENANTS.
(a) If Borrower shall fail to observe or perform any covenant or
agreement made by Borrower contained in Section 6.2, 6.5, 6.6, 6.8,
6.9, 6.13 or in Article
VII;
(b) If Borrower shall fail to observe or perform any covenant or
agreement made by Borrower contained in Section 6.1 or 6.3 and such
failure shall continue for a period of 5 Business Days; or
(c) If Borrower or Guarantor shall fail to observe or perform any
covenant or agreement (other than those referred to in subparagraphs
(a) or (b) above or specifically addressed elsewhere in this Section
8.1) made by such Person in any of the Loan Instruments to which such
Person is a party, and such failure shall continue for a period of 30
days.
8.1.3 BREACH OF WARRANTY. If any representation or warranty made by or
on behalf of any Obligor in or pursuant to any of the Loan Instruments or
in any instrument or document furnished in compliance with the Loan
Instruments shall prove to be false or misleading in any material respect.
8.1.4 DEFAULT UNDER OTHER INDEBTEDNESS FOR BORROWED MONEY. If any
default shall occur in respect of any issue of Indebtedness for Borrowed
Money of any Obligor (other than Borrower's Obligations) outstanding in a
principal amount of at least $1,000,000, or in respect of any agreement or
instrument relating to any such issue of Indebtedness for Borrowed Money,
and such default shall continue beyond the grace period, if any, applicable
thereto.
8.1.5 BANKRUPTCY.
(a) If any Obligor shall (i) generally not be paying its debts as
they become due, (ii) file, or consent, by answer or otherwise, to the
filing against it of a petition for relief or reorganization or
arrangement or any other petition in bankruptcy or insolvency under
the laws of any jurisdiction, (iii) make an assignment for the benefit
of creditors, (iv) consent to the appointment of a custodian,
receiver, trustee or other officer with similar powers for it or for
any substantial part of its Property, or (v) be adjudicated insolvent.
38
(b) If any Governmental Body of competent jurisdiction shall
enter an order appointing, without consent of such Obligor, a
custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its Property,
or if an order for relief shall be entered in any case or proceeding
for liquidation or reorganization or otherwise to take advantage of
any bankruptcy or insolvency law of any jurisdiction, or ordering the
dissolution, winding-up or liquidation of any Obligor or if any
petition for any such relief shall be filed against it and such
petition shall not be dismissed or stayed within 90 days.
8.1.6 JUDGMENTS. If there shall be entered against Borrower one or
more judgments, awards or decrees, or orders of attachment, garnishment or
any other writ, which exceed $250,000 in the aggregate at any one time
outstanding, excluding judgments, awards, decrees, orders or writs (i) for
which there is full insurance (subject to applicable deductibles) and with
respect to which the insurer has assumed responsibility in writing, (ii)
for which there is full indemnification (upon terms and by creditworthy
indemnitors which are satisfactory to FINOVA) or (iii) which have been in
force for less than the applicable period for filing an appeal so long as
execution has not been levied thereunder (or in respect of which Borrower
shall at the time in good faith be prosecuting an appeal or proceeding for
review and in respect of which a stay of execution or appropriate appeal
bond shall have been obtained pending such appeal or review).
8.1.7 IMPAIRMENT OF LICENSES; OTHER AGREEMENTS. If (i) any
Governmental Body shall revoke, terminate, suspend or adversely modify any
License of Borrower, the adverse modification or non-continuation of which
could have a Material Adverse Effect, or (ii) there shall exist any
violation or default in the performance of, or a material failure to comply
with any agreement, or condition or term of any License or Franchise
Agreement, which violation, default or failure has a Material Adverse
Effect, or (iii) any Franchise Agreement or other agreement which is
necessary to the operation of the Restaurant Business of Borrower with
respect to any Collateral Store shall be revoked or terminated and not
replaced by a substitute acceptable to FINOVA within 30 days after the date
of such revocation or termination, and such revocation or termination and
non-replacement could have a Material Adverse Effect.
