Exhibit 10.4 $1,750,000 Equipment Loan and Security Agreement dated
December 31, 2002 between TW Real Estate II, LLC and GE
Capital Franchise Finance Corporation
EQUIPMENT LOAN AND SECURITY AGREEMENT
THIS EQUIPMENT LOAN AND SECURITY AGREEMENT (this "Agreement") is made
as of December 31, 2002 (the "Closing Date"), by and between GE CAPITAL
FRANCHISE FINANCE CORPORATION, a Delaware corporation ("Lender"), and TW REAL
ESTATE II, LLC, a Delaware limited liability company ("Borrower").
AGREEMENT:
In consideration of the mutual covenants and provisions of this
Agreement, the parties agree as follows:
1. Definitions. The following terms shall have the following meanings
for all purposes of this Agreement:
"Affiliate" means any Person which directly or indirectly controls, is
under common control with, or is controlled by any other Person. For purposes of
this definition, "controls," "under common control with" and "controlled by"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through
ownership of voting securities or otherwise.
"Anti-Money Laundering Laws" means all applicable laws, regulations and
government guidance on the prevention and detection of money laundering,
including 18 U.S.C. ss. ss. 1956 and 1957, and the BSA.
"Applicable Regulations" means all applicable statutes, regulations,
rules, ordinances, codes, licenses, permits, orders and approvals of each
Governmental Authority having jurisdiction over the Equipment, including,
without limitation, all health, building, fire, safety and other codes,
ordinances and requirements, and all policies or rules of common law, in each
case, as amended, and any judicial or administrative interpretation thereof,
including any judicial order, consent, decree or judgment applicable to any of
the Borrower Parties.
"Borrower Parties" means, collectively, Borrower and any guarantors of
the Equipment Loan (including, in each case, any predecessors-in-interest).
"BSA" means the Bank Secrecy Act (31 X.X.X.xx.xx. 5311 et. seq.), and
its implementing regulations, Title 31 Part 103 of the U.S. Code of Federal
Regulations.
"Business Day" means any day on which Lender is open for business other
than a Saturday, Sunday or a legal holiday, ending at 5:00 P.M. Phoenix, Arizona
time.
"Change of Control" means a change in control of any of the Borrower
Parties, including, without limitation, a change in control resulting from
direct or indirect transfers of voting stock or partnership, membership or other
ownership interests, whether in one or a series of transactions. For purposes of
this definition, "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of any of
the Borrower Parties, as applicable, and a Change of Control will occur if any
of the following occur: (i) any merger or consolidation by any of the Borrower
Parties, as applicable, with or into any other entity; or (ii) if any "Person"
as defined in Section 3(a)(9) of the Securities and Exchange Act of 1934, as
amended (the "Exchange Act"), and as used in Section 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d) of the Exchange Act, subsequent
to the Closing, becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), of securities of any of the Borrower Parties, as applicable,
representing 50% or more of the combined voting power of Borrower's then
outstanding securities (other than indirectly as a result of the redemption by
any of the Borrower Parties, as applicable, of its securities).
"Closing" means the disbursement of the Equipment Loan as contemplated
by this Agreement.
"Code" means Title 11 of the United States Code, 11 U.S.C. Sec. 101 et
seq., as amended.
1
"Default Rate" has the meaning set forth in the Equipment Note.
"Entity" means any entity that is not a natural person.
"Equipment" means all furniture, equipment, trade fixtures, appliances
and other tangible personal property now or hereafter located on or at the
Premises, and all income therefrom and all proceeds thereof.
"Equipment Leases" means, collectively, any leases or other agreements
relating to the use of the Equipment in which Borrower is the lessor, whether
existing on the Closing Date or thereafter entered into, and, including, without
limitation, the Master Lease.
"Equipment Loan" means the equipment loan by Lender to Borrower with
respect to the Equipment at all of the Premises in the amount of $1,750,000.00.
"Equipment Note" means the equipment promissory note dated as of the
Closing Date in the amount of the Equipment Loan executed by Borrower in favor
of Lender evidencing the Equipment Loan, as the same may be amended from time to
time.
"Event of Default" has the meaning set forth in Section 7.
"Fee" means an underwriting, equipment assessment, valuation,
processing and commitment fee equal to 1% of the amount of the Equipment Loan.
"GAAP" means generally accepted accounting principles consistently
applied.
"Governmental Authority" means any governmental authority, agency,
department, commission, bureau, board, instrumentality, court or
quasi-governmental authority having jurisdiction or supervisory or regulatory
authority over the Equipment or any of the Borrower Parties.
"Landlord's Agreements Regarding Equipment" has the meaning set forth
in Section 2(c)(vi).
"Leases" means, collectively, those leases relating to the Leased
Premises and all modifications, amendments and supplements thereto disclosed in
the Landlord's Agreements Regarding Equipment delivered with respect thereto.
"Lessors" means the lessors under the Leases.
"Leased Premises" means those Premises other than the Mortgaged
Premises, as identified on Schedule I hereto.
"Lender Entities" means, collectively, Lender (including any
predecessor-in-interest to Lender) and any Affiliate of Lender (including any
Affiliate of any predecessor-in-interest to Lender).
"Lessee" means Tumbleweed, Inc., a Delaware corporation, and its
successors.
"Lessee Parties" means, collectively, Lessee and any guarantors of the
Master Lease (including, in each case, any predecessors-in-interest).
"Letter of Credit" means an irrevocable standby letter of credit in the
amount of $779,628.00 to be issued to Lender in a form and by a financial
institution acceptable to Lender.
2
"Loan Agreement" means that certain Loan Agreement dated as of the
Closing Date between Borrower and Lender with respect to mortgage loans to be
made by Lender to Borrower and secured by first priority liens on the Mortgaged
Premises, as the same may be amended from time to time.
"Loan Documents" means, collectively, this Agreement, the Equipment
Note, the UCC-1 Financing Statements, the Renovation Agreement, the Landlord's
Agreements Regarding Equipment and all other documents, instruments and
agreements executed in connection therewith or contemplated thereby.
"Loan Pool" means:
(i) in the context of a Securitization, any pool
or group of loans that are a part of such Securitization;
(ii) in the context of a Transfer, all loans
which are sold, transferred or assigned to the same
transferee; and
(iii) in the context of a Participation, all loans as
to which participating interests are granted to the same
participant.
"Master Lease" means the master lease between Borrower, as lessor, and
Lessee, as lessee, with respect to the Mortgaged Premises and the Equipment,
together with all amendments, modifications and supplements thereto.
"Material Adverse Effect" means a material adverse effect on (i) the
Equipment, in the aggregate, located at any of the Premises, including without
limitation, the use of such Equipment in the operation of a Permitted Concept,
or (ii) Borrower's ability to perform its obligations under the Loan Documents.
"Mortgage Loan Documents" means the "Loan Documents" as defined in the
Loan Agreement.
"Mortgage Loans" means the "Loans" as defined in the Loan Agreement.
"Mortgage Notes" means the "Notes" as defined in the Loan Agreement.
"Mortgaged Premises" means the "Premises" as defined in the Loan
Agreement.
"Obligations" has the meaning set forth in Section 3 hereof.
"OFAC Laws and Regulations" means Executive Order 13224 issued by the
President of the United States of America, the Terrorism Sanctions Regulations
(Title 31 Part 595 of the U.S. Code of Federal Regulations), the Terrorism List
Governments Sanctions Regulations (Title 31 Part 596 of the U.S. Code of Federal
Regulations), the Foreign Terrorist Organizations Sanctions Regulations (Title
31 Part 597 of the U.S. Code of Federal Regulations), and the Cuban Assets
Control Regulations (Title 31 Part 515 of the U.S. Code of Federal Regulations),
and all other present and future federal, state and local laws, ordinances,
regulations, policies, lists (including, without limitation, the Specially
Designated Nationals and Blocked Persons List) and any other requirements of any
Governmental Authority (including, without limitation, the United States
Department of the Treasury Office of Foreign Assets Control) addressing,
relating to, or attempting to eliminate, terrorist acts and acts of war, each as
hereafter supplemented, amended or modified from time to time, and the present
and future rules, regulations and guidance documents promulgated under any of
the foregoing, or under similar laws, ordinances, regulations, policies or
requirements of other states or localities.
"Other Agreements" means, collectively, all agreements and instruments
between, among or by (1) any of the Borrower Parties, Related Borrower and/or
any Affiliate of any of the Borrower Parties or Related Borrower (including any
Affiliate of any predecessor-in-interest to any of the Borrower Parties or
Related Borrower), and, or for the benefit of, (2) any of the Lender Entities,
including, without limitation, the Loan Agreement, the Related Loan Agreement,
the Related Equipment Loan Agreement, promissory notes and guaranties; provided,
however, the term "Other Agreements" shall not include the agreements and
instruments defined as the Loan Documents.
3
"Participation" means one or more grants by Lender or any of the other
Lender Entities to a third party of a participating interest in notes evidencing
obligations to repay secured or unsecured loans owned by Lender or any of the
other Lender Entities or any or all servicing rights with respect thereto.
"Permitted Concept" means a Tumbleweed restaurant.
"Person" means any individual, corporation, partnership, limited
liability company, trust, unincorporated organization, Governmental Authority or
any other form of entity.
"Premises" means the parcel or parcels of real estate corresponding to
the FFC Numbers and addresses identified on Exhibit A attached hereto, together
with all rights, privileges and appurtenances associated therewith and all
buildings, fixtures and other improvements now or hereafter located thereon
(whether or not affixed to such real estate). As used herein, the term
"Premises" shall mean either a singular property or all of the properties
collectively, as the context may require.
"Related Borrower" means TW Real Estate I, LLC, a Delaware limited
liability company.
"Related Equipment Loan Agreement" means that certain Equipment Loan
and Security Agreement dated as of the Closing Date between Lender and Related
Borrower, as the same may be amended from time to time.
"Related Equipment Note" means the "Equipment Note" as defined in the
Related Equipment Loan Agreement.
"Related Loan Agreement" means the Loan Agreement dated as of the
Closing Date between Related Borrower and Lender, as the same may be amended
from time to time.
"Related Mortgage Notes" means the "Notes" as defined in the Related
Loan Agreement.
"Renovation Agreement" means the renovation agreement dated as of the
Closing Date between Borrower and Lender with respect to the Letter of Credit
and Borrower's obligations to upgrade the Equipment, as the same may be amended
from time to time.
"Securitization" means one or more sales, dispositions, transfers or
assignments by Lender or any of the other Lender Entities to a special purpose
corporation, trust or other entity identified by Lender or any of the other
Lender Entities of notes evidencing obligations to repay secured or unsecured
loans owned by Lender or any of the other Lender Entities (and, to the extent
applicable, the subsequent sale, transfer or assignment of such notes to another
special purpose corporation, trust or other entity identified by Lender or any
of the other Lender Entities), and the issuance of bonds, certificates, notes or
other instruments evidencing interests in pools of such loans, whether in
connection with a permanent asset securitization or a sale of loans in
anticipation of a permanent asset securitization. Each Securitization shall be
undertaken in accordance with all requirements which may be imposed by the
investors or the rating agencies involved in each such sale, disposition,
transfer or assignment or which may be imposed by applicable securities, tax or
other laws or regulations.
"Substitute Documents" has the meaning set forth in Section 10.
"Substitute Equipment" means furniture, equipment, trade fixtures,
appliances and other tangible personal property substituted for the Equipment
located at a Mortgaged Premises in accordance with the requirements of Section
10, together with all rights and privileges associated therewith. For purposes
of clarity, where items of equipment located on two or more parcels of real
estate comprise the Substitute Equipment, such items of equipment shall be
aggregated and deemed to constitute the Substitute Equipment for all purposes of
this Agreement.
"Substitute Premises" means one or more parcels of real estate
substituted for a Mortgaged Premises in accordance with the requirements of
Section 11 of the Loan Agreement, together with all rights, privileges and
appurtenances associated therewith and all buildings, fixtures and other
improvements located thereon (whether or not affixed to such real estate). For
purposes of clarity, where two or more parcels of real estate comprise a
4
Substitute Premises, such parcels or interests shall be aggregated and deemed to
constitute the Substitute Premises for all purposes of this Agreement.
"Transfer" means one or more sales, transfers or assignments by Lender
or any of the other Lender Entities to a third party of notes evidencing
obligations to repay secured or unsecured loans owned by Lender or any of the
other Lender Entities or any or all servicing rights with respect thereto.
"UCC" means the Uniform Commercial Code as adopted in the State of
Arizona.
"UCC-1 Financing Statements" means such UCC-1 Financing Statements as
Lender shall file with respect to the transactions contemplated by this
Agreement.
"U.S. Publicly-Traded Entity" is an Entity whose securities are listed
on a national securities exchange or quoted on an automated quotation system in
the U.S. or a wholly-owned subsidiary of such an Entity.
2. Transaction; Reduced Term Option; Closing Conditions. (a) On the
terms and subject to the conditions set forth in the Loan Documents, Lender
shall make the Equipment Loan to Borrower. The Equipment Loan will be evidenced
by the Equipment Note and secured by this Agreement and the UCC-1 Financing
Statements. Borrower shall repay the outstanding principal amount of the
Equipment Loan together with interest thereon in the manner and in accordance
with the terms and conditions of the Equipment Note and the other Loan
Documents. The Equipment Loan shall be advanced at the Closing in cash or
otherwise immediately available funds subject to any prorations and adjustments
required by this Agreement. The Equipment shall be leased to Lessee pursuant to
the Master Lease and the Premises shall be leased to Lessee pursuant to the
Leases and the Master Lease. Pursuant to the Renovation Agreement, Borrower will
upgrade the existing Equipment at the Premises and $779,628.00 of the proceeds
of the Equipment Loan will be used by Borrower to pay for such Equipment
upgrades. The Letter of Credit will secure Borrower's obligations under the Loan
Documents until such time as the Equipment upgrades have been completed.
(b) Notwithstanding anything to the contrary contained in the Equipment
Note or any of the other Loan Documents, Lender shall have the option (the
"Reduced Term Option"), at any time prior to December 31, 2003 and upon not less
than 15 days prior notice to Borrower, to shorten the term of the Equipment Note
to a maturity date of January 1, 2008 (the "Reduced Term"), without changing any
of the debt service payments due prior to such revised maturity date. Borrower
hereby acknowledges that, if the Reduced Term Option is exercised, unless the
Equipment Note is prepaid in accordance with the terms and conditions set forth
therein, on the maturity date thereof a major portion of the principal amount of
the Equipment Note will not have been paid through the monthly installments
therein provided for, and that such unpaid balance will then become due and
payable as a balloon payment. If Lender exercises the Reduced Term Option,
Borrower shall execute such amendment to the Equipment Note or such amended and
restated Equipment Note as Lender may reasonably request to effectuate the
Reduced Term. If Borrower shall fail to execute and deliver any of the documents
contemplated by the preceding sentence within ten (10) days after Lender's
request, (i) such failure shall be deemed to be an Event of Default under this
Agreement, and (ii) Lender shall be and is hereby irrevocably appointed the
agent and attorney-in-fact of Borrower to execute and deliver such documents,
which appointment is coupled with an interest and is irrevocable and binding.
(c) The obligation of Lender to consummate the transaction contemplated
by this Agreement is subject to the fulfillment or waiver of each of the
following conditions:
(i) Lender shall have approved the Equipment.
(ii) All of the representations and warranties of Borrower set
forth in Section 4 of this Agreement shall be true, correct and
complete, and Borrower shall be in compliance with each of the
covenants set forth in Section 5 of this Agreement. No event shall have
occurred or condition shall exist or information shall have been
disclosed by Borrower or discovered by Lender which has had or would be
reasonably likely to have a material adverse effect on any of the
Premises, the Equipment, any of the Borrower Parties or Lessee
5
Parties or Lender's willingness to consummate the transaction
contemplated by this Agreement, as determined by Lender in its sole and
absolute discretion.
(iii) Borrower shall have paid the Fee to Lender and shall
have paid all costs of the transaction described in this Agreement,
including, without limitation, UCC search and litigation search
charges, the attorneys' fees of Borrower, reasonable attorneys' fees
and expenses of Lender, stamp taxes, mortgage taxes, transfer fees, and
escrow, filing and recording fees (including preparation, filing and
recording fees for UCC continuation statements).
(iv) Borrower shall have provided Lender with evidence
reasonably satisfactory to Lender that the Closing Documents have been
duly authorized, executed and delivered on behalf of the Borrower
Parties.
(v) Lender and/or Borrower, as may be appropriate, shall have
executed and delivered or shall have caused to be executed and
delivered to Lender, or as Lender may otherwise direct, the Loan
Documents and such other documents, payments, instruments and
certificates, as Lender may require in form acceptable to Lender.
(vi) Each of the Leases shall be in full force and effect and
Lessee shall be entitled to occupy the Leased Premises corresponding
thereto. Lender shall have approved each Lease in its sole discretion
and Borrower shall have delivered to Lender a landlord's agreement
regarding equipment from each Lessor, the form and substance of which
shall be satisfactory to Lender in its sole discretion (the "Landlord's
Agreements Regarding Equipment"). Borrower shall have provided Lender
with a recorded copy (or executed original in recordable form) of a
memorandum of lease for each Leased Premises. If any mortgages or deeds
of trust (or other similar security agreements) encumber fee simple
title to any Leased Premises, the holders of such instruments shall
have delivered nondisturbance agreements to Borrower and Lender with
respect to the corresponding Leases in form and substance acceptable to
Lender in its reasonable discretion.
(vii) Borrower shall have caused to be delivered to Lender
the Letter of Credit.
(viii) Borrower shall have delivered to Lender such legal
opinions as Lender may reasonably require all in form and substance
reasonably satisfactory to Lender and its counsel.
(ix) All of the transactions described in the Loan Agreement
shall have closed prior to or concurrently with the Closing of the
transactions described in this Agreement.
Upon fulfillment or waiver of all of the above conditions, this transaction
shall close in accordance with the terms and conditions of this Agreement.
3. Security Interest Created; Obligations Secured. A. To secure the
payment of the Obligations (as defined below), Borrower hereby grants to Lender
a security interest in the Equipment.
B. This Agreement secures the following indebtedness and obligations
(the "Obligations"): (1) payment of indebtedness evidenced by the Equipment
Note, together with all extensions, renewals, amendments and modifications
thereof; (2) payment of indebtedness evidenced by the Mortgage Notes, together
with all extensions, renewals, amendments and modifications of any thereof; (3)
payment of indebtedness evidenced by the Related Equipment Note, together with
all extensions, renewals, amendments and modifications thereof; (4) payment of
indebtedness evidenced by the Related Mortgage Notes, together with all
extensions, renewals, amendments and modifications of any thereof; and (5)
payment of all other indebtedness and other sums, including interest at the
applicable rate, which may be owed under, and performance of all other
obligations and covenants contained in, any other Loan Document or any Other
Agreement, together with any other instrument given to evidence or further
secure the payment and performance of any obligation secured hereby or thereby.
C. Borrower authorizes Lender to file financing statements with respect
to the security interest of Lender, continuation statements with respect
thereto, and any amendments to such financing statements which may be
6
necessitated by reason of any of the changes described in Section 5.C. Borrower
agrees that, notwithstanding any provision in the UCC to the contrary, Borrower
shall not file a termination statement of any financing statement filed by
Lender in connection with any security interest granted under this Agreement if
Lender reasonably objects to the filing of such termination statement.
D. Lender shall at all times have a perfected security interest in the
Equipment that shall be prior to any other interests therein. Borrower shall do
all acts and things, shall execute and file all instruments (including security
agreements, UCC financing statements, continuation statements, etc.) requested
by Lender to establish, maintain and continue the perfected security interest of
Lender in the Equipment, and shall promptly on demand pay all costs and expenses
of (1) filing and recording, including the costs of any searches deemed
necessary by Lender from time to time to establish and determine the validity
and the continuing priority of the security interest of Lender, and (2) all
other claims and charges that in the reasonable opinion of Lender might
prejudice, imperil or otherwise affect the Equipment or security interest
therein of Lender. Borrower agrees that a carbon, photographic or other
reproduction of a security agreement or financing statement shall be sufficient
as a financing statement. Lender is hereby irrevocably appointed Borrower's
attorney-in-fact to take any of the foregoing actions requested of Borrower by
Lender if Borrower should fail to take such actions, which appointment shall be
deemed coupled with an interest.
4. Representations and Warranties of Borrower. The representations and
warranties of Borrower contained in this Section are being made by Borrower as
of the Closing Date to induce Lender to enter into this Agreement and consummate
the transactions contemplated herein and shall survive the Closing. Borrower
represents and warrants to Lender as follows:
A. Financial Information. Borrower has delivered to Lender certain
financial statements and other information concerning the Borrower Parties in
connection with the transaction described in this Agreement (collectively, the
"Financial Information"). The Financial Information is true, correct and
complete in all material respects; there have been no amendments to the
Financial Information since the date such Financial Information was prepared or
delivered to Lender. Borrower understands that Lender is relying upon the
Financial Information and Borrower represents that such reliance is reasonable.
All financial statements included in the Financial Information were prepared in
accordance with GAAP and fairly present as of the date of such financial
statements the financial condition of each individual or entity to which they
pertain. No change has occurred with respect to the financial condition of any
of the Borrower Parties and/or the Equipment as reflected in the Financial
Information which has not been disclosed in writing to Lender or has had, or
could reasonably be expected to result in, a Material Adverse Effect.
B. Organization and Authority. Each of the Borrower Parties (other than
individuals), as applicable, is duly organized or formed, validly existing and
in good standing under the laws of its state of incorporation or formation,
Borrower is qualified as a foreign corporation, partnership or limited liability
company, as applicable, to do business in the state(s) where the Equipment is
located, and each of the Borrower Parties is qualified as a foreign corporation,
partnership or limited liability company, as applicable, to do business in any
other jurisdiction where the failure to be qualified would reasonably be
expected to result in a Material Adverse Effect. All necessary action has been
taken to authorize the execution, delivery and performance by the Borrower
Parties of this Agreement and the other Loan Documents. The person(s) who have
executed this Agreement on behalf of Borrower are duly authorized so to do.
Borrower is not a "foreign corporation," "foreign partnership," "foreign trust,"
"foreign estate" or "foreign person" (as those terms are defined by the Internal
Revenue Code of 1986, as amended). Borrower's U.S. Federal Tax Identification
number, Organization Identification number and principal place of business are
correctly set forth on the signature page of this Agreement. None of the
Borrower Parties, and no individual or entity owning directly or indirectly any
interest in any of the Borrower Parties, is an individual or entity whose
property or interests are subject to being blocked under any of the OFAC Laws
and Regulations or is otherwise in violation of any of the OFAC Laws and
Regulations; provided, however, the representation contained in this sentence
shall not apply to any Person to the extent such Person's interest is in or
through a U.S. Publicly-Traded Entity.
C. Enforceability of Documents. Upon execution by the Borrower Parties,
this Agreement and the other Loan Documents shall constitute the legal, valid
and binding obligations of the Borrower Parties, respectively, enforceable
against the Borrower Parties in accordance with their respective terms, except
as such enforceability
7
may be limited by applicable bankruptcy, insolvency, liquidation, reorganization
and other laws affecting the rights of creditors generally and general
principles of equity.
D. Litigation. There are no suits, actions, proceedings or
investigations pending, or to the best of Borrower's knowledge, threatened
against or involving the Borrower Parties, any of the Equipment or any of the
Premises before any arbitrator or Governmental Authority, except for such suits,
actions, proceedings or investigations which, individually or in the aggregate,
have not had, and could not reasonably be expected to result in, a Material
Adverse Effect.
E. Absence of Breaches or Defaults; Compliance with Laws. The Borrower
Parties are not, and the authorization, execution, delivery and performance of
this Agreement and the other Loan Documents will not result, in any breach or
default under any other document, instrument or agreement to which any of the
Borrower Parties is a party or by which any of the Borrower Parties, any of the
Premises, any of the Equipment or any of the property of any of the Borrower
Parties is subject or bound, except for such breaches or defaults which,
individually or in the aggregate, have not had, and could not reasonably be
expected to result in, a Material Adverse Effect. The authorization, execution,
delivery and performance of this Agreement and the other Loan Documents will not
violate any applicable law, statute, regulation, rule, ordinance, code, rule or
order. None of the Premises nor the Equipment are subject to any right of first
refusal, right of first offer or option to purchase or lease granted to a third
party. Neither the Premises nor the Equipment are subject to any right of first
refusal, right of first offer or option to purchase or lease granted to a third
party. The Borrower Parties and the Equipment are in compliance with all
Applicable Regulations, except for such noncompliance which has not had, and
could not reasonably be expected to result in, a Material Adverse Effect.
F. Licenses and Permits. All required licenses and permits, both
governmental and private, to use and operate the Equipment and to use and
operate each of the Premises as a Permitted Concept are in full force and
effect, except for such licenses and permits the failure of which to obtain has
not had, and could not reasonably be expected to result in, a Material Adverse
Effect.
G. Condition of Equipment. The Equipment is in good condition and
repair and well maintained, ordinary wear and tear excepted, and is fully
operational.
H. Title to Equipment; First Priority Lien. Borrower owns the
Equipment, free and clear of all liens, encumbrances, charges and security
interests of any nature whatsoever. Upon Closing, Lender shall have a first
priority lien upon and security interest in the Equipment pursuant to this
Agreement and the UCC-1 Financing Statements.
I. Leases. Borrower has delivered to Lender a true, correct and
complete copy of each of the Leases. The Leases are the only leases or
agreements between the Lessors and Lessee with respect to the Leased Premises.
The Leases are in full force and effect and constitute the legal, valid and
binding obligations of Lessee and the Lessors, enforceable against Lessee and
the Lessors in accordance with their terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, liquidation, reorganization and
other laws affecting the rights of creditors generally and general principles of
equity. Each of the Leases has a remaining term which is at least equal in
duration to the term of the Equipment Note. Lessee has not assigned,
transferred, mortgaged, hypothecated or otherwise encumbered any of the Leases
or any rights thereunder or any interest therein, and Lessee has not received
any notice that any of the Lessors have made any assignment, pledge or
hypothecation of all or any part of their rights or interests in the Leases. No
notice of default from any of the Lessors has been received under any of the
Leases which has not been cured and no notice of default to any of the Lessors
has been given under any of the Leases which has not been cured. No event has
occurred and no condition exists which, with the giving of notice or the lapse
of time or both, would constitute a default under any of the Leases.
J. Master Lease. Borrower has delivered to Lender a true, correct and
complete copy of the Master Lease. The Master Lease is the only lease with
respect to the Equipment, and is in full force and effect, and constitutes the
legal, valid and binding obligations of the parties thereto, enforceable against
such parties in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, liquidation, reorganization and
other laws affecting the rights of creditors generally and general principles of
equity. Borrower has not assigned, transferred, mortgaged, hypothecated or
otherwise encumbered the Master Lease or any
8
rights thereunder or any interest therein, and Borrower has not received any
notice that the Lessee has made any assignment, pledge or hypothecation of all
or any part of its rights or interests in the Master Lease. Borrower has not
received any notice of default from the Lessee which has not been cured or given
any notice of default to the Lessee which has not been cured. No event has
occurred and no condition exists which, with the giving of notice or the lapse
of time or both, would constitute a default by the Lessee or Borrower under the
Master Lease.
K. Nonconsolidation. (1) Borrower maintains correct and complete books
and records of account separate from all other Persons. Where necessary or
appropriate, Borrower has disclosed the nature of the transaction contemplated
by the Loan Documents and Borrower's independent status to its creditors. The
Equipment and the Mortgaged Premises represent all of the assets owned or leased
by Borrower as of the date hereof, and Borrower has not commingled its assets
and its liabilities with those of any other Person.
(2) Borrower maintains its own checking account or accounts with
commercial banking institutions separate from other Persons.
(3) To the extent that Borrower shares the same employees with other
Persons, the salaries of and the expenses related to providing benefits to such
employees have been fairly and nonarbitrarily allocated among such Persons, with
the result that each such Person bears its fair share of the salary and benefit
costs associated with all such common employees.
(4) To the extent that Borrower jointly contracts with other Persons to
do business with vendors or service providers or to share overhead expenses, the
costs incurred in so doing are, and at all times shall be, fairly and
nonarbitrarily allocated among such Persons, with the result that each such
Person bears its fair share of such costs. To the extent that Borrower contracts
or does business with vendors or service providers where the goods or services
provided are or shall be partially for the benefit of other Persons, the costs
incurred in so doing are fairly and nonarbitrarily allocated to or among such
Persons for whose benefit the goods or services are provided, with the result
that each such Person bears its fair share of such costs.
(5) To the extent that Borrower or other Persons have offices in the
same location, there is a fair, appropriate and nonarbitrary allocation of
overhead among them, with the result that each such Person bears its fair share
of such expenses.
(6) Borrower has not incurred any indebtedness, secured or unsecured,
direct or indirect, absolute or contingent, including, without limitation,
liability for the debts of any other Person (and Borrower has not held itself
out as being liable for the debts of any other Person), other than the Equipment
Loan, the Mortgage Loans and trade and operational debt incurred in the ordinary
course of business with trade creditors and in amounts as are normal and
reasonable under the circumstances. Borrower is not a guarantor of any
obligations.
(7) Borrower is not presently a party to a pledge of its assets for the
benefit of other Persons. Borrower has not made any loans or advances to any
third party (including any Affiliate or constituent party of Borrower).
(8) Borrower has conducted its affairs strictly in accordance with its
organizational documents including Borrower's corporate managing member's
organizational documents and has observed all necessary, appropriate and
customary formalities.
(9) Borrower does not hold itself out to the public or to any of its
individual creditors as being a unified entity with assets and liabilities in
common with any other Person.
(10) Borrower (a) is solvent, (b) is able to pay its obligations as
they become due and (c) is not and shall not be engaged in any business or
transaction for which its remaining capital is or may be unreasonably small.
(11) Borrower has no actual intent to hinder, delay or defraud
creditors in connection with any of the transactions contemplated herein or
intent to incur (or belief that it is incurring) debts beyond its ability to pay
the same as they mature.
9
(12) Borrower has not, as to itself or as to other Persons, (a)
commenced any case, proceeding or other action under any existing or future law
of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to Borrower or other Persons or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to Borrower or its debts or other Persons or their
debts or (b) sought appointment of a receiver, trustee, custodian or other
similar official for Borrower or for all or any substantial part of its or other
Person's assets or made a general assignment for the benefit of Borrower's
creditors.
L. Money Laundering. (1) Borrower has taken all reasonable measures, in
accordance with all applicable Anti-Money Laundering Laws, with respect to each
holder of a direct or indirect interest in the Borrower Parties, to assure that
funds invested by such holders in the Borrower Parties are derived from legal
sources; provided, however, none of the foregoing shall apply to any Person to
the extent that such Person's interest is in or through a U.S. Publicly-Traded
Entity.
(2) To Borrower's knowledge after making due inquiry, neither any of
the Borrower Parties nor any holder of a direct or indirect interest in the
Borrower Parties (a) is under investigation by any Governmental Authority for,
or has been charged with, or convicted of, any violation of any Anti-Money
Laundering Laws, or drug trafficking, terrorist-related activities or other
money laundering predicated crimes or a violation of the BSA, (b) has been
assessed civil penalties under these or related laws, or (c) has had any of its
funds seized or forfeited in an action under these or related laws; provided,
however, none of the foregoing shall apply to any Person to the extent that such
Person's interest is in or through a U.S. Publicly-Traded Entity.
(3) Borrower has taken reasonable steps, consistent with industry
practice for comparable organizations and in any event as required by law, to
ensure that the Borrower Parties are and shall be in compliance with all (i)
Anti-Money Laundering Laws and (ii) OFAC Laws and Regulations.
5. Covenants. Borrower covenants to Lender from and after the Closing
Date and until all of the Obligations are satisfied in full, as follows:
A. Payment of the Equipment Note. Borrower shall punctually pay, or
cause to be paid, the principal, interest and all other sums to become due in
respect of the Equipment Note and the other Loan Documents in accordance with
the Equipment Note and the other Loan Documents. Borrower shall authorize Lender
to establish arrangements whereby all scheduled payments made in respect of the
Obligations are transferred by Automated Clearing House Debit initiated by
Lender directly from an account at a U.S. bank in the name of Borrower to such
account as Lender may designate or as Lender may otherwise designate.
B. Title; Additional Encumbrances. Borrower shall own the Equipment
(whether acquired prior to or after the date hereof), free and clear of all
liens, encumbrances, charges and other exceptions to title except those in favor
of Lender, and Borrower shall not execute or permit the filing of any financing
statement thereon other than the UCC-1 Financing Statements. Lender shall have a
valid first lien upon and security interest in the Equipment pursuant to this
Agreement and the UCC-1 Financing Statements. Borrower shall defend the
Equipment against all claims and demands of all persons. Borrower shall not
permit any action to be taken which would adversely affect the value of the
Equipment or which would encumber, cloud or adversely effect in any manner
Borrower's title or interest therein.
C. Organization and Status; Preservation of Existence. Each of the
Borrower Parties (other than individuals), as applicable, shall be validly
existing and in good standing under the laws of its state of incorporation or
formation and qualified as a foreign corporation, partnership or limited
liability company to do business in the state(s) where the Equipment is located
and any other jurisdiction where the failure to be qualified could reasonably be
expected to result in a Material Adverse Effect. Borrower shall preserve its
current form of organization and shall not change its legal name, its state of
formation, nor, in one transaction or a series of related transactions, merge
with or into, or consolidate with, any other entity without providing, in each
case, Lender with 30 days' prior written notice and obtaining Lender's prior
written consent (to the extent such consent is required under Section 6 of this
Agreement). In addition, Borrower shall require, and shall take reasonable
measures to comply with the requirement, that no individual or entity owning
directly or indirectly any interest in any of the Borrower Parties is an
individual or entity whose property or interests are subject to being blocked
under any of the OFAC Laws and Regulations or is otherwise in violation of any
of the OFAC Laws and Regulations; provided, however, the covenant
10
contained in this sentence shall not apply to any Person to the extent that such
Person's interest is in or through a U.S. Publicly-Traded Entity.
D. Licenses and Permits; Compliance With Laws. All required licenses
and permits, both governmental and private, to use and operate the Equipment and
to use and operate each of the Premises as a Permitted Concept shall be
maintained in full force and effect. The Borrower Parties shall comply with all
Applicable Regulations now or hereafter in effect, including, without
limitation, the OFAC Laws and Regulations and Anti-Money Laundering Laws.
E. Financial Statements. Within 45 days after the end of each fiscal
quarter and within 120 days after the end of each fiscal year of Borrower,
Borrower shall deliver to Lender (a) complete financial statements of the
Borrower Parties including a balance sheet, profit and loss statement, statement
of cash flows and all other related schedules for the fiscal period then ended;
(b) income statements for the business at each of the Premises; and (c) such
other financial information as Lender may reasonably request in order to
establish compliance with the financial covenants in the Loan Documents. All
such financial statements and information shall be prepared in accordance with
GAAP from period to period, and shall be certified to be accurate and complete
by Borrower (or the Treasurer or other appropriate officer of Borrower).
Borrower understands that Lender is relying upon such financial statements and
Borrower represents that such reliance is reasonable. The financial statements
delivered to Lender need not be audited, but Borrower shall deliver to Lender
copies of any audited financial statements of Borrower which may be prepared, as
soon as they are available.
F. Inspections. Borrower shall, during normal business hours (or at any
time in the event of an emergency), (1) provide Lender and Lender's officers,
employees, agents and advisors with access to the Equipment and all files,
correspondence and documents relating to the Equipment (including, without
limitation, any of the foregoing information stored in any computer files), and
(2) allow such persons to make such inspections, tests, copies, and
verifications as Lender considers necessary.
G. Removal of Equipment. Except for purposes of replacement with like
property of equal or greater value and repair in the ordinary course of
business, Borrower shall not remove or allow to be removed from any of the
Premises the Equipment, or any part thereof, without the prior written consent
of Lender. Borrower shall promptly give written notice to Lender of any
substantial change in the character of the business conducted on any of the
Premises and of the cessation of all or any part thereof and of any loss or
damage by fire or other casualty to any substantial part of the Equipment.
H. Maintenance and Repair. Borrower shall at all times keep and
maintain the Equipment in good order, repair and condition, ordinary wear and
tear excepted, and will promptly replace any part thereof that from time to time
may become obsolete, badly worn or in a state of disrepair or, if supplies, be
consumed in the normal course of Borrower's business operations. Lender shall
have a lien on and security interest in all replacements and all replacements
shall be free of any other lien, security interest or encumbrance of any nature,
including any purchase money lien or security interest. Borrower shall not
transfer or permit any transfer of any part of the Equipment to be made or any
interest therein to be created by way of a sale (except as permitted below), by
way of a grant of a security interest, or by way of a levy or other judicial
process. Borrower may sell or dispose of only that part of the Equipment that
Borrower will replace, and the proceeds from such sale and disposition must be
invested in replacement property of like kind and of equal or greater value.
I. Notices. Borrower shall promptly notify Lender of any levy,
distraint or other seizure by legal process or otherwise of any part of the
Equipment and of any threatened or filed claims or proceedings that might in any
way affect or impair any of the Equipment.
J. Insurance. Borrower shall obtain and maintain in force insurance
policies, naming Lender as sole loss payee and as additional insured, covering
losses or damage to the Equipment due to fire (with extended coverage), theft,
physical damage and such other risks as Lender may from time to time reasonably
require, which insurance shall insure the Equipment for its full replacement
cost. Lender is hereby irrevocably appointed Borrower's attorney-in-fact to
endorse any check or draft that may be payable to Borrower, alone or jointly
with other payees, so that Lender may collect the proceeds payable for any loss
under such insurance, which appointment shall be deemed coupled with an
interest. The proceeds of such insurance, less any costs and expenses incurred
or
11
paid by Lender in the collection thereof, shall be applied, at the option of
Lender, either toward the cost of repair or replacement of the items damaged or
destroyed or on account of any sums secured by this Agreement, whether or not
then due or payable.
K. Actions by Lender. (1) Borrower agrees that Lender may, at its
option, and without any obligation to do so, pay, perform, and discharge any and
all amounts, costs, expenses and liabilities that are the responsibility of
Borrower under the Loan Documents if Borrower fails to timely pay, perform or
discharge the same, and all amounts expended by Lender in so doing or in respect
of or in connection with the Equipment shall become part of the obligations
secured by the Loan Documents and shall be immediately due and payable by
Borrower to Lender upon demand therefor and shall bear interest at the Default
Rate.
(2) Borrower agrees that the Loan Documents shall remain in full
effect, without waiver or surrender of any of Lender's rights thereunder,
notwithstanding the occurrence of any one or more of the following: (a)
extension of the time of payment of the whole or any part of the Equipment Note;
(b) any change in the terms and conditions of the Equipment Note; (c)
substitution of any other evidence of indebtedness for the Equipment Note; (d)
acceptance by Lender of any collateral or security of any kind for the payment
of the Equipment Note; (e) surrender, release, exchange or alteration of any
Equipment, collateral or other security, either in whole or in part; or (f)
release, settlement, discharge, compromise, change or amendment, in whole or in
part, of any claim of Lender against Borrower or of any claim against any
guarantor or other party secondarily or additionally liable for the payment of
the Equipment Note.
L. Lost Note. Borrower shall, if the Equipment Note is mutilated,
destroyed, lost or stolen (a "Lost Note"), promptly deliver to Lender, upon
receipt from Lender of an affidavit and indemnity in a form reasonably
acceptable to Lender and Borrower stipulating that the Equipment Note has been
mutilated, destroyed, lost or stolen, in substitution therefor, a new promissory
note containing the same terms and conditions as the Lost Note with a notation
thereon of the unpaid principal and accrued and unpaid interest. Borrower shall
provide fifteen (15) days' prior notice to Lender before making any payments to
third parties in connection with a Lost Note.
M. Affiliate Transactions. Unless otherwise approved by Lender, all
transactions between Borrower and any of its Affiliates shall be on terms
substantially as advantageous to Borrower as those which could be obtained by
Borrower in a comparable arm's length transaction with a non-Affiliate of
Borrower.
N. Nonconsolidation. (1) Borrower shall at all times maintain correct
and complete books and records of account separate from all other Persons. Where
necessary or appropriate, Borrower shall disclose the nature of the transaction
contemplated by the Loan Documents and Borrower's independent status to its
creditors. Borrower shall not own or lease any assets other than the Mortgaged
Premises and the Equipment, nor engage in any business other than owning and
leasing the Mortgaged Premises and the Equipment, including financing the
Mortgaged Premises and the Equipment with Lender or its affiliates. Borrower
shall not commingle its assets and its liabilities with those of any other
Person.
(2) Borrower shall maintain its own checking account or accounts with
commercial banking institutions separate from other Persons.
(3) To the extent that Borrower shares the same employees with other
Persons, the salaries of and the expenses related to providing benefits to such
employees, at all times shall be, fairly and nonarbitrarily allocated among such
Persons, with the result that each such Person shall bear its fair share of the
salary and benefit costs associated with all such common employees.
(4) To the extent that Borrower jointly contracts with other Persons to
do business with vendors or service providers or to share overhead expenses, the
costs incurred in so doing at all times shall be, fairly and nonarbitrarily
allocated among such Persons, with the result that each such Person shall bear
its fair share of such costs. To the extent that Borrower contracts or does
business with vendors or service providers where the goods or services provided
are or shall be partially for the benefit of other Persons, the costs incurred
in so doing at all times shall be, fairly and nonarbitrarily allocated to or
among such Persons for whose benefit the goods or services are provided, with
the result that each such Person shall bear its fair share of such costs. All
transactions between Borrower and other Persons shall be only on an arm's-length
basis.
12
(5) To the extent that Borrower or other Persons have offices in the
same location, there shall be a fair, appropriate and nonarbitrary allocation of
overhead among them, with the result that each such Person shall bear its fair
share of such expenses.
(6) Borrower shall not incur any indebtedness, secured or unsecured,
direct or indirect, absolute or contingent (including guaranteeing any
obligation or assuming liability for the debts of any other Person and Borrower
will not hold itself out as being liable for the debts of any other Person),
other than the Mortgage Loans, the Equipment Loan, and trade and operational
debt incurred in the ordinary course of business with trade creditors and in
amounts as are normal and reasonable under the circumstances. No indebtedness
other than the Mortgage Loans, the Equipment Loan and the indebtedness evidenced
by the Related Mortgage Notes and the Related Equipment Note may be secured
(subordinate or pari passu) by the Equipment or any portion thereof.
(7) Borrower shall not enter into any contract or agreement with any
Affiliate of Borrower, any constituent party of Borrower or any Affiliate of any
constituent party of Borrower except upon terms and conditions that are
intrinsically fair and substantially similar to those that would be available on
an arms-length basis with third parties other than any such party.
(8) Except as contemplated by the Loan Documents and the Mortgage Loan
Documents, Borrower shall not pledge, grant any security interest in,
hypothecate or otherwise encumber its assets for the benefit of any other
Persons.
(9) Borrower shall issue separate financial statements prepared not
less frequently than annually and prepared according to GAAP.
(10) Borrower shall maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and character in
light of its contemplated business operations.
(11) Borrower shall conduct its affairs strictly in accordance with its
organizational documents, including Borrower's corporate managing member's
organizational documents and shall observe all necessary, appropriate and
customary formalities. The books, records and accounts of Borrower shall at all
times be maintained in a manner permitting the assets and liabilities of
Borrower to be easily separated and readily ascertained from those of any other
Person and Borrower shall file its own tax returns.
(12) Borrower shall not hold itself out to the public or to any of its
individual creditors as being a unified entity with assets and liabilities in
common with any other Person. Borrower shall maintain and utilize separate
stationery, invoices and checks.
(13) Borrower shall not make any loans or advances to any third party
(including any Affiliate of Borrower or constituent party of Borrower).
(14) Borrower shall not, as to itself or as to other Persons, (a)
commence any case, proceeding or other action under any existing or future law
of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to Borrower or other Persons or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to Borrower or its debts or other Persons or their
debts or (b) seek appointment of a receiver, trustee, custodian or other similar
official for Borrower or for all or any substantial part of its or other
Person's assets or make a general assignment for the benefit of Borrower's
creditors. Borrower shall not take any action in furtherance of, or indicating
its consents to, approval of or acquiescence in, any of the acts set forth
above. Borrower shall not be unable to, or admit in writing its inability to,
pay its debts.
O. Equipment Leases. (1) Borrower shall not, without Lender's prior
consent (i) enter into any Equipment Lease (other than the Master Lease); (ii)
modify or amend the terms of any Equipment Lease; (iii) grant any consents under
any Equipment Lease, including, without limitation, any consent to an assignment
of any Equipment Lease, a mortgaging of the leasehold estate created by any
Equipment Lease or a subletting by the lessee under any Equipment Lease; (iv)
terminate, cancel, surrender, or accept the surrender of, any Equipment Lease,
or
13
waive or release any person from the observance or performance of any
obligation to be performed under the terms of any Equipment Lease or liability
on account of any warranty given thereunder; or (v) assign, transfer, mortgage,
pledge or hypothecate any Equipment Lease or any interest therein to any party
other than Lender. Any lease, modification, amendment, grant, termination,
cancellation, surrender, waiver or release in violation of the foregoing
provision shall be null and void and of no force and effect. Unless Lender
otherwise consents or elects, Borrower's title to the Equipment and the
leasehold interest in the Equipment created by any Equipment Lease shall not
merge, but shall always be kept separate and distinct, notwithstanding the union
of such estates in Borrower, Lender or any other person by purchase, operation
of law, foreclosure of the lien of this Agreement, sale of the Equipment
pursuant to this Agreement or otherwise.
(2) Borrower shall (i) fulfill, perform and observe in all respects
each and every condition and covenant of Borrower contained in any Equipment
Lease; (ii) give prompt notice to Lender of any claim or event of default under
any Equipment Lease given to or by Borrower, together with a complete copy or
statement of any information submitted or referenced in support of such claim or
event of default; (iii) at the sole cost and expense of Borrower, enforce the
performance and observance of each and every covenant and condition of any
Equipment Lease to be performed or observed by any other party thereto, unless
such enforcement is waived in writing by Lender; and (iv) appear in and defend
any action challenging the validity or enforceability of any Equipment Lease.
P. Compliance Certificates. Within 60 days after the end of each fiscal
year of Borrower, Borrower shall deliver, upon Lender's request, a compliance
certificate to Lender in a form to be provided by Lender in order to establish
that Borrower is in compliance in all material respects with all of its
obligations, duties and covenants under the Loan Documents.
Q. OFAC Laws and Regulations. Borrower shall immediately notify Lender
in writing if any individual or entity owning directly or indirectly any
interest in any of the Borrower Parties or any director, officer, member,
manager or partner of any of such holders is an individual or entity whose
property or interests are subject to being blocked under any of the OFAC Laws
and Regulations or is otherwise in violation of any of the OFAC Laws and
Regulations, or is under investigation by any governmental entity for, or has
been charged with, or convicted of, drug trafficking, terrorist-related
activities or any violation of Anti-Money Laundering Laws, has been assessed
civil penalties under these or related laws, or has had funds seized or
forfeited in an action under these or related laws; provided, however, the
covenant contained in this sentence shall not apply to any Person to the extent
that such Person's interest is in or through a U.S. Publicly-Traded Entity.
R. Leases. Borrower shall cause Lessee to give prompt notice to Lender
of any claim or event of default under any of the Leases given to or by Lessee,
together with a complete copy or statement of any information submitted or
referenced in support of such claim or event of default
6. Prohibition on Change of Control, Pledge and Prohibited Transaction.
Without limiting the terms and conditions of Section 5.B and 5.G, Borrower
agrees that, from and after the Closing Date and until all of the Obligations
are satisfied in full, without the prior written consent of Lender: (1) no
Change of Control shall occur; (2) no interest in any of the Borrower Parties
shall be pledged, encumbered, hypothecated or assigned as collateral for any
obligation of any of the Borrower Parties (each, a "Pledge"); and (3) no
Prohibited Transaction (as defined below) shall occur. In addition, no interest
in any of the Borrower Parties, or in any individual or person owning directly
or indirectly any interest in any of the Borrower Parties, shall be transferred,
assigned or conveyed to any individual or person whose property or interests are
subject to being blocked under any of the OFAC Laws and Regulations and/or who
is in violation of any of the OFAC Laws and Regulations, and any such transfer,
assignment or conveyance shall not be effective until the transferee has
provided written certification to Borrower and Lender that (A) the transferee or
any person who owns directly or indirectly any interest in transferee, is not an
individual or entity whose property or interests are subject to being blocked
under any of the OFAC Laws and Regulations or is otherwise in violation of the
OFAC Laws and Regulations, and (B) the transferee has taken reasonable measures
to assure than any individual or entity who owns directly or indirectly any
interest in transferee, is not an individual or entity whose property or
interests are subject to being blocked under any of the OFAC Laws and
Regulations or is otherwise in violation of the OFAC Laws and Regulations;
provided, however, the covenant contained in this sentence shall not apply to
any Person to the extent that such Person's interest is in or through a U.S.
Publicly-Traded Entity. Lender's consent to a Change of Control, Pledge and/or
Prohibited Transaction shall
14
be subject to the satisfaction of such conditions as Lender shall determine in
its sole discretion. In addition, any such consent shall be conditioned upon
payment by Borrower to Lender of (x) a fee equal to one percent (1%) of the then
outstanding principal balance of the Equipment Note and (y) all out-of-pocket
costs and expenses incurred by Lender in connection with such consent,
including, without limitation, reasonable attorneys' fees; provided that such
one percent (1%) fee shall not be applicable with respect to a Change of Control
consented to by Lender which occurs prior to June 30, 2004 and results from any
member of Borrower which is now a U.S. Publicly-Traded Entity becoming a
non-publicly traded Entity. Lender shall not be required to demonstrate any
actual impairment of its security or any increased risk of default hereunder in
order to declare the Obligations immediately due and payable upon a Change of
Control, Pledge or Prohibited Transaction in violation of this Section. The
provisions of this Section shall apply to every Change of Control, Pledge or
Prohibited Transaction regardless of whether voluntary or not, or whether or not
Lender has consented to any previous Change of Control, Pledge or Prohibited
Transaction. For purposes of this Section 6, a "Prohibited Transaction" shall
mean any sale, conveyance, mortgage, grant, bargain, encumbrance, pledge,
assignment or other transfer of all or any of the Equipment or any part thereof,
other than replacements as contemplated by Section 5.H. A sale, conveyance,
mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer within
the meaning of this Section shall be deemed to include, but not be limited to,
(a) an installment sale agreement wherein Borrower agrees to sell the Equipment
or any part thereof for a price to be paid in installments; and (b) an agreement
by Borrower leasing all or any part of the Equipment.
7. Default and Remedies; Proceeds. A. Each of the following shall be
deemed an event of default by Borrower (each, an "Event of Default"):
(1) If any representation or warranty of any of the Borrower Parties
set forth in any of the Loan Documents is false in any material respect or if
any of the Borrower Parties renders any statement or account which is false in
any material respect.
(2) If any principal, interest or other monetary sum due under the
Equipment Note, any of the Mortgage Notes or any other Loan Document is not paid
within five days after the date when due; provided, however, notwithstanding the
occurrence of such an Event of Default, Lender shall not be entitled to exercise
its rights and remedies set forth below unless and until Lender shall have given
Borrower notice thereof and a period of five days from the delivery of such
notice shall have elapsed without such Event of Default being cured.
(3) If Borrower fails to observe or perform any of the other covenants,
conditions, or obligations of this Agreement; provided, however, if any such
failure does not involve the payment of any monetary sum, is not willful or
intentional, does not place any rights or interest in collateral of Lender in
immediate jeopardy, and is within the reasonable power of Borrower to promptly
cure after receipt of notice thereof, all as determined by Lender in its
reasonable discretion, then such failure shall not constitute an Event of
Default hereunder, unless otherwise expressly provided herein, unless and until
Lender shall have given Borrower notice thereof and a period of 30 days shall
have elapsed, during which period Borrower may correct or cure such failure,
upon failure of which an Event of Default shall be deemed to have occurred
hereunder without further notice or demand of any kind being required. If such
failure cannot reasonably be cured within such 30-day period, as determined by
Lender in its reasonable discretion, and Borrower is diligently pursuing a cure
of such failure, then Borrower shall have a reasonable period to cure such
failure beyond such 30-day period, which shall not exceed 90 days after
receiving notice of the failure from Lender. If Borrower shall fail to correct
or cure such failure within such 90-day period, an Event of Default shall be
deemed to have occurred hereunder without further notice or demand of any kind
being required.
(4) If any of the Borrower Parties becomes insolvent within the meaning
of the Code, files or notifies Lender that it intends to file a petition under
the Code, initiates a proceeding under any similar law or statute relating to
bankruptcy, insolvency, reorganization, winding up or adjustment of debts
(collectively, an "Action"), becomes the subject of either a petition under the
Code or an Action, or is not generally paying its debts as the same become due.
(5) If there is an "Event of Default" or a breach or default, after the
passage of all applicable notice and cure or grace periods, under any other Loan
Document, the Master Lease, any Mortgage Loan Document or any of the Other
Agreements.
(6) If a final, nonappealable judgment is rendered by a court against
any of the Borrower Parties which (i) has a material adverse effect on the
operation of the Premises as a Permitted Concept, or (ii) is in an
15
amount greater than $100,000.00 and not covered by insurance, and, in either
case, is not discharged or provision made for such discharge within 60 days from
the date of entry of such judgment.
B. Upon the occurrence and during the continuance of an Event of
Default, subject to the limitations set forth in subsection A, Lender shall have
all rights and remedies of a secured party in, to and against the Equipment
granted by the UCC and otherwise available at law or in equity, including,
without limitation: (1) the right to declare any or all payments due under the
Equipment Note, the other Loan Documents, the Mortgage Loan Documents, the Other
Agreements and all other documents evidencing the Obligations immediately due
and payable without any presentment, demand, protest or notice of any kind,
except as otherwise expressly provided herein, and Borrower hereby waives notice
of intent to accelerate the Obligations and notice of acceleration; (2) the
right to recover all fees and expenses (including reasonable attorney fees) in
connection with the collection or enforcement of the Obligations, which fees and
expenses shall constitute additional Obligations of Borrower hereunder; (3) the
right to act as, and Borrower hereby constitutes and appoints Lender, Borrower's
true, lawful and irrevocable attorney-in-fact (which appointment shall be deemed
coupled with an interest) to demand, receive and enforce payments and to give
receipts, releases, satisfaction for and to xxx for moneys payable to Borrower
under or with respect to any of the Equipment, and actions taken pursuant to
this appointment may be taken either in the name of Borrower or in the name of
Lender with the same force and effect as if this appointment had not been made;
(4) the right to take immediate and exclusive possession of the Equipment, or
any part thereof, and for that purpose, with or without judicial process and
notice to the Borrower, enter (if this can be done without breach of the peace)
upon any premises on which the Equipment or any part thereof may be situated and
remove the same therefrom (provided that if the Equipment is affixed to real
estate, such removal shall be subject to the conditions stated in the UCC); (5)
the right to hold, maintain, preserve and prepare any of the Equipment for sale,
until disposed of; (6) the right to render any of the Equipment unusable and
dispose of the Equipment; (7) the right to require Borrower to assemble and
package the Equipment and make it available to Lender for its possession at a
place to be designated by Lender which is reasonably convenient to Lender; (8)
the right to sell, lease, hold or otherwise dispose of all or any part of the
Equipment; and (9) the right to xxx for specific performance of any Obligations
or to recover damages for breach thereof.
Lender shall be entitled to receive on demand, as additional
Obligations hereunder, interest accruing at the Default Rate on all amounts not
paid when due under the Equipment Note or this Agreement until the date of
actual payment. Lender shall have no duty to mitigate any loss to Borrower
occasioned by enforcement of any remedy hereunder and shall have no duty of any
kind to any subordinated creditor of Borrower. Neither the acceptance of this
Agreement nor its enforcement shall prejudice or in any manner affect Lender's
right to realize upon or enforce any other security now or hereafter held by
Lender, it being agreed that Lender shall be entitled to enforce this Agreement
and any other security now or hereafter held by Lender in such order and manner
as it may in its absolute discretion determine. No remedy herein conferred upon
or reserved to Lender is intended to be exclusive of any other remedy given
hereunder or now or hereafter existing at law or in equity or by statute. Every
power or remedy given by any of the Loan Documents to Lender, or to which Lender
may be otherwise entitled, may be exercised, concurrently or independently, from
time to time and as often as may be deemed expedient by Lender.
C. Should Lender exercise the rights and remedies specified in the
preceding subsection B, any proceeds received thereby shall be first applied to
pay the costs and expenses, including reasonable attorneys' fees, incurred by
Lender as a result of the Event of Default. The remainder of any proceeds, net
of Lender's costs and expenses, shall be applied to the satisfaction of the
Obligations and any excess paid over to Borrower.
D. Until an Event of Default shall occur, Borrower may retain
possession of the Equipment and may use it in any lawful manner not inconsistent
with this Agreement, with the provisions of any policies of insurance thereon or
the other Loan Documents.
8. Indemnity. Borrower shall, at its sole cost and expense, protect,
defend, indemnify, release and hold harmless each of the Indemnified Parties
for, from and against any and all claims, suits, liabilities (including, without
limitation, strict liabilities), actions, proceedings, obligations, debts,
damages, losses, costs, expenses, diminutions in value, fines, penalties,
charges, fees, expenses, judgments, awards, amounts paid in settlement and
damages of whatever kind or nature (including, without limitation, attorneys'
fees, court costs and other costs of defense) (collectively, "Losses")
(excluding Losses suffered by an Indemnified Party directly arising out of such
Indemnified Party's gross negligence or willful misconduct; provided, however,
that the term "gross negligence"
16
shall not include gross negligence imputed as a matter of law to any of the
Indemnified Parties solely by reason of Borrower's interest in the Equipment or
Borrower's failure to act in respect of matters which are or were the obligation
of Borrower under the Loan Documents), engineers' fees, governmental inspection
fees, and costs of investigation imposed upon or incurred by or asserted against
any Indemnified Parties, and directly or indirectly arising out of or in any way
relating to any one or more of the following: (a) any administrative processes
or proceedings or judicial proceedings in any way connected with any matter
addressed in this Agreement; (b) any past, present or threatened injury to, or
destruction of, the Equipment, including but not limited to costs to investigate
and assess such injury or destruction; (c) any personal injury, wrongful death,
or property damage arising under any statutory or common law or tort law theory,
including but not limited to damages assessed for the maintenance of a private
or public nuisance or for the conducting of an abnormally dangerous activity on
or near the Equipment; (d) any misrepresentation or inaccuracy in any
representation or warranty or material breach or failure to perform any
covenants or other obligations pursuant to this Agreement; or (e) any failure by
Borrower or any of the Borrower Parties to comply with any of the terms and
conditions of the Leases, including, without limitation, any costs and expenses
incurred by any of the Indemnified Parties to cure any such failure. The term
"Indemnified Parties" means Lender and any person or entity who is or will have
been involved in the origination of the Equipment Loan, any person or entity who
is or will have been involved in the servicing of the Equipment Loan, persons
and entities who may hold or acquire or will have held a full or partial
interest in the Equipment Loan, as well as the respective directors, officers,
shareholders, partners, members, employees, lenders, agents, servants,
representatives, contractors, subcontractors, affiliates, subsidiaries,
participants, successors and assigns of any and all of the foregoing (including,
but not limited to, any other person or entity who holds or acquires or will
have held a participation or other full or partial interest in the Equipment
Loan or the Equipment, whether during the term of the Equipment Loan or as a
part of or following a foreclosure of the Equipment Loan and including, but not
limited to, any successors by merger, consolidation or acquisition of all or a
substantial portion of Lender's assets and business).
9. Miscellaneous Provisions.
A. Notices. All notices, consents, approvals or other instruments
required or permitted to be given by either party pursuant to this Agreement or
the other Loan Documents shall be in writing and given by (i) hand delivery,
(ii) facsimile, (iii) express overnight delivery service or (iv) certified or
registered mail, return receipt requested, and shall be deemed to have been
delivered upon (a) receipt, if hand delivered, (b) transmission, if delivered by
facsimile, (c) the next Business Day, if delivered by express overnight delivery
service, or (d) the third Business Day following the day of deposit of such
notice with the United States Postal Service, if sent by certified or registered
mail, return receipt requested. Notices shall be provided to the parties and
addresses (or facsimile numbers, as applicable) specified below:
If to Borrower: TW Real Estate II, LLC
0000 Xxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Lender: GE Capital Franchise Finance Corporation
00000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: General Counsel
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
B. Brokerage Commission. Lender and Borrower represent and warrant to
each other that they have dealt with no broker, agent, finder or other
intermediary in connection with the transactions contemplated by this Agreement
or the other Loan Documents. Lender and Borrower shall indemnify and hold each
other harmless from and against any costs, claims or expenses, including
attorneys' fees, arising out of the breach of their respective representations
and warranties contained within this Section.
17
C. Waiver and Amendment; Document Review. (1) No provisions of this
Agreement or the other Loan Documents shall be deemed waived or amended except
by a written instrument unambiguously setting forth the matter waived or amended
and signed by the party against which enforcement of such waiver or amendment is
sought. Waiver of any matter shall not be deemed a waiver of the same or any
other matter on any future occasion.
(2) In the event Borrower makes any request upon Lender requiring
Lender or Lender's attorneys to review and/or prepare (or cause to be reviewed
and/or prepared) any documents or other submissions in connection with or
arising out of this Agreement or any of the other Loan Documents, then Borrower
shall (x) reimburse Lender promptly upon Lender's demand for all out-of-pocket
costs and expenses incurred by Lender in connection with such review and/or
preparation, including, without limitation, reasonable attorneys' fees, and (y)
pay Lender a reasonable processing and review fee.
D. Captions. Captions are used throughout this Agreement and the other
Loan Documents for convenience of reference only and shall not be considered in
any manner in the construction or interpretation hereof.
E. Lender's Liability. Notwithstanding anything to the contrary
provided in this Agreement or the other Loan Documents, it is specifically
understood and agreed, such agreement being a primary consideration for the
execution of this Agreement and the other Loan Documents by Lender, that (1)
there shall be absolutely no personal liability on the part of any shareholder,
director, officer or employee of Lender, with respect to any of the terms,
covenants and conditions of this Agreement or the other Loan Documents, (2)
Borrower waives all claims, demands and causes of action against Lender's
officers, directors, employees and agents in the event of any breach by Lender
of any of the terms, covenants and conditions of this Agreement or the other
Loan Documents to be performed by Lender and (3) Borrower shall look solely to
the assets of Lender for the satisfaction of each and every remedy of Borrower
in the event of any breach by Lender of any of the terms, covenants and
conditions of this Agreement or the other Loan Documents to be performed by
Lender, such exculpation of liability to be absolute and without any exception
whatsoever.
F. Severability. The provisions of this Agreement and the other Loan
Documents shall be deemed severable. If any part of this Agreement or the other
Loan Documents shall be held invalid, illegal or unenforceable, the remainder
shall remain in full force and effect, and such invalid, illegal or
unenforceable provision shall be reformed by such court so as to give maximum
legal effect to the intention of the parties as expressed therein.
G. Construction Generally. This Agreement and the other Loan Documents
have been entered into by both parties in reliance upon the economic and legal
bargains contained therein and shall be interpreted and construed in a fair and
impartial manner without regard to such factors as the party which prepared the
instrument, the relative bargaining powers of the parties or the domicile of any
party. Borrower and Lender were each represented by legal counsel competent in
advising them of their obligations and liabilities hereunder.
H. Further Assurances. Borrower will, at its sole cost and expense, do,
execute, acknowledge and deliver or cause to be done, executed, acknowledged and
delivered all such further acts, documents, conveyances, notes, assignments,
security agreements, financing statements and assurances as Lender shall from
time to time reasonably require or deem advisable to carry into effect the
purposes of this Agreement and the other Loan Documents, to perfect any lien or
security interest granted in any of the Loan Documents and for the better
assuring and confirming of all of Lender's rights, powers and remedies under the
Loan Documents.
I. Attorneys' Fees. In the event of any judicial or other adversarial
proceeding between the parties concerning this Agreement or the other Loan
Documents, the prevailing party shall be entitled to recover its attorneys' fees
and other costs in addition to any other relief to which it may be entitled.
J. Entire Agreement. This Agreement and the other Loan Documents,
together with any other certificates, instruments or agreements to be delivered
in connection therewith, constitute the entire agreement between the parties
with respect to the subject matter hereof, and there are no other
representations, warranties or agreements, written or oral, between Borrower and
Lender with respect to the subject matter of this Agreement and other Loan
Documents. Notwithstanding anything in this Agreement and the other Loan
Documents to the contrary, upon the execution and delivery of this Agreement by
Borrower and Lender, any bid proposals or loan commitments with respect to the
transactions contemplated by this Agreement shall be deemed null and void and of
no further force and effect and
18
the terms and conditions of this Agreement shall control notwithstanding that
such terms and conditions may be inconsistent with or vary from those set forth
in such bid proposals or loan commitments.
K. Forum Selection; Jurisdiction; Venue; Choice of Law. Borrower
acknowledges that this Agreement and the other Loan Documents were substantially
negotiated in the State of Arizona, this Agreement and the other Loan Documents
were executed and delivered by Borrower and Lender in the State of Arizona, all
payments under the Equipment Note will be delivered in the State of Arizona and
there are substantial contacts between the parties and the transactions
contemplated herein and the State of Arizona. For purposes of any action or
proceeding arising out of this Agreement or any of the other Loan Documents, the
parties hereto hereby expressly submit to the jurisdiction of all federal and
state courts located in the State of Arizona and Borrower consents that it may
be served with any process or paper by registered mail or by personal service
within or without the State of Arizona in accordance with applicable law.
Furthermore, Borrower waives and agrees not to assert in any such action, suit
or proceeding that it is not personally subject to the jurisdiction of such
courts, that the action, suit or proceeding is brought in an inconvenient forum
or that venue of the action, suit or proceeding is improper. It is the intent of
the parties hereto that all provisions of this Agreement and the Equipment Note
shall be governed by and construed under the laws of the State of Arizona,
without giving effect to its principles of conflicts of law. To the extent that
a court of competent jurisdiction finds Arizona law inapplicable with respect to
any provisions of this Agreement or the Equipment Note, then, as to those
provisions only, the laws of the state(s) where the Equipment is located shall
be deemed to apply. Nothing in this Section shall limit or restrict the right of
Lender to commence any proceeding in the federal or state courts located in the
state(s) in which the Equipment is located to the extent Lender deems such
proceeding necessary or advisable to exercise remedies available under this
Agreement or the other Loan Documents.
L. Counterparts. This Agreement and the other Loan Documents may be
executed in one or more counterparts, each of which shall be deemed an original.
M. Assignment by Lender; Binding Effect. Lender may assign in whole or
in part its rights under this Agreement. Upon any unconditional assignment of
Lender's entire right and interest hereunder, Lender shall automatically be
relieved, from and after the date of such assignment, of liability for the
performance of any obligation of Lender contained herein. This Agreement and the
other Loan Documents shall be binding upon and inure to the benefit of Borrower
and Lender and their respective successors and permitted assigns, including,
without limitation, any United States trustee, any debtor in possession or any
trustee appointed from a private panel.
N. Survival. Except for the conditions of Closing set forth in Section
2, which shall be satisfied or waived as of the Closing Date, all
representations, warranties, agreements, obligations and indemnities of Borrower
and Lender set forth in this Agreement and the other Loan Documents shall
survive the Closing.
O. Waiver of Jury Trial and Punitive, Consequential, Special and
Indirect Damages. BORROWER AND Lender HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO
ANY AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM
BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER OR ITS SUCCESSORS WITH
RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, ANY
OF THE OTHER LOAN DOCUMENTS OR ANY DOCUMENT CONTEMPLATED HEREIN OR RELATED
HERETO. THIS WAIVER BY THE PARTIES HERETO OF ANY RIGHT EITHER MAY HAVE TO A
TRIAL BY JURY HAS BEEN NEGOTIATED AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.
FURTHERMORE, BORROWER AND LENDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE THE RIGHT EITHER MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND
INDIRECT DAMAGES FROM THE OTHER AND ANY OF THE OTHER'S AFFILIATES, OFFICERS,
DIRECTORS OR EMPLOYEES OR ANY OF THEIR SUCCESSORS WITH RESPECT TO ANY AND ALL
ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY
EITHER PARTY AGAINST THE OTHER OR ANY OF THE OTHER'S AFFILIATES, OFFICERS,
DIRECTORS OR EMPLOYEES OR ANY OF THEIR SUCCESSORS WITH RESPECT TO ANY MATTER
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, ANY OF THE OTHER LOAN
DOCUMENTS OR ANY DOCUMENT CONTEMPLATED HEREIN OR RELATED HERETO. THE WAIVER BY
BORROWER AND LENDER OF ANY RIGHT THEY MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL,
SPECIAL AND INDIRECT DAMAGES HAS BEEN NEGOTIATED BY THE PARTIES HERETO AND IS AN
ESSENTIAL ASPECT OF THEIR BARGAIN.
19
P. Estoppel Certificate. At any time, and from time to time, each party
agrees, promptly and in no event later than fifteen (15) days after a request
from the other party, to execute, acknowledge and deliver to the other party a
certificate in the form supplied by the other party, certifying as to such
information reasonably requested by the other party in connection with this
Agreement and the other Loan Documents.
Q. Transfers, Participations and Securitizations. Transfers,
Participations and Securitizations. (1) A material inducement to Lender's
willingness to complete the transactions contemplated by the Loan Documents is
Borrower's agreement that Lender may, at any time, complete a Transfer,
Participation or Securitization with respect to the Equipment Note, this
Agreement and/or any of the other Loan Documents or any or all servicing rights
with respect thereto.
(2) Borrower agrees to cooperate in good faith with Lender in
connection with any such Transfer, Participation and/or Securitization of the
Equipment Note, this Agreement and/or any of the other Loan Documents, or any or
all servicing rights with respect thereto, including, without limitation (i)
providing such documents, financial and other data, and other information and
materials (the "Disclosures") which would typically be required with respect to
the Borrower Parties by a purchaser, transferee, assignee, servicer,
participant, investor or rating agency involved with respect to such Transfer,
Participation or Securitization, as applicable; provided, however, the Borrower
Parties shall not be required to make Disclosures of any confidential
information or any information which has not previously been made public unless
required by applicable federal or state securities laws; and (ii) amending the
terms of the transactions evidenced by the Loan Documents to the extent
necessary so as to satisfy the requirements of purchasers, transferees,
assignees, servicers, participants, investors or selected rating agencies
involved in any such Transfer, Participation or Securitization, so long as such
amendments would not have a material adverse effect upon the Borrower Parties or
any of the primary economic terms of the transactions contemplated hereunder.
Lender shall be responsible for preparing at its expense any documents
evidencing the amendments referred to in the preceding subitem (ii).
(3) Borrower consents to Lender providing the Disclosures, as well as
any other information which Lender may now have or hereafter acquire with
respect to the Premises, the Equipment or the financial condition of the
Borrower Parties to each purchaser, transferee, assignee, servicer, participant,
investor or rating agency involved with respect to each Transfer, Participation
and/or Securitization, as applicable. Lender and Borrower (and their respective
Affiliates) shall each pay their own attorneys fees and other out-of-pocket
expenses incurred in connection with the performance of their respective
obligations under this Section.
(4) Notwithstanding anything to the contrary contained in this
Agreement or the other Loan Documents: (a) an Event of Default or a breach or
default, after the passage of all applicable notice and cure or grace periods,
under any Loan Document or Other Agreement which relates to a loan or
sale/leaseback transaction which has not been the subject of a Securitization,
Participation or Transfer shall not constitute an Event of Default or a breach
or default, as applicable, under any Loan Document or Other Agreement which
relates to a loan which has been the subject of a Securitization, Participation
or Transfer; (b) an Event of Default or a breach or default, after the passage
of all applicable notice and cure or grace periods, under any Loan Document or
Other Agreement which relates to a loan which is included in any Loan Pool shall
not constitute an Event of Default or a breach or default, as applicable, under
any Loan Document or Other Agreement which relates to a loan which is included
in any other Loan Pool; (c) the Loan Documents and Other Agreements
corresponding to the loans in any Loan Pool shall not secure the obligations of
any of the Borrower Parties and/or any Affiliate of any of the Borrower Parties
contained in any Loan Document or Other Agreement which does not correspond to a
loan in such Loan Pool; and (d) the Loan Documents and Other Agreements which do
not correspond to a loan in any Loan Pool shall not secure the obligations of
any of the Borrower Parties and/or any Affiliate of any of the Borrower Parties
contained in any Loan Document or Other Agreement which does correspond to a
loan in such Loan Pool.
10. Substitution. If Borrower exercises its right to substitute a
Substitute Premises for a Mortgaged Premises pursuant to the terms of the Loan
Agreement and the Equipment Loan is still outstanding, Borrower shall substitute
Substitute Equipment located at such Substitute Premises for the Equipment
located at such Mortgaged Premises, such substitution to occur simultaneously
with the closing of the substitution of such Substitute Premises and be
otherwise on the following conditions:
(1) The proposed Substitute Equipment must:
20
(a) be suitable for use in a Permitted Concept and
in good condition and repair, ordinary wear and tear excepted;
(b) be owned by and vested in Borrower, free and
clear of all liens and encumbrances; and
(c) have a fair market value no less than the greater
of the then fair market value of the Equipment to be replaced
or the fair market value of such Equipment as of the Closing,
all as reasonably determined by Lender's in-house inspectors
and underwriters.
(2) Lender shall have inspected and approved the Substitute
Equipment utilizing Lender's customary equipment inspection and
underwriting approval criteria. Borrower shall have reimbursed Lender
for all of its costs and expenses incurred with respect to such
proposed substitution, including, without limitation, Lender's
inspectors' costs and expenses with respect to the proposed Substitute
Equipment. Borrower shall be solely responsible for the payment of all
costs and expenses resulting from such proposed substitution,
including, without limitation, UCC search and litigation search
charges, attorneys' fees of Borrower and reasonable attorneys' fees and
expenses of Lender, stamp taxes, mortgage taxes, transfer fees, and
escrow, filing and recording fees (including preparation, filing and
recording fees for UCC continuation statements);
(3) Lender shall have received UCC search results indicating
that the Substitute Equipment is free and clear of all liens, security
interests and encumbrances;
(4) Borrower shall deliver, or cause to be delivered, such
legal opinions as Lender may reasonably require with respect to the
proposed substitution, all in a form and substance which would be
satisfactory to a prudent institutional mortgage loan lender and its
counsel. If the Equipment Loan is part of a Securitization, such
opinions shall include, without limitation, an opinion of counsel to
the rating agencies which have issued ratings in connection with such
Securitization that the substitution does not constitute a "significant
modification" of such Equipment Loan under Section 1001 of the Internal
Revenue Code or otherwise cause a tax to be imposed on a "prohibited
transaction" by any REMIC Trust;
(5) no Event of Default shall have occurred and be
continuing under any of the Loan Documents;
(6) Borrower Parties and the Lessee Parties shall have
executed such documents as are comparable to the security documents
executed and delivered at Closing, as applicable (but with such
revisions as may be reasonably required by Lender to address matters
unique to the Substitute Equipment) or amendments to such documents,
including, without limitation, an amendment to this Agreement, an
amendment to the Master Lease and UCC-1 Financing Statements (the
"Substitute Documents"), to provide Lender with a first priority lien
on and security interest in the proposed Substitute Equipment, and all
other rights, remedies and benefits with respect to the proposed
Substitute Equipment which Lender holds in the Equipment to be
replaced, all of which documents shall be in form and substance
reasonably satisfactory to Lender;
(7) the representations and warranties set forth in the
Substitute Documents and Section 4 of this Agreement applicable to the
proposed Substitute Premises and Substitute Equipment shall be true and
correct in all material respects as of the date of substitution, and
Borrower shall have delivered to Lender an officer's certificate to
that effect;
(8) Borrower shall have delivered to Lender certificates of
insurance and insurance policies showing that all insurance required by
the Substitute Documents is in full force and effect;
Upon satisfaction of the foregoing conditions with respect to
the release of the Equipment to be replaced:
21
(a) the proposed Substitute Equipment shall be deemed
substituted for the Equipment to be replaced;
(b) the Substitute Equipment shall be referred to herein as
"Equipment" and shall secure the same Obligations as were secured by
the Equipment that was replaced;
(c) the Substitute Documents shall be dated as of the date
of the substitution; and
(d) Lender will release, or cause to be released, the lien of
this Agreement, the UCC-1 Financing Statements and any other Loan
Documents encumbering the replaced Equipment; and
(e) at the closing of the substitution, Borrower shall convey
without warranty or recourse the replaced Equipment to a third party
other than any of the Borrower Parties.
11. Assignment of Rents and Equipment Leases. (i) Borrower hereby
assigns, transfers, conveys and sets over to Lender all of Borrower's estate,
right, title and interest in, to and under the Equipment Leases, together with
any changes, extensions, revisions or modifications thereof and all rights,
powers, privileges, options and other benefits of Borrower as the lessor under
the Equipment Leases regarding the current lessees and any future lessees of any
of the Equipment, and all rents, issues, profits, royalties, income and other
benefits derived from the Equipment Leases, whether now due, past due or to
become due (collectively, the "Rents"). Borrower irrevocably appoints Lender its
true and lawful attorney-in-fact, at the option of Lender, at any time and from
time to time upon an Event of Default, to take possession and control of the
Equipment, pursuant to Borrower's rights under the Equipment Leases, to exercise
any of Borrower's rights under the Equipment Leases and to demand, receive and
enforce payment, to give receipts, releases and satisfaction and to xxx, in the
name of Borrower or Lender, for all of the Rents. The power of attorney granted
hereby shall be irrevocable and coupled with an interest and shall terminate
only upon the payment of all sums due Lender for all losses, costs, damages,
fees and expenses whatsoever associated with the exercise of this power of
attorney, and Borrower hereby releases Lender from all liability (other than as
a result of the gross negligence or willful misconduct of Lender) whatsoever for
the exercise of the foregoing power of attorney and all actions taken pursuant
thereto. The consideration received by Borrower to execute and deliver this
assignment and the liens and security interests created herein is legally
sufficient and will provide a direct economic benefit to Borrower. It is
intended by Borrower and Lender that the assignment set forth herein constitutes
an absolute assignment and not merely an assignment for additional security.
Notwithstanding the foregoing, this assignment shall not be construed to bind
Lender to the performance of any of the covenants, conditions or provisions of
Borrower contained in the Equipment Leases or otherwise to impose any obligation
upon Lender, and so long as no Event of Default has occurred and is continuing,
Borrower shall have a license, revocable upon the occurrence and during the
continuance of an Event of Default, to possess and control the Equipment and
collect and receive all Rents. Upon the occurrence and during the continuance of
an Event of Default, such license shall be automatically revoked.
(ii) Upon the occurrence and during the continuance of any Event of
Default, Lender may, at any time without notice (except if required by
applicable law), either in person, by agent or by a court-appointed receiver,
regardless of the adequacy of Lender's security, and at its sole election
(without any obligation to do so), enter upon the Premises and take possession
and control of the Equipment, or any part thereof, to perform all acts necessary
and appropriate to operate and maintain any of the Equipment, including, but not
limited to, execute, cancel or modify the Equipment Leases, make repairs to any
of the Equipment, execute or terminate contracts providing for the management or
maintenance of any of the Equipment, all on such terms as are deemed best to
protect the security of this Agreement, and in Lender's or Borrower's name, xxx
for or otherwise collect such Rents as specified in this Agreement as the same
become due and payable, including, but not limited to, Rents then due and
unpaid. Lender may so xxx for or otherwise collect such Rents with or without
taking possession of any of the Equipment. Borrower shall hold that portion of
the Rents which is sufficient to discharge all current sums due under the
Equipment Note for use in the payment of such sums. Borrower agrees that upon
the occurrence and during the continuance of an Event of Default, each lessee of
any of the Equipment shall make its rent payable to and pay such rent to Lender
(or Lender's agents) on Lender's written demand therefor, delivered to such
lessee personally, by mail, or by delivering such demand to each rental unit,
without any liability on the part of said lessee to inquire further as to the
existence of an Event of Default by Borrower.
22
(iii) All Rents collected subsequent to any Event of Default shall be
applied at the direction of, and in such order as determined by, Lender to the
costs, if any, of taking possession and control of and managing the Equipment
and collecting such amounts, including, but not limited to, reasonable
attorney's fees, receiver's fees, premiums on receiver's bonds, costs of repairs
to any of the Equipment, premiums on insurance policies, taxes, assessments and
other charges on any of the Equipment, and the costs of discharging any
obligation or liability of Borrower with respect to the Equipment Leases and to
the sums secured by this Agreement. Lender or the receiver shall have access to
the books and records used in the operation and maintenance of the Equipment and
shall be liable to account only for those Rents actually received.
(iv) Lender shall not be liable to Borrower, anyone claiming under or
through Borrower or anyone having an interest in any of the Equipment by reason
of anything done or left undone by Lender hereunder, except to the extent of
Lender's gross negligence or willful misconduct.
(v) Any entering upon the Premises and taking possession and control of
any of the Equipment by Lender or the receiver and any application of Rents as
provided herein shall not cure or waive any Event of Default hereunder or
invalidate any other right or remedy of Lender under applicable law or provided
therein.
23
IN WITNESS WHEREOF, Borrower and Lender have entered into this
Agreement as of the Closing Date.
Lender:
GE CAPITAL FRANCHISE FINANCE CORPORATION, a Delaware
corporation
By /s/ Xxxxxx Xxxxxx
------------------------------------------------------
Printed Name Xxxxxx Xxxxxx
--------------------------------------------
Its Senior Vice President
-----------------------------------------------------
BORROWER:
TW REAL ESTATE II, LLC, a Delaware limited liability
company
By TW Management II, Inc., a Delaware corporation,
its managing member
By /s/ Xxxxxxx X. Mattinlgy
------------------------------------------------------
Xxxxxxx X. Xxxxxxxxx
Its Chief Financial Officer
U.S. Federal Tax Identification Number:
00-0000000
Organization Identification Number:
3604529
Principal Place of Business:
Louisville, Kentucky
24
POWER OF ATTORNEY
Lender may act as attorney-in-fact or otherwise on behalf of Borrower
pursuant to Sections 2(b), 3, 5.J, 7.B and 11 of this Agreement. This power of
attorney is coupled with an interest, is durable and is not affected by
subsequent disability or incapacity of the principal or lapse of time.
SLR Glennone X. Xxxxxxxxx
---------------- --------------------
Witness Borrower
WITNESS
In accordance with the requirements of Arizona Revised Statutes Section
14-5506 and other applicable law, the undersigned has executed this Agreement
for the purpose of witnessing the grant of the powers of attorney by Borrower to
Lender.
Xxxxxx Xxxx
------------------------------------
25
STATE OF ARIZONA )
) SS.
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me on December 31,
2002 by __Harold Vinson__________________, __Senior Vice President________ of GE
Capital Franchise Finance Corporation, a Delaware corporation, on behalf of the
corporation.
/s/ Xxxxx Xxxxxxxx
Notary Public
My Commission Expires: February 29, 2004 [stamp and seal]
STATE OF ARIZONA )
) SS.
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me on December 31,
2002 by Xxxxxxx X. Xxxxxxxxx, Chief Financial Officer of TW Management II, Inc.,
a Delaware corporation, managing member of TW Real Estate II, LLC, a Delaware
limited liability company, on behalf of the limited liability company.
/s/ Xxxxx Xxxxxxxx
Notary Public
My Commission Expires:February 29, 2003 [stamp and seal]
26
EXHIBIT A
PREMISES
ddress
FFC No. Unit No. A City State
------- -------- - ---- -----
8001-5179 8 0000 Xxxxx Xxxx Xxxxxxxxxx XX
0000-0000 17 0000 Xxxxxxx Xxxx Xxxxxxxx XX
0000-0000 18 0000 Xxxxxxxxxxx Xxxx Xxxxxxx Xxxxx XX
0000-0000 24 0000 Xxxxxxxxx Xxxxxx Xxxxxxxxx XX
0000-0000 35 0000 Xxxxxxx Xxxx Xxxxxxx XX
0000-0000 36 0000 X. Xxxxx Xxxxxx Xxxxxxxx XX
0000-0000 37 000 Xxxxxx Xxxxxx Xxxxx Xxxxxxxxx XX
0000-0000 40 0000 XX 00 Xxxx Xx. Xxxxx XX
0000-0000 41 0000 Xxxx Xxxxx Xxxxxx Xxxxxxxx XX
0000-0000 43 0000 Xxxx Xxxxxxx Xxxx Xxxxxxxxx XX
0000-0000 44 0000 Xxxxxxxx Xxxxxx Xxxxxxxxxx XX
0000-0000 45 0000 Xxxx Xxxx Xx. Xxxxx XX
0000-0000 46 0000 XX Xxxxxxx 00 Xxxxx Xxxxxxxxx XX
0000-0000 48 0000 Xxxxxxxxx Xxxxxx Xxxxxxxxxx XX
0000-0000 52 0000 Xxxxxxxxxxx Xxxxxxx Xxxxxxxxxx XX
27
SCHEDULE I
LEASED PREMISES
FFC No. Unit No. Address City State
------- -------- ------- ---- -----
8001-5200 40 0000 XX 00 Xxxx Xx. Xxxxx XX
0000-0000 41 0000 Xxxx Xxxxx Xxxxxx Xxxxxxxx XX
0000-0000 43 0000 Xxxx Xxxxxxx Xxxx Xxxxxxxxx XX
0000-0000 44 0000 Xxxxxxxx Xxxxxx Xxxxxxxxxx XX
0000-0000 45 0000 Xxxx Xxxx Xx. Xxxxx XX
0000-0000 46 0000 XX Xxxxxxx 00 Xxxxx Xxxxxxxxx XX
0000-0000 48 0000 Xxxxxxxxx Xxxxxx Xxxxxxxxxx XX
0000-0000 52 0000 Xxxxxxxxxxx Xxxxxxx Xxxxxxxxxx XX
28
