EXHIBIT K-2(A)
FORM OF FRANCHISEE NOTE
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NOTE
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$____________ (U.S.) _______ ___, 199__
FOR VALUE RECEIVED, _________________________________________, a
___________________________ having an office at __________________________
("MAKER") promises to pay to the order of BANCO POPULAR DE PUERTO RICO, having
an office at 0 Xxxx 00/xx/ Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (hereinafter
referred to as "PAYEE"), or at such place as the holder hereof may from time to
time designate in writing, the principal sum of
__________________________________ DOLLARS ($__________) or so much thereof as
may be outstanding (THE "PRINCIPAL AMOUNT") in lawful money of the United States
of America with interest on the Principal Amount outstanding from time to time
to be computed from the date the funds are advanced by Payee at the Applicable
Interest Rate (hereinafter defined) as provided herein. Defined terms used in
this Note shall have the meanings ascribed thereto in paragraph 1 hereof.
1. DEFINITIONS. The following terms shall have the following meanings:
"APPLICABLE INTEREST
RATE" (i) During the Initial Period, the Initial Period
Interest Rate,
(ii) during the Second Period, the Second Period
Interest Rate, [and (iii) during the Third Period, the
Third Period Interest Rate.]
"APPLICABLE TREASURY
RATE" The Treasury Rate plus ______ basis points.
"FIRST PERIODIC
AMORTIZATION DATE" [First day of month occurring six (6) months after
closing date.]
"FIRST PERIODIC
INTEREST DATE" [First day of first month after closing date].
"INITIAL PERIOD" The period commencing on the date of this Note and
ending on [date preceding first (1/st/) anniversary of
closing date].
"INITIAL PERIOD INTEREST
RATE" A per annum rate equal to the Prime Rate in effect
from time to time.
"LOAN DOCUMENTS" As defined in the Mortgage.
"MATURITY DATE" ____________.
"MORTGAGE" The Mortgage, Security Agreement and Assignment of
Leases and Rents, dated as of the date hereof, made by
Maker, as mortgagor, to Xxxxx, as mortgagee, as the
same may be amended or supplemented from time to time.
"PERIODIC AMORTIZATION
AMOUNT" $__________.
"PERIODIC AMORTIZATION
DATE" The first (1st) day of each calendar month occurring
after the First Periodic Amortization Date and prior
to the Maturity Date.
"PERIODIC AMORTIZATION
PAYMENT" A periodic payment of a portion of the Principal
Amount equal to the Periodic Amortization Amount.
"PERIODIC INTEREST DATE" The first (1st) day of each calendar month occurring
after the First Periodic Interest Date and prior to
the Maturity Date.
"PRIME RATE" The prime commercial lending rate of Payee as publicly
announced (or published internally) by Payee to be in
effect from time to time, or, if the actual cost to
Payee of its overnight federal funds borrowings
exceeds the announced or published prime rate, the
overnight federal funds rate. The Prime Rate is not
the lowest rate charged by Payee for commercial or
other types of loans, it being understood that the
Prime Rate is only one of the bases for computing
interest on loans made by Payee and that, by basing
interest on the Prime Rate, Xxxxx has not committed to
charge and Maker has not in any way bargained for
interest based on a lower or the lowest rate at which
Payee may now or in the future make loans to other
borrowers. Any interest rate based on the Prime Rate
shall be adjusted on and as of the effective date of
any change in the Prime Rate.
"PRINCIPAL AMOUNT" _______________ Dollars ($__________(U.S.)) or so much
thereof as may be outstanding from time to time.
"SECOND PERIOD" The period commencing on (first (1/st/) anniversary of
closing date) and ending on [(the Maturing Date/date
preceding 7/th/ anniversary of closing date)].
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"SECOND PERIOD
INTEREST RATE" [To be elected by Maker as of closing date] Either (i)
a floating per annum rate equal to the Prime Rate plus
____ basis points, or (ii) a fixed per annum rate
equal to the Applicable Treasury Rate. The Second
Period Interest Rate shall remain in effect for the
entire Second Period.
["THIRD PERIOD" The period commencing on [the 7/th/ anniversary of the
closing date] and ending on the Maturity Date.]
["THIRD PERIOD
INTEREST RATE" ________________.]
"TREASURY RATE" The yield on United States Treasury notes having a
maturity closest to the Maturity Date as in effect on
the date of this Note based on the rate published on
such date in The Wall Street Journal.
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2. INTEREST RATE. During the entire period of this Note occurring prior
to maturity (whether such maturity occurs by acceleration or otherwise), this
Note shall bear interest commencing on the date hereof at the Applicable
Interest Rate.
3. INTEREST PAYMENTS. Xxxxx agrees to pay interest from the date hereof
on the Principal Amount at a rate per annum equal to the Applicable Interest
Rate by periodic payments of interest in arrears commencing on the First
Periodic Interest Date and continuing on each Periodic Interest Date thereafter
until the entire Principal Amount is paid. Interest shall also be due on the
Maturity Date at the Applicable Interest Rate for the period from the Periodic
Interest Date immediately preceding the Maturity Date up to and including the
Maturity Date. Interest shall be calculated on the basis of a 360-day year for
the actual number of days involved. After maturity, the Principal Amount and
accrued interest thereon, shall, at Xxxxxx's option, be payable on demand.
4. PRINCIPAL PAYMENTS. In addition to the payment of interest hereunder,
Xxxxx agrees to pay the Principal Amount now or hereafter owing under this Note
prior to the Maturity Date by making Periodic Amortization Payments that are due
and payable during the term of this Note commencing on the First Periodic
Amortization Date, and thereafter on each succeeding Periodic Amortization Date,
and the entire unpaid Principal Amount, and all accrued and unpaid interest
thereon, shall be due and payable on the Maturity Date.
5. EVENTS OF DEFAULT; ATTORNEY'S FEES. The whole of the principal sum of
this Note, together with all interest accrued and unpaid thereon and all other
sums due under this Note and the other Loan Documents (all such sums hereinafter
collectively referred to as the "Debt") shall without notice become immediately
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due and payable at the option of Payee if any
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payment required in this Note is not paid within five (5) days of the date when
due or on the happening of any other default, after the expiration of any
applicable notice and grace periods, herein or under the terms of the Mortgage
or any other Loan Document (hereinafter collectively an "Event of Default"). All
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of the terms, covenants and conditions contained in the Mortgage and the other
Loan Documents are hereby made a part of this Note to the same extent and with
the same force as if they were fully set forth herein. In the event that it
should become necessary to employ counsel to collect the Debt or to protect or
foreclose the security hereof, Maker also agrees to pay reasonable attorney's
fees for the services of such counsel whether or not suit is brought.
6. PREPAYMENT. (a) The Note may be prepaid in whole or in part, together
with interest on the amount being prepaid up to the date of such payment and, in
the case of prepayment in full, all others amounts due and payable by Maker
under this Note, the Mortgage and the other Loan Documents, at any time upon
giving Payee not less than sixty (60) days prior written notice, provided that,
at the time of such prepayment (whether by voluntary prepayment, involuntary
prepayment following acceleration, or otherwise), Maker shall pay to Payee an
additional prepayment consideration [IF PRIME RATE IN EFFECT AT TIME OF PAYOFF -
equal to (i) three percent (3%) of the Principal Amount being prepaid, if
prepayment occurs prior to [1st four years of Loan term], (ii) two percent (2%)
of the Principal Amount being prepaid, if prepayment occurs prior to [period
between 4/th/ anniversary of closing and date preceding 7/th/ anniversary of
closing], and (iii) one percent (1%) of the Principal Amount being prepaid, if
prepayment occurs at any time on or after [7/th/ anniversary of closing date and
prior to Maturity Date]/IF APPLICABLE TREASURY RATE IN EFFECT AT TIME OF PAYOFF-
calculated as follows: (i) the present value as of the date of prepayment of the
remaining scheduled payments of principal and interest (including any ballon
payment) determined by discounting such payments at the "Monthly Equivalent
Treasury Note Rate" (hereinafter defined) less (ii) the amount of principal
being prepaid, provided such difference shall not be less than zero. The Monthly
Equivalent Treasury Note Rate for purposes of this provision shall be the rate
which when compounded monthly results in a yield that is equivalent to the yield
on the U.S. Treasury Note plus ___ percent (__%) which is compounded semi-
annually, having a maturity date closest to the Maturity Date. In no event shall
the prepayment consideration be less than one percent (1%) of the then
outstanding Principal Amount.]
(b) Any prepayment of the Principal Amount, whether in whole or in part,
shall be accompanied by payment of all accrued interest on the Principal Amount
being prepaid and shall be applied to installments of the Periodic Amortization
Payments in inverse order of maturity. Sums prepaid shall not be readvanced by
Xxxxx.
7. DEFAULT RATE. Maker does hereby agree that upon the occurrence of an
Event of Default or upon the failure of Maker to pay the Debt in full on the
Maturity Date, Payee shall be entitled to receive and Maker shall pay interest
on the entire unpaid principal sum from the date of an Event of Default at the
rate (the "Default Rate") equal to the Applicable Interest Rate then in effect
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plus five hundred (500) basis points. Interest shall accrue hereunder at the
Default Rate from the occurrence of the Event of Default until the actual
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receipt and collection of the Debt. This charge shall be added to the Debt, and
shall be deemed secured by the Mortgage. This clause, however, shall not be
construed as an agreement or privilege to extend the date of the payment of the
Debt, nor as a waiver of any other right or remedy accruing to Payee by reason
of the occurrence of any Event of Default. In the event the Default Rate is
above the maximum rate permitted by applicable law, the Default Rate shall be
the maximum rate permitted by applicable law.
8. LOAN DOCUMENTS. This Note is secured by the Mortgage and the other
Loan Documents. Whenever used, the singular number shall include the plural, the
plural the singular, and the words "Payee" and "Maker" shall include their
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respective successors, assigns, heirs, executors and administrators.
9. NO USURY. This Note is subject to the express condition that at no
time shall Maker be obligated or required to pay interest on the Debt at a rate
which could subject Payee to either civil or criminal liability as a result of
being in excess of the maximum interest rate which Maker is permitted by
applicable law to contract or agree to pay. If by the terms of this Note, Maker
is at any time required or obligated to pay interest on the Debt at a rate in
excess of such maximum rate, the rate of interest due under this Note shall be
deemed to be immediately reduced to such maximum rate and all previous payments
in excess of the maximum rate shall be deemed to have been payments in reduction
of principal and not on account of the interest due hereunder.
10. LATE CHARGE. If any sum payable under this Note is not paid within
fifteen (15) days after the date on which it is due, Maker shall pay to Payee
upon demand an amount equal to the lesser of two percent (2%) of such unpaid sum
or the maximum amount permitted by applicable law to defray the expenses
incurred by Payee in handling and processing such delinquent payment and to
compensate Payee for the loss of the use of such delinquent payment and such
amount shall be secured by the Mortgage and the other Loan Documents.
11. NO ORAL MODIFICATIONS. This Note may not be modified, amended, waived,
extended, changed, discharged or terminated orally or by any act or failure to
act on the part of Maker or Payee, but only by an agreement in writing signed by
the party against whom enforcement of any modification, amendment, waiver,
extension, change, discharge or termination is sought.
12. WAIVER. Maker and all others who are or who may become liable for the
payment of all or any part of the Debt do hereby severally waive presentment and
demand for payment, notice of dishonor, protest, notice of protest, and non-
payment, and notice of intent to accelerate the maturity hereof (and of such
acceleration). No release of any security for the Debt or extension of time for
payment of this Note or any installment hereof, and no alteration, amendment or
waiver of any provision of this Note, the Mortgage or the other Loan Documents
made by agreement between Payee and any other person or party shall release,
modify, amend, waive, extend, change, discharge, terminate or affect the
liability of Maker, and any other who may become liable for the payment of all
or any part of the Debt, under this Note, the Mortgage or the other Loan
Documents.
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13. AUTHORITY OF MAKER. Maker (and the undersigned representative of
Maker, if any) represents that Maker has full power, authority and legal right
to execute, deliver and perform its obligations pursuant to this Note, the
Mortgage and the other Loan Documents and that this Note, the Mortgage and the
other Loan Documents constitute valid and binding obligations of Maker.
14. GOVERNING LAW. This Note shall be governed and construed in accordance
with the laws of the State of New York without regard to principles of conflict
of laws.
15. NOTICES. Any notice, demand, statement, request or consent made
hereunder shall be in writing to the other party hereto at its address set forth
below or at such other address as such party may designate by notice to the
other party hereto and shall be deemed given (i) on receipt, if mailed, by
certified or registered U.S. mail, return receipt requested, postage prepaid;
(ii) on receipt, if delivered, fee prepaid, to a national overnight delivery
service (such as Federal Express, Purolater Courier, U.P.S. Next Day Air); (iii)
when delivered, if delivered by hand, as evidenced by a signed receipt; or (iv)
the date of transmission of notice sent by telecopier or facsimile machine (with
a copy thereof sent in accordance with clause (ii) above) provided notice was
transmitted on a Business Day (hereinafter defined) otherwise notice shall be
deemed given on the next Business Day:
To Maker:
___________________
___________________
___________________
Attention:_________
Telephone: ( )__-__
Telecopy: ( )__-__
With a courtesy copy to:
___________________
___________________
___________________
Attention:_________
Telephone: ( )__-__
Telecopy: ( )__-__
To Payee:
Banco Popular de Puerto Rico
0 Xxxx 00/xx/ Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxxx Xxx
Vice President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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With a courtesy copy to:
XxXxxxxxx Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
A "Business Day" is any day other than a Saturday or Sunday, or a day on which
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banking and savings and loan institutions in the State of New York are
authorized or obligated by law or executive order to remain closed. Refusal to
accept delivery of any notice shall be deemed to be receipt of such notice.
16. MISCELLANEOUS. (a) The rights and remedies of Payee as provided in
this Note, the Mortgage or in the other Loan Documents shall be cumulative and
concurrent; may be pursued separately, successively, or together at the sole
discretion of Payee, may be exercised as often as occasion for their exercise
shall arise; and in no event shall the failure to exercise any such right or
remedy be construed as a waiver or release of it.
(b) If any provision of this Note is held to be invalid or
unenforceable by a court of competent jurisdiction, the other provisions of this
Note shall remain in full force and effect.
(c) Any failure by Xxxxx to insist upon strict performance by Maker
of any of the provisions of this Note, the Mortgage or the other Loan Documents
shall not be deemed to be a waiver of any of the terms or provisions of this
Note, the Mortgage or the other Loan Documents, and Payee shall have the right
thereafter to insist upon strict performance by Maker of any and all of them.
(d) All times, wherever stated herein, shall be of the essence of
this Note.
17. ASSIGNMENT BY PAYEE. Payee shall have the right, exercisable at any
time and from time to time, to sell, transfer or assign this Note, the Mortgage
and the other Loan Documents, or grant participations therein, or issue
certificates or securities evidencing a beneficial interest therein in a rated
or unrated public offering or private placement, and Payee may forward to any
purchaser, transferee, assignee, servicer, participant, investor or credit
rating agency rating such securities (collectively, an "Investor") or
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prospective Investor all documents and information in Xxxxx's possession with
respect to Maker, the Mortgaged Property (as defined in the Mortgage) and the
Loan Documents as such Investor or prospective Investor may request.
18. WAIVER OF TRIAL BY JURY. MAKER AND PAYEE HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED ON
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THE LOAN EVIDENCED BY THIS NOTE OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS NOTE, THE MORTGAGE OR ANY OF THE OTHER LOAN DOCUMENTS, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER VERBAL OR WRITTEN) OR ACTION OF
MAKER OR PAYEE. THIS PROVISION IS A MATERIAL INDUCEMENT FOR XXXXX'S MAKING OF
THE LOAN SECURED BY THE MORTGAGE AND THE OTHER LOAN DOCUMENTS.
IN WITNESS WHEREOF, Xxxxx has duly executed this Note, intending to be
legally bound, the day and year first above written.
_______________________________,
a ___________________________
By:____________________________
Name:__________________________
Title:_________________________
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EXHIBIT K-2(B)
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FORM OF FRANCHISEE OWNED PROPERTY MORTGAGE
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MORTGAGE, SECURITY AGREEMENT AND
ASSIGNMENT OF LEASES AND RENTS
BY AND BETWEEN
_____________________
_____________________
__________
_______________________
("MORTGAGOR")
AND
BANCO POPULAR DE PUERTO RICO
0 XXXX 00XX XXXXXX
XXX XXXX, XXX XXXX 00000
("MORTGAGEE")
DATED AS OF _________, 199__
LOCATION OF PREMISES:
RECORDING REQUESTED BY AND
WHEN RECORDED - RETURN TO:
Xxxxx X. Xxxxx, Esq.
XxXxxxxxx Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
THIS MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF LEASES AND RENTS (the
"Mortgage"), made as of the __ day of _____, 199_, by _______________________, a
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__________________, having an office at ____________
_________________________________________________ ("Mortgagor") and BANCO
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POPULAR DE PUERTO RICO, having offices at 0 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 ("Mortgagee").
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W I T N E S S E T H:
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To secure the payment of an indebtedness in the principal sum of
________________________________ DOLLARS ($___________), lawful money of the
United States of America, to be paid with interest according to a certain note
dated the date hereof made by Mortgagor to Mortgagee (the note together with all
extensions, renewals or modifications thereof being hereinafter collectively
called the "Note") (said indebtedness, interest and all other sums due hereunder
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and under the Note being collectively called the "Debt"), Xxxxxxxxx has
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mortgaged, given, granted, bargained, sold, aliened, conveyed, confirmed,
pledged, assigned, and hypothecated and by these presents does hereby mortgage,
give, grant, bargain, sell, alien, convey, confirm, pledge, assign and
hypothecate unto Mortgagee the real property described in Exhibit A attached
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hereto (the "Land") and the buildings, structures, fixtures, additions,
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enlargements, extensions, modifications, repairs, replacements and improvements,
now or hereafter located thereon (the "Improvements");
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TOGETHER WITH: all right, title, interest and estate of Xxxxxxxxx now
owned, or hereafter acquired, in and to the following property, rights,
interests and estates (the Land and the Improvements together with the following
property, rights, interests and estates being hereinafter described are
collectively referred to herein as the "Mortgaged Property"):
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(a) all easements, rights-of-way, strips and gores of land, streets,
ways, alleys, passages, sewer rights, water, water courses, water rights and
powers, air rights and development rights, and all estates, rights, titles,
interests, privileges, liberties, tenements, hereditaments and appurtenances of
any nature whatsoever, in any way belonging, relating or pertaining to the Land
or the Improvements and the reversion and reversions, remainder and remainders,
and all land lying in the bed of any street, road or avenue, opened or proposed,
in front of or adjoining the Land, to the center line thereof and all the
estates, rights, titles, interests, dower and rights of dower, curtesy and
rights of curtesy, property, possession, claim and demand whatsoever, both at
law and in equity, of Mortgagor of, in and to the Land and the Improvements and
every part and parcel thereof, with the appurtenances thereto;
(b) all machinery, equipment, fixtures, furniture, equipment, cooking
supplies, stoves, refrigerators, dishes, glassware, utensils and inventories and
other property of every kind and nature, whether tangible or intangible,
whatsoever owned by Mortgagor, or in which Mortgagor has or shall have an
interest, now or hereafter located upon the Land or the Improvements, or
appurtenant thereto, and usable in connection with the present or future
operation and occupancy of the Land or the Improvements and all building
equipment, materials and supplies and construction equipment, materials and
supplies of any nature whatsoever owned by Mortgagor, or in which Mortgagor has
or shall have an interest, now or hereafter located upon the Land or the
Improvements, or appurtenant thereto, or usable in connection with the present
or future construction, renovation, operation, enjoyment and occupancy of the
Land or the Improvement (hereinafter collectively called the "Equipment"),
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including the proceeds of any sale or transfer of the foregoing, and the right,
title and interest of Mortgagor in and to any of the Equipment which may be
subject to any security interests, as defined in the Uniform Commercial Code, as
adopted and enacted by the State of ______________ (the "Uniform Commercial
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Code") superior in lien to the lien of this Mortgage;
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(c) all awards or payments, including interest thereon, which may
heretofore or hereafter be made with respect to the Mortgaged Property, whether
from the exercise of eminent domain or condemnation (including but not limited
to any transfer made in lieu of or in anticipation of the exercise of said
rights), or for a change of grade, or for any other injury to or decrease in the
value of the Mortgaged Property;
(d) all leases and other agreements affecting the use, enjoyment or
occupancy of the Land or the Improvements heretofore or hereafter entered into
by Mortgagor (collectively, the "Leases") and all income, rents, issues, profits
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and revenues from the Land or Improvements (collectively, the "Rents") and all
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proceeds from the sale, surrender, termination or other disposition of the
Leases and the right to receive and apply the Rents to the payment of the Debt;
(e) all proceeds of and any unearned premiums on any insurance
policies covering the Mortgaged Property, including, without limitation, the
right to receive and apply the proceeds of any insurance, judgments, or
settlements made in lieu thereof, for damage to the Mortgaged Property; and
(f) the right, in the name and on behalf of Xxxxxxxxx, to appear in
and defend any action or proceeding brought with respect to the Mortgaged
Property and to commence any action or proceeding to protect the interest of
Mortgagee in the Mortgaged Property.