8.1.8 COLLATERAL. If any material portion of the Collateral or any
Collateral Store Lease shall be seized or taken by a Governmental Body or
Person (unless in any such case either (i) the Initial Store or Substitute
Store affected is replaced with a Substitute Store within 60 days after
such seizure or taking and Borrower otherwise complies with the
requirements of subsection 2.6.2(a) with respect to such Substitute Store
or (ii) Borrower prepays the Principal Balance in an amount equal to the
Allocated Loan Amount with respect to such Initial Store or Substitute
Store), or Borrower shall fail to maintain or cause to be maintained the
Security Interests and priority of the Loan Instruments as against any
Person, or the title and rights of Borrower to any material portion of the
Collateral or any Collateral Store Lease shall have become the subject
matter of
39
litigation which could reasonably be expected to result in impairment or
loss of the security provided by the Loan Instruments,
8.1.9 PLANS. If an event or condition specified in subsection 6.3.9
hereof shall occur or exist with respect to any Pension Plan or
Multiemployer Plan and, as a result of such event or condition, together
with all other such events or conditions, Borrower or any ERISA Affiliate
shall incur, or in the opinion of FINOVA be reasonably likely to incur, a
liability to a Pension Plan or Multiemployer Plan or the PBGC (or any of
them) which, in the reasonable judgment of FINOVA, would have a Material
Adverse Effect.
8.1.10 CHANGE IN CONTROL. If Guarantor at any time shall cease (i) to
own at least 51% of the Borrower Capital Stock or (ii) to maintain (A)
effective voting control over Borrower, including the right to elect a
majority of the board of directors of Borrower or (B) the ability to direct
the management and policies of Borrower.
8.1.11 GUARANTY. If prior to the termination of the Guaranty in
accordance with its terms, Guarantor shall (i) deny or disaffirm its
obligations thereunder or (ii) fail to make any payment required thereunder
when due.
8.2 ACCELERATION OF BORROWER'S OBLIGATIONS. Upon the occurrence of:
(a) any Event of Default described in clauses (ii), (iii), (iv) and
(v) of subsection 8.1.5(a) or in 8.1.5(b), all of Borrower's Obligations at
that time outstanding automatically shall mature and become due, and
(b) any other Event of Default, FINOVA, at any time, at its option,
without further notice or demand, may declare all of Borrower's Obligations
due and payable, whereupon Borrower's Obligations immediately shall mature
and become due and payable,
all without presentment, demand, protest or notice (other than notice of the
declaration referred to in clause (b) above), all of which hereby are waived.
8.3 REMEDIES ON DEFAULT. If Borrower's Obligations have been accelerated
pursuant to Section 8.2, FINOVA, at its option, may:
8.3.1 ENFORCEMENT OF SECURITY INTERESTS. Enforce its rights and
remedies under the Loan Instruments in accordance with their respective
terms.
8.3.2 OTHER REMEDIES. Enforce any of the rights or remedies accorded
to FINOVA at equity or law, by virtue of statute or otherwise.
40
8.4 APPLICATION OF FUNDS. Any funds received by FINOVA pursuant to the
exercise of any rights accorded to FINOVA pursuant to, or by the operation of
any of the terms of, any of the Loan Instruments, including, without limitation,
insurance proceeds, condemnation proceeds or proceeds from the sale of
Collateral, shall be applied to Borrower's Obligations in the following order of
priority:
8.4.1 EXPENSES. First, to the payment of (i) all fees and expenses
actually incurred, including, without limitation, court costs, fees of
appraisers, title charges, costs of maintaining and preserving the
Collateral, costs of sale, and all other costs incurred by FINOVA in
exercising any rights accorded to such Persons pursuant to the Loan
Instruments or by applicable law, including, without limitation, reasonable
attorney's fees, and (ii) all Liens superior to the Liens of FINOVA except
such superior Liens subject to which any sale of the Collateral may have
been made.
8.4.2 BORROWER'S OBLIGATIONS. Next, to the payment of the remaining
portion of Borrower's Obligations in such order as FINOVA may determine.
8.4.3 SURPLUS. Any surplus, to the Person or Persons entitled thereto.
8.5 PERFORMANCE OF BORROWER'S Obligations. If Borrower fails to (i)
maintain in force and pay for any insurance policy or bond which Borrower is
required to provide pursuant to any of the Loan Instruments, (ii) keep the
Collateral free from all Liens except for Permitted Liens, (iii) pay when due
all taxes, levies and assessments on or in respect of the Collateral, except as
otherwise permitted pursuant to the terms hereof, (iv) make all payments and
perform all acts on the part of Borrower to be paid or performed in the manner
required by the terms hereof and by the terms of the other Loan Instruments with
respect to any of the Collateral, including, without limitation, all expenses of
protecting, storing, warehousing, insuring, handling and maintaining the
Collateral, (v) keep fully and perform promptly any other of the obligations of
Borrower hereunder or under any of the other Loan Instruments, and (vi) keep
fully and perform promptly the obligations of Borrower with respect to any issue
of Indebtedness for Borrowed Money secured by a Permitted Prior Lien, then
FINOVA may (but shall not be required to) procure and pay for such insurance
policy or bond, place such Collateral in good repair and operating condition,
pay, contest or settle such Liens or taxes or any judgments based thereon or
otherwise make good any other aforesaid failure of Borrower. Borrower shall
reimburse FINOVA immediately upon demand for all sums paid or advanced on behalf
of Borrower for any such purpose, together with costs and expenses (including
reasonable attorney's fees) paid or incurred by FINOVA in connection therewith
and interest on all sums advanced from the date of advancement until repaid to
FINOVA at the Default Rate. All such sums advanced by FINOVA, with interest
thereon, immediately upon advancement thereof, shall be deemed to be part of
Borrower's Obligations.
41
ARTICLE IX
CLOSING
The Closing Date shall be such date as the parties shall determine, and the
Closing shall take place on such date, provided all conditions for the Closing
as set forth in this Loan Agreement have been satisfied or otherwise waived by
FINOVA. The Closing shall take place at the offices of Altheimer & Xxxx, 00 X.
Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000 or such other place as the parties hereto
shall agree. Unless the Closing occurs on or before December 29, 1999, this Loan
Agreement shall terminate and be of no further force or effect and, except for
any obligation of Borrower to FINOVA pursuant to Article X, none of the parties
hereto shall have any further obligation to any other party.
ARTICLE X
EXPENSES AND INDEMNITY
10.1 ATTORNEYS' Fees and Other Fees and Expenses. Whether or not any of the
transactions contemplated by this Loan Agreement shall be consummated, subject
to the limitations set forth in subsection 10.1.1, Borrower agrees to pay to
FINOVA on demand all reasonable expenses incurred by FINOVA in connection with
the transactions contemplated hereby and in connection with any amendments,
modifications or waivers (whether or not the same become effective) under or in
respect of any of the Loan Instruments, including, without limitation:
10.1.1 FEES AND EXPENSES FOR PREPARATION OF LOAN INSTRUMENTS. All
reasonable expenses, disbursements (including, without limitation, charges
for required mortgagee's title insurance, lien searches, reproduction of
documents, long distance telephone calls and overnight express carriers)
and reasonable attorneys' fees, actually incurred by FINOVA in connection
with the (i) preparation and negotiation of the Loan Instruments or any
amendments, modifications or waivers thereto or any documents delivered
pursuant thereto and (ii) administration of the Loan.
10.1.2 FEES AND EXPENSES IN ENFORCEMENT OF RIGHTS OR DEFENSE OF LOAN
INSTRUMENTS. Any reasonable expenses or other costs, including reasonable
attorneys' fees and expert witness fees, actually incurred by FINOVA in
connection with the enforcement or collection against any Obligor of any
provision of any of the Loan Instruments, and in connection with or arising
out of any litigation, investigation or proceeding instituted by any
Governmental Body or any other Person with respect to any of the Loan
Instruments, whether or not suit is instituted, including, but not limited
to, such costs or expenses arising from the enforcement or collection
against any Obligor of any provision of any of the Loan Instruments in any
workout or restructuring or in any state or federal bankruptcy or
reorganization proceeding.
10.2 INDEMNITY. Borrower agrees to indemnify and save FINOVA harmless of
and from the following:
10.2.1 BROKERAGE FEES. The fees, if any, of brokers and finders
engaged by Borrower.
42
10.2.2 GENERAL. Any loss, cost, liability, damage or expense
(including reasonable attorneys' fees and expenses) incurred by FINOVA in
investigating, preparing for, defending against, providing evidence,
producing documents or taking other action in respect of any commenced or
threatened litigation, administrative proceeding, suit instituted by any
Person or investigation under any law, including any federal securities
law, the Bankruptcy Code, any relevant state corporate statute or any other
securities law, bankruptcy law or law affecting creditors generally of any
jurisdiction, or any regulation pertaining to any of the foregoing, or at
common law or otherwise, relating, directly or indirectly, to the
transactions contemplated by or referred to in, or any other matter related
to, the Loan Instruments, except to the extent (i) of any gross negligence
or willful misconduct of FINOVA or (ii) Borrower is the prevailing party in
any adversarial proceeding between Borrower and FINOVA.
10.2.3 OPERATION OF COLLATERAL; JOINT VENTURERS. Any loss, cost,
liability, damage or expense (including reasonable attorneys' fees and
expenses) incurred in connection with the ownership, operation or
maintenance of the Collateral, the construction of FINOVA and Borrower as
having the relationship of joint venturers or partners or the determination
that FINOVA has acted as agent for Borrower.
10.2.4 ENVIRONMENTAL INDEMNITY. Any and all claims, losses, damages,
response costs, clean-up costs and expenses suffered and/or incurred at any
time by FINOVA arising out of or in any way relating to the existence at
any time of any Hazardous Materials in, on, under, at, transported to or
from, or used in the construction and/or renovation of, any of the Real
Estate or Leasehold Property, or otherwise with respect to any
Environmental Law, and/or the failure of any Obligor to perform its
obligations and covenants hereunder witch respect to environmental matters,
including, but not limited to: (i) claims of any Persons for damages,
penalties, response costs, clean-up costs, injunctive or other relief, (ii)
costs of removal and restoration, including reasonable fees of attorneys
and experts, and costs of reporting the existence of Hazardous Materials to
any Governmental Body, and (iii) any expenses or obligations, including
reasonable attorneys' fees and expert witness fees, incurred at, before and
after any trial or other proceeding before any Governmental Body or appeal
therefrom whether or not taxable as costs, including, without limitation,
reasonable witness fees, deposition costs, copying and telephone charges
and other expenses, all of which shall be paid by Borrower to FINOVA on
demand, except where such costs were directly caused by the gross
negligence or willful misconduct of FINOVA or by any agent or third party
acting on behalf of and at the direction of FINOVA.
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ARTICLE XI
MISCELLANEOUS
11.1 NOTICES. All notices and communications under this Loan Agreement
shall be in writing and shall be (i) delivered in person, (ii) sent by telecopy,
or (iii) mailed, postage prepaid, either by registered or certified mail, return
receipt requested, or by overnight express carrier, addressed in each case as
follows:
To Borrower: I.C.H. Corporation
Sybra, Inc.
0000 Xxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxx
Senior Vice President
Chief Financial Officer
Telecopy No.: (000) 000-0000
Copy to: I.C.H. Corporation
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Executive Vice President
Telecopy No.: (000) 000-0000
Copy to: Xxxxx Xxxxxxx Xxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
To FINOVA: FINOVA Capital Corporation
000 Xxxx Xxxxxxx Xxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx X'Xxxxxxx
Vice President
Telecopy No.: (000) 000-0000
Copy to: FINOVA Capital Corporation
0000 X. Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Vice President, Law
Telecopy No.: (000) 000-0000
44
Copy to: Altheimer & Xxxx
00 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxx, Esq.
Telecopy No.: (000) 000-0000
or to any other address or telecopy number, as to any of the parties hereto, as
such party shall designate in a written notice to the other parties hereto. All
notices sent pursuant to the terms of this Section 11.1 shall be deemed received
(i) if personally delivered, then on the Business Day of delivery, (ii) if sent
by telecopy before 2:00 p.m. Phoenix time, on the day sent if a Business Day or
if such day is not a Business Day or if sent after 2:00 p.m. Phoenix time, then
on the next Business Day, (iii) if sent by overnight, express carrier, on the
next Business Day immediately following the day sent, or (iv) if sent by
registered or certified mail, on the earlier of the fifth Business Day following
the day sent or when actually received. Any notice by telecopy shall be followed
by delivery on the next Business Day by overnight, express carrier or by hand.
11.2 SURVIVAL OF LOAN AGREEMENT; INDEMNITIES. All covenants, agreements,
representations and warranties made in this Loan Agreement and in the
certificates delivered pursuant hereto shall survive the making by FINOVA of the
Loans and the execution and delivery to FINOVA of the Notes and of all other
Loan Instruments, and shall continue in full force and effect so long as any of
Borrower's Obligations remain outstanding, unperformed or unpaid.
Notwithstanding the repayment of all amounts due under the Loan Instruments, the
cancellation of the Note and the release and/or cancellation of any and all of
the Loan Instruments or the foreclosure of any Liens on the Collateral, the
obligations of Borrower to indemnify FINOVA with respect to the expenses,
damages, losses, costs and liabilities described in Section 10.2 shall survive
until all applicable statute of limitations periods with respect to actions
which may be brought against FINOVA have run.
11.3 FURTHER ASSURANCE. From time to time, Borrower shall execute and
deliver to FINOVA such additional documents as FINOVA reasonably may require to
carry out the purposes of the Loan Instruments and to protect rights of FINOVA
thereunder, including, without limitation, using its reasonable best efforts in
the event any Collateral is to be sold to secure the approval by any
Governmental Body of any application required by such Governmental Body in
connection with such sale, and not take any action inconsistent with such sale
or the purposes of the Loan Instruments.
11.4 TAXES AND FEES. Should any tax (other than taxes based upon the net
income of any FINOVA), recording or filing fees become payable in respect of any
of the Loan Instruments, or any amendment, modification or supplement thereof,
Borrower agrees to pay the same on demand, together with any interest or
penalties thereon attributable to any delay by Borrower in meeting any FINOVA
demand, and agrees to hold FINOVA harmless with respect thereto.
45
11.5 SEVERABILITY. In the event that any provision of this Loan Agreement
is deemed to be invalid by reason of the operation of any law, or by reason of
the interpretation placed thereon by any court or any other Governmental Body,
as applicable, the validity, legality and enforceability of the remaining terms
and provisions of this Loan Agreement shall not in any way be affected or
impaired thereby, all of which shall remain in full force and effect, and the
affected term or provision shall be modified to the minimum extent permitted by
law so as to achieve most fully the intention of this Loan Agreement.
11.6 WAIVER. No delay on the part of FINOVA in exercising any right, power
or privilege hereunder shall operate as a waiver thereof, and no single or
partial exercise of any right, power or privilege hereunder shall preclude other
or further exercise thereof, or be deemed to establish a custom or course of
dealing or performance between the parties hereto, or preclude the exercise of
any other right, power or privilege.
11.7 MODIFICATION OF LOAN INSTRUMENTS. No modification or waiver of any
provision of any of the Loan Instruments shall be effective unless the same
shall be in writing and signed by Borrower and FINOVA, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given. No notice to or demand on Borrower in any case shall entitle
Borrower to any other or further notice or demand in the same, similar or other
circumstances.
11.8 CAPTIONS. The headings in this Loan Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof.
11.9 SUCCESSORS AND ASSIGNS. This Loan Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided that Borrower may not assign any of its
rights or delegate any of its duties hereunder to any other Person.
11.10 REMEDIES CUMULATIVE. All rights and remedies of the parties hereto,
any other Loan Instruments or otherwise, shall be cumulative and non-exclusive,
and may be exercised singularly or concurrently. FINOVA shall not be required to
prosecute collection, enforcement or other remedies against any Obligor before
proceeding against any other Obligor or to enforce or resort to any security,
liens, collateral or other rights of FINOVA. One or more successive actions may
be brought against Borrower and/or any other Obligor, either in the same action
or in separate actions, as often as FINOVA deems advisable, until all of
Borrower's Obligations are paid and performed in full.
11.11 ENTIRE AGREEMENT; CONFLICT. This Loan Agreement and the other Loan
Instruments executed prior or pursuant hereto constitute the entire agreement
among the parties hereto with respect to the transactions contemplated hereby or
thereby and supersede any prior agreements, whether written or oral, relating to
the subject matter hereof. In the event of a conflict between the terms and
conditions set forth herein and the terms and conditions set forth in any other
Loan Instrument, the terms and conditions set forth herein shall govern.
46
11.12 APPLICABLE LAW. THE LOAN INSTRUMENTS SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS AND DECISIONS OF THE STATE OF ARIZONA. FOR
PURPOSES OF THIS SECTION 11.12, THE LOAN INSTRUMENTS SHALL BE DEEMED TO BE
PERFORMED AND MADE IN THE STATE OF ARIZONA.
11.13 BORROWER HEREBY AGREES THAT ALL ACTIONS OR PROCEEDINGS INITIATED BY
BORROWER AND ARISING DIRECTLY OR INDIRECTLY OUT OF THE LOAN INSTRUMENTS SHALL BE
LITIGATED IN THE SUPERIOR COURT OF MARICOPA COUNTY, OR THE UNITED STATES
DISTRICT COURT FOR THE DISTRICT OF ARIZONA OR, IF FINOVA INITIATES SUCH ACTION,
IN ADDITION TO THE FOREGOING COURTS, ANY COURT IN WHICH FINOVA SHALL INITIATE OR
TO WHICH FINOVA SHALL REMOVE SUCH ACTION, TO THE EXTENT SUCH COURT HAS
JURISDICTION. BORROWER HEREBY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED BY FINOVA IN OR REMOVED BY
FINOVA TO ANY OF SUCH COURTS, AND HEREBY AGREES THAT PERSONAL SERVICE OF THE
SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS ISSUED THEREIN MAY BE SERVED
IN THE MANNER PROVIDED FOR NOTICES HEREIN, AND AGREES THAT SERVICE OF SUCH
SUMMONS AND COMPLAINT OR OTHER PROCESS OR PAPERS MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL ADDRESSED TO BORROWER AT THE ADDRESS TO WHICH NOTICES ARE TO BE
SENT PURSUANT TO SECTION 11.1. BORROWER WAIVES ANY CLAIM THAT MARICOPA COUNTY,
ARIZONA OR THE DISTRICT OF ARIZONA IS AN INCONVENIENT FORUM OR AN IMPROPER FORUM
BASED ON LACK OF VENUE. TO THE EXTENT PROVIDED BY LAW, SHOULD BORROWER, AFTER
BEING SO SERVED, FAIL TO APPEAR OR ANSWER TO ANY SUMMONS, COMPLAINT, PROCESS OR
PAPERS SO SERVED WITHIN THE NUMBER OF DAYS PRESCRIBED BY LAW AFTER THE MAILING
THEREOF, BORROWER SHALL BE DEEMED IN DEFAULT AND AN ORDER AND/OR JUDGMENT MAY BE
ENTERED BY THE COURT AGAINST BORROWER AS DEMANDED OR PRAYED FOR IN SUCH SUMMONS,
COMPLAINT, PROCESS OR PAPERS. THE EXCLUSIVE CHOICE OF FORUM FOR BORROWER SET
FORTH IN THIS SECTION 11.13 SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT BY
FINOVA OF ANY JUDGMENT OBTAINED IN ANY OTHER FORUM OR THE TAKING BY FINOVA OF
ANY ACTION TO ENFORCE THE SAME IN ANY OTHER APPROPRIATE JURISDICTION, AND
BORROWER HEREBY WAIVES THE RIGHT TO COLLATERALLY ATTACK ANY SUCH JUDGMENT OR
ACTION.
11.14 FINOVA AND BORROWER ACKNOWLEDGE AND AGREE THAT ANY CONTROVERSY WHICH
MAY ARISE UNDER ANY OF THE LOAN INSTRUMENTS OR WITH RESPECT TO THE TRANSACTIONS
CONTEMPLATED THEREBY WOULD BE BASED UPON DIFFICULT AND COMPLEX ISSUES AND,
THEREFORE, THE PARTIES AGREE THAT ANY LAWSUIT ARISING OUT OF ANY SUCH
CONTROVERSY WILL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE
SITTING WITHOUT A JURY.
11.15 ESTOPPEL CERTIFICATE. Within 15 days after FINOVA requests Borrower
to do so, Borrower will execute and deliver to FINOVA a statement certifying (i)
that this Loan Agreement is in full force and effect and has not been modified
except as described in such statement, (ii) the date to which interest and
principal on the Notes has been paid, (iii) the Principal Balance, (iv) whether
or not to its knowledge an Incipient Default or Event of Default has occurred
and is continuing, and, if so, specifying in reasonable detail each such
Incipient Default or Event of Default of which it has knowledge, (v) whether to
its knowledge it has any defense, setoff or counterclaim to the payment of the
Note in accordance with its terms, and, if so, specifying each defense, setoff
or counterclaim of which it has knowledge in reasonable
47
detail (including where applicable the amount thereof), and (vi) as to any other
matter reasonably requested by FINOVA.
11.16 CONSEQUENTIAL DAMAGES. Neither FINOVA nor any agent or attorney of
FINOVA shall be liable to Borrower for consequential damages arising from any
breach of contract, tort or other wrong relating to the establishment,
administration or collection of Borrower's Obligations.
11.17 COUNTERPARTS. This Loan Agreement may be executed by the parties
hereto in several counterparts and each such counterpart shall be deemed to be
an original, but all such counterparts shall together constitute one and the
same agreement.
11.18 NO FIDUCIARY RELATIONSHIP. No provision in this Loan Agreement or in
any other Loan Instrument, and no course of dealing among the parties hereto,
shall be deemed to create any fiduciary duty by FINOVA to Borrower.
11.19 SALE OF NOTE; PARTICIPATIONS. FINOVA may assign to one or more banks
or other Persons all or any part of, or may grant participations to one or more
banks or other Persons in, its right, title and interest in the Loan, this Loan
Agreement, the other Loan Instruments, or any of them, and to the extent of any
such assignment or participation (unless otherwise stated therein) the assignee
or participant of such assignment or participation shall have the same rights,
benefits and obligations hereunder and thereunder as FINOVA would have
hereunder.
11.20 PUBLICITY. Borrower authorizes FINOVA to issue appropriate press
releases and to cause a tombstone to be published announcing the consummation of
this transaction and the aggregate amount thereof.
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IN WITNESS WHEREOF, this Loan Agreement has been executed and delivered by
each of the parties hereto by a duly authorized officer of each such party on
the date first set forth above.
SYBRA, INC., a Michigan corporation
By:
------------------------------------
Xxxx X. Xxxxxx
Senior Vice President
Chief Financial Officer
FINOVA CAPITAL CORPORATION, a
Delaware corporation
By:
------------------------------------
Name:
-----------------------------------
Title:
----------------------------------