LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement") is made and entered
into as of the 30th day of September, 1997, by and between DENAMERICA CORP., a
Georgia corporation, whose address is 0000 Xxxxx Xxxxxxxxxx Xxxx, Xxxxx X-000,
Xxxxxxxxxx, Xxxxxxx 00000 ("Corporation"), CNL GROWTH CORP., a Florida
corporation ("Agent") whose address is 000 Xxxx Xxxxx Xxxxxx, Xxxxx 000,
Xxxxxxx, Xxxxxxx 00000, as Agent for CNL Income & Growth Fund, Ltd., a Florida
limited partnership ("Growth Fund I"), CNL Income & Growth Fund II, Ltd., a
Florida limited partnership ("Growth Fund II"), Denglass Restaurants Real Estate
Joint Venture, a Florida general partnership ("Denglass"), Denwest Foods, Ltd.,
a Florida limited partnership ("Denwest I") and Denwest Foods II, Ltd., a
Florida limited partnership ("Denwest II"), (hereinafter together referred to as
"Lenders"), MIDSOUTH FOODS I, LTD., a Florida limited partnership ("Midsouth I")
and MIDSOUTH FOODS II, LTD., a Florida limited partnership ("Midsouth II").
Background Information:
CNL Growth Fund I, CNL Growth Fund II and Denglass have agreed to sell,
and Corporation has agreed to buy, certain real property pursuant to the terms
of that certain Contract for Purchase and Sale of even date herewith, with title
to such real property to be transferred to Corporation's designee, CNL-BB Corp.,
a Florida corporation, at the closing.
Corporation has agreed to make and deliver to Agent, pursuant to the
terms of this Agreement, a promissory note in the principal amount of Seven
Million Seven Hundred Thousand and No/100 Dollars ($7,700,000) in payment of the
purchase price for such real property.
Denwest I has agreed to sell, and Corporation has agreed to buy,
Denwest I's fifty percent (50%) general partnership interest in Denwest Joint
Venture, a Florida general partnership.
Denwest II has agreed to sell, and Corporation has agreed to buy,
Denwest II's fifty percent (50%) general partnership interest in Denwest II
Joint Venture, a Florida general partnership.
Corporation has agreed to make and deliver to Agent, pursuant to the
terms of this Agreement, a convertible debenture in the principal amount of Four
Million Four Hundred Thousand and No/100 Dollars ($4,400,000.00) in payment of
the purchase price for the general partnership interests of Denwest I and
Denwest II.
Midsouth I and Midsouth II are Affiliates of Denwest I and Denwest II
and currently hold shares of the common stock of Corporation and are executing
this Agreement for the sole purpose of joining in certain covenants contained in
paragraph 18 and paragraph 19 below.
As a condition of the purchase and sale of the real property and
general partnership interests referenced above, Agent has required and
Corporation has agreed that Corporation shall grant a security interest to Agent
in and to certain restaurant property interests of Corporation more particularly
described below.
NOW THEREFORE, for and in consideration of the mutual promises,
covenants and agreements hereinafter set forth and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. Definitions. For purposes of the Loan Documents (as defined below),
the following definitions shall apply unless the context otherwise requires
(such definitions to be equally applicable to both the singular and plural forms
of the terms defined):
(a) "Affiliate" or "affiliate" means
(i) any Person owning, directly or indirectly, more than ten
percent (10%) of the issued and outstanding stock of, or more than a ten percent
(10%) beneficial interest in, any of Agent, Midsouth I or Midsouth II;
(ii) any Person in which Agent, Midsouth I or Midsouth II owns,
directly or indirectly, more than ten percent (10%) of the issued and
outstanding stock or more than a ten percent (10%) beneficial interest;
(iii) any affiliate of the Persons named above in (a) and (b)
above, meaning any Person that owns more than ten percent (10%) of the issued
and outstanding stock of, or more than a ten percent (10%) beneficial interest
in, either of the Persons described in (a) or (b) above, or is owned by such
Persons according to the same thresholds; and
(iv) any agent, officer, director, employee, or partner (or any
member of the family of any agent, officer, director, employee or partner) of
Agent, or any of the Persons or affiliates of Persons as described in (a), (b)
or (c) above.
(b) "Agent" means CNL Growth Corp., a Florida corporation, and its
successors and assigns.
(c) "Agreement" means this Agreement (together with exhibits and
schedules referred to herein) as from time to time assigned, supplemented or
amended or as the terms hereof may be waived.
(d) "Business Day" means any day, other than a Saturday, Sunday or
legal holiday, on which banks in the State of Florida are open for business.
(e) "Collateral" has the meaning set forth in the paragraph 4
hereof.
(f) "Common Stock" has the meaning set forth in paragraph 3(a)
hereof.
(g) "Conversion Date" has the meaning set forth in paragraph 3(c)
hereof.
(h) "Conversion Shares" has the meaning set forth in paragraph 3(b)
hereof.
(i) "Corporation" means DenAmerica Corp., a Georgia corporation,
and its successors and assigns.
(j) "Debenture" has the meaning set forth in paragraph 2(a)
below.
(k) "Event of Default" has the meaning set forth in paragraph 12
hereof.
(l) "GAAP" means generally accepted accounting principles,
consistently applied.
(m) "Indebtedness" has the meaning set forth in paragraph 6(a)
hereof.
(n) "Lenders" has the meaning set forth in the preamble above.
(o) "Loan Documents" has the meaning set forth in paragraph 2(b)
hereof.
(p) "Material Adverse Effect" means a material adverse effect on
any of the following: (i) the operations, business, assets, properties or
condition of Corporation, (ii) the ability of Corporation to perform any of its
obligations under the Loan Documents, (iii) the legality, validity or
enforceability of the Loan Documents, or (iv) the rights and remedies of Agent
under the Loan Documents.
(q) "Maturity Date" has the meaning set forth in paragraph 3(a)
hereof.
(r) "Note" has the meaning set forth in paragraph 2(c) below.
(s) "Person" means an individual, corporation, limited liability
company, partnership, firm, association, joint venture, trust, unincorporated
organization, government, governmental body, agency, political subdivision or
other entity.
(t) "Potential Default" means a condition or event which, with
notice or lapse of time or both, would constitute an Event of Default.
(u) "Real Property" has the meaning set forth in paragraph 4 below.
(v) "Registration Rights Agreement" has the meaning set forth in
paragraph 2(b).
(w) "Securities Act" means the Securities Act of 1933, as amended,
and the rules, regulations and interpretations thereunder.
(x) "Security Interest" means the security interests granted by
Corporation to Agent pursuant to paragraph 4 hereof.
(y) "Threshold Amount" has the meaning set forth in paragraph 8(b)
hereof.
2. Issuance of Debenture and Note.
(a) Corporation agrees to issue, and of even date herewith has
issued, to Agent and, subject to the terms and conditions hereof and in reliance
upon the representations and warranties of Corporation contained herein or made
pursuant hereto, Agent agrees to accept from Corporation as payment for the sale
of the general partnership interests as described in the Background Information
above, a Debenture in the principal amount of Four Million Four Hundred Thousand
and No/100 Dollars ($4,400,000.00) (the "Debenture").
(b) Agent and each of the holders of any Conversion Shares shall
have certain registration rights set forth in a registration rights agreement by
and between Corporation and Agent of even date herewith (the "Registration
Rights Agreement"). This Agreement, the Debenture, the Note, the Registration
Rights Agreement and all other documents related thereto are sometimes
hereinafter referred to collectively as the "Loan Documents."
(c) Corporation agrees to issue, and of even date herewith has
issued, to Agent and, subject to the terms and conditions hereof and in reliance
upon the representations and warranties of Corporation contained herein or made
pursuant hereto, Agent agrees to accept from Corporation as payment for the sale
of the real property interests as described in the Background Information above,
a promissory note in the principal amount of Seven Million Seven Hundred
Thousand and No/100 Dollars ($7,700,000.00) (the "Note").
3. Conversion of the Debenture.
(a) At any time and from time to time during the period commencing
on the date hereof and ending on the date that is five years after the date
first written above (the "Maturity Date"), Agent may convert the entire
outstanding principal amount of the Debenture, or any portion thereof, into
fully paid and nonassessable shares of Corporation's $.10 par value per share
common stock ("Common Stock"), at the conversion rate provided for in paragraph
3(b) below. If Agent has not converted the entire principal amount of the
Debenture into Common Stock before the Maturity Date and, provided that no Event
of Default has occurred and continues to exist, then the entire remaining
principal balance then outstanding under the Debenture shall be converted into
Common Stock as of the Maturity Date. If an Event of Default has occurred and
continues to exist as of the Maturity Date, then the Maturity Date shall be
extended for forty five (45) days to allow Corporation an opportunity to cure
such Event of Default to the extent provided below.
(b) The number of shares of Common Stock that Agent shall receive
upon a conversion of all or a portion of the outstanding principal amount of the
Debenture (the "Conversion Shares") shall be determined by dividing the
principal amount being converted by ninety percent (90%) of the fair market
value of a share of Common Stock as of the Conversion Date. For purposes of this
paragraph 3(b), the fair market value of a share of Common Stock shall be
determined as follows:
(i) If the Common Stock is listed on a National Securities
Exchange or admitted to unlisted trading privileges on such exchange or approved
for quotation on the Nasdaq Stock Market, the fair market value shall be the
average per-share closing price for the ten (10) Business Days immediately
preceding the Conversion Date, on such exchange or market, as the case may be,
or if no sale of Common Stock is made on any of such days, the average of the
closing bid and asked prices for any such day on such exchange or market, as the
case may be, shall be used for the purposes of the calculation provided for in
this paragraph 3(b)(i); or
(ii) If the Common Stock is not so listed, admitted to unlisted
trading privileges or approved for quotation, the fair market value shall be the
average of the mean of the last reported bid and asked prices
(iii) reported by National Quotation Bureau, Inc. for the ten
(10) Business Days immediately preceding the Conversion Date; or
(iv) If the Common Stock is not so listed, admitted to unlisted
trading privileges or approved for quotation and bid and asked prices are not so
reported, the fair market value of a share of Common Stock as of the Conversion
Date as determined by an investment banking firm selected by Agent.
(c) To convert all of the remaining outstanding principal amount of
the Debenture, or any portion thereof, into Common Stock, Agent shall provide a
written notice to Corporation. Such written notice shall state the name or names
(with address) in which the certificate or certificates for shares of Common
Stock that shall be issuable on such conversion shall be issued as well as the
amount of the remaining outstanding principal amount of the Debenture. Each
conversion of a portion of the remaining outstanding principal balance of the
Debenture shall be deemed to have been made as of the date of such written
notice (the "Conversion Date"); provided, however, that if Agent has not
converted the Debenture as of the Maturity Date and no Event of Default has
occurred and is continuing as of such date, then the Maturity Date shall be the
Conversion Date.
(d) As promptly as practicable, but no later than twenty (20) days
after the Conversion Date, Corporation shall pay to Agent, by check, all accrued
and unpaid interest on the converted Debenture or any portion thereof converted
through the date of such payment, as well as the fair market value of any
fractional share as provided in paragraph 3(e) below.
(e) No fractional shares of, or scrip representing fractional
shares of, Common Stock shall be issued upon the conversion of any portion of
the remaining outstanding principal balance of the Debenture. Instead,
Corporation shall pay Agent an amount equal to the fair market value of such
fractional share of Common Stock in lieu of each fraction of a share otherwise
called for upon any conversion of a Debenture. For purposes of this paragraph
3(e), the fair market value of a share of Common Stock shall be determined as
provided in paragraph 3(b) above.
(f) At such time as the entire remaining principal amount
outstanding under the Debenture shall be paid in full or converted to Common
Stock, Agent shall surrender the Debenture, duly endorsed, at the principal
office of Corporation, or at such other place as Corporation may designate by
written notice to Agent.
4. Creation of Security Interest. To secure the performance and payment
of the obligations of Corporation under the Loan Documents, Corporation hereby
grants to Agent a present security interest in all of Corporation's right, title
and interest in and to all trade fixtures, furniture, furnishings, machinery,
equipment and other personal property, including, without limitation, those
items of personal property described on Exhibit A attached hereto and by this
reference made a part hereof, which are presently existing or located at or upon
the real property described on Exhibit B attached hereto and by this reference
made a part hereof (the "Real Property") including, without limitation, any and
all rights of Corporation as a lessee of any such items of personal property.
Corporation also grants to Agent a security interest in all of Corporation's
right, title and interest in and to any of such items of personal property
located at or upon the Real Property acquired by Corporation after the date
hereof including, without limitation, any and all rights as a lessee of any of
such items of personal property. All of such interests of Corporation in which
Corporation has granted to Agent a security interest under this paragraph 4, as
well as the items of personal property as to which such interests relate, are
hereinafter referred to as the "Collateral."
5. Leasehold Mortgages. To further secure the performance and payment
of the obligations of Corporation under the Loan Documents, Corporation grants
to Agent a present security interest in its leasehold interests in the parcels
of real property and leased restaurant sites described on Exhibit B attached
hereto. Corporation and Agent shall enter into a separate Leasehold Mortgage for
each such parcel of real property substantially in the form attached hereto as
Exhibit C and each such Leasehold Mortgage shall be recorded or filed in the
appropriate public records to provide record notice to all third persons.
Notwithstanding any term or covenant of the Leasehold Mortgages to the contrary,
the following provisions shall apply thereto:
(a) in the event of any conflict or ambiguity between any provision
of the Leasehold Mortgage and the provisions of this Agreement and any of the
other Loan Documents, the provisions hereof and of the Loan Documents other than
the Leasehold Mortgages shall control;
(b) in the event of any conflict or ambiguity between any provision
of the Leasehold Mortgages and the rights of and obligations of the Tenant to
the landlord under any lease encumbered thereby (herein an "Encumbered Lease"),
the provisions of the Encumbered Lease shall control; and
(c) without limiting the generality of the foregoing, absent an
Event of Default hereunder the landlord's insurance requirements under the
Encumbered Leases shall supercede any greater amount required under the Loan
Documents, and the Agent shall consent to the application of insurance and
condemnation proceeds for reconstruction of the leased premises consistent with
the requirements of each Encumbered Lease.
So long as and under the condition that no Event of Default exists hereunder, or
any event which with the giving of notice or passage of time could constitute an
Event of Default, then upon and in the event of the bona fide sale of the
Corporation's interest in any of the restaurant sites subject hereto to an
unaffiliated third party in an arm's length transaction, the Leasehold Mortgage
and all other security interests of the Agent hereunder encumbering such
restaurant site and personal property located thereat shall be released. No
release price shall be due, so long as the Corporation pays any costs incurred
by Agent in connection with any such release.
6. Corporation's Obligations. The obligations of Corporation to Agent,
the performance and payment of which are secured by this Security Agreement are
as follows:
(a) Obligation to Pay Indebtedness. Corporation shall pay to Agent
the sum or sums evidenced by, and in accordance with the terms of the Note, the
Debenture and all of the other Loan Documents (the "Indebtedness").
(b) Compliance with Agreements. Corporation shall execute all
documents, perform all acts, do all things and pay all sums on Corporation's
part to be executed, performed, done and paid pursuant to the terms and
provisions of each and every one of the covenants and agreements on its part
made in the Loan Documents.
7. Right to Discharge Corporation's Obligations. Agent may, at its
option, discharge taxes, liens, public charges or security interests or other
encumbrances at any time levied or placed on the Collateral which are or may
become superior to the security interest herein granted if the same are not
promptly discharged by Corporation, may remedy or cure any default of
Corporation under the terms hereof (after written notice and opportunity to cure
as provided below) or under the terms of any lease, rental agreement or other
document which in any way pertains to or affects Corporation's title to or
interest in any of the Collateral if such default is not promptly remedied or
cured by Corporation, may pay for insurance on the Collateral if the insurance
premiums due on any insurance maintained by Corporation on the Collateral is not
promptly paid by Corporation, and may pay for the maintenance and preservation
of the Collateral if an Event of Default exists and is continuing, and
Corporation agrees to reimburse Agent, upon five (5) days prior written notice,
for any payment made or any expense incurred by Agent pursuant to the foregoing
authorization, which payments and expenses, together with interest thereon at
the lesser of fourteen percent (14%) per annum or the highest rate allowed by
law, and reasonable attorney fees incurred by Agent in connection therewith,
shall be secured by the security intended to be afforded by this Agreement.
8. Representations and Warranties of Corporation. Corporation hereby
makes the following representations and warranties as of the date hereof for the
benefit of Agent and hereby acknowledges that Agent is relying on the truth and
accuracy of such representations and warranties in entering into this Agreement:
(a) Corporate Existence Power and Authority.
(i) Corporation is a corporation duly organized, validly
existing and in good standing under the laws of the State of Georgia, and is
duly qualified and authorized to do business and in good standing in each other
jurisdiction where the failure to be so qualified could reasonably be expected
to have a Material Adverse Effect.
(ii) No proceeding looking toward the dissolution or merger of
Corporation or the amendment of its Articles of Incorporation has been
commenced. Corporation is not in violation in any respect of its Articles of
Incorporation or Bylaws.
(iii)Corporation has all requisite corporate power, authority
and legal right to own or to hold under lease its properties and to conduct its
business as presently conducted.
(iv) Corporation has all requisite power, authority and legal
right to execute, deliver, enter into, consummate and perform each of the Loan
Documents including, without limitation, the issuance by Corporation of the Note
and the Debenture as contemplated herein. The execution, delivery and
performance of the Loan Documents (including, without limitation, the issuance
by Corporation of the Note and the Debenture as contemplated herein) have been
duly authorized by all required corporate and other actions. Corporation has
duly executed and delivered the Loan Documents, and the Loan Documents
constitute the legal, valid and binding obligations of Corporation, enforceable
in accordance with their terms, subject to the effect of any applicable
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting
creditors' rights generally and subject to the effect of general principals of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
(b) Stock Ownership. The authorized Common Stock of Corporation
consists of 40,000,000 shares of such common stock, par value $.10 per share, of
which 13,437,777 shares are presently issued and outstanding. All of
Corporation's issued and outstanding shares are duly authorized, validly issued
and fully paid and non-assessable. Except for the 13,437,777 shares of Common
Stock presently issued and outstanding, and except as set forth on Schedule 8(b)
attached hereto, Corporation has not issued any capital stock, options, rights
or convertible securities for an amount in excess of thirty percent (30%) of
Corporation's current market capitalization (the "Threshold Amount"). Except in
connection with the Debenture and except as set forth on Schedule 8(b) attached
hereto, Corporation is not a party to any agreements or commitments providing
for the issuance, transfer, disposition or acquisition of any of its capital
stock in amounts in excess of the Threshold Amount.
(c) No Conflicts or Defaults.
(i)No Event of Default or Potential Default has occurred and is
continuing.
(ii) Corporation is not in violation or default in any material
respect under any material indenture, agreement or instrument to which it is a
party or by which it or its properties may be bound.
(iii) None of the execution, delivery or performance by
Corporation of the Loan Documents or any of the transactions contemplated hereby
or thereby (including, without limitation, the issuance of the Note and the
Debenture as contemplated herein) (i) violates or conflicts with or will violate
or conflict with, in any material respect, with or without the giving of notice
or the passage of time or both, any provision of (A) the Articles of
Incorporation or Bylaws of Corporation or (B) any law, rule, regulation, order,
judgment, writ, injunction, decree, agreement, indenture or other instrument
applicable to Corporation or any of its properties (or to which Corporation is a
party or by which its properties may be bound), (ii) results or will result in
the creation of any security interest or lien upon any of Corporation's
properties, assets or revenues, other than the Security Interest created
hereunder, (iii) requires or will require the consent, waiver, approval, order
or authorization of, or declaration, registration, qualification or filing with,
any Person (whether or not a governmental authority and including, without
limitation, any shareholder approval) except as disclosed on Schedule 8(c)(iii)
attached hereto, all of which will have been obtained or made prior to the date
of this Agreement, or (iv) except as set forth on Schedule 8(b) attached hereto,
causes or will cause anti-dilution clauses of any outstanding securities to
become operative.
(d) Litigation. Except as disclosed on Schedule 8(d) attached
hereto, there is no action, suit, proceeding, investigation or claim pending or,
to the knowledge of Corporation, threatened in law, equity or otherwise before
any court, administrative agency or arbitrator which either (i) questions the
validity of any of the Loan Documents or any action taken or to be taken
pursuant hereto or thereto, or (ii) could reasonably be expected to have a
Material Adverse Effect, or (iii) if adversely determined, could reasonably be
expected to have a Material Adverse Effect.
(e) Taxes. Corporation has filed all federal, state, local and other
tax returns and reports required to be filed by it except to the extent that the
failure to so file could not be reasonably expected to have a Material Adverse
Effect. Corporation has paid or caused to be paid all taxes (including interest
and penalties) that are due and payable, except those which are being contested
by it in good faith by appropriate proceedings and in respect of which adequate
reserves are being maintained on its books in accordance with GAAP, and except
to the extent that the failure to pay any such taxes could not reasonably be
expected to have a Material Adverse Effect. Corporation has no material
liabilities for taxes other than those incurred in the ordinary course of
business and in respect of which adequate reserves are being maintained by it in
accordance with GAAP. No claims against Corporation have been made or, to
Corporation's knowledge, threatened by the U.S. government or any other taxing
agency, except such as have been paid.
(f) Legal Compliance.
(i) Corporation has, to its knowledge, complied in all material
respects with all applicable laws, rules, regulations, orders, licenses,
judgments, writs, injunctions, decrees or demands, except to the extent that
failure to so comply could not reasonably be expected to have a Material Adverse
Effect.
(ii) To Corporation's knowledge, there are no orders, judgments,
writs, injunctions, decrees or demands of any court or administrative body,
domestic or foreign, or of any other governmental agency or instrumentality,
domestic or foreign, outstanding against Corporation that could reasonably be
expected to have a Material Adverse Effect.
(g) Title to Collateral. Except as described on Schedule 8(g)
attached hereto, Corporation is the owner or lessor of the Collateral, free and
clear of all security interests or other encumbrances and claims of any kind or
nature in favor of any third person, other than the Security Interest.
(h) Use of Collateral. The Collateral is used, bought or leased for
use solely in business operations.
(i) Chief Executive Office. Corporation's chief executive office and
principal place of business is located at the address set forth on the first
page hereof.
(j) Properties. Certain real property used by Corporation in the
conduct of its business at the Restaurants is held under lease, and there is no
pending or, to the knowledge of Corporation, threatened claim or action by any
lessor of any such property to terminate any such lease that could reasonably be
expected to have a Material Adverse Effect.
9. Affirmative Covenants. Corporation covenants and agrees that so long
as any portion of the principal of the Debenture remains outstanding it will do
all of the following:
(a) promptly pay and discharge all lawful taxes, assessments, and
governmental charges or levies imposed upon Corporation or upon its income and
profits, or upon any of its property (including the Collateral), before the same
shall become in default, as well as all lawful claims for labor, materials and
supplies which, if unpaid, might become a lien or charge upon such properties or
any part thereof; provided, however, that Corporation shall not be required to
pay and discharge any such tax, assessment, charge, levy or claim so long as (a)
the validity thereof shall be contested in good faith by appropriate proceedings
and Corporation shall set aside on its books adequate reserves with respect to
any such tax, assessment, charge, levy or claim so contested, and (ii) the
failure to pay could not reasonably be expected to have a Material Adverse
Effect;
(b) do or cause to be done all things necessary to preserve and keep
in full force and effect its corporate existence, rights and franchises and
comply with all laws applicable to Corporation as its counsel may advise except
to the extent that the failure to keep any of such franchises in full force and
effect or to comply with such laws could not reasonably be expected to have a
Material Adverse Effect.
(c) at all times maintain, preserve, protect and keep its property
used or useful in the conduct of its business in good repair, working order and
condition, subject to ordinary wear and tear, and from time to time make all
needful and proper repairs, renewals, replacements, betterments and improvements
thereto, so that the business carried on in connection therewith may be properly
and advantageously conducted at all times;
(d) at all times keep true and correct books, records and accounts;
(e) maintain its corporate existence, rights and other franchises in
full force and effect; provided that Corporation may permit the termination or
abandonment of rights or other franchises if, in the reasonable opinion of
Corporation it is no longer in Corporation's best interests to maintain such
existence, rights or other franchises and such termination or abandonment will
not be prejudicial in any material respect to Agent;
(f) comply in all material respects with all applicable laws,
orders, rules, rulings, certificates, licenses, regulations, demands, judgments,
writs, injunctions and decrees; provided that such compliance shall not be
necessary so long as the failure to so comply could not reasonably be expected
to have a Material Adverse Effect;
(g) defend the Collateral against the claims and demands of all
other persons and keep the Collateral free and clear from all security
interests, liens and other encumbrances and claims of any kind or nature in
favor of any third persons except for those listed on Schedule 8(g) attached
hereto and except for the Security Interest;
(h) keep in accordance with generally accepted accounting
principles, consistently applied, accurate and complete records concerning the
Collateral; xxxx such records and, upon reasonable prior written request of
Agent made from time to time, permit Agent or its agents to inspect the
Collateral and Corporation's records concerning the Collateral and to audit and
make abstracts of such records or any of Corporation's books, ledgers, reports,
correspondence and other records during normal business hours;
(i) notify Agent in writing at least thirty (30) days in advance of
any of the following: any change in Corporation's name; any change in
Corporation's address set forth on the first page hereof; any change in the
location, or of any additional locations, at which the Collateral is kept; any
change in the address at which records concerning the Collateral are kept; and
any change in the location of Corporation's chief executive office or principal
place of business;
(j) execute and deliver to Agent such financing statements and other
documents reasonably requested by Agent and take such other action as Agent may
reasonably deem advisable (i) to perfect, protect or continue the perfection of
the Security Interest including, without limitation, obtaining appropriate
landlord's and mortgagee's waivers, and (ii) to otherwise effect the purposes of
this Agreement;
(k) use the Collateral in the conduct of Corporation's operation of
restaurants at the Real Property, unless Agent consents in writing to another
use or to another location;
(l) keep the Collateral at all times insured against loss, damage,
theft and such other risks in such amounts, with such companies, under such
policies (the originals or certified copies of which, together with renewals
thereof and receipts evidencing the payment of the premium therefor, shall be
deposited with and held by Agent) in such form and for such periods as shall be
reasonably required by Agent, and each such policy shall provide for not less
than thirty (30) days prior written notice of expiration or cancellation to
Agent and shall further provide that the loss thereunder and the proceeds
payable thereunder shall be payable to Agent, pursuant to a non-contributing
loss payable clause, as Agent's interest may appear, and Agent shall apply any
proceeds of such insurance which may be received by Agent toward the
restoration, repair or replacement of the Collateral unless an Event of Default
has occurred and is continuing in which event Agent, at its option, may apply
such proceeds toward the payment of Corporation's obligations under the Note and
the Debenture, whether due or not due, in such order as Agent may determine;
(m) keep the Collateral located at the site of the Restaurants where
the Collateral is presently located, except for its temporary removal for
maintenance or repair in connection with its ordinary use or unless Corporation
notifies Agent in writing and Agent consents in writing in advance of its
removal to another location, except that Corporation shall be entitled to
dispose of such of the Collateral as may become unfit for continued use provided
Corporation replaces such unfit Collateral with fit Collateral of similar kind
and for like use and provided the purchase price of such replacement Collateral
be paid in full at the time of such replacement and provided that the security
interest and lien granted to Agent in this Security Agreement shall continue to
be effective upon and with respect to such replacement Collateral;
(n) retain the Collateral in its control, keep the Collateral in
good condition and repair and not use the Collateral in violation of any
provisions of this Agreement, of any applicable statute, rule, regulation or
ordinance, any order binding Corporation or of any policy of insurance insuring
the Collateral; and
(o) prevent the Collateral or any part thereof from being an
accession to other goods or property not covered by this Agreement.
10. Negative Covenants. Corporation further covenants and agrees that
it shall not take any of the following actions without the prior written consent
of Agent, which consent shall not be unreasonably withheld by Agent:
(a) amend or alter any provision of Corporation's Articles of
Incorporation in any way that could reasonably be expected to have a Material
Adverse Effect;
(b) change or alter the nature of Corporation's business or any
major business activity or the purpose of Corporation in any way that could
reasonably be expected to have a Material Adverse Effect, or divest any major
business activity or activities of Corporation unless all successor owners of
any such business activity shall guarantee the Indebtedness under instruments
reasonably acceptable to Agent;
(c) sell, lease, exchange or distribute all or any substantial
portion of the property and assets of Corporation unless any such successor
owner thereof shall guarantee the Indebtedness under instruments reasonably
acceptable to Agent;
(d) undertake the dissolution of Corporation, any acquisition of
another entity for consideration paid by Corporation in excess of the Threshold
Amount, or any merger, consolidation, division, amalgamation of Corporation or
any spin-off, split-off or split-up by Corporation, unless any and all successor
entities of and to the Corporation shall guarantee the Indebtedness under
instruments reasonably acceptable to Agent;
(e) undertake any action in connection with Corporation's
appointment of a receiver, custodian, trustee or liquidator; admission of
inability to pay debts; assignment for the benefit of creditors; commencement of
any bankruptcy, insolvency, reorganization, winding-up or omposition or
adjustment of debt; or any action for the purposes of effecting the foregoing;
(f) except as provided under the release provisions of paragraph 5
hereinabove, pledge, sell, transfer, assign, lease or otherwise dispose of any
of the Collateral or any interest therein or offer to do so without the prior
written consent of Agent, which consent shall not be unreasonably withheld, or
permit anything to be done that may impair the value of any of the Collateral or
the security intended to be afforded by this Agreement;
(g) misuse, waste or allow the Collateral to deteriorate, except for
ordinary wear and tear resulting from its intended primary use; or
(h) use the Collateral in violation of any statute or ordinance.
11.Replacement of the Debenture. Upon receipt by Corporation of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of the Debenture and, in the case of any such loss, theft or
destruction, upon delivery of an indemnity agreement or sufficient indemnity
bond reasonably satisfactory to Corporation (if requested by Corporation), or in
the case of any such mutilation, upon surrender and cancellation of the
Debenture, Corporation shall execute and deliver a new Debenture of like tenor
in lieu of such lost, stolen, destroyed or mutilated Debenture as if the lost,
stolen, destroyed or mutilated Debenture were then surrendered for exchange.
12.Default. If any of the following events (each herein called an
"Event of Default") shall occur and be continuing:
(a) If Corporation shall default in the payment of any part of the
principal of or accrued interest on the Note or the Debenture when the same
shall become due and payable, whether at maturity or by acceleration or
otherwise, and such default in the payment of principal or interest shall have
continued for ten (10) days after Corporation's receipt of written notice
thereof from Agent; or
(b) If Corporation shall default in the performance of any agreement
or covenant in any of the Loan Documents and such default shall not have been
remedied within thirty (30) days after Corporation's receipt of written notice
thereof from Agent (provided that if such default cannot reasonably be cured
within such thirty (30) day period, then Borrower shall have up to an additional
thirty (30) days to cure such default as long as Borrower is proceeding at all
times with due diligence to cure such default); or
(c) If any representation or warranty by Corporation herein or in
any certificate delivered pursuant hereto shall prove to have been incorrect in
any material respect when made; or
(d) If a final judgment which, either alone or together with other
outstanding final judgments against Corporation, exceeds the Threshold Amount
shall be rendered against Corporation and such judgment shall have continued
undischarged or unstayed for thirty (30) days after entry thereof; or
(e) If Corporation shall make an assignment for the benefit of
creditors, or shall admit in writing its inability to pay its debts; or if a
receiver or trustee shall be appointed for Corporation or for substantially all
of its assets and, if appointed without its consent, such appointment is not
discharged or stayed within ninety (90) days; or if proceedings under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors are
instituted by or against Corporation, and, if contested by it, are not dismissed
or stayed within one hundred and twenty (120) days; or if any writ of attachment
or execution or any similar process is issued or levied against Corporation or
any significant part of its property and is not released, stayed, bonded or
vacated within ninety (90) days after its issue or levy; or if Corporation takes
corporate action in furtherance of any of the foregoing; or then and in each
such event Agent may at any time (unless all Events of Default shall theretofore
have been remedied) at its option, by written notice to Corporation, declare the
entire unpaid principal amount of the Note and/or the Debenture to be due and
payable, whereupon the same shall forthwith mature and become due and payable,
together with interest accrued thereon, without presentment, demand, protest or
further notice, all of which are hereby waived and any obligation of Agent to
convert the remaining outstanding principal balance of the Debenture upon the
Maturity Date shall terminate.
13. Remedies.
(a) In case any one or more Events of Default shall occur and be
continuing, Agent may proceed to protect and enforce its rights by an action at
law, suit in equity or other appropriate proceeding, whether for the specific
performance of any agreement contained herein or in any of the other Loan
Documents, or for an injunction against a violation of any of the terms hereof
or thereof, or in aid of the exercise of any power granted hereby or thereby or
by law or for any other remedy (including, without limitation, damages).
(b) Agent shall have all of the rights and remedies of a secured
party under the Uniform Commercial Code as enacted in the State of Florida and
under any other applicable law from time to time in effect. Agent shall also
have any additional rights and remedies granted herein and in any other
agreement now or hereafter in effect between Corporation and Agent or otherwise
granted by law or equity. If requested by Agent, Corporation will assemble the
Collateral and make it available to Agent at a place to be designated by Agent.
All rights and remedies of Agent under this Agreement, the Uniform Commercial
Code, or otherwise shall be cumulative and exercisable concurrently or
consecutively or in the alternative, at Agent's option. Without limiting the
generality of the foregoing, Corporation expressly agrees that, after an Event
of Default and provided that Corporation has not cured such Event of Default,
Agent may (i) lawfully enter any premises where any Collateral may be without
judicial process and take possession of the Collateral, and (ii) sell, lease or
otherwise dispose of any or all of the Collateral.
(c) In case of a default in the payment of any principal or interest
on the Note or the Debenture, Corporation will pay to Agent thereof, in addition
to any principal and interest otherwise required, such further amount as shall
be sufficient to cover any and all costs and expenses of enforcement and
collection, including, without limitation, reasonable attorney fees, expenses
and disbursements. No course of dealing and no delay on the part of Agent in
exercising any rights or remedies shall operate as a waiver thereof or otherwise
prejudice such Agent's rights. No right or remedy conferred hereby or by any of
the other Loan Documents shall be exclusive of any other right or remedy
referred to herein or therein or available at law, in equity, by statute or
otherwise.
(d) Agent shall, in addition to other remedies provided by law, have
the right and remedy to have the provisions of this Agreement specifically
enforced by any court having equity jurisdiction, it being acknowledged and
agreed that any breach or threatened breach of the provisions of this Agreement
will cause irreparable injury to Agent and that money damages will not provide
an adequate remedy. Nothing contained herein shall be construed as prohibiting
Agent from pursuing any other remedies available to it for such breach or
threatened breach, including the recovery of damages from Corporation.
14. Restrictions on Transfer. Agent agrees that it will not sell or
otherwise dispose of the Debenture unless (i) the Debenture has been registered
under the Securities Act, or (ii) the Debenture is sold in accordance with the
applicable requirements and limitations of Rule 144 under the Securities Act (or
any successor rule, regulation or statute to Rule 144), or (iii) Corporation has
been furnished with an opinion or opinions reasonably satisfactory to
Corporation's counsel to the effect that registration under the Securities Act
is not required for the transfer as proposed (which opinion may be conditioned
upon the transferee's assuming the obligations of Agent under this paragraph 14)
or (iv) Corporation has been furnished with a letter from the Division of
Corporate Finance of the Securities Exchange Commission to the effect that such
Division would not recommend any action to the Securities Exchange Commission if
such proposed transfer were effected without a registration statement effective
under the Securities Act. Corporation agrees that within ten (10) Business Days
after receipt of any opinion referred to in (iii) above, it will notify Agent
whether such opinion is satisfactory to Corporation. Agent will promptly give
notice to Corporation of any transfer by it of the Debenture.
15. Payments. Corporation shall make payments of principal and interest
on the Note and the Debenture by check or checks payable to the order of Agent
or other registered holder of the Debenture, directly or to the separate Lenders
in amounts designated by Agent, duly mailed or delivered to Agent at its address
as set forth on the first page hereof, or at such other address as Agent (or
Agent's successor or assign) may designate in writing, or, at the option of
Corporation, by wire transfer to the account(s) of such Person(s) at any bank or
trust company in the United States of America. All such payments shall be made
in lawful money of the United States of America.
16. Reservation of Shares. Corporation will at all times reserve for
issuance and delivery upon conversion of the Debenture all Conversion Shares.
All such Conversion Shares shall be duly authorized and, when issued upon such
conversion, shall be validly issued, fully paid and nonassessable and free of
all preemptive rights.
17. Redemption. Corporation may at any time prepay in whole or in part,
without any prepayment premium, penalty or fee whatsoever, the remaining
outstanding principal amount plus accrued interest to the date of prepayment of
the Debenture. Corporation shall give Agent at least thirty (30) days prior
written notice (the "Redemption Notice") specifying the date of redemption (the
"Redemption Date"). The portion of the remaining outstanding principal balance
of the Debenture that is the subject of the Redemption Notice shall become due
and payable on the Redemption Date specified in such notice and from and after
Agent's receipt of payment, interest on such Debenture shall cease to accrue.
After its receipt of a Redemption Notice hereunder, Agent may exercise its
conversion rights under paragraph 3 above as to any portion of the remaining
outstanding principal amount of the Debenture including the portion thereof to
be redeemed by Corporation pursuant to the Redemption Notice.
18. Lock-Out Provisions. During the ninety (90) consecutive days after
Agent, Midsouth I or Midsouth II or any of their respective Affiliates sells any
Common Stock, Agent may not exercise its right to convert all or any portion of
the remaining outstanding principal amount of the Debenture pursuant to
paragraph 3 above. Furthermore, each of Agent, Midsouth I, Midsouth II and their
respective Affiliates agree not to sell any Common Stock during the ninety (90)
consecutive days immediately prior to the Maturity Date if any of the principal
amount of the Debenture (after reductions for all Conversion Notices given to
Corporation) remains outstanding. The provisions of this paragraph 18 above
shall be terminated and of no force or effect as of the date of any notice given
pursuant to paragraph 3(c) above to convert the entire remaining outstanding
principal balance of the Debenture.
19. Private Placement Rights.
(a) If any of Agent, Midsouth I, Midsouth II or any of their
respective Affiliates intends to sell any Common Stock, such Person (the
"Selling Shareholder") shall notify Corporation in writing of the intended sale
and the number of shares of Common Stock to be sold and, if applicable, any
agreed-upon price at which Selling Shareholder has offered to sell such shares.
For a period of five (5) Business Days after its receipt of such written notice,
Corporation shall have the right to redeem or privately place such Common Stock
at a sales price that is no less than the value of the fair market value of such
Common Stock on the notice date or specified price. If Corporation does not
privately place or release such Common Stock within such five (5) day period,
then the Selling Shareholder shall be free for a period of thirty (30) days
thereafter to sell such Common Stock .
(b) Any of Agent, Midsouth I, Midsouth II or any of their respective
Affiliates may not pledge any of their Common Stock unless the pledgee of such
Common Stock agrees in writing that if such pledgee ever intends to sell such
stock to recover amounts owed to such pledgee, then such pledgee shall give
written notice of such fact to Corporation and Corporation shall have the right,
for five (5) Business Days after its receipt of such notice, to privately place
such Common Stock at such Common Stock's fair market value on the date of such
private placement. Midsouth I and Midsouth II shall use good faith efforts to
obtain such an undertaking from any current pledgee of Common Stock held by
them, if any.
(c) For purposes of this paragraph 19, the fair market value of
Common Stock shall be the number of shares of Common Stock to be privately
placed multiplied by the fair market value of a share of Common Stock as
determined under paragraph 3(b) above except that in the case of paragraph
3(b)(i) such fair market value shall be the per-share closing price on the day
immediately prior to the private placement, and in the case of paragraph
3(b)(ii) such fair market value shall be the mean of the last reported bid and
asked prices reported by the National Quotation Bureau, Inc. on the day of the
private placement.
20. Payment of Existing Debt. As described in the Background
Information hereinabove, Corporation has agreed to sell the real property
described in such Background Information to CNL-BB Corp, a Florida corporation.
Further, Corporation has agreed to sell the personal property previously owned
by the general partnerships described in the Background Information above to CNL
American Properties Fund, Inc., a Maryland corporation. Corporation hereby
covenants and agrees that it will use all of the proceeds of such sales (after
the payment of reasonable expenses of Corporation incurred in connection
therewith and in connection with certain related transactions as well as any and
all outstanding legal fees and costs of Corporation's legal counsel), to pay
down the outstanding balance of the loan to Corporation from the group of
lenders represented by Banque Paribas, a French corporation, as agent.
21. Notices. Unless otherwise expressly specified or permitted by the
terms hereof, all notices, requests, demands, consents and other communications
hereunder or with respect to any of the Loan Documents shall be in writing and
shall be delivered or shall be sent, postage prepaid, by registered or certified
U.S. mail, return receipt requested, or by reputable registered overnight
courier service, to the following addresses:
(a) If to Agent or its nominee, at its address as set forth on the
first page hereof, or at such other address as may have been furnished to
Corporation by such Agent in writing; or
(b) If to any other holder of the Debenture, at such address as the
payee or registered holder thereof shall have designated to Corporation by a
written notice stating that such holder has acquired the Debenture and
designating such address; or
(c) If to Corporation, at the address set forth on the first page
hereof or at such other address as may have been furnished in writing by
Corporation to Agent, with a copy to Xxxxxxx X. Xxxxxx, Esquire, X'Xxxxxx
Cavanagh, Anderson, Killinsworth & Xxxxxxxx, P.A., Xxx Xxxx Xxxxxxxxx Xxxx,
Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000-0000.
Whenever any notice is required to be given hereunder, such notice
shall be deemed received (if not sooner actually received) three (3) days after
being placed in the U.S. mail or the day after being delivered to a reputable
registered overnight courier service.
22. Miscellaneous.
(a) Notice. Corporation agrees that any notice by Agent of the sale,
lease or other disposition of the Collateral or any other intended action
hereunder, whether required by the Uniform Commercial Code or otherwise, shall
constitute reasonable notice to Corporation if the notice is provided in the
manner set forth in paragraph 21 hereof at least ten (10) days before the date
of any public sale, lease or other disposition of the Collateral, or the time
after which any private sale, lease or other disposition of the Collateral is to
take place.
(b) Perfection of Security Interests. Corporation agrees to
cooperate with Agent as to the execution and filing of any financing statement
or statements relating to the Collateral (with or without Corporation's
signature thereon), and to take any other action deemed necessary or appropriate
by Agent to perfect and to continue perfection of the Security Interest.
(c) Right to Proceeds. After an Event of Default and provided that
Corporation has not cured such Event of Default, Agent may demand, collect, and
xxx for all proceeds of the Collateral (either in Corporation's or Agent's name
at the latter's option) with the right to enforce, compromise, settle, or
satisfy any claim and, in connection therewith, Corporation hereby irrevocably
appoints Agent as Corporation's attorney-in-fact to endorse, by writing or
stamp, Corporation's name on all checks, commercial paper, and other instruments
pertaining to the proceeds. Such appointment is binding and coupled with an
interest. After an Event of Default and provided that Corporation has not cured
such Event of Default, Corporation also authorizes Agent to collect and apply
against the Indebtedness any refund of insurance premiums or any insurance
proceeds payable on account of the loss of or damage to any of the Collateral
and hereby irrevocably appoints Agent as Corporation's attorney-in-fact to
endorse, by writing or stamp, any check or draft representing such proceeds or
refund. Such appointment is binding and coupled with an interest. After an Event
of Default and provided that Corporation has not cured such Event of Default,
Agent may notify any party obligated to pay proceeds of the Collateral of the
existence of the Security Interest and may also direct them to pay all such
proceeds to Agent.
(d) Confidentiality. Agent shall not disclose, divulge or
communicate any financial information of Corporation received by Agent from
Corporation under the terms of this Agreement to any other person or persons
(other than Agent's officers, directors, employees, agents, legal counsel and
affiliates), except as may be required by law.
(e) Entire Agreement. The Loan Documents contain the entire
agreement among Agent and Corporation with respect to the indebtedness
represented by the Note and the Debenture, and supersede any prior oral or
written agreements, commitments, terms or understandings, regarding the subject
matter hereof.
(f) Survival. All agreements, representations and warranties
contained in the Loan Documents shall survive, and shall continue in effect
following, the execution and delivery of the Loan Documents, any investigation
at any time made by Agent or on its behalf or by any other Person, and the
issuance, sale and delivery of the Debenture and any disposition thereof;
provided, however, that such agreements (including, without limitation, the
security agreement contained herein), representations and warranties will
terminate upon Corporation's full payment of all amounts due to Agent under the
Loan Documents. All statements contained in any certificate or other document
delivered by or on behalf of Corporation pursuant hereto shall constitute
representations and warranties by Corporation hereunder.
(g) Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument, and all signatures need not appear on any one
counterpart.
(h) Headings. The headings and captions in this Agreement are for
convenience of reference only and shall not define, limit or otherwise affect
any of the terms or provisions hereof.
(i) Binding Effect and Assignment. The terms of this Agreement shall
be binding upon, and inure to the benefit of, the parties and their respective
successors and assigns whether so expressed or not. Corporation may not assign
any of its obligations, duties or rights under this Agreement, or under any of
the other Loan Documents. In addition to any assignment by operation of law,
except as otherwise set forth in this Agreement and the other Loan Documents,
Agent may assign, in whole or in part, any or all of its rights under this
Agreement or under the Debenture issued hereunder to any Person and any such
assignment shall not diminish the rights such Agent would otherwise have under
this Agreement or with respect to any remaining Debenture held by it.
(j) Severability. Any provision hereof or of the Note or the
Debenture issued hereunder which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or thereof, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
(k) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Florida (other than any
conflict of laws rule which might result in the application of the laws of any
other jurisdiction).
(l) Jurisdiction and Venue.
(i) Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any Florida court or federal court of the United States of
America sitting in Orlando, Florida, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to any of the Loan
Documents, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in any such
Florida court or, to the extent permitted by law, in such federal court. Each of
the parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
(ii) Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue or any suit,
action or proceeding arising out of or relating to any of the Loan Documents in
any Florida State or federal court. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.
(iii) Each of the parties hereto hereby irrevocably waives all
right to trial by jury in any action, proceeding or counterclaim (whether based
on contract, tort or otherwise) arising out of or relating to any of the Loan
Documents or the actions of the Agent in the negotiation, administration,
performance or enforcement thereof.
IN WITNESS WHEREOF, the parties have caused these presents to be
executed as of the day and year first above written.
DENAMERICA CORP., a Georgia
corporation
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: SR VICE PRESIDENT
(CORPORATE SEAL) "Corporation"
CNL GROWTH CORP., a Florida
corporation
By:____________________________
Name:__________________________
Title:_________________________
(CORPORATE SEAL) "Agent"
MIDSOUTH FOODS I, LTD., a
Florida limited partnership
By: CNL Growth Partners, Inc.,
a Florida corporation,
General Partner
By:________________________
Name:______________________
Title:_____________________
(CORPORATE SEAL) "Midsouth I"
MIDSOUTH FOODS II, LTD., a
Florida limited partnership
By: CNL Growth Partners, Inc.,
a Florida corporation,
General Partner
By:________________________
Name:______________________
Title:_____________________
(CORPORATE SEAL)
"Midsouth II"