TO HAVE AND TO HOLD the above granted and described Mortgaged Property unto
and to the use and benefit of Mortgagee, and the successors and assigns of
Mortgagee, forever.
AND Xxxxxxxxx represents and warrants to and covenants and agrees with Mortgagee
as follows:
1. Payment of Debt and Incorporation of Covenants, Conditions and
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Agreements. Mortgagor will pay the Debt at the time and in the manner provided
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in the Note and in this
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Mortgage. All the covenants, conditions and agreements contained in (a) the Note
and (b) all and any of the documents other than the Note or this Mortgage now or
hereafter executed by Xxxxxxxxx and/or others and by or in favor of Mortgagee,
which wholly or partially secure or guaranty payment of the Note (collectively,
the "Loan Documents"), are hereby made a part of this Mortgage to the same
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extent and with the same force as if fully set forth herein.
2. Warranty of Title. Mortgagor warrants that it has good title to the
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Mortgaged Property and has the right to mortgage, give, grant, bargain, sell,
alien, convey, confirm, pledge, assign and hypothecate the same and that
Mortgagor possesses an unencumbered fee estate in the Land and the Improvements
and that it owns the Mortgaged Property free and clear of all liens,
encumbrances and charges whatsoever except for those exceptions shown in the
title insurance policy insuring the lien of this Mortgage. Mortgagor shall
forever warrant, defend and preserve such title and the validity and priority of
the lien of this Mortgage and shall forever warrant and defend the same to
Mortgagee against the claims of all persons whomsoever.
3. Insurance.
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(a) Mortgagor, at its sole cost and expense, will keep the Mortgaged
Property insured during the entire term of this Mortgage for the mutual benefit
of Mortgagor and Mortgagee against loss or damage by fire and against loss or
damage by other risks and hazards covered by a standard extended coverage
insurance policy including, but not limited to, riot and civil commotion,
vandalism, malicious mischief, burglary and theft. Such insurance shall be in
an amount (i) equal to one hundred percent (100%) of the then replacement cost
of the Improvements and the Equipment, without deduction for physical
depreciation and (ii) such that the insurer would not deem Mortgagor a co-
insurer under said policies. The policies of insurance carried in accordance
with this paragraph shall be paid annually in advance and shall contain the
"Replacement Cost Endorsement" with a waiver of depreciation.
(b) Mortgagor, at its sole cost and expense, for the mutual benefit
of Mortgagor and Mortgagee, shall also obtain and maintain during the entire
term of this Mortgage the following policies of insurance:
(i) Flood insurance if any part of the Mortgaged Property is located
in an area identified by the Federal Emergency Management Agency as an area
having special flood hazards and in which flood insurance has been made
available under the National Flood Insurance Act of 1968 (and any successor
act thereto) in an amount at least equal to the outstanding principal
amount of the Note or the maximum limit of coverage available with respect
to the Improvements and Equipment under said Act, whichever is less.
(ii) Comprehensive public liability insurance, including broad form
property damage, blanket contractual and personal injuries (including death
resulting therefrom)
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coverages in an amount not less than $1,000,000 per occurrence and
$10,000,000 in the aggregate.
(iii) Business interruption insurance in an amount equal to the
aggregate annual amount of all income from, and revenues and rents payable
with respect to, the Mortgaged Property, such business interruption
insurance to cover losses for a period of at least twelve (12) months after
the date of the fire or casualty in question.
(iv) During the course of any construction, renovation or equipping
of the Improvements, builder's completed value risk insurance against "all
risks of physical loss", including collapse and transit coverage, with
deductibles reasonably satisfactory to Mortgagee, in non-reporting form,
covering the total value of work performed and equipment, supplies and
materials furnished. Such policy of insurance shall contain the "permission
to occupy upon completion of work or occupancy" endorsement and a waiver of
co-insurance or an agreed amount endorsement.
(v) Such other insurance as may from time to time be reasonably
required by Mortgagee in order to protect its interests.
(c) All policies of insurance (the "Policies") required pursuant to
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this paragraph 3 shall be issued by an insurer having an A.M. Best rating of A:V
or better and satisfactory to Mortgagee, (ii) shall contain the standard New
York mortgagee non-contribution clause naming Mortgagee as the person to which
all payments made by such insurance company shall be paid, (iii) shall be
maintained throughout the term of this Mortgage without cost to Mortgagee, (iv)
original certificates, or copies thereof, certified to be true and correct,
shall be delivered to Mortgagee, (v) shall contain such provisions as Mortgagee
deems reasonably necessary or desirable to protect its interest including,
without limitation, endorsements providing that neither Mortgagor, Mortgagee nor
any other party shall be a co-insurer under said Policies and that Mortgagee
shall receive at least thirty (30) days prior written notice of any modification
or cancellation, and (vi) shall be satisfactory in form and substance to
Mortgagee and shall be approved by Mortgagee as to amounts, form, risk coverage,
deductibles, loss payees and insureds. All such premiums for such Policies (the
"Insurance Premiums") shall be paid by Mortgagor making payment when due
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directly to the carrier. Not later than thirty (30) days prior to the expiration
date of each of the Policies, Xxxxxxxxx will deliver to Mortgagee satisfactory
evidence of the renewal of each Policy.
(d) If the Mortgaged Property shall be damaged or destroyed, in
whole or in part, by fire or other casualty, Mortgagor shall give prompt written
notice thereof to Mortgagee. Sums paid to Mortgagee by an insurer, after
deduction of Mortgagee's reasonable costs and expenses of collection (after such
deduction, the " Insurance Proceeds"), shall be retained and (i) applied by
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Mortgagee toward payment of the Debt in such priority and proportions as
Mortgagee in its discretion shall deem proper (any such application for
repayment to be without any prepayment consideration, except that if any Event
of Default (hereinafter defined), or an event that with notice and/or the
passage of time, or both, would constitute an Event of Default, has occurred,
then such application shall be subject to the
-4-
prepayment consideration computed in accordance with the Note) or, (ii) if the
conditions set forth in paragraph 3(f) of this Mortgage are satisfied, as
determined by Mortgagee in its sole discretion, paid to Mortgagor for the
restoration and repair of the Mortgaged Property in accordance with paragraph
3(e) of this Mortgage in whole or in such lesser amount as is necessary to pay
for the costs of such restoration and repair.
(e) If the Insurance Proceeds are held by Mortgagee to reimburse
Mortgagor for the cost of restoration and repair of the Mortgaged Property, (i)
the Mortgaged Property shall be substantially restored to the equivalent of its
condition prior to such casualty or to such other condition as Mortgagee may
approve in writing, (ii) such restoration and repair shall be done in compliance
with all applicable laws, rules and regulations, and (iii) all reasonable costs
and expenses incurred by Mortgagee in connection with making the Insurance
Proceeds available for such restoration and repair including, without
limitation, counsel fees and inspecting engineers' fees incurred by Mortgagee,
shall be paid by Xxxxxxxxx. Mortgagee may, at Mortgagee's option, condition
disbursement of said proceeds on Mortgagee's approval of such plans and
specifications of an architect reasonably satisfactory to Mortgagee,
contractor's cost estimates, architect's certificates, waivers of liens, sworn
statements of mechanics and material men and such other evidence of costs,
percentage completion of construction, application of payments, and satisfaction
of liens as Mortgagee may reasonably require. If the Insurance Proceeds are
applied to the payment of the Debt, any such application of proceeds to
principal shall not extend or postpone the maturity date of the Note or change
the amount or the due date of any installment payment under the Note. Any
surplus Insurance Proceeds, after payment of the Debt, shall be paid to
Mortgagor. If the Mortgaged Property is sold pursuant to paragraph 28 of this
Mortgage or if Mortgagee acquires title to the Mortgaged Property, Mortgagee
shall have all of the right, title and interest of Mortgagor in and to any
insurance policies and unearned premiums thereon and in and to the Insurance
Proceeds resulting from any damage to the Mortgaged Property prior to such sale
or acquisition.
(f) Mortgagee shall not exercise Mortgagee's option to apply
Insurance Proceeds to the payment of the sums secured by this Mortgage if all
the following conditions are met, as determined by Mortgagee in its sole
discretion: (i) no Event of Default is then continuing under this Mortgage, the
Note or any other Loan Document; (ii) Mortgagee determines that there will be
sufficient funds (whether consisting of Insurance Proceeds and/or other sums
made available by Mortgagor for restoration) to restore and repair the Mortgaged
Property to the condition required under paragraph 3(e) above; (iii) the
Franchise Agreement (hereinafter defined) shall not have been terminated as a
result of such damage or destruction and the Franchise Agreement shall continue
in full force and effect notwithstanding such damage or destruction; (iv)
Mortgagee determines that the income of the Mortgaged Property, after
restoration and repair of the Mortgaged Property to the condition required under
paragraph 3(e) above, will be sufficient to meet all operating costs and other
expenses, payments for reserves and loan repayment obligations relating to the
Mortgaged Property; (v) Mortgagee determines that restoration and repair of the
Mortgaged Property to the condition required under paragraph 3(e) above will be
completed within the greater of (A) three (3) months or (B) the period of time
covered by the business interruption insurance, if any, then in effect from
-5-
the date of the loss or casualty to the Mortgaged Property; and (vi) Mortgagee
shall have received evidence reasonably satisfactory to it that during the
period of restoration and repair of the Mortgaged Property to the condition
required under subparagraph 3(e) above, the sum of (A) income derived from the
Mortgaged Property, as reasonably determined by Mortgagee, plus (B) proceeds of
business interruption insurance, if any, to be paid, plus (C) amounts that
Mortgagor demonstrates to Mortgagee's reasonable satisfaction will be made
available by Mortgagor from other sources during such period will equal or
exceed the sum of (D) expenses in connection with the operation of the Mortgaged
Property and (E) the debt service under the Note.
4. Payment of Taxes, etc.
---------------------
(a) All taxes, assessments and water and sewer rents, now or
hereafter levied or assessed or imposed against the Mortgaged Property or any
part thereof (the "Taxes"") shall be paid when due in the manner provided in
-----
paragraph 5 of this Mortgage. Mortgagor shall pay all ground rents, maintenance
charges, other governmental impositions, and other charges, including without
limitation vault charges and license fees for the use of vaults, chutes and
similar areas adjoining the Mortgaged Property, now or hereafter levied or
assessed or imposed against the Mortgaged Property or any part thereof (the
"Other Charges") as the same become due and payable. Mortgagor will deliver to
-------------
Mortgagee, promptly upon Mortgagee's request, tax certificates or receipted tax
bills issued by the relevant taxing authority or other evidence satisfactory to
Mortgagee that the Taxes and Other Charges have been so paid or are not then
delinquent. Mortgagor shall not suffer and shall promptly cause to be paid or
discharged any lien or charge whatsoever which may be or become a lien or charge
against the Mortgaged Property, and shall promptly pay for all utility services
provided to the Mortgaged Property. Mortgagor shall furnish to Mortgagee or its
designee receipts for the payment of Taxes and Other Charges prior to the date
the same shall become delinquent.
