Loan and Security Agreement
Borrower: Home office address:
FFP Operating 0000 Xxxxxx Xxxxxx
Partners, L.P., a Fort Worth, Texas
Delaware limited 76117-4391
partnership
Borrower's|_| Social _ _ _ - _ _ - _ _ _ _
Security #:
[check one]
[X| Fed. 00-0000000
Employer Tax I.D. #:
Lender: Address:
Franchise Mortgage Three American Lane
Acceptance Xxxxxxxxx, XX 00000
Company, a
Delaware
corporation
Loan Date:February Facility:
__, 1999
Station No. 358
000 X. Xxx Xxxxxx
Xxxxxx, XX 00000
Loan Amount:
$305,000.00
Commitment issued:
February __, 1999
Borrower's books and records maintained at:
[check one]
|_| Facility |X| Home office address
Minimum FCCR: 1.25
================================= ================================
THIS IS THE "Loan and Security Agreement" (this "Agreement") referred to in
the Secured Promissory Note dated today's date from the Borrower to the Lender
(the "Note"). The Note represents a loan to the Borrower (the "Loan") made
pursuant to a Commitment issued under the Franchise Mortgage Acceptance Company
Service Station Finance Program.
Capitalized terms in the box above are defined as they there appear. Other
capitalized terms used in this Agreement have the meanings given to them in
Section 18.
The Borrower agrees with the Lender as follows:
1. LOAN.
1.1. Loan Documents. Subject to the terms of this Agreement and the other
Loan Documents, including the Commitment, the Lender has agreed to make, or has
made, the Loan to the Borrower.
1.2. Disbursement Procedure. Unless otherwise specified in the Commitment or
required by the Lender, the Lender will disburse the net proceeds of the Loan
directly to the Borrower, after first deducting any costs, fees and other
amounts due as set forth in the Commitment. If the Commitment or the Lender
specifies disbursement to anyone else, the Borrower specifically authorizes and
directs the Lender to make disbursement directly to the specified payee, and
agrees that the Borrower's Obligations under the Loan Documents shall continue
in full force and effect regardless of how the specified payee applies or fails
to apply any disbursements, and regardless of anything else which the specified
payee does or fails to do.
1.3. Subsequent Modifications. The Lender may or may not, in the Lender's
sole discretion, agree with the Borrower from time to time to modify, extend or
otherwise change the payment dates, amounts, interest rate or other provisions
of the Note or the other Obligations, but if so, no such change, extension or
modification shall affect in any way the Lien or priority of the security
interest granted under this Agreement.
2. SECURITY INTEREST.
2.1. Grant. As security for the Obligations, the Borrower grants the Lender a
security interest in all of the Borrower's property located at the Facility or
used primarily in connection with the Facility or any other facilities pledged
to the Lender under this Agreement or under any other agreement or document now
or hereafter executed by Borrower in favor of Lender and all of the Borrower's
proceeds, cash flow and rights derived from the operation of the Facility, in
each case whether now owned or subsequently acquired or in which the Borrower
now has or subsequently may obtain any interest (collectively, the
"Collateral"), including the Borrower's present and future:
(i) Equipment and Inventory at the Facility;
(ii) Accounts receivable, bank accounts, certificates of deposit, contract
rights and general intangibles arising from or held in connection with the
operation of the Facility, including goodwill, trademarks, trade names and
franchise rights;
(iii) Books and records relating to the Collateral, including computer data;
and
(iv) To the extent not otherwise included, additions to, and Proceeds and
products of, the foregoing.
2.2. Financing Statements. Together with this Agreement, the Borrower has
delivered to the Lender, for filing in the appropriate jurisdictions at the
Borrower's expense, UCC-1 Financing Statements signed by the Borrower to
evidence the Lender's security interest in the Collateral.
2.3. First Lien. The Lender's security interest in the Collateral is and
shall always be a first priority security interest, subject to no Liens other
than Permitted Liens. The Borrower covenants and agrees to defend the Lender's
priority security interest in the Collateral against the claims of every other
Person.
3. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The Borrower makes the
following representations and warranties to the Lender, knowing and intending
that the Lender will rely upon them, and subject to no qualifications or
exceptions except those (if any) expressly set forth in the attached Disclosure
Schedule:
3.1. Borrower Information. The Borrower's: (i) full legal name, (ii) social
security number or federal employer tax identification number, as applicable,
(iii) mailing address and if, different, street address, and (where the Borrower
is an entity and not a natural person) (iv) type of entity and (v) jurisdiction
of organization, are all correctly and completely set forth in the box at the
beginning of this Agreement. During the last five (5) years, the Borrower has
operated the Facility only under the name shown in the box at the beginning of
this Agreement, and has not used any trade name or other name in connection with
the Facility.
3.2. Existence. If the Borrower is an entity and not a natural person, the
Borrower is duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization, and is duly qualified to do business and in
good standing in every jurisdiction where the conduct of its business or the
character of its assets makes qualification necessary.
3.3. Authorization; Binding Effect. The Borrower has the requisite power and
authority to carry on its business, including the operation of the Facility, and
to enter into and perform this Agreement and the other Loan Documents. The
Borrower's signing, delivery and performance of this Agreement and the other
Loan Documents have been duly authorized by all necessary action, and the Loan
Documents represent valid and binding obligations of the Borrower, enforceable
against the Borrower in accordance with their respective terms.
3.4. No Conflict. The Borrower's entry into and performance of this Agreement
and the other Loan Documents will not violate, conflict with or result in a
default under: (i) the Borrower's organizational documents (where applicable),
or (ii) any agreement or obligation to which the Borrower is a party or is
subject, or (iii) any order or law to which Borrower is subject.
3.5. No Consent Required. The Borrower does not require the consent, approval
or authorization of anyone else, including any landlord, lender or equipment
lessor or vendor, in order to incur the Obligations, give the Lender a security
interest in the Collateral or otherwise enter into and perform under the Loan
Documents.
3.6. Financial Condition. The Borrower is solvent and will continue to be so
after incurring the Obligations. The Borrower's Financial Statements were
prepared in accordance with the provisions of Section 4.1, and present fairly
the financial position of the Borrower as of the respective dates and for the
respective periods shown. The Borrower has no material liabilities, absolute or
contingent, liquidated or unliquidated, which are not reflected in the Financial
Statements. Since the most recent Financial Statements, the Borrower has not
experienced any material adverse change in financial condition or prospects, or
any material business reversal.
3.7. Litigation; Absence of Violations. There is no lawsuit or other legal
proceeding pending or, to the Borrower's knowledge, threatened, involving the
Borrower, the Facility, the Trust Property or any Collateral, nor is there any
basis for such a lawsuit or legal proceeding. The Borrower holds all business
licenses, environmental permits, certificates of occupancy and other
governmental authorizations and approvals required in order to own or operate
the Facility. The Borrower is in compliance with applicable Legal Requirements,
including applicable Environmental Laws, governing the Borrower and the
Facility, and there are no outstanding directives or notices of violation from
any governmental agency or authority involving the Borrower, the Facility, the
Trust Property or any Collateral.
3.8. Ownership. The Borrower has, and will maintain, good and marketable
title to each item of Collateral, free and clear of Liens (except Permitted
Liens). Except as may have been previously disclosed to and specifically
approved by the Lender in writing, none of the Collateral is or will be subject
to any security agreement, mortgage, deed of trust, financing statement or other
Lien.
3.9. Operations. The Borrower is the operator of record of the Facility, with
full rights and authority under the Supply Agreement to use the trademarks
currently in use at the Facility in connection with the sale, consignment and
distribution of motor fuels and related operations. The Borrower is a
"franchisee" within the meaning of the PMPA and is entitled to the benefits and
protections of the PMPA with respect to the Borrower's occupancy and operations
at the Facility.
3.10. Supply Agreement. A true and complete copy of the Borrower's Supply
Agreement (with all amendments and modifications) has been provided to the
Lender. The Supply Agreement constitutes a "franchise" within the meaning of the
PMPA and is not subject to termination, cancellation or nonrenewal except in
compliance with the PMPA. The Supply Agreement is in full force and effect.
Neither the Borrower nor any other party to the Supply Agreement is in default
under the Supply Agreement, nor is there any event or condition which, with
notice or the lapse of time or both, would become a default under the Supply
Agreement.
3.11. Equipment/Inventory. The Equipment and Inventory are all kept at the
Facility. All Equipment and Inventory are currently usable or currently salable
in the normal course of the Borrower's business. None of the Equipment or
Inventory is held by the Borrower on a consignment basis or is, or will be,
stored with a bailee, warehouseman or anywhere other than at the Facility.
3.12. Outstanding Debt. Except for Permitted Debt, the Borrower has no Debt.
The Borrower is not in default under any instrument or agreement relating to
Permitted Debt.
3.13. Taxes. To date, the Borrower has filed all required federal, state and
local tax returns, and has paid all taxes and assessments, including sales taxes
and personal property taxes, due and payable. No tax Lien has been filed and no
tax deficiency has been asserted against the Borrower. The Borrower's tax
liabilities are adequately provided for in the Financial Statements and in the
Borrower's books and records.
3.14. No Broker's Commissions. Unless otherwise specified in the Disclosure
Schedule, the Borrower has not dealt with any broker or finder in connection
with the Loan, and no broker's or finder's fee or commission will be payable by
reason of any actions of the Borrower. The Borrower understands and acknowledges
that unless otherwise agreed in advance by the Lender in writing, the Borrower,
and not the Lender, shall be solely responsible for paying any broker's or
finder's fee or commission. Any broker's or finder's fee or commission payable
by the Borrower must be disclosed to and approved by the Lender in advance,
prior to the Lender's making the Loan. The Borrower shall indemnify the Lender
in accordance with Section 12 against any claim for broker's or finder's fee or
commission which under this Section 3.14 is the Borrower's responsibility.
3.15. Year 2000. On the basis of a comprehensive review and assessment of
Borrower's systems and equipment, and inquiry made of Borrower's material
suppliers, vendors, customers, and affiliates, Borrower reasonably believes that
the Year 2000 Problem (hereinafter defined), including all costs of
investigation, analysis, testing, and remediation, could not reasonably be
expected to result in or have any material adverse effect upon the business,
financial condition, operations, administration, sales and acquisitions,
business prospects, or other business affairs of Borrower; and Borrower has
developed feasible contingency plans adequate to ensure uninterrupted and
unimpaired business operation in the event of a failure of its own or a third
party's systems or equipment due to the Year 2000 Problem, including those of
vendors, customers and suppliers, as well as a general failure of or
interruption in its communications and delivery infrastructure. Except for any
reprogramming referred to above, the computer systems of Borrower and its
affiliates are and, with ordinary course upgrading and maintenance, will
continue for the duration of the Loan to be, sufficient for the conduct of their
respective businesses as currently conducted. For purposes of this Agreement,
the term "Year 2000 Problem" means the inability of computers and computer
components, software, and accessories, as well as imbedded microchips in
non-computing devices and equipment, to perform properly and for the purpose or
purposes intended, including performance of date-sensitive functions with
respect to certain dates prior to and after December 31, 1999.
3.16. Disclosure Schedule. There are no exceptions or qualifications to any
of the Borrower's representations and warranties except as expressly set forth,
if at all, in the attached Disclosure Schedule. Neither this Agreement nor any
other Loan Document contains a misstatement of material fact or omits to state
any material fact necessary in order to make the Loan Documents not misleading.
The Borrower knows of no factors that, either individually or in the aggregate,
would have or can reasonably be expected to have a material adverse effect on
the Borrower's operations, financial condition or prospects, or on the Facility
or any Collateral.
4. FINANCIAL STATEMENTS AND INFORMATION. While any Obligations remain
outstanding, the Borrower will furnish to the Lender:
4.1. Financial Reports. Within 45 days after the end of each fiscal quarter
and within 90 days after the end of each fiscal year, Financial Statements for
the corresponding period, including a balance sheet as of the end of the period,
and income and expense and Cash Flow statements for the period, all in detail
and form satisfactory to the Lender and providing such comparative data from
prior periods as the Lender shall specify.
4.1.1. If the Borrower is a natural person, Financial Statements shall be
furnished both for the Facility on a stand alone basis and on a combined,
unit-by-unit basis for the Facility and all other service station facilities
owned or operated by the Borrower (including related operations such as car
washes, convenience stores and other retail operations). If the Borrower is an
entity and not a natural person, Financial Statements shall be furnished both on
a consolidated and on a consolidating unit- by-unit basis for the Facility and
all other facilities and operations of the Borrower.
4.1.2. Financial Statements shall be prepared in accordance with GAAP (or
such other accounting principles generally and customarily used in the industry
and reasonably acceptable to the Lender), consistently applied and, unless
audited, shall be signed by the Borrower, where a natural person, and otherwise
by the Borrower's president, chief financial officer or equivalent. The
signature shall constitute a certification that the Financial Statements have
been so prepared and that they present fairly the Borrower's financial position
and results of operations for the specified periods. Year- end Financial
Statements shall be prepared by an independent public accountant on (i) a review
basis, if the aggregate original principal amount of the Loan and all other
loans or advances at any time outstanding by the Lender and any of the Lender's
Affiliates to the Borrower or any Affiliate of the Borrower is more than $10
million, or (ii) a compilation basis, if the aggregate original principal amount
of the Loan and all other loans or advances at any time outstanding by the
Lender and any of the Lender's Affiliates to the Borrower or any Affiliate of
the Borrower is between $5 million and $10 million.
4.2. Adverse Event. As soon as the Borrower becomes aware of it, notice of
any adverse event or condition affecting the Borrower or the Facility, including
(i) any Default or Default Event, (ii) any material casualty loss or other
damage to the Facility, (iii) any breach, actual or alleged, termination or
nonrenewal of the Supply Agreement, and (iv) any representation or warranty in
the Loan Documents being incorrect or inaccurate in any material respect.
4.3. Other Information. Any other financial information relating to the
Borrower or the operation of the Facility, including proof of payment of sales
taxes, which the Lender may from time to time request.
5. FINANCIAL COVENANTS. While any Obligations remain outstanding, and unless
the Lender consents otherwise in writing in its sole and nonreviewable
discretion, the Borrower covenants and agrees as follows:
5.1. FCCR. The Borrower shall at all times maintain the Minimum FCCR, as
specified in the box at the beginning of this Agreement. Subject to the
foregoing sentence, Lender will review compliance with the Minimum FCCR every
three months on a trailing 12-month basis, as of the end of each fiscal quarter
and as at the end of each fiscal year; provided, however, if a Borrower is an
entity and has been in existence for a period of less than 12 months on the date
hereof, the 12 month measurement period shall be reduced to the number of months
in which Borrower has been in existence until such time as Borrower has been in
existence for one year and provided further however, if Borrower is a natural
person and has owned or operated the Facility for a period of less than 12
months on the date hereof, the 12 month measurement period shall be reduced to
the number of months for which Borrower has owned or operated the Facility until
such time as Borrower has owned or operated the Facility for one year. The
Minimum FCCR shall be measured with respect to either (i) the Borrower as a
whole (if the Borrower is an entity and not a natural person), or (ii) the
Facility and all other service station facilities owned or operated by the
Borrower, including related operations such as car washes, convenience stores
and other retail operations (if the Borrower is a natural person and not an
entity).
5.2. Limit on Distributions. The Borrower shall make no Distributions unless
the actual FCCR for the Borrower for the twelve (12) months preceding the date
of the proposed Distribution and the reasonably projected FCCR for the
subsequent twelve (12) months are and shall be at least equal to the Minimum
FCCR as specified in the box at the beginning of this Agreement. If the actual
FCCR for the twelve (12) months preceding the date of the proposed Distribution
and the reasonably projected FCCR for the subsequent twelve (12) months are and
shall be at least equal to the Minimum FCCR, then the Borrower may make a
Distribution, but only up to the amount by which the actual FCCR for the twelve
(12) months preceding the date of the proposed Distribution exceeds the Minimum
FCCR.
5.3. No Consolidation or Merger. The Borrower shall not merge or consolidate
with any other Person, liquidate or dissolve, or enter into any partnership,
joint venture, syndicate or other business combination.
5.4. Use of Proceeds. Loan proceeds shall be used solely for lawful
commercial purposes as provided for in the Commitment. No loan proceeds shall be
used to acquire or carry any securities, including margin stock, except in
accordance with the requirements of Federal Regulations G,T,X and U.
5.5. Guarantees. Borrower shall not enter into any Guarantees.
6. COVENANTS REGARDING COLLATERAL. While any Obligations remain outstanding,
and unless the Lender consents otherwise in writing in its sole and
nonreviewable discretion, the Borrower covenants and agrees as follows:
6.1. Pay Taxes and Claims. The Borrower will pay, before they become
delinquent and before any interest or penalties accrue, all taxes, assessments
and governmental levies, and all claims which, if unpaid, might result in the
creation of a Lien upon the Facility or any Collateral. The Borrower will timely
file all tax returns.
6.2. Maintain Collateral; Comply with Law. The Borrower will: (i) maintain
the Facility and the Collateral in good operating condition; (ii) keep
consistent books and records containing full and correct entries of all
transactions; (iii) do everything necessary to stay in existence, keep the
Supply Agreement and all franchises in effect and maintain all governmental
permits, licenses and authorizations; and (iv) comply with applicable laws and
regulations.
6.3. Location of Records. The Borrower will keep its books and records at the
address of the Facility or at the Borrower's home office address, as specified
in the box at the beginning of this Agreement. The Borrower will not change the
address where books and records are kept, or change its name or operate the
Facility under any name other than as set forth in the box at the beginning of
this Agreement.
6.4. Location of Equipment and Inventory. Equipment and Inventory will be
kept only at the Facility and, except for sales of Inventory in the ordinary
course of business, shall not be removed or relocated anywhere else, but even if
removed or relocated, all Equipment and Inventory will remain subject to the
Lender's continuing, first priority security interest.
6.5. No Disposition. The Borrower shall not sell, transfer or otherwise
dispose of any
Collateral, except for sales of Inventory in the ordinary course of business
and replacement of obsolete or worn-out Equipment with new Equipment of
equivalent value to which the Lender's first priority security interest will
likewise attach.
6.6. Power of Attorney. The Borrower irrevocably appoints the Lender, with
full power of substitution, as its lawful agent and attorney in fact to: (i)
sign and file financing statements and other documents as the Lender deems
necessary to evidence, perfect or confirm the security interest granted by this
Agreement; and (ii) file proofs of loss respecting the Collateral with the
appropriate insurers and endorse in the Borrower's name any checks or drafts
constituting insurance proceeds.
6.6.1. Effective upon the occurrence of any Default Event, the Lender or its
designee is further authorized, as agent and attorney- in-fact for the Borrower,
to endorse the Borrower's name on checks and other instruments relating to the
Collateral, to change the address where mail relating to the Collateral should
be sent, and generally to take such actions as may be appropriate to effectuate
the Lender's remedies.
6.6.2. The powers of attorney granted to the Lender in this Agreement are
coupled with an interest and are irrevocable so long as this Agreement remains
in force. In exercising any power of attorney granted pursuant to this
Agreement, neither the Lender nor its designee shall be held liable for any acts
or omissions or for any error of judgment or mistake. However, the Lender's
powers of attorney do not and shall not be construed to authorize any confession
of judgment. Any Person shall be entitled to rely on the provisions of this
Agreement as conclusive evidence that the Lender holds a continuing, valid and
binding power-of-attorney from the Borrower.
6.7. Inspection. The Lender shall have the right to inspect the Facility and
the Collateral, to examine the Borrower's books and records, to make copies at
the Borrower's expense, and to discuss the Borrower's business and affairs with
the Borrower's officers, employees, any outside management firm, advisor or
consultant and the Borrower's accountants (all of whose fees and expenses shall
be paid by the Borrower).
6.8. Supply Agreement. The Borrower shall at all times keep the Supply
Agreement in good standing and in full force and effect, and shall not make or
agree to any material modification of the Supply Agreement. The Borrower shall
fully comply, at the Borrower's own cost and expense, with the terms of the
Supply Agreement and shall promptly notify Lender of any adverse development
with regard to the Supply Agreement, including any claim of breach of or default
under, or threat of nonrenewal or termination of, or litigation involving the
Supply Agreement. The Borrower shall provide the Lender with proof of the Supply
Agreement's renewal at least thirty (30) days' prior to the stated expiration
date of the then current term of the Supply Agreement, and upon each renewal or
modification of the Supply Agreement shall deliver to the Lender an updated
copy, certified by the Borrower as true and complete, of the Supply Agreement as
so renewed or modified.
6.9. Standard of Care. Except to the extent, if any, otherwise required by
the UCC or other applicable law which by its express terms cannot be modified,
waived or excused, the Lender's sole duty with respect to Collateral in its
possession (whether before or after a Default or Default Event) is to deal with
the Collateral in the same manner as the Lender deals with the Lender's own
similar property. The Borrower agrees that this standard of care is reasonable
and appropriate under the circumstances, and that the Lender will not be
responsible for any shortage, discrepancy, damage, loss or destruction of
Collateral, wherever located, regardless of cause.
6.10 Notices. Borrower shall provide Lender with copies of all
correspondence, notices and documents relating to a default or potential default
under any real property Lease, if any, within twenty-four (24) hours after any
Borrower's receipt thereof.
7. ENVIRONMENTAL MATTERS.
7.1. Environmental Covenants. The Borrower represents, warrants and covenants
as follows:
7.1.1. All answers and information supplied to the Lender by or on behalf of
the Borrower in response to the Lender's "Environmental Questionnaire" are and
remain true, accurate and complete in all respects, and do not contain any
misstatement of fact or omit to state any fact necessary in order to make them
not misleading.
7.1.2. There are no outstanding citations, directives, notices or orders of
violation or noncompliance with applicable Environmental Laws or other Legal
Requirements issued to the Borrower or with respect to the Facility, nor does
there exist any condition which, if known to the appropriate authorities, could
result in the issuance of any such citation, directive, notice or order. Neither
the Borrower nor any Affiliate of the Borrower has ever been the subject of a
notice under the citizen suit provision of any Environmental Law or of a
complaint, claim or other notice alleging violation of Environmental Laws,
whether with respect to the Facility or elsewhere, nor has any of them ever
caused, been held responsible for, or been alleged by any governmental authority
or other Person to have been responsible for, any release or discharge of
Hazardous Materials in violation of Environmental Laws, whether with respect to
the Facility or elsewhere.
7.1.3. The Borrower shall not process, manufacture, store (except in strict
compliance with Section 7.1.4), treat, spill, leak, discharge, use or dispose of
any Hazardous Materials of any kind on or from the Facility nor permit any other
Person to do so, other than the storage and dispensing of gasoline and other
motor vehicle fuels and the storage (in proper containers and under appropriate
conditions) and use in the ordinary course of normal quantities of lubricants,
oils and cleaning products for servicing motor vehicles; in each case as
necessary for the proper day-to-day operations and maintenance of the Facility
and all of which shall be in strict compliance with applicable Legal
Requirements, manufacturers' and installers' guidelines and sound management
practices. The Borrower shall comply with all applicable labeling and
notification requirements in the use of such materials, including maintaining
MSDS materials and complying with worker "right to know" and similar Legal
Requirements.
7.1.4. The Borrower shall be responsible, at its sole cost and expense, for
complying with all applicable Legal Requirements and insurance requirements,
including registration, record-keeping, monitoring, inspection, financial
assurance and upgrading requirements for all underground storage tanks. No
underground storage tank has been, or shall be, installed, renovated, removed or
decommissioned except in compliance with applicable Legal Requirements and
pursuant to an approved permit or closure plan, which shall include
post-excavation sampling to confirm the absence of soil or groundwater impacts
from Hazardous Materials. At the Lender's request (but not more often than
annually, unless Legal Requirements specify a greater frequency), the Borrower
shall cause the underground storage tanks to be tested for tightness and
integrity by any approved method specified by the Lender. The Borrower shall
maintain, by way of tank insurance, surety bond, letter of credit, proof of
coverage eligibility under the State's leaking underground storage tank trust
fund (if solvent) or such other method and in such amount as shall be prescribed
or approved by the Lender from time to time (and which initially shall be for
not less than $1,000,000 per occurrence), evidence of financial responsibility
in the event of any leakage, unpermitted discharge or other failure of the
Facility's underground storage tanks to be in full compliance with all
applicable Legal Requirements.
7.1.5. The Lender reserves the right (but never assumes the obligation) to
cause an environmental audit or Phase I or Phase II assessment of the Facility
to be conducted on written notice to the Borrower in the event of reasonable
concern on the part of the Lender regarding environmental conditions at the
Facility, or following any environmental incident referred to in Section 7.2,
the cost of which shall in each case be paid by the Borrower. The Lender may
require the Borrower to correct or mitigate, at the Borrower's cost and expense,
any unsatisfactory conditions disclosed by such audit or assessment.
7.2. Notice of Environmental Incident. If the Borrower becomes aware or
receives notice of: (i) any event or condition involving the spill, discharge,
leakage, improper storage, improper disposal or need for cleanup of any
Hazardous Materials at or about or emanating from any of the Trust Property; or
(ii) any complaint, order, directive, citation or other notice with regard to
the alleged violation of any Environmental Law or otherwise involving air
emissions, water quality, noise emissions, sanitation, hazardous discharges,
excessive exposure levels or any other environmental, health or safety matter
affecting the Borrower, any Affiliate of the Borrower or the Facility, the
Borrower shall immediately notify the Lender, and shall promptly comply with all
applicable Legal Requirements.
7.3. Lender's Rights. Unless immediately resolved by the Borrower to the
Lender's reasonable satisfaction, the Lender shall have the right (but never the
obligation), without limiting any of the Lender's other rights and remedies
under this Agreement and the other Loan Documents, to take or cause to be taken
such actions reasonably determined to be necessary or advisable to respond to a
release or threatened release of any Hazardous Material from or onto the
Facility or effect compliance with any applicable Environmental Law. All
reasonable costs and expenses incurred by or on behalf of the Lender in doing
so, including but not limited to attorneys' fees and environmental consultants'
and contractors' fees, shall be secured by this Agreement and shall be payable
by the Borrower upon demand, together with interest at the Default Rate from the
date when incurred by the Lender until the date when paid or reimbursed in full
by the Borrower.
7.4. Indemnification. The Borrower shall indemnify, defend (with counsel
satisfactory to the Lender), protect and hold harmless the Facility, the
Collateral, the Lender and the other Indemnitees against all liability
(including liability in tort or contract, whether strict or otherwise), damage
(whether direct, indirect, consequential, punitive, incidental, special or
otherwise), obligation, loss, penalty, fine, claim, lawsuit or other proceeding,
costs, disbursements and expenses (including cleanup costs, response costs,
accounting, consulting and engineering fees, and reasonable attorneys' fees)
directly or indirectly arising from or in connection with any matter referred to
in Section 7.2, or any violation of Environmental Laws or other Legal
Requirements with respect to the Facility, the Borrower, or any Affiliate of the
Borrower, or incurred by the Lender pursuant to Section 7.3 or otherwise of this
Agreement. This indemnification obligation will survive any termination,
discharge or cancellation of this Agreement, and is in addition to and not in
derogation or in lieu of any other indemnification obligations under this
Agreement, the Note, the Indenture or any other Loan Document.
8. INSURANCE.
8.1. Coverages Required. The Borrower shall, at its own cost and expense, at
all times maintain the following insurance with respect to the Facility:
8.1.1. Comprehensive general public liability insurance (including
contractual liability and motor vehicle coverage) covering all claims for bodily
injury, including death, and property damage occurring on, in or about the
Facility or otherwise associated with Borrower's operations at the Facility,
with a combined single limit of no less than $1,000,000 per occurrence.
8.1.2. "All risk" extended coverage property insurance against loss or damage
to the tangible Collateral and the Improvements from fire or any other cause,
including vandalism and malicious mischief, for one hundred percent (100%) of
the full replacement value.
8.1.3. Business interruption insurance covering at least six (6) months of
operating costs and expenses, including debt service for the Loan and all other
financing costs.
8.1.4. If any of the Improvements at the Facility are located within a
designated flood hazard area, federal flood hazard insurance for such
Improvements in the maximum amount obtainable.
8.1.5. Builder's risk insurance covering Improvements during construction,
restoration or renovation.
8.1.6. Workers compensation insurance covering all of the Borrower's
employees.
8.1.7. Tank insurance in such amounts and covering such risks as may be
required by the Lender at any time.
8.1.8. Such other insurance as may, from time to time, be reasonably required
by the Lender against the same or other risks. The Lender also reserves the
right to require, but not more often than once every twelve (12) months (except
in the event of a change in the nature or scope of the Borrower's operations, or
upon the construction or installation of additional Improvements), an adjustment
in the amount or nature of the liability coverage or other insurance coverage
required to be maintained by the Borrower, as the Lender deems advisable to take
into account changes in market conditions, inflation rates, insurance policies
and prudent lending practices observed by institutional lenders or program
lenders generally. The Borrower shall promptly comply with any such adjustment.
8.2. Policy Requirements. The insurance coverage required to be maintained
pursuant to Section 8.1 must meet the following requirements:
8.2.1. All policies shall be issued by financially sound and responsible
insurance carriers authorized to do business in the jurisdiction where the
Facility is located and reasonably acceptable to the Lender. Certificates of
coverage on the XXXXX or comparable form issued by a broker shall be delivered
to the Lender concurrently with the execution and delivery of this Agreement,
together with paid receipts confirming that premiums have been paid in full in
advance for the next quarterly, semiannual or annual (as applicable) payment
period. Thereafter, renewal or replacement certificates, or other evidence of
renewal satisfactory to the Lender, shall be delivered to the Lender not less
than thirty (30) days before the expiration date of the policy being renewed or
replaced.
8.2.2. All policies shall contain (i) an endorsement or agreement by the
insurer that any loss will be paid to the Lender in accordance with the terms of
the policy, notwithstanding any act or negligence of the Borrower or the
Borrower's agents or representatives that might otherwise result in denial or
forfeiture of coverage, and (ii) an agreement by the insurer waiving all rights
of recovery, set-off or counterclaim against the Lender by way of subrogation or
otherwise. All policies must unconditionally provide for at least thirty (30)
days' prior written notice to the Lender of cancellation, nonrenewal or material
amendment (including any reduction in the scope or limits of coverage or any
increase in deductible amounts). If any coverage required by Section 8.1
expires, is withdrawn or lapses for any reason, the Borrower shall immediately,
and in any event prior to the expiration, withdrawal or lapse taking effect,
obtain replacement coverage at the Borrower's sole cost and expense.
Alternatively, the Lender shall have the right in its sole discretion (but not
the obligation), upon receiving notice of any impending lapse, cancellation or
non-renewal of coverage, to obtain replacement coverage in some or all of the
amounts and against any or all of the risks as required under this Agreement.
All costs and expenses incurred by the Lender in doing so shall be paid or
reimbursed by the Borrower immediately upon demand, together with interest at
the Default Rate, and until repaid shall constitute part of the Obligations
secured by the lien and security interest of this Agreement and the Indenture.
8.2.3. Liability policies shall designate the Lender or its designee(s) and
their respective successors and assigns as additional named insured(s). All
other policies shall designate the Lender or its designee(s) and their
respective successors and assigns as loss payee(s) with respect to the
Collateral and all business interruption coverage, and shall contain a standard
non-contributory form first mortgagee endorsement, entitling the Lender to
collect all proceeds, together with a standard waiver of subrogation endorsement
in form and substance reasonably satisfactory to the Lender.
8.2.4. All policies shall be written as primary policies, not as contributing
with or in excess of any other coverage which the Borrower may carry, and
without any coinsurance provisions. The Borrower shall not maintain separate
insurance which is concurrent in form or kind or contributory in the event of
loss with any insurance required pursuant to Section 8.1.
8.2.5. All property insurance and liability insurance deductibles, if any,
shall be in amounts satisfactory to the Lender.
8.3. Ownership of Policies. If the Lender, its designee(s) or any of their
respective successors or assigns acquire by any manner the title or estate of
the Borrower in any of the Collateral or the Trust Property, then the Lender
shall become the sole and absolute owner of all of the insurance policies
relating to such property, with the sole right to collect and retain any
unearned premiums. The Borrower agrees, immediately upon demand, to execute and
deliver any assignments or other authorizations or instructions as the Lender
may request to effectuate this assignment.
8.4. Damage to Collateral. In case of damage or destruction to the Collateral
or the Trust Property, the corresponding provisions of the Indenture shall
govern the respective rights and obligations of the Borrower and the Lender and
the adjustment and application of insurance proceeds payable in respect of the
damaged or destroyed Collateral or Trust Property.
9. DUE-ON-SALE PROVISIONS; ASSUMPTION.
9.1. Change in Ownership. Except in compliance with all of the requirements
of Section 9.3, the Borrower shall not, whether voluntarily or involuntarily by
operation of law or otherwise, do any of the following (each of which shall
constitute a "Change in Ownership"): (i transfer, sell, convey or assign any
interest in the Facility or in the Borrower's operations at the Facility, or any
part of the Collateral (except in compliance with Section 6.5), the
Improvements, or the other Trust Property, or enter into any contract or other
agreement or commitment to do so, including options to purchase, installment
sale contracts, land contracts, real estate contracts, sale-leaseback
arrangements or mortgage commitments; or (ii) amend or terminate the Supply
Agreement or enter into, amend or terminate any Leases; or (iii) merge or
consolidate with any other Person (where the Borrower is an entity and not a
natural person), or become a partner, member (except for membership in trade
associations) or participant with any other Person in any partnership, limited
liability company, joint venture or other business venture involving the
Facility.
9.2. Change in Control. Where the Borrower is an entity and not a natural
person, none of the equity interests in the Borrower nor any substantive rights
(such as voting rights) or economic incidents (such as the right to receive
dividends or distributions) appurtenant to such equity interests shall be sold,
transferred, pledged or encumbered, whether voluntarily or involuntarily by
operation of law or otherwise (in each case, a "Change in Control"), except in
compliance with all of the requirements of Section 9.3. The death after the date
of this Agreement of a natural Person who is the Borrower or who prior to the
making of this Agreement had been disclosed to the Lender in writing to be an
equity holder in the Borrower, and the resulting devolution of the decedent's
proprietary or equity interest by will or the laws of intestacy to the
decedent's spouse or children, or to a trust or trusts for their respective
benefit, shall not constitute a "Change in Control" for purposes of this
Agreement; provided, however, that in all events: (i) there exists and has
occurred no Default or Default Event, (ii) the Facility continues to be managed
by a Person acceptable to the Lender, and (iii) any subsequent sale, transfer,
pledge, encumbrance or other voluntary or involuntary disposition by the
decedent's transferees of the equity interest or of any substantive rights or
economic incidents appurtenant to such equity interest shall be deemed to
constitute a "Change in Control" and shall be subject to the provisions of this
Section 9.
9.2.1. If any controlling Person (other than a natural person) of the
Borrower as of the date of this Agreement undergoes or experiences a change in
control, whether by way of merger or consolidation, sale or other disposition of
assets or equity interests, or otherwise, such change in control shall be deemed
to constitute a "Change in Control" subject to the provisions of Section 9.2. As
used in this Section 9.2.1, the terms "control" and "controlling" have the
meanings ascribed to them under the Securities Act of 1933, as amended, and the
Rules promulgated under such statute, as amended.
9.3. Lender's Consent Required. No Change in Ownership or (except as
expressly provided in Section 9.2) Change in Control shall be permitted without
the Lender's prior written approval, as determined by the Lender in its sole and
nonreviewable discretion. The Lender shall not consider any request for approval
unless: (i) the Borrower submits an application on such form and with such
supporting documentation as may be required by the Lender; (ii) the Borrower is
not in default of any of the Borrower's obligations under the Note, this
Agreement or any of the other Loan Documents; (iii) the Facility continues to
meet all of the Lender's underwriting requirements as then in effect, including
loan-to-value requirements, as demonstrated by an updated appraisal or other
evidence satisfactory to the Lender; (iv) the proposed transferee of the
Facility (in the case of a Change in Ownership) or of an equity or other
interest (in the case of a Change in Control) shall be a Person meeting all of
the Lender's credit and underwriting standards and otherwise acceptable to the
Lender; (v) if required by the Lender, the Borrower shall provide Guaranty
Agreements with respect to the Obligations from the transferee or from one or
more Affiliates of the transferee, as applicable, together with such other
documents as the Lender or the Lender's counsel may require to document the
transfer or to affirm the responsibility of the Persons involved for the
Obligations; (vi) the Borrower shall pay a transfer fee equal to one percent
(1%) of the outstanding Principal Amount as of the effective date of the Change
in Ownership or Change in Control; and (vii) the Borrower shall pay all costs
and expenses incurred by or on behalf of the Lender in connection with the
Change in Ownership or Change in Control, including the cost of an updated
appraisal, under writing reviews, reasonable attorneys' fees and disbursements,
and document preparation and record ing/filing fees and charges. Unless and then
only to the extent otherwise expressly stated in the Lender's written approval
issued at the time, no Change in Ownership or Change in Control shall relieve
the named Borrower or any existing Guarantor from responsibility for the
Obligations, and they shall continue to remain liable, jointly and severally
with the transferee and any new Guarantors, for the payment and performance of
the Obligations in accordance with their terms. If the Lender provides its
written approval of a Change in Ownership or Change in Control, the transferee
shall acquire its interest subject to the terms and conditions of the Loan
Documents, as if such transferee had itself executed and delivered the same.
9.4. Borrower's Acknowledgments. The Borrower acknowledges and agrees that
the creditworthiness and experience of the Borrower and (where applicable) the
Borrower's equity holder(s) in owning, developing and operating the Facility
were primary factors in the Lender's determination to make the Loan and extend
credit to the Borrower at the interest rate and on the other terms and
conditions contained in the Note and the other Loan Documents. The Borrower
agrees that the due-on-sale provisions contained in this Agreement are fair and
reasonable protections to safeguard the Lender's investment, to preserve the
benefit of the Lender's economic bargain and to guard against the impairment of
the Lender's security and the risk of default.
10. DEFAULT EVENTS.
10.1. Specified Events. The "Default Events" below are in addition to and not
in lieu of those specified in the Note or any other Loan Document. Each of the
following shall constitute a "Default Event" under this Agreement and the other
Loan Documents:
10.1.1. Failure to Pay Note. The Borrower fails to make any payment required
by the Note in accordance with its terms.
10.1.2. Other Failure to Pay. The Borrower fails to make any other payment
required by this Agreement or any other Loan Document when due or (but only
where such a period is expressly specified) within any applicable notice or cure
period.
10.1.3. Failure to Comply with Financial Covenants. The Borrower breaches, is
in default under or fails to achieve or comply with any of the Borrower's
covenants or obligations under Section 5 of this Agreement.
10.1.4. Representations and Statements. Any representation, warranty,
certificate, statement or information made or provided at any time by the
Borrower or any Guarantor in or pursuant to any Loan Document, including
financial statements, shall have been untrue or incorrect or shall have been
misleading or incomplete in any material respect when made.
10.1.5. Financial Information and Inspections. The Borrower or any Guarantor
shall fail, promptly after request by the Lender, to furnish financial
information or to permit inspection of any books or records or of the Collateral
or Trust Property as required under any Loan Document.
10.1.6. Contested Obligation. (i) Any Loan Document shall for any reason
cease to be, or is asserted by the Borrower or any Guarantor, as applicable, not
to be, a legal, valid and binding obligation of that Person, enforceable in
accordance with its terms; or (ii) the validity, perfection or priority of the
Lender's first lien and security interest on any of the Collateral under this
Agreement or any of the Trust Property under the Indenture is contested by any
Person; or (iii) any Guarantor repudiates, revokes, contests or disputes, in
whole or in part, such Guarantor's obligations under any Guaranty Agreement.
10.1.7. Judgments. A judgment shall be entered against the Borrower in excess
of $20,000 or against any Guarantor in excess of $20,000 and, in either such
case, the judgment is not paid in full and discharged, or stayed and bonded to
the satisfaction of the Lender, within thirty (30) days after being entered,
unless the amount of the judgment is fully covered by insurance and an insurer
has, in writing, unconditionally accepted responsibility for payment.
10.1.8. Insolvency.
(a) The Borrower or any Guarantor shall: (i voluntarily begin any proceeding
or file any petition seeking relief under Title 11 of the United States Code
(the "Bankruptcy Code") or any other federal, state or foreign bankruptcy,
insolvency, receivership, liquidation or similar law; (ii) consent to or fail to
oppose the institution of any such proceeding or the filing of any such
petition; (iii) apply for, or consent to or fail to oppose, the appointment of a
receiver, trustee, custodian, fiscal agent or similar official for the Borrower
or any Guarantor or for any substantial part of any of their respective property
or assets; (iv) file an answer admitting the material allegations of a petition
filed against the Borrower or any Guarantor for the benefit of creditors; (v)
make a general assignment in writing for the benefit of creditors; (vi) become
unable, admit in writing an inability or fail generally to pay their respective
debts as they become due; (vii) take advantage of any other law or procedure for
the relief of debtors; or (viii) take any action for the purpose of or with a
view towards effecting any of the foregoing.
(b) An involuntary proceeding shall be commenced or an involuntary petition
shall be filed in a court of competent jurisdiction seeking: (i) relief in
respect of the Borrower or any Guarantor under the Bankruptcy Code or any other
federal, state or foreign bankruptcy, insolvency, receivership, liquidation or
similar law; (ii) appointment of a receiver, trustee, custodian, fiscal agent or
similar official for the Borrower or any Guarantor or for any substantial part
of any of their respective property or assets; or (iii) the winding up or
liquidation of the Borrower or any Guarantor which is an entity and not a
natural person; and such proceeding shall continue undismissed for sixty (60)
days, or an order or decree approving or ordering any of the foregoing shall
continue unstayed or in effect for sixty (60) days.
10.1.9. Additional Liens; Loss of Priority. Any of the Collateral becomes
subject to a Lien other than the Permitted Liens, or the Lender does not obtain
or continue to have a perfected first priority security interest in any of the
Collateral, subject to the Permitted Liens.
10.1.10. Seizure of Property or Collateral. Any of the Collateral or the
Facility are seized or foreclosed upon pursuant to process of law or by way of
legal self-help.
10.1.11. Default under Supply Agreement or Material Agreements; Loss of
Supply Agreement or License. There occurs a default beyond any applicable grace
or cure period on the part of the Borrower under any real property or Equipment
Lease which is material to the operation of the Facility, under the Supply
Agreement or under any other agreement which is material to the operation of the
Facility, including without limitation any food and/or beverage supply
agreement; or the Supply Agreement or any license, permit or other governmental
authorization necessary or material to the operation of the Facility is
terminated, is suspended for more than seven (7) days, or is allowed to lapse or
expire, in each case without being immediately renewed or without an equivalent
substitute satisfactory to the Lender being immediately applied for and obtained
by the Borrower.
10.1.12. Suspension of Business. The Borrower shuts down or suspends the
transaction of business at the Facility for more than fifteen (15) days total in
any calendar year.
10.1.13. Material Adverse Change. There occurs any adverse change in the
Collateral, the Trust Property or the operations, prospects or condition,
financial or otherwise, of the Borrower or any Guarantor, and such change, in
the Lender's sole and nonreviewable opinion, is material or could otherwise
materially increase the Lender's credit or collection risk under the Note or any
other Obligation owed to the Lender.
10.1.14. Environmental Violation. The Borrower fails to take immediate steps
to respond appropriately (or thereafter to diligently resolve) to the Lender's
satisfaction and in compliance with Legal Requirements and all Environmental
Laws, any environmental incident as described in Section 7.2.
10.1.15. Prohibited Transfer. There occurs any Change in Ownership or Change
in Control prohibited by Sections 9.1 or 9.2.
10.1.16. Failure to Perform Generally. The Borrower fails to perform or
comply when required with any other requirement, covenant or condition contained
in this Agreement or any other Loan Document.
10.1.17. Default Under Other Loan Documents. There occurs any "Default Event"
under the Note, the Indenture, any Guaranty or any other Loan Document.
10.1.18. Cross-Default with Lender. There occurs a default beyond any
applicable grace or cure period on the part of the Borrower, any Guarantor or
any of their respective Affiliates under any other note, loan agreement,
security instrument or financial arrangement of any kind, whether now existing
or subsequently entered into, with the Lender or any Affiliate of the Lender.
10.1.19. Cross-Default with Other Debt. The Borrower fails to pay when due
(whether at scheduled maturity, upon acceleration, demand or otherwise) or
within any applicable grace or cure period any amount in respect of any Debt in
excess of $20,000 (excluding the Debt outstanding under the Note), or there
occurs any other default in respect of such Debt which entitles the creditor or
obligee to accelerate the balance due or exercise any other collection remedies.
10.2. Cross-Default With Other Documents. If the Lender or any Affiliate of
the Lender, on the one hand, and the Borrower, any Guarantor or any of their
respective Affiliates, on the other hand, are or subsequently become parties to
any other note, loan agreement, security instrument or credit arrangement of any
kind, all such other obligations are automatically amended, without the need for
further action or documentation, to provide that a Default Event under this
Agreement shall be an event of default under the other obligations, entitling
the Lender or other holder of them to accelerate and to exercise all other
remedies available upon default.
11. REMEDIES UPON DEFAULT. Upon the occurrence of a Default Event:
11.1. In General.
11.1.1. All of the Obligations shall at the option of the Lender become
immediately due and payable, without further notice or demand.
11.1.2. The Lender shall have and shall be entitled to exercise all rights
and remedies of a secured party under the UCC and other applicable law.
11.1.3. The Lender may, by written notice, require the Borrower to assemble
and promptly deliver the Collateral wherever the Lender shall designate, or the
Lender or its agent or designee may enter the Facility or other premises where
Collateral is located and remove the Collateral without liability to the
Borrower, in each case at the Borrower's expense.
11.1.4. The Lender shall be entitled, as of right and without any need to
prove a diminution in the Collateral's value, to the appointment of a receiver,
with such powers in respect of the Collateral as the appointing court shall
confer.
11.2. Sale of Collateral. The Lender may sell, lease or rent out Collateral
at public or private sale, at such prices or terms as the Lender deems
appropriate, whether for cash, on credit, or for future delivery, in bulk or in
lots, or may retain any Collateral, even if then left idle. The Borrower agrees
that ten (10) days' notice of any sale or other disposition shall be reasonable
notice. The Lender may adjourn any sale by announcement at the scheduled time
and place, without further notice or advertisement, and the Lender shall not be
obligated to accept any bids at the sale if the Lender determines not to do so.
The Lender may bid (with credit for the outstanding amount of the Obligations)
or become purchaser at any sale, free of the Borrower's right of redemption, if
any, which the Borrower expressly waives. Sales may be conducted at the
Facility, and the Borrower shall have no claim for rent, storage or otherwise.
11.2.1. The proceeds, if any, of sale or lease of Collateral shall be
applied: (i) first, to payment of fees and expenses incurred by the Lender as a
result of the Default Event, including reasonable attorneys' fees and other
expenses in repossessing, selling or leasing the Collateral; (ii) next, to
payment of the outstanding Obligations, including interest and all other costs,
fees and charges allowed by the Loan Documents; and (iii) finally, only then
shall any net surplus be remitted to the Borrower.
11.3. Accounts Receivable. The Lender may (but shall not be obligated to)
give notice to account debtors and xxxx and collect the Borrower's accounts
receivable for the Facility in whole or in part, either directly or through the
Lender's agent or designee, in its own, the Borrower's or any other names.
11.4. Collection Action. The Lender may bring an appropriate action to
recover the amounts due in respect of the Obligations. Doing so shall not
prevent the Lender from subsequently bringing an action to realize or foreclose
upon the Collateral for any Default Event existing at the time the collection
action was instituted, or for any subsequent Default Event.
11.5. Other Remedies. The Lender shall be entitled to exercise all other
rights and remedies available under this Agreement and the other Loan Documents,
and all other rights and remedies available under applicable law and in equity.
11.6. Remedies Cumulative. The Lender's remedies are cumulative, and by
reason of exercising any particular remedy the Lender shall not be prevented
from later exercising any other remedy. To the full extent permitted by
applicable law, the Lender shall have no obligation to realize or foreclose
first upon the Collateral or the Trust Property under the Indenture, but may
proceed directly against the Borrower, or against both the Borrower and some or
all of the Collateral or Trust Property or both, or against neither, with or
without proceeding at the same time against any Guarantor, all as the Lender
decides in the Lender's sole and nonreviewable discretion. Even if the Lender
does not immediately require the Borrower to make payment in full or does not
immediately exercise the Lender's other rights and remedies upon the occurrence
of a particular Default Event, the Lender shall still have the right to do so
later if the Default Event continues or if another Default Event subsequently
occurs.
11.7. Default Interest. Following the occurrence of a Default Event, the
Obligations shall bear interest at the Default Rate and, notwithstanding the
entry of any judgment relating to the Obligations, shall continue to accrue
interest at the Default Rate until paid and satisfied in full.
12. INDEMNIFICATION. The Borrower shall indemnify, defend (with counsel
acceptable to the Lender), protect and hold the Facility, the Collateral, the
Lender and the other Indemnitees harmless against all liability (including
liability in tort or contract, whether strict or otherwise), damage (whether
direct, indirect, consequential, punitive, incidental, special or otherwise),
obligation, loss, penalty, fine, claim, suit or other proceeding, together with
associated costs and expenses (including reasonable legal and other professional
fees and disbursements), that may be asserted against the Facility or the
Collateral or incurred by or asserted against the Lender or any of the other
Indemnitees, in connection with or arising out of: (i) breach or default under
any of the Borrower's representations, warranties, covenants or undertakings in
the Loan Documents; (ii) any personal injury or property damage occurring on or
about the Facility; (iii) the ownership, use, occupancy, operation or leasing of
the Facility or any Collateral; or (iv) otherwise incidental to or involving the
Facility or the Collateral, or the interest of the Lender or any other
Indemnitee in them, whether before or after a Default Event. The Borrower's
obligation to indemnify shall survive any foreclosure or other disposition of
the Collateral and the termina tion, discharge or cancellation of this Agreement
for any reason, and is in addition to, and not in derogation or in lieu of, any
other indemnity obliga tions contained in the Indenture or elsewhere in the Loan
Documents.
13. MISCELLANEOUS SECURITY AGREEMENT PROVISIONS.
13.1. Security Agreement. This Agreement is intended to constitute a security
agreement in accordance with the UCC, and to create a security interest in favor
of the Lender in all of the Collateral.
13.2. Effectiveness. The security provisions of this Agreement shall be
effective immediately when signed by the Borrower, whether or not countersigned
by the Lender.
13.3. Revival. If any payment received or applied by the Lender on account of
the Obligations, including any payment out of collection or Proceeds of
Collateral, is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be refunded to a trustee, debtor in
possession, receiver or other Person under any bankruptcy or insolvency law or
in any other proceeding, then a corresponding amount of the Obligations shall be
revived and reinstated, as if the payment had never been received by the Lender,
and the Lender's security interest, rights and remedies under this Agreement and
the other Loan Documents shall to such extent continue in full force and effect.
14. NO JURY TRIAL. The Borrower and the Lender each waive all rights to trial
by jury in any litigation or other proceeding relating to or arising out of this
Agreement or any other Loan Document. The Borrower further waives, to the full
extent permitted by law, any right to an appraisal of the Collateral or of any
other security for the Obligations. The Borrower acknowledges that these waivers
(i) have been fully disclosed to and discussed by the Borrower and the Lender,
(ii) are subject to no exceptions, and (iii) are made knowingly, intentionally
and willingly as part of a bargained-for loan transaction.
15. ATTORNEYS' FEES. Whether or not a Default Event has occurred or is
continuing, if: (i) the Lender becomes a party to any third-party suit or
proceeding involving the Facility, the Lien created by this Agreement or the
Lender's interest in any of the Collateral; or (ii) the Lender engages counsel
to collect any of the Obligations or to enforce the Lender's rights or remedies
or the performance of this Agreement or any other Loan Document; then, in each
such case, the Borrower shall pay to the Lender, upon demand, the Lender's
costs, expenses and reasonable attorneys' fees incurred in so doing. All such
amounts shall be deemed to be part of the Obligations secured by this Agreement,
and shall bear interest at the Default Rate from the date incurred until the
date repaid in full.
16. ASSIGNMENT BY LENDER.
16.1. Lender's Right to Assign. The Lender reserves the right, at any time
while the Obligations remain outstanding, to sell, assign, syndicate or
otherwise transfer or dispose of any or all of the Lender's interest under the
Loan Documents. The Lender also reserves the right at any time to pool the Loan
with one or more other loans originated by the Lender or any other Person, and
to securitize or offer interests in such pool on whatever terms and conditions
the Lender shall deter mine. The Borrower consents to the Lender's releasing
financial and other information regarding the Borrower, the Facility and the
Loan in connection with any such sale, pooling, securitization or other
offering.
16.2. Assignee's Rights. The Lender's assignee shall, to the extent of the
assignment, be vested with all the rights and remedies of the Lender under this
Agreement (including those granted with respect to the Collateral), and to the
extent of such assignment the assignee may fully enforce the secured party's
rights and remedies, and all references to the Lender shall mean and include the
assignee. The Lender shall retain all rights and remedies not so assigned or
transferred.
17. MISCELLANEOUS.
17.1. Final Agreement. This Agreement, together with the other Loan
Documents, represents the final agreement and understanding between the Borrower
and the Lender and may not be contradicted or amended by evidence of prior,
contemporaneous or subsequent oral agreements between the Borrower and the
Lender. The Borrower represents, warrants and acknowledges that no oral
agreements exist between the Borrower and the Lender.
17.2. Amendments. None of the provisions of this Agreement or any other Loan
Document may be waived, modified or amended except by a specific written
instrument signed in each instance by an authorized officer of the Lender.
17.3. Notices. Any notice pursuant to this Agreement shall be in writing and
shall be mailed by certified mail, return receipt requested, or sent by Federal
Express or other nationwide overnight courier service capable of providing
delivery confirmation, or delivered by hand. The notice shall be deemed duly
given when so mailed, sent or hand-delivered. Notices shall be addressed to the
Borrower and to the Lender at their respective addresses set forth at the
beginning of this Agreement, or to any other address which either of them may
designate in a notice to the other that meets the requirements of this Section
17.3.
17.4. Interest Limits.
17.4.1. Notwithstanding anything to the contrary contained in this Agreement,
the Note or any of the other Loan Documents, in no event shall the amount or
rate of interest (including interest at the Default Rate and, to the extent that
they may be deemed, notwithstanding their characterization in the Loan
Documents, to constitute interest, any prepayment fees, late payment processing
fees and other fees or charges) payable, charged or received in connection with
this Agreement or the Loan ever exceed the maximum rate or amount, if any,
specified by applicable law.
17.4.2. If at the time any payment becomes due, enforcing this Agreement or
any other Loan Document as written is prohibited by or would result in violation
of any applicable law limiting the rate or amount of interest or other charges
which the Lender may collect, then the interest or other charges shall
automatically be reduced to the maximum amount then permitted by applicable law.
If the Lender ever collects from the Borrower interest or other charges that
would exceed the highest applicable lawful amount, then the excess amount shall
immediately be deemed credited for the Borrower's account and will be returned
to the Borrower, either by being applied to reduce the then outstanding
principal balance of the Note or by way of direct refund to the Borrower, as the
Lender shall elect.
17.5. Binding Effect. This Agreement is binding upon the Borrower and shall
inure to the benefit of the Lender and the Lender's successors in interest and
assigns, and may be enforced against the Borrower by any of them. The Borrower
shall not assign the Loan or delegate any of its obligations under the Loan
Documents except as expressly permitted by and subject to compliance with the
conditions set forth in this Agreement.
17.6. Interpretation; Construction.
17.6.1. No provision of this Agreement shall be construed against a
particular Person or in favor of another Person merely because of which Person
(or its representative) drafted or supplied the wording for such provision.
17.6.2. References to "Sections" shall be deemed to refer to the sections or
subsections, as appropriate, of this Agreement. References to "Schedules" mean
the Schedules attached to and made a part of this Agreement.
17.6.3. Where the context requires: (i) use of the singular or plural
incorporates the other, and (ii) pronouns and modifiers in the masculine,
feminine or neuter gender shall be deemed to refer to or include the other
genders.
17.6.4. As used in this Agreement, the terms "include[s]" and "including"
mean "including but not limited to"; that is, in each case the example or
enumeration which follows the use of either term is illustrative, but not
exclusive or exhaustive.
17.6.5. Section headings appearing in this Agreement are inserted solely as
reference aids for the ease and convenience of the reader; they shall not be
deemed to modify, limit or define the scope or substance of the provisions they
introduce, nor shall they be used in construing the intent or effect of such
provisions.
17.7. Further Assurances. The Borrower shall, promptly and at the Borrower's
sole cost and expense, sign, acknowledge and deliver such other documents and
instruments, and take such other actions, as the Lender may from time to time
request in order to evidence, confirm or perfect this Agreement or any security
interest granted to the Lender under this Agreement, to confirm the outstanding
balance of the Note, or to otherwise carry out the purpose and intent of this
Agreement and the other Loan Documents.
17.8. Survival. All representations, warranties, agreements and covenants
contained in this Agreement shall survive the signing and delivery of this
Agreement, and all of the waivers made and indemnification obligations
undertaken by the Borrower shall survive the termination, discharge or
cancellation for any reason of this Agreement.
17.9. Severability. If any provision of this Agreement is held invalid,
illegal or unenforceable by a court of competent jurisdiction, the provision
shall only be enforced to the extent, if any, reasonable under the facts and
circumstances, and otherwise shall be deemed deleted from this Agreement. The
remaining provisions shall not be affected, and shall remain in full force and
effect.
17.10. Time of the Essence. Time is of the essence with respect to the
Borrower's performance of its obligations under this Agreement.
17.11. Governing Law. This Agreement shall be governed by and interpreted
according to Connecticut law, but without giving effect to any Connecticut
choice of law provisions which might otherwise make the laws of a different
jurisdiction govern or apply; except that the laws of the State shall govern but
only to the extent of mandatory provisions applicable to the filing and
perfection of security interests, notice, foreclosure procedures and the like
with respect to the Collateral or the Trust Property.
17.12. Joint and Several Liability. If Borrower comprises more than one
person or entity, all such persons and entities shall be jointly and severally
liable for the performance of Borrower's obligations hereunder.
18. DEFINITIONS.
18.1. Capitalized Terms. As used in this Agreement, the following terms mean:
"Adjusted Debt": All Debt of the Borrower, measured as of the last day of the
relevant period, with the sole exception of contingent reimbursement obligations
and contingent Guarantees, but in each case only while they remain contingent.
"Affiliate": With respect to any particular Person, any other Person directly
or indirectly controlling, controlled by or under common control with such
Person.
"Cash Flow": Net Income of the Borrower for any period, plus (but only to the
extent previously deducted in determining such net income) depreciation,
amortization, taxes, Lease Obligations and non-cash charges for the same period,
all determined in accordance with GAAP or such other accounting principles
generally and customarily used in the industry and reasonably acceptable to the
Lender. Cash Flow as so determined shall be adjusted by the Lender in accordance
with the Lender's policy to reflect standardized operating and overhead expenses
(including normalized rent and occupancy costs if the Facility is leased by the
Borrower from an Affiliate, and deduction of owner compensation at a standard
rate if the Borrower has operations at one or more additional locations besides
the Facility), and to exclude the impact (positive or negative) of certain
extraordinary and nonrecurring income and expenses not generally reflected in
prior period results and not reasonably anticipated to be received or incurred
in any subsequent periods.
"Change in Control": As defined in Section 9.2.
"Change in Ownership": As defined in Section 9.1.
"Collateral": As defined in Section 2.1.
"Commitment": The commitment letter issued by the Lender to the Borrower and
accepted by the Borrower.
"Debt": All of the following, but without duplication: (i) indebtedness of a
Person for borrowed money; (ii) any obligation incurred for all or part of the
purchase price of property or services, other than accounts payable and accrued
expenses included entirely within current liabilities in accordance with GAAP;
(iii) indebtedness or obligations evidenced by bonds, debentures, notes, or
similar written instruments; (iv) reimbursement obligations of a Person (whether
contingent or otherwise) in respect of letters of credit, bankers' acceptances,
surety or other bonds and similar instruments; (v) any obligation secured by a
Lien on the property of a Person; (vi) Lease Obligations; and (vii) all
Guarantees by a Person of the payment or performance obligations of any other
Person, including obligations of the kind referred to in clauses (i) through
(vi). The term "Debt" shall not include any unsecured, self-amortizing debt
advanced to the Borrower by the motor fuel supplier named in the Supply
Agreement, where repayment shall be made solely by way of a surcharge, which
shall not exceed a specified number of cents per gallon approved by the Lender,
on the price per gallon charged by the supplier for motor fuel supplied to the
Borrower, and not out of the Borrower's other assets.
"Default": Any event or condition which, with notice or the lapse of time or
both, would become a Default Event.
"Default Event": Any of the events, conditions or circumstances described in
Section 10 of this Agreement.
"Default Rate": As defined in the Note.
"Disclosure Schedule": The Disclosure Schedule completed by the Borrower
concurrently with the making of the Loan and attached to this Agreement.
"Distribution": Any payment, transfer or other distribution of any kind to a
Person with an equity interest, legal or beneficial, in the Borrower (whether as
a shareholder, partner, member or otherwise), to any Guarantor, or to any of
their respective Affiliates, whether or not characterized as a dividend or
distribution, and whether made to them in their capacities as shareholder,
partner, member or otherwise, or characterized as repayment of loans or other
Debt or as interest, or as return of capital, return on equity or investment, or
as salary, bonus or other compensation; except only for such payments or
distributions as may be consented to in writing in advance by the Lender in its
sole discretion, or as are expressly permitted by this Agreement.
"Environmental Laws": All Legal Requirements governing the use, storage,
shipment, handling, disposal, discharge, release, cleanup, reporting, labelling,
warning, workplace disclosure or monitoring of Hazardous Materials, or otherwise
relating to environmental pollution or environmental protection, including, as
may be applicable to environmental matters, the common law respecting nuisance,
trespass, tortious liability and strict liability.
"Equipment": All goods defined as such in the UCC, including all equipment,
machinery, appliances, furniture, furnishings and fixtures which are now or may
at any time in the future be installed in, attached to or located at the
Facility, or used or held for use in connection with the operation of the
Facility, such as pumps, dispensing equipment, car wash equipment, vacuum units,
store fixtures, cash registers, point-of-sale devices, diagnostic, monitoring
and repair equipment, tools, racks, coolers, display cases, cooking apparatus,
and food service equipment, whether or not constituting "fixtures" under State
law; together with all alterations, replacements, controls and operating
accessories.
"Facility": The service station or other facility, including the real estate
and Improvements, as more fully described in the Indenture.
"FCCR": Fixed Charge Coverage Ratio, which is the ratio of Cash Flow for any
period to scheduled or required payments of Adjusted Debt for the same period.
"Financial Statements": The Borrower's financial statements, including
balance sheets, statements of operations and statements of cash flows, together
with the accompanying notes, as delivered to the Lender.
"GAAP": Generally accepted accounting principles as in effect in the United
States of America, applied on a consistent basis.
"Guarantor": Every Person signing and delivering a Guaranty, together with
any other Person besides the Borrower who is or may subsequently become liable,
directly or indirectly, in respect of any of the Obligations as maker,
guarantor, surety, accommodation party, coindorser or in any similar capacity.
"Guaranty": The Guaranty, if any, dated today's date, made by one or more
Affiliates of the Borrower or other Persons (and if more than one, jointly and
severally) to the Lender, together with any subsequent guaranty, endorsement or
other undertaking by which any Person guarantees or assumes responsibility in
any capacity for the payment or performance of any of the Obligations.
"Guarantee": Any guarantee or other contingent liability (other than the
endorsement of third-party checks for collection or deposit in the ordinary
course of business, and indemnity obligations not guaranteeing or otherwise
insuring payment or performance of any Debt or other financial obligation),
direct or indirect, made or assumed by a Person with respect to any Debt or
other obligation of another Person.
"Hazardous Materials": All substances, in whatever form or concentration,
which are classified as hazardous, toxic or dangerous or as pollutants or
contaminants under any Environmental Law. "Hazardous Materials" specifically
include gasoline, oil and other petroleum products, their fractions and their
constituent and residual compounds and by-products, and radon, asbestos,
ureaformaldehyde and PCB's. Where under applicable Environmental Laws a
jurisdiction exercises the authority to establish stricter requirements
regarding Hazardous Materials or to define Hazardous Materials more inclusively,
the stricter requirements and more inclusive definitions shall apply with
respect to the Facility to the extent located within such jurisdiction or
otherwise subject to its authority.
"Improvements": All structures and appurtenances installed or constructed at
the Facility, including buildings, canopies, garages, booths, fuel storage
facilities, paving, fencing, lighting, landscaping and other real estate
improvements.
"Indemnitees": The Lender and each other holder of the Note or the other Loan
Documents or of any interest in them, together with each of their respective
officers, directors, stockholders, members, partners, trustees, employees,
representatives, agents and Affiliates, including every other Person controlling
the Lender or the Lender's Affiliates, and each of their respective successors
and assigns.
"Indenture": The "First Leasehold Deed of Trust, Security Agreement and
Fixture Filing," dated today's date, granted by Borrower in respect of the
Facility for the benefit of the Lender.
"Inventory": All goods defined as such in the UCC, including bulk fuel,
supplies, spare parts and store inventories.
"Lease": As to any Person, a lease or other agreement according such Person
the right to use real or personal property as lessee, whether classified as an
operating lease or as a capital lease under GAAP.
"Lease Obligation": The obligation of a Person to pay rent or other amounts
under a Lease.
"Legal Requirements": All present and future: (i) laws, ordinances, rules,
statutes, regulations, requirements, rulings, orders and decrees of the federal,
state, county, municipal and local governments and their respective constituent
administrative departments, public and semi-public agencies, commissions,
boards, bureaus, offices and judicial and other authorities; (ii) orders, rules
and regulations of any national or local board of fire underwriters or other
public or private body exercising similar functions; and (iii) requirements
under policies of comprehensive general liability, property and other insurance
in force with respect to any part of the Facility; in each case whether foreseen
or unforeseen, ordinary or extraordinary, and whether or not they may
necessitate structural changes or improvements or may interfere with the use and
enjoyment of any of the Facility by the Borrower or by anyone else.
"Lien": Any security interest, mortgage, pledge, lien, claim, charge,
encumbrance, conditional sale or title retention or reservation agreement,
including the lessor's title or reversionary interest under a Lease or analogous
instrument.
"Loan": As defined in the preamble of this Agreement.
"Loan Documents": The Commitment, this Agreement, the Note, the Indenture,
the Guaranty and all other security instruments, assignments, certificates,
certifications and agreements of any kind relating to the Loan, whether signed
or delivered concurrently with or subsequent to this Agreement.
"Minimum FCCR": The Minimum FCCR as specified in the box at the beginning of
this Agreement.
"Note": As defined in the preamble of this Agreement.
"Obligations": All indebtedness, liability and obligation for payment or
performance, whether accrued or contingent, whether direct or indirect, whether
arising from tort, contract, or otherwise, and whether incurred in the capacity
of maker, co-endorser or obligor or as surety, guarantor or in any other
capacity, of the Borrower, each Guarantor or any of their respective Affiliates
to the Lender or to any of the Lender's Affiliates under: (i) the Note, (ii)
this Agreement, (iii) the Indenture, (iv) the Guaranty, (v) any other Loan
Document, or (vi) any other present or future agreement, commitment,
undertaking, instrument or obligation of the Borrower to the Lender or any
Affiliate of the Lender, including future advances (whether or not pursuant to a
written commitment), with respect to the Facility; in each case whether due or
to become due or whether now existing or subsequently incurred or arising, and
as may be amended, recast, renewed, replaced or extended from time to time. The
term "Obligations" specifically includes but is in no way limited to principal,
accrued interest and late payment processing fees under the Note, all advances
made by or on behalf of the Lender under any Loan Document, and all collection
and other costs and expenses incurred by or on behalf of the Lender. The term
"Obligations" also includes all indebtedness, liability and obligation for
payment or performance, whether accrued or contingent, whether direct or
indirect, and whether incurred in the capacity of maker, co- endorser or obligor
or as surety, guarantor or in any other capacity, of the Borrower, each
Guarantor or any of their respective Affiliates to the Lender or to any of the
Lender's Affiliates under any present or future agreement, commitment,
undertaking, instrument or obligation related to the loans made under the
Secured Promissory Note (or Notes, as the case may be) of even date herewith
executed by Borrower to the order of Lender.
"Permitted Debt": Only: (i) the Debt represented by the Note; (ii) the Debt
previously disclosed to and approved by the Lender in writing in connection with
the Borrower's application for financing from the Lender; and (iii) purchase
money financing or Lease financing (with the vendor reserving a security
interest or lessor interest, as the case may be, limited just to the Equipment
financed) for specific items of Equipment for the Facility, but subject always
to the Lender's prior approval in the case of Equipment purchases or Leases
which, individually or in the aggregate, entail a commitment or involve
Equipment with a retail value in excess of $10,000 (and provided further that,
whether or not the Lender's prior approval is otherwise required, in no event
shall the Borrower incur purchase money financing or Lease Obligations unless
afterwards, and after giving effect to the payments required under such
financing arrangements, the Borrower will continue to maintain the required
FCCR, measured on a trailing and a forecasted 12-month basis).
"Permitted Liens": Only: (i) Liens created pursuant to the Loan Documents;
(ii) other existing Liens as previously disclosed to and approved by the Lender
in writing covering only specific items of Collateral and Trust Property
securing Permitted Debt; (iii) Liens on specific items of after-acquired
Equipment securing Permitted Debt subsequently incurred in compliance with the
requirements of this Agreement; (iv) Liens for taxes, assessments or
governmental charges not yet due and payable; and (v) statutory liens of
carriers, warehousemen, mechanics and other Liens imposed by law in the ordinary
course of business for sums not yet delinquent.
"Person": Any natural person and any corporation, partnership (general,
limited or otherwise), limited liability company, trust, association, joint
venture, governmental body or agency or other entity having legal status of any
kind.
"PMPA": The Petroleum Marketing Practices Act, 15 U.S.C. Section 2801 et
seq., and any accompanying regulations, each as may be amended from time to
time.
"Proceeds": As defined in the UCC, and including (whether or not they
constitute "proceeds" under the UCC) proceeds of any insurance policy,
indemnity, warranty or guaranty payable in respect of any Collateral, and all
amounts realized from the sale, exchange, collection or other disposition of
Collateral.
"State": The State where the Facility is located.
"Supply Agreement": The supply agreement between the Borrower and the
Borrower's motor fuel supplier, as provided to the Lender prior to the making of
the Loan.
"Trust Property": The "Trust Property" or the "Mortgaged Property", as the
case may be, in either case as defined in the Indenture.
"UCC": The Uniform Commercial Code as enacted and in force in the State, as
may be amended from time to time.
18.2. Accounting and UCC Terms. Accounting terms not specifically defined
shall have the meanings customarily given them in accordance with GAAP. Terms
defined in the UCC shall, unless otherwise noted, have the respective meanings
specified in the UCC.
19. CROSS DEFAULT AND CROSS COLLATERALIZATION. Under the terms of the Loan
Documents, the Loan and all other loans from Lender to Borrower which closed
concurrently herewith (the "Other Loans") are cross-defaulted and
cross-collateralized and the Loan and all other loans to Borrower, now existing
or made in the future, are cross-defaulted. All loans to Borrower by Lender
other than the Loan are referred to herein as the "Other Loans". Borrower
acknowledges and agrees that Lender may be selling the Loan and some or all of
the Other Loans to one or more different parties. If the Loan and the Other
Loans are not sold to the same party, the Loan will automatically, without need
for future documentation, cease to be cross-defaulted and cross-collateralized
with any of the Other Loans not sold to the third party which purchased the
Loan. The Loan and any Other Loan which are sold to the same third party will
remain cross-collateralized (if it is originally cross-collateralized) and
cross-defaulted.
* * *
FFP Operating Partners, L.P., a Delaware limited partnership
By: FFP Operating LLC
a Delaware limited liability company,
its sole general partner
By:___________________________________
Xxxxxx X. Xxxxxx,
President
Franchise Mortgage Acceptance Company, a Delaware corporation
By:
Name:____________________________________
Title:___________________________________