(b) Mortgagor, at its own expense, may contest by appropriate legal
proceeding, promptly initiated and conducted in good faith and with due
diligence, the amount or validity or application in whole or in part of any of
the Taxes or Other Charges, provided that (i) Mortgagor is not in default under
the Note, this Mortgage or any other Loan Document, (ii) such proceeding shall
be permitted under and be conducted in accordance with the provisions of any
other instrument to which Mortgagor is subject and shall not constitute a
default thereunder, (iii) neither the Mortgaged Property nor any part thereof or
interest therein will be in danger of being sold, forfeited, terminated,
cancelled or lost, (iv) Mortgagor shall have paid the Taxes under protest or set
aside adequate reserves for the payment of the Taxes or Other Charges, together
with all interest and penalties thereon and (v) Mortgagor shall have furnished
such security as may be required in the proceeding, or as may be requested by
Mortgagee to insure the payment of any such Taxes or Other Charges, together
with all interest and penalties thereon.
(c) Upon demand by Mortgagee, Mortgagor, at Xxxxxxxxx's sole cost and
expense, shall contest any increase in any assessment for the Mortgaged Property
with respect to Taxes or Other Charges or seek a reduction in such assessment in
the event of a casualty,
-6-
condemnation or other event which could result in a reduction of the assessment
with respect to Taxes or Other Charges for the Mortgaged Property by
instituting, or causing to be instituted, a proceeding to reduce such
assessment, conducted in accordance with the recognized procedure therefore (a
"Tax Appeal"). If, after demand by Mortgagee, Xxxxxxxxx shall fail to commence a
----------
Tax Appeal, Mortgagee shall be entitled, at its option, to commence, appear in
and prosecute any Tax Appeal either in its own name or in the name of Mortgagor,
for which Mortgagee is hereby appointed as attorney-in-fact for Mortgagor, which
appointment, being for security and coupled with an interest, is irrevocable. If
no Event of Default under this Mortgage or any other Loan Document shall have
occurred and be continuing, Mortgagor shall be entitled to participate with
Mortgagee in the settlement or compromise of any claim in connection with any
such Tax Appeal. Upon the occurrence of an Event of Default and the continuance
thereof, Mortgagee shall be entitled to make any compromise or settlement in
connection with any such Tax Appeal without the participation of Mortgagor. All
such refunds, compensation, awards, damages, rights of action and proceeds
awarded to Xxxxxxxxx, less the reasonable costs and expenses incurred by
Xxxxxxxxx in prosecuting such Tax Appeal (the "Refund Proceeds") are hereby
---------------
assigned to Mortgagee as additional security for the payment of Taxes and Other
Charges as they become due. Upon the occurrence of an Event of Default and the
continuance thereof, Mortgagee shall be entitled to apply the Refund Proceeds to
the repayment of the Debt in such order and in such amount as Mortgagee may
determine. If there are any excess Refund Proceeds after repayment of the Debt,
Mortgagee shall pay such excess Refund Proceeds to Mortgagor.
5. Escrow Fund. (a) Mortgagor shall, on the first day of each calendar
-----------
month, pay to Mortgagee one--twelfth (1/12th) of an amount which would be
sufficient to pay the Taxes payable, or estimated by Mortgagee to be payable,
during the next twelve (12) months and also provide for an additional reserve
equal to one-sixth (1/6th) of the Taxes payable (said amounts being hereinafter
called the "Tax Escrow Fund.")
---------------
(b) The Tax Escrow Fund and the payments of interest or principal or
both, payable pursuant to the Note, shall be added together and shall be paid as
an aggregate sum by Mortgagor to Mortgagee. Mortgagor hereby pledges to
Mortgagee any and all monies now or hereafter deposited in the Tax Escrow Fund
as additional security for the payment of the Debt. Mortgagee will apply the Tax
Escrow Fund to payments of Taxes to be made by Mortgagor pursuant to paragraph 4
hereof. If the amount of the Tax Escrow Fund shall exceed the amounts due for
Taxes pursuant to paragraph 4 hereof, Mortgagee shall, in its discretion, return
any excess to Mortgagor or credit such excess against future payments to be made
to the Tax Escrow Fund. In allocating such excess, Mortgagee may deal with the
person shown on the records of Mortgagee to be the owner of the Mortgaged
Property. If the balance in the Tax Escrow Fund on the first day of the month
which is one full month prior to the due date of any Taxes is not sufficient to
pay the Taxes, Mortgagor shall pay to Mortgagee, upon demand, an amount which
Mortgagee shall estimate as sufficient to make up the deficiency. Upon the
occurrence of an Event of Default, Mortgagee may apply any sums then present in
the Tax Escrow Fund to the payment of the following items in any order in its
sole discretion:
(i) Taxes and Other Charges;
-7-
(ii) Interest on the unpaid principal balance of the Note;
(iii) Amortization of the unpaid principal balance of the Note; or
(iv) All other sums payable pursuant to the Note, this Mortgage and
the other Loan Documents, including without limitation, advances made by
Mortgagee pursuant to the terms of this Mortgage.
(c) Until expended or applied as above provided, any amounts in the
Tax Escrow Fund shall constitute additional security for the Debt. The Tax
Escrow Fund shall not constitute a trust fund and may be commingled with other
monies held by Mortgagee. No earnings or interest on the Tax Escrow Fund shall
be paid to Mortgagor, unless applicable law requires interest on the Tax Escrow
Fund to be paid to Mortgagor. Any such required interest shall be deposited in
the Tax Escrow Fund as additional security for the payment of the Debt.
6. Condemnation.
------------
(a) Mortgagor shall promptly give Mortgagee written notice of the
actual or threatened commencement of any condemnation or eminent domain
proceeding and shall deliver to Mortgagee copies of any and all papers served in
connection with such proceedings. Notwithstanding any taking by any public or
quasi-public authority through eminent domain or otherwise (including but not
limited to any transfer made in lieu of or in anticipation of the exercise of
such taking), Xxxxxxxxx shall continue to pay the Debt at the time and in the
manner provided for its payment in the Note, this Mortgage and the other Loan
Documents and the Debt shall not be reduced until any award or payment therefor
shall have been actually received after expenses of collection and applied by
Mortgagee to the discharge of the Debt. Mortgagee shall not be limited to the
interest paid on the award by the condemning authority but shall be entitled to
receive out of the award interest at the rate or rates provided herein and in
the Note. Mortgagor shall cause the award or payment made in any condemnation or
eminent domain proceeding, which is payable to Mortgagor, to be paid directly to
Mortgagee. Sums paid to Mortgagee for such condemnation or action of eminent
domain, after deduction of Mortgagee's reasonable costs and expenses of
collection (after such deduction, the "Condemnation Proceeds"), shall be
---------------------
retained and (i) applied by Mortgagee toward payment of the Debt in such
priority and proportions as Mortgagee in its discretion shall deem proper (any
such application for repayment to be without any prepayment consideration,
except that if any Event of Default, or an event that with notice and/or the
passage of time, or both, would constitute an Event of Default, has occurred,
then such application shall be subject to the prepayment consideration computed
in accordance with the Note), or (ii) if the conditions set forth in paragraph
6(c) of this Mortgage are satisfied, as determined by Mortgagee in its sole
discretion, paid to Mortgagor for the restoration and repair of the Mortgaged
Property in accordance with paragraph 6(b) of this Mortgage in whole or in such
lesser amount as is necessary to pay for the costs of such restoration and
repair. If the Mortgaged Property is sold pursuant to paragraph 28 of this
Mortgage or if Mortgagee acquires title to the Mortgaged Property, Mortgagee
shall have all of the right, title and interest of Mortgagor in and to any
-8-
Condemnation Proceeds resulting from any condemnation or eminent domain
proceeding of the Mortgaged Property prior to such sale or acquisition.
(b) If the Condemnation Proceeds are held by Mortgagee to reimburse
Mortgagor for the cost of restoration and repair of the Mortgaged Property, (i)
the Mortgaged Property shall be substantially restored to the equivalent of its
condition prior to such condemnation or to such other condition as Mortgagee may
approve in writing, (ii) such restoration and repair shall be done in compliance
with all applicable laws, rules and regulations, and (iii) all reasonable costs
and expenses incurred by Mortgagee in connection with making the Condemnation
Proceeds available for such restoration and repair including, without
limitation, counsel fees and inspecting engineers' fees incurred by Mortgagee,
shall be paid by Xxxxxxxxx. Mortgagee may, at Mortgagee's option, condition
disbursement of said proceeds on Mortgagee's approval of such plans and
specifications of an architect reasonably satisfactory to Mortgagee,
contractor's cost estimates, architect's certificates, waivers of liens, sworn
statements of mechanics and material men and such other evidence of costs,
percentage completion of construction, application of payments, and satisfaction
of liens as Mortgagee may reasonably require. If the Condemnation Proceeds are
applied to the payment of the Debt, any such application of proceeds to
principal shall not extend or postpone the maturity date of the Note or change
the amount or the due date of any installment payment under the Note. Any
surplus Condemnation Proceeds, after payment of the Debt, shall be paid to
Mortgagor. If the Mortgaged Property is sold pursuant to paragraph 28 of this
Mortgage or if Mortgagee acquires title to the Mortgaged Property, Mortgagee
shall have all of the right, title and interest of Mortgagor in and to any
Condemnation Proceeds resulting from any condemnation or eminent domain
proceeding of the Mortgaged Property prior to such sale or acquisition.
(c) Mortgagee shall not exercise Mortgagee's option to apply
Condemnation Proceeds to the payment of the sums secured by this Mortgage if all
the following conditions are met, as determined by Mortgagee in its sole
discretion: (i) no Event of Default is then continuing under this Mortgage, the
Note or any other Loan Document; (ii) Mortgagee determines that there will be
sufficient funds (whether consisting of Condemnation Proceeds and/or other sums
made available by Mortgagor for restoration) to restore and repair the Mortgaged
Property to the condition required under paragraph 6(b) above; (iii) the
Franchise Agreement shall not have been terminated as a result of such
condemnation or eminent domain proceeding and the Franchise Agreement shall
continue in full force and effect notwithstanding such condemnation or eminent
domain proceeding; (iv) Mortgagee determines that the income of the Mortgaged
Property, after restoration and repair of the Mortgaged Property to the
condition required under paragraph 6(b) above, will be sufficient to meet all
operating costs and other expenses, payments for reserves and loan repayment
obligations relating to the Mortgaged Property; (v) Mortgagee determines that
restoration and repair of the Mortgaged Property to the condition required under
paragraph 6(b) above will be completed within the greater of (A) three (3)
months or (B) the period of time covered by the business interruption insurance,
if any, then in effect from the date of the loss or casualty to the Mortgaged
Property; and (vi) Mortgagee shall have received evidence reasonably
satisfactory to it that during the period of restoration and repair of the
Mortgaged Property to the condition required
-9-
under subparagraph 6(b) above, the sum of (A) income derived from the Mortgaged
Property, as reasonably determined by Mortgagee, plus (B) proceeds of business
interruption insurance, if any, to be paid, plus (C) amounts that Mortgagor
demonstrates to Mortgagee's reasonable satisfaction will be made available by
Mortgagor from other sources during such period will equal or exceed the sum of
(D) expenses in connection with the operation of the Mortgaged Property and (E)
the debt service under the Note.
7. Leases and Rents.
----------------
(a) Xxxxxxxxx does hereby absolutely and unconditionally assign to
Mortgagee its right, title and interest in all current and future Leases and
Rents, it being intended by Xxxxxxxxx that this assignment constitutes a
present, absolute assignment and not an assignment for additional security only.
Such assignment to Mortgagee shall not be construed to bind Mortgagee to the
performance of any of the covenants, conditions or provisions contained in any
such Lease or otherwise to impose any obligation upon Mortgagee. Xxxxxxxxx
agrees to execute and deliver to Mortgagee such additional instruments, in form
and substance reasonably satisfactory to Mortgagee, as may hereafter be
requested by Mortgagee to further evidence and confirm such assignment.
Nevertheless, subject to the terms of this paragraph 7, Mortgagee grants to
Mortgagor a revocable license to operate and manage the Mortgaged Property and
to collect the Rents. Mortgagor shall hold the Rents, or a portion thereof
sufficient to discharge all current sums due on the Debt, in trust for the
benefit of Mortgagee for use in the payment of such sums. Upon an Event of
Default, the license granted to Mortgagor herein shall be automatically revoked
and Mortgagee shall immediately be entitled to possession of all Rents, whether
or not Mortgagee enters upon or takes control of the Mortgaged Property.
Mortgagee is hereby granted and assigned by Xxxxxxxxx the right, at its option,
upon the revocation of the license granted herein to enter upon the Mortgaged
Property in person, by agent or by court-appointed receiver to collect the
Rents. Any Rents collected after the revocation of the license herein granted
may be applied toward payment of the Debt in such priority and proportion as
Mortgagee in its discretion shall deem proper.
(b) Upon request, Mortgagor shall furnish Mortgagee with copies of
all Leases and all amendments or modifications of any Lease. All Leases shall
provide that each such Lease is subordinate to this Mortgage and that the lessee
agrees to attorn to Mortgagee. Mortgagor (i) shall observe and perform all the
obligations imposed upon the lessor under the Leases and shall not do or permit
to be done anything to impair the value of the Leases as security for the Debt;
(ii) shall upon request by Mortgagee, send Mortgagee copies of all notices of
default sent or received by Mortgagee under the Leases; (iii) shall enforce all
of the terms, covenants and conditions contained in the Leases on the part of
the lessee thereunder to be observed or performed; (iv) shall not collect any of
the Rents more than one (1) month in advance (except with respect to collection
of the final month's rent as security); (v) shall not execute any other
assignment of xxxxxx's interest in the Leases or the Rents; and (vi) shall
execute and deliver at the request of Mortgagee all such further assurances,
confirmations and assignments in connection with the Mortgaged Property as
Mortgagee shall from time to time require.
-10-
(c) Mortgagor shall not, without the prior written consent of
Mortgagee (i) amend or modify any Lease, (ii) execute a new Lease, (iii) permit
use of the demised premises under any Lease for use or uses other than quick
service restaurant use; or (iv) terminate, cancel or accept a surrender of any
Lease.
8. Maintenance of Mortgaged Property. Mortgagor shall cause the Mortgaged
---------------------------------
Property to be maintained in a good and safe condition and repair. The
Improvements and the Equipment shall not be removed, demolished or materially
altered (except for normal replacement of the Equipment) without the written
consent of Mortgagee. Mortgagor shall promptly comply with all laws, orders and
ordinances affecting the Mortgaged Property and the use thereof. Mortgagor shall
promptly repair, replace or rebuild any part of the Mortgaged Property that (i)
is damaged or destroyed by any casualty (subject to the provisions of paragraph
3 hereof), (ii) becomes damaged, worn or dilapidated, or (iii) is affected by
any proceeding of the character referred to in paragraph 6 hereof (subject to
the provision of such paragraph 6) and Mortgagor shall complete and pay for any
structure at any time in the process of construction, renovation or repair on
the Land. Mortgagor shall not initiate, join in, acquiesce in, or consent to any
change in any private restrictive covenant, zoning law or other public or
private restriction, limiting or defining the uses which may be made of the
Mortgaged Property or any part thereof. If under applicable zoning provisions
the use of all or any portion of the Mortgaged Property is or shall become a
nonconforming use, Mortgagor will not cause or permit such nonconforming use to
be discontinued or abandoned without the express written consent of Mortgagee.
9. Transfer or Encumbrance of the Mortgaged Property.
-------------------------------------------------
(a) Mortgagor acknowledges that Mortgagee has examined and relied on
the creditworthiness of Mortgagor and experience of Mortgagor in owning and
operating properties such as the Mortgaged Property in agreeing to make the Loan
secured hereby, and that Mortgagee will continue to rely on Xxxxxxxxx's
ownership of the Mortgaged Property as a means of maintaining the value of the
Mortgaged Property as security for repayment of the Debt. Mortgagor acknowledges
that Mortgagee has a valid interest in maintaining the value of the Mortgaged
Property so as to ensure that, should Mortgagor default in the repayment of the
Debt, Mortgagee can recover the Debt by a sale of the Mortgaged Property.
Mortgagor shall not, without the prior written consent of Mortgagee, sell,
convey, alien, lease, mortgage, encumber, pledge or otherwise transfer the
Mortgaged Property or any part thereof, or permit the Mortgaged Property or any
part thereof to be sold, conveyed, aliened, leased, mortgaged, encumbered,
pledged or otherwise transferred (any of the foregoing, a "Transfer").
--------
(b) A Transfer of the Mortgaged Property within the meaning of this
paragraph 9 shall be deemed to include:
(i) an installment sales agreement wherein Xxxxxxxxx agrees to sell
the Mortgaged Property or any part thereof for a price to be paid in
installments;
-11-
(ii) an agreement by Mortgagor selling, leasing, assigning or
otherwise transferring all or a substantial part of the Mortgaged Property,
or a sale, assignment or other transfer of, or the grant of a security
interest in, Xxxxxxxxx's right, title and interest in and to any Leases or
any Rents; and
(iii) any voluntary or involuntary Transfer of a Control Individual's
(hereinafter defined) Controlling Interests (hereinafter defined) or any
voluntary or involuntary event whereby a Control Individual's Controlling
Interests are diluted or his or her Control over Mortgagor is otherwise
diminished.
(c) Mortgagee shall not be required to demonstrate any actual
impairment of its security or any increased risk of default hereunder in order
to declare the Debt immediately due and payable upon Xxxxxxxxx's Transfer of the
Mortgaged Property without Mortgagee's consent; this provision shall apply to
every Transfer of the Mortgaged Property regardless of whether voluntary or not,
or whether or not Mortgagee has consented to any previous Transfer of the
Mortgaged Property.
(d) For purposes of this paragraph 9, the following terms shall have
the following meanings: "Control" when used with respect to Mortgagor means the
power to direct the respective management and policies of Mortgagor, directly or
indirectly, whether through the ownership of voting securities, membership
interests, partnership interests or any other beneficial interest, by contract
or otherwise, whether acting alone or with others, but an individual does not
have "Control" if he or she has only the right to take those actions that a
limited partner may take without participating in the business of a limited
partnership, as set forth in Article ______ of the Uniform Limited Partnership
Law of the State of __________, the terms "Controlling" and "Controlled" shall
have the meanings correlative to the foregoing; "Control Individual" shall mean
any one of ______________ or ________________; "Controlling Interests" shall
mean those beneficial interests or contract rights in or with respect to the
Mortgagor (or any entity that has a direct or indirect beneficial interest in
Mortgagor) that give a Control Individual his or her Control over Mortgagor;
"Non-controlling Interests" shall mean any beneficial interests in Mortgagor (or
any entity that has a direct or indirect beneficial interest in the Mortgagor)
that are not Controlling Interests and shall include, without limitation,
limited partnership interests.
10. Estoppel Certificates and No Default Affidavits.
-----------------------------------------------
(a) After request by Mortgagee, Mortgagor shall within ten (10) days
furnish Mortgagee with a statement, duly acknowledged and certified, setting
forth (i) the amount of the original principal amount of the Note, (ii) the
unpaid principal amount of the Note, (iii) the rate of interest of the Note,
(iv) the date installments of interest and/or principal were last paid, (v) any
offsets or defenses to the payment of the Debt, if any and (vi) that the Note
and this Mortgage are valid, legal and binding obligations and have not been
modified or if modified, giving the particulars of such modification.
-12-
(b) Within ten (10) days after request by Xxxxxxxxx, Xxxxxxxxx will
request lessees under the Leases to furnish Mortgagee with estoppel certificates
as required by such lessees' respective Lease and Xxxxxxxxx will use diligent
efforts to obtain such estoppel certificates.
11. Changes in the Laws Regarding Taxation. If any law is enacted or
--------------------------------------
adopted or amended after the date of this Mortgage which deducts the Debt from
the value of the Mortgaged Property for the purpose of taxation or which imposes
a tax, either directly or indirectly, on the Debt or Mortgagee's interest in the
Mortgaged Property, Mortgagor will pay such tax, with interest and penalties
thereon, if any. In the event Mortgagee is advised by counsel chosen by it that
the payment of such tax or interest and penalties by Xxxxxxxxx would be unlawful
or taxable to Mortgagee or unenforceable or provide the basis for a defense of
usury, then in any such event, Mortgagee shall have the option, by written
notice of not less than ninety (90) days, to declare the Debt immediately due
and payable.
12. No Credits on Account of the Debt. Mortgagor will not claim or demand
---------------------------------
or be entitled to any credit or credits on account of the Debt for any part of
the Taxes or Other Charges assessed against the Mortgaged Property, or any part
thereof, and no deduction shall otherwise be made or claimed from the assessed
value of the Mortgaged Property, or any part thereof, for real estate tax
purposes by reason of this Mortgage or the Debt. In the event such claim, credit
or deduction shall be required by law, Mortgagee shall have the option, by
written notice of not less than ninety (90) days, to declare the Debt
immediately due and payable.
13. Documentary Stamps. If at any time the United States of America, the
------------------
State of ______________ or any subdivision thereof shall require revenue or
other stamps to be affixed to the Note or this Mortgage, or impose any other tax
or charge on the same, Mortgagor will pay for the same, with interest and
penalties thereon, if any.
14. Usury Laws. This Mortgage and the Note are subject to the express
----------
condition that at no time shall Mortgagor be obligated or required to pay
interest on the Debt at a rate which could subject Mortgagee to either civil or
criminal liability as a result of being in excess of the maximum interest rate
which Mortgagor is permitted by law to contract or agree to pay. If by the terms
of this Mortgage or the Note, Mortgagor is at any time required or obligated to
pay interest on the Debt at a rate in excess of such maximum rate, the rate of
interest under the same shall be deemed to be immediately reduced to such
maximum rate and the interest payable shall be computed at such maximum rate and
all previous payments in excess of such maximum rate shall be deemed to have
been payments in reduction of the principal and not on account of the interest
due hereunder.
15. Performance of Franchise Agreement and Leases; Security Agreement
-----------------------------------------------------------------
(a) Mortgagor will duly comply with the terms and conditions of the
franchise agreement, dated ____________, 199__, between AFC Enterprises, Inc.,
as franchisor, and mortgagor, as franchisee (the "Franchise Agreement") and will
-------------------
faithfully perform all of its
-13-
obligations under the Franchise Agreement and promptly cure any default by it
under any of the provisions thereof. Mortgagor shall promptly send to Mortgagee
a true and correct copy of any notice, report, certificate or other
communication that Mortgagor is obligated to deliver under the Franchise
Agreement.
(b) Xxxxxxxxx will comply with the terms and provisions of the Leases
and will faithfully perform all of its obligations under the Leases and promptly
cure any default by it under any of the provisions thereof. Mortgagor shall
promptly send to Mortgagee a true and correct copy of any notice, report,
certificate or other communication that Mortgagor is obligated to deliver in
connection with any Lease.
(c) Mortgagor hereby assigns and transfers to Mortgagee and creates a
security interest in all of Xxxxxxxxx's right, title and interest in and to the
consideration, in whatever form delivered, for the sale, transfer or conveyance
of Xxxxxxxxx's interest in the Franchise Agreement and the Leases.
16. Performance of Other Agreements. Mortgagor shall observe and perform
-------------------------------
each and every term to be observed or performed by Mortgagor pursuant to the
terms of any agreement or recorded instrument affecting or pertaining to the
Mortgaged Property.
17. Books and Records; Financial Statements; Financial Covenants.
------------------------------------------------------------
(a) Mortgagor shall keep adequate books and records of account in
accordance with generally accepted accounting principles consistently applied
and shall furnish to Mortgagee (i) within sixty (60) days after the end of each
second (2/nd/) and fourth (4/th/) fiscal quarter of Mortgagor, semiannual
internally-prepared financial statements, certified by the chief financial
officer of Mortgagor; (ii) within ninety (90) days after the end of each fiscal
year of Mortgagor, (x) annual internally-prepared financial statements,
certified by the chief financial officer of Xxxxxxxxx, and (y) a certificate,
executed by a financial officer of Mortgagor acceptable to Mortgagee, as to the
absence of any default or Event of Default hereunder or under any other Loan
Document or under the Franchise Agreement; (iii) copies of Xxxxxxxxx's federal
tax returns (together with any extension filed) within fifteen (15) days after
filing of same but in no event later than April 30 of each year; (x) and (iv)
such other financial information with respect to Xxxxxxxxx, Guarantor
(hereinafter defined) or the Mortgaged Property at may be reasonably requested
by Mortgagee from time to time.
(b) Mortgagor shall cause each of ______________ and ____________
(collectively, "Guarantor") to furnish to Mortgagee (i) within thirty (30) days
---------
after the end of each calendar year, updated annual financial statements in form
similar to that previously provided to Mortgagee; (ii) copies of their federal
tax returns (together with any extensions filed) within fifteen (15) days after
filing of same but in no event later than April 30 of each year; and (iii) such
other financial information with respect to Guarantor as may be reasonably
requested by Mortgagee from time to time.
-14-
(c) Mortgagor shall promptly provide Mortgagee with written notice of
any pending or threatened litigation against Mortgagor or any Guarantor or the
commencement of any proceedings or investigations by any governmental or
regulatory agency involving Mortgagor or any Guarantor.
(d) Mortgagor shall maintain a Minimum Cash Flow Coverage Ratio of
not less than ______ for each fiscal year of Mortgagor. The term "Minimum Cash
------------
Flow Coverage Ratio" shall be calculated annually and shall mean:
-------------------
Cash Flow Before Debt Service
-----------------------------
Debt Service
For purposes of this paragraph 17(d), "Cash Flow Before Debt Service"
-----------------------------
shall mean annual operating income of the Mortgaged Property plus depreciation,
amortization and interest expense. "Debt Service" shall mean the total required
------------
annual principal and interest payments under the Note.
(e) Any and all debt incurred by Mortgagor to its shareholders,
officers, partners, members and/or affiliates shall be incurred only with
Mortgagee's prior written consent and Mortgagor shall cause any such debt
approved by Mortgagee to be expressly subordinated to the Debt.
(f) At any time while all or any portion of the Debt remains
outstanding, Mortgagor shall not, directly or indirectly, convey, transfer or
assign any property or asset of any nature, whether real property, personal
property or mixed, tangible or intangible, or any interest therein, without the
prior written consent of Mortgagee, and any such conveyance, transfer or
assignment shall occur solely in the ordinary course of Xxxxxxxxx's business.
(g) At any time while all or any portion of the Debt remains
outstanding, Mortgagor shall not, directly or indirectly, (i) make any loans to
any partners, shareholders, officers, members or affiliates of Mortgagor, nor
guarantee any indebtedness of any such party without the prior written consent
of Mortgagee; or (ii) make any advances or distributions to Mortgagor or any
partners, shareholders, officers, members or affiliates of Mortgagor.
(h) At any time while all or any portion of the Debt remains
outstanding, Mortgagor shall not enter into any additional Indebtedness
(hereinafter defined) nor guarantee any additional Indebtedness, without the
prior written consent of Mortgagee, other than (i) unsecured Indebtedness
constituting trade debt and (ii) other Indebtedness incurred in the ordinary
course of business in connection with the ownership, management and operation of
the Mortgaged Property.
18. Further Acts, etc. Mortgagor will, at the cost of Xxxxxxxxx, and
-----------------
without expense to Mortgagee, do, execute, acknowledge and deliver all and every
such further acts, deeds, conveyances, mortgages, assignments, notices of
assignment, transfers and assurances as Mortgagee shall, from time to time,
require, for the better assuring, conveying, assigning, transferring, and
confirming unto Mortgagee the property and rights hereby mortgaged, given,
-15-
granted, bargained, sold, aliened, enfeoffed, conveyed, confirmed, pledged,
assigned and hypothecated or intended now or hereafter so to be, or which
Mortgagor may be or may hereafter become bound to convey or assign to Mortgagee,
or for carrying out the intention or facilitating the performance of the terms
of this Mortgage or for filing, registering or recording this Mortgage.
Xxxxxxxxx, on demand, will execute and deliver and hereby authorizes Mortgagee
to execute in the name of Xxxxxxxxx or without the signature of Mortgagor to the
extent Mortgagee may lawfully do so, one or more financing statements, chattel
mortgages or other instruments, to evidence more effectively the security
interest of Mortgagee in the Mortgaged Property. Mortgagor grants to Mortgagee
an irrevocable power of attorney coupled with an interest for the purpose of
exercising and perfecting any and all rights and remedies available to Mortgagee
at law and in equity, including without limitation such rights and remedies
available to Mortgagee pursuant to this paragraph 18.
19. Trust Fund. Mortgagor shall receive the advances secured hereby and
----------
shall hold the right to receive the advances as a trust fund to be applied first
for the purpose of paying the cost of any improvement and shall apply the
advances first to the payment of the cost of any such improvement on the
Mortgaged Property before using any part of the total of the same for any other
purpose.
20. Recording of Mortgage, etc. Mortgagor forthwith upon the execution and
--------------------------
delivery of this Mortgage and thereafter, from time to time, will cause this
Mortgage, and any security instrument creating a lien or security interest or
evidencing the lien hereof upon the Mortgaged Property and each instrument of
further assurance to be filed, registered or recorded in such manner and in such
places as may be required by any present or future law in order to publish
notice of and fully to protect the lien or security interest hereof upon, and
the interest of Mortgagee in, the Mortgaged Property. Mortgagor will pay all
filing, registration or recording fees, and all expenses incident to the
preparation, execution and acknowledgment of this Mortgage, any mortgage
supplemental hereto, any security instrument with respect to the Mortgaged
Property and any instrument of further assurance, and all federal, state, county
and municipal, taxes, duties, imposts, assessments and charges arising out of or
in connection with the execution and delivery of this Mortgage, any mortgage
supplemental hereto, any security instrument with respect to the Mortgaged
Property or any instrument of further assurance, except where prohibited by law
so to do. Mortgagor shall hold harmless and indemnify Mortgagee, its successors
and assigns, against any liability incurred by reason of the imposition of any
tax on the making and recording of this Mortgage.
21. Prepayment. The Debt may be prepaid subject to the terms of paragraph
----------
___ of the Note.
22. Events of Default. The Debt shall become immediately due and payable
-----------------
at the option of Mortgagee, without notice or demand, upon any one or more of
the following events ("Events of Default"):
-----------------
(a) if any portion of the Debt is not paid within five (5) days after
the same is due;
-16-
(b) if any of the Taxes or Other Charges is not paid when the same is
due and payable, subject to the provisions of paragraphs 4 and 5;
(c) if the Policies are not kept in full force and effect, or if the
Policies are not delivered to Mortgagee upon request;
(d) if Mortgagor violates or does not comply with any of the
provisions of paragraphs 7, 9, 15, 17(c), 17(d), 17(e), 17(f), 17(g) or 17(h);
(e) if a default under the Franchise Agreement shall continue beyond
any applicable notice or grace period, or if the Franchise Agreement shall be
modified, amended, terminated, surrendered or assigned without the prior written
consent of Mortgagee;
(f) if a default by Mortgagor under any Lease shall continue beyond
any applicable notice or grace period, or if any Lease shall be modified,
amended, terminated, surrendered or assigned by Xxxxxxxxx, without the prior
written consent of Mortgagee;
(g) if the Mortgaged Property becomes subject to any mechanic's,
materialman's or other lien other than a lien for local real estate taxes and
assessments not then due and payable and such lien shall remain undischarged of
record (by payment, bonding or otherwise) for a period of thirty (30) calendar
days after the filing of such lien;
(h) if Xxxxxxxxx fails to cure promptly any violations of laws or
ordinances affecting the Mortgaged Property and such failure continues for a
period of thirty (30) calendar days after Xxxxxxxxx's receipt of notice thereof;
(i) if any representation or warranty of Mortgagor or any Guarantor,
made herein or in the Environmental Indemnity Agreement, dated as of the date
hereof, made by Mortgagor and Guarantor, jointly and severally, for the benefit
of Mortgagee (the "Environmental Indemnity Agreement"), or by any Guarantor in
---------------------------------
the Guarantee of Payment and Performance, dated as of the date hereof, made by
Guarantor for the benefit of Mortgagee (the "Guarantee"), or in any certificate,
---------
report, financial statement or other instrument or document furnished to
Mortgagee by Mortgagor or any Guarantor shall have been false or misleading in
any material respect when made;
(j) if Mortgagor or any Guarantor shall make an assignment for the
benefit of creditors or if Mortgagor or any Guarantor shall generally not be
paying its debts as they become due;
(k) if a receiver, liquidator or trustee of Mortgagor or any
Guarantor shall be appointed or if Mortgagor or any Guarantor shall be
adjudicated a bankrupt or insolvent, or if any petition for bankruptcy,
reorganization or arrangement pursuant to federal bankruptcy law, or any similar
federal or state law, shall be filed by or against, consented to, or acquiesced
in by, Mortgagor or any Guarantor or if any proceeding for the dissolution or
liquidation of
-17-
Mortgagor or any Guarantor shall be instituted; however, if such appointment,
adjudication, petition or proceeding was involuntary and not consented to by
Mortgagor or any Guarantor, upon the same not being discharged, stayed or
dismissed within sixty (60) days;
(l) If Mortgagor or any Guarantor shall be in default (beyond any
applicable grace period) in the payment of any amount of any Indebtedness
(hereinafter defined) other than the Debt; or if Mortgagor or any Guarantor
shall default (beyond any applicable grace period) in the performance of any
agreement under which such Indebtedness is created or evidenced, if the effect
of such default is to cause, or permit the holder of such Indebtedness to cause,
such Indebtedness to become due prior to its stated maturity. The term
"Indebtedness" shall mean, as at any date (i) all indebtedness of Mortgagor or
------------
any Guarantor for borrowed money or for the deferred purchase price of property
or services (except such indebtedness the existence of which is being contested
by Mortgagor or any Guarantor in good faith and by appropriate action); (ii) all
obligations of Mortgagor or any Guarantor evidenced by bonds, debentures, notes
or other similar instruments; (iii) all obligations under leases which shall
have been or should be, in accordance with generally accepted accounting
principles consistently applied, recorded as capital leases of which Mortgagor
or any Guarantor is liable as lessee (except such obligations the existence of
which is being contested by Mortgagor or any Guarantor in good faith and by
appropriate action); (iv) any Guaranteed Indebtedness (hereinafter defined); and
(v) any other indebtedness required to be recorded as indebtedness on the
financial statements of Mortgagor or any Guarantor in accordance with generally
accepted accounting principles consistently applied. The term "Guaranteed
----------
Indebtedness" shall mean any indebtedness which is guaranteed directly or
------------
indirectly in any manner by Mortgagor or any Guarantor, or in effect guaranteed
directly or indirectly in any manner by Mortgagor or any Guarantor;
(m) (i) if Mortgagor or any Control Individual shall engage in any
"prohibited transaction" (as defined in Section 406 of the Employee Retirement
Income Security Act of 1974, as amended from time to time ("ERISA") or Section
-----
4975 of the Internal Revenue Code of 1986, as amended from time to time (the
"Code") involving any employee benefit plan covered by ERISA (a "Plan"), (ii)
---- ----
any "accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall occur with respect to any Plan or any lien in favor
of the Pension Benefit Guaranty Corporation ("PBGC") or a Plan shall arise on
----
the assets of Mortgagor or any Control Individual, or (iii) a "reportable event"
(as defined in Section 4043(b) of ERISA) shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall be
appointed, to administer or to terminate, any Plan, which reportable event or
commencement of proceedings or appointment of a trustee is, in the reasonable
opinion of Mortgagee, likely to result in the termination of such Plan for
purposes of Title IV of ERISA;
(n) if one or more judgments or decrees shall be entered against
Mortgagor or any Guarantor involving an aggregate liability (not paid or fully
covered by insurance) of $____________ or more, and any such judgment or decree
shall not have been vacated, discharged, stayed or bonded pending appeal within
thirty (30) days from the entry thereof;
-18-
(o) Mortgagor shall be in default beyond any applicable notice and
cure period under any other term, covenant or condition of the Note, this
Mortgage or any of the other Loan Documents; or
(p) if at any time while this Mortgage is of record _____________ and
____________ shall fail to own in the aggregate one hundred percent (100%) of
the ownership interests in Mortgagor or shall cease to have sole responsibility
for the day-to-day management and Control of Mortgagor.
23. Default Interest. Upon the occurrence of any Event of Default,
----------------
Mortgagor shall pay interest on the unpaid principal balance of the Note at the
Default Rate (as defined in the Note). The Default Rate shall be computed from
the occurrence of the Event of Default until the actual receipt and collection
of the Debt. This charge shall be added to the Debt, and shall be deemed secured
by this Mortgage. This clause, however, shall not be construed as an agreement
or privilege to extend the date of the payment of the Debt, nor as a waiver of
any other right or remedy accruing to Mortgagee by reason of the occurrence of
any Event of Default. If the Default Rate is above the maximum rate permitted by
applicable law, the Default Rate shall be the maximum rate permitted by
applicable law.
24. Right to Cure Defaults. Upon the occurrence of any Event of Default or
----------------------
if Mortgagor fails to make any payment or to do any act as herein provided,
Mortgagee may, but without any obligation to do so and without notice to or
demand on Mortgagor and without releasing Mortgagor from any obligation
hereunder, make or do the same in such manner and to such extent as Mortgagee
may deem necessary to protect the security hereof. Mortgagee is authorized to
enter upon the Mortgaged Property for such purposes or appear in, defend, or
bring any action or proceeding to protect its interest in the Mortgaged Property
or to foreclose this Mortgage or collect the Debt, and the reasonable cost and
expense thereof (including reasonable attorneys' fees to the extent permitted by
law and any appraisal fees), with interest calculated at the Default Rate, shall
constitute a portion of the Debt and shall be secured by this Mortgage and the
other Loan Documents and shall be due and payable to Mortgagee upon demand. All
such costs and expenses incurred by Mortgagee in remedying such Event of Default
or in appearing in, defending, or bringing any such action or proceeding shall
bear interest at the Default Rate, for the period after notice from Mortgagee
that such cost or expense was incurred to the date of payment of Mortgagee.
25. Late Payment Charge. If any portion of the Debt is not paid within
-------------------
fifteen (15) calendar days after the date on which it is due, Mortgagor shall
pay to Mortgagee upon demand a late charge equal to the lesser of two percent
(2%) of such unpaid portion of the Debt or the maximum amount permitted by
applicable law, to defray the expense incurred by Mortgagee in handling and
processing such delinquent payment and to compensate Mortgagee for the loss of
the use of such delinquent payment, and such amount shall be secured by this
Mortgage.
26. Prepayment After Event of Default. If following the occurrence of any
---------------------------------
Event of Default, Mortgagor shall tender payment of an amount sufficient to
satisfy the Debt at any
-19-
time prior to a sale of the Mortgaged Property either through foreclosure or the
exercise of other remedies available to Mortgagee under this Mortgage, such
tender by Mortgagor shall be deemed to be a voluntary prepayment under the Note
and this Mortgage in the amount tendered, and Mortgagor shall, in addition to
the entire Debt, also pay to Mortgagee the applicable prepayment consideration
specified in paragraph ___ of the Note.
27. Right of Entry. Mortgagee and its agents shall have the right to enter
--------------
and inspect the Mortgaged Property at all reasonable times.
28. Remedies.
--------
(a) Upon the occurrence of any Event of Default, Mortgagee may take
such action, without notice or demand, as it deems advisable to protect and
enforce its rights against Mortgagor and in and to the Mortgaged Property,
including, but not limited to, the following actions, each of which may be
pursued concurrently or otherwise, at such time and in such order as Mortgagee
may determine, in its sole discretion, without impairing or otherwise affecting
the other rights and remedies of Mortgagee:
(i) declare the entire Debt to be immediately due and payable;
(ii) institute proceedings for the complete foreclosure of this
Mortgage, in which case the Mortgaged Property or any interest therein may
be sold for cash or upon credit in one or more parcels or in several
interests or portions and in any order or manner;
(iii) with or without entry, to the extent permitted and pursuant to
the procedures provided by applicable law, institute proceedings for the
partial foreclosure of this Mortgage for the portion of the Debt then due
and payable, subject to the continuing lien of this Mortgage for the
balance of the Debt not then due;
(iv) sell for cash or upon credit the Mortgaged Property or any part
thereof and all estate, claim, demand, right, title and interest of
Mortgagor therein and rights of redemption thereof, pursuant to power of
sale or otherwise, at one or more sales, as an entity or in parcels, at
such time and place, upon such terms and after such notice thereof as may
be required or permitted by law;
(v) institute an action, suit or proceeding in equity for the
specific performance of any covenant, condition or agreement contained
herein or in the Note;
(vi) recover judgment on the Note either before, during or after any
proceedings for the enforcement of this Mortgage;
(vii) apply for the appointment of a receiver of the Mortgaged
Property, without notice and without regard for the adequacy of the
security for the Debt and without regard for the solvency of the Mortgagor
or of any person, firm or other entity liable for the payment of the Debt;
-20-
(viii) enforce Mortgagee's interest in the Leases and Rents and enter
into or upon the Mortgaged Property, either personally or by its agents,
nominees or attorneys and dispossess Mortgagor and its agents and servants
therefrom, and thereupon Mortgagee may (A) use, operate, manage, control,
insure, maintain, repair, restore and otherwise deal with all and every
part of the Mortgaged Property and conduct the business thereat; (B) make
alterations, additions, renewals, replacements and improvements to or on
the Mortgaged Property; (C) exercise all rights and powers of Mortgagor
with respect to the Mortgaged Property, whether in the name of Mortgagor or
otherwise, including, without limitation, the right to make, cancel,
enforce or modify Leases, obtain and evict tenants, and demand, sue for,
collect and receive all earnings, revenues, rents, issues, profits and
other income of the Mortgaged Property and every part thereof; and (D)
apply the receipts from the Mortgaged Property to the payment of the Debt,
after deducting therefrom all reasonable expenses (including reasonable
attorneys' fees) incurred in connection with the aforesaid operations and
all amounts necessary to pay the Taxes, assessments, insurance and Other
Charges in connection with the Mortgaged Property, as well as just and
reasonable compensation for the services of Mortgagee, its counsel, agents
and employees; or
(ix) pursue such other rights and remedies as may be available at
law and in equity.
In the event of a sale, by foreclosure or otherwise, of less than all of
the Mortgaged Property, this Mortgage shall continue as a lien on the remaining
portion of the Mortgaged Property.
(b) The proceeds of any sale made under or by virtue of this
paragraph, together with any other sums which then may be held by Mortgagee
under this Mortgage, whether under the provisions of this paragraph or
otherwise, shall be applied by Mortgagee to the payment of the Debt in such
priority and proportion as Mortgagee in its discretion shall deem proper.
(c) To the extent permitted by applicable law, Mortgagee may
adjourn from time to time any sale by it to be made under or by virtue of this
Mortgage by announcement at the time and place appointed for such sale or for
such adjourned sale or sales; and, except as otherwise provided by any
applicable provision of law, Mortgagee, without further notice or publication,
may make such sale at the time and place to which the same shall be so
adjourned.
(d) Upon the completion of any sale or sales made by Mortgagee
under or by virtue of this paragraph, Mortgagee, or an officer of any court
empowered to do so, shall execute and deliver to the accepted purchaser or
purchasers a good and sufficient instrument, or good and sufficient instruments,
conveying, assigning and transferring all estate, right, title and interest in
and to the property and rights sold. Mortgagee is hereby irrevocably appointed
the true and lawful attorney of Xxxxxxxxx, in its name and stead, to make all
necessary conveyances, assignments, transfers and deliveries of the Mortgaged
Property and rights so
-21-
sold and for that purpose Mortgagee may execute all necessary instruments of
conveyance, assignment and transfer, and may substitute one or more persons with
like power, Xxxxxxxxx hereby ratifying and confirming all that its said attorney
or such substitute or substitutes shall lawfully do by virtue hereof. Any such
sale or sales made under or by virtue of this paragraph shall operate to divest
all the estate, right, title, interest, claim and demand whatsoever, whether at
law or in equity, of Mortgagor in and to the properties and rights so sold, and
shall be a perpetual bar both at law and in equity against Mortgagor and against
any and all persons claiming or who may claim the same, or any part thereof
from, through or under Xxxxxxxxx.
(e) Upon any sale made under or by virtue of this paragraph,
Mortgagee may bid for and acquire the Mortgaged Property or any part thereof and
in lieu of paying cash therefor may make settlement for the purchase price by
crediting upon the Debt the net sales price after deducting therefrom the
expenses of the sale and costs of the action and any other sums which Mortgagee
is authorized to deduct under this Mortgage.
(f) No recovery of any judgment by Xxxxxxxxx and no levy of an
execution under any judgment upon the Mortgaged Property or upon any other
property of Mortgagor shall affect in any manner or to any extent the lien of
this Mortgage upon the Mortgaged Property or any part thereof, or any liens,
rights, powers or remedies of Mortgagee hereunder, but such liens, rights,
powers and remedies of Mortgagee shall continue unimpaired as before.
29. Reasonable Use and Occupancy. In addition to the rights which
----------------------------
Mortgagee may have herein, upon the occurrence of any Event of Default,
Mortgagee, at its option, may require Mortgagor to pay monthly in advance to
Mortgagee, or any receiver appointed to collect the Rents, the fair and
reasonable rental value for the use and occupation of such part of the Mortgaged
Property as may be occupied by Mortgagor or may require Mortgagor to vacate and
surrender possession of the Mortgaged Property to Mortgagee or to such receiver
and, in default thereof, Mortgagor may be evicted by summary proceedings or
otherwise.
30. Security Agreement. This Mortgage is both a real property mortgage and
------------------
a "security agreement" within the meaning of the Uniform Commercial Code. The
Mortgaged Property includes both real and personal property and all other rights
and interests, whether tangible or intangible in nature, of Mortgagor in the
Mortgaged Property. Mortgagor by executing and delivering this Mortgage has
granted and hereby grants to Mortgagee, as security for the Debt, a security
interest in the Mortgaged Property to the full extent that the Mortgaged
Property may be subject to the Uniform Commercial Code (said portion of the
Mortgaged Property so subject to the Uniform Commercial Code being called in
this paragraph 30 the "Collateral"). If an Event of Default shall occur,
----------
Mortgagee, in addition to any other rights and remedies which it may have, shall
have and may exercise immediately and without demand, any and all rights and
remedies granted to a secured party upon default under the Uniform Commercial
Code, including, without limiting the generality of the foregoing, the right to
take possession of the Collateral or any part thereof, and to take such other
measures as Mortgagee may deem necessary for the care, protection and
preservation of the Collateral. Upon the request or demand of Mortgagee,
Mortgagor shall at its expense assemble the
-22-
Collateral and make it available to Mortgagee at a convenient place acceptable
to Mortgagee. Mortgagor shall pay to Mortgagee on demand any and all expenses,
including legal expenses and reasonable attorneys' fees, incurred or paid by
Mortgagee in protecting the interest in the Collateral and in enforcing the
rights hereunder with respect to the Collateral. Any notice of sale, disposition
or other intended action by Mortgagee with respect to the Collateral sent to
Mortgagor in accordance with the provisions hereof at least ten (10) days prior
to such action, shall constitute commercially reasonable notice to Mortgagor.
The proceeds of any disposition of the Collateral, or any part thereof, may be
applied by Mortgagee to the payment of the Debt in such priority and proportions
as Mortgagee in its discretion shall deem proper.
31. Actions and Proceedings. Mortgagee has the right to appear in and
-----------------------
defend any action or proceeding brought with respect to the Mortgaged Property
and to bring any action or proceeding, in the name and on behalf of Mortgagor,
which Mortgagee, in its discretion, decides should be brought to protect their
interest in the Mortgaged Property. Mortgagee shall, at its option, be
surrogated to the lien of any mortgage or other security instrument discharged
in whole or in part by the Debt, and any such subrogation rights shall
constitute additional security for the payment of the Debt.
32. Waiver of Counterclaim. Mortgagor hereby waives the right to assert a
----------------------
counterclaim, other than a mandatory or compulsory counterclaim, in any action
or proceeding brought against it by Mortgagee.
33. Recovery of Sums Required to Be Paid. Mortgagee shall have the right
------------------------------------
from time to time to take action to recover any sum or sums which constitute a
part of the Debt as the same become due, without regard to whether or not the
balance of the Debt shall be due, and without prejudice to the right of
Mortgagee thereafter to bring an action of foreclosure, or any other action, for
a default or defaults by Mortgagor existing at the time such earlier action was
commenced.
34. Marshalling and Other Matters. Mortgagor hereby waives, to the extent
-----------------------------
permitted by law, the benefit of all appraisement, valuation, stay, extension,
reinstatement and redemption laws now or hereafter in force and all rights of
marshalling in the event of any sale hereunder of the Mortgaged Property or any
part thereof or any interest therein. Further, Mortgagor, to the extent
permitted by law, hereby expressly waives any and all rights of redemption from
sale under any order or decree of foreclosure of this Mortgage on behalf of
Mortgagor, and on behalf of each and every person acquiring any interest in or
title to the Mortgaged Property subsequent to the date of this Mortgage and on
behalf of all persons to the extent permitted by applicable law.
35. Hazardous Waste and Asbestos. Mortgagor hereby represents and warrants
----------------------------
to Mortgagee that (a) the Mortgaged Property is not in direct or indirect
violation of any local, state, federal or other governmental authority, statute,
ordinance, code, order, decree, law, rule or regulation pertaining to or
imposing liability or standards of conduct concerning environmental regulation,
contamination or clean-up including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act, as amended
-23-
("CERCLA"), the Resource Conservation and Recovery Act, as amended ("RCRA"), and
------ ----
any state super-lien and environmental clean-up statutes (collectively,
"Environmental Laws"); (b) the Mortgaged Property is not subject to any private
------------------
or governmental lien or judicial or administrative notice or action relating to
hazardous and/or toxic, dangerous and/or regulated, substances, wastes,
materials, pollutants or contaminants, petroleum, tremolite, anthlophylie or
actinolite or polychlorinated biphenyls (including, without limitation, any raw
materials which include hazardous constituents) and any other substances or
materials which are included under or regulated by Environmental Laws
(collectively, "Hazardous Materials"); (c) no Hazardous Materials are or have
-------------------
been, prior to Mortgagor's acquisition of the Mortgaged Property, discharged,
generated, treated, disposed of or stored on, incorporated in, or removed or
transported from the Mortgaged Property otherwise than in compliance with all
Environmental Laws and (d) there is no asbestos present in, and no underground
storage tanks exist on, any of the Mortgaged Property. So long as Mortgagor owns
or is in possession of the Mortgaged Property, Mortgagor shall keep or cause the
Mortgaged Property to be kept free from Hazardous Materials and in compliance
with all Environmental Laws, shall promptly notify Mortgagee if Mortgagor shall
become aware of any Hazardous Materials on the Mortgaged Property and/or if
Mortgagor shall become aware that the Mortgaged Property is in direct or
indirect violation of any Environmental Laws and Mortgagor shall remove such
Hazardous Materials and/or cure such violations, as applicable, as required by
law, promptly after Xxxxxxxxx becomes aware of same, at Xxxxxxxxx's sole
expense. Nothing herein shall prevent Mortgagor from recovering such expenses
from any other party that may be liable for such removal or cure. The
obligations and liabilities of Mortgagor under this paragraph 35 shall survive
any termination, satisfaction, or assignment of this Mortgage, any Transfer
and/or any exercise by Mortgagee of any of its rights or remedies hereunder,
including but not limited to, the acquisition of the Mortgaged Property by
foreclosure or a conveyance in lieu of foreclosure.
36. Handicapped Access.
------------------
(a) Xxxxxxxxx agrees that the Mortgaged Property shall at all times
comply to the extent applicable with the requirements of the Americans with
Disabilities Act of 1990, all state and local laws and ordinances related to
handicapped access and all rules, regulations, and orders issued pursuant
thereto including, without limitation, the Americans with Disabilities Act
Accessibility Guidelines for Buildings and Facilities (collectively, "Access
------
Laws").
----
(b) Xxxxxxxxx agrees to give prompt notice to Mortgagee of the
receipt by Xxxxxxxxx of any complaints related to violations of any Access Laws
and of the commencement of any proceedings or investigations which relate to
compliance with applicable Access Laws.
37. Indemnification. In addition to any other indemnifications provided
---------------
herein or in the Note or the other Loan Documents, Mortgagor shall protect,
defend, indemnify and save harmless Mortgagee from and against all liabilities,
obligations, claims, demands, damages, penalties, causes of action, losses,
fines, costs and expenses (including, without limitation,
-24-
reasonable attorneys' fees and expenses) imposed upon or incurred by or asserted
against Mortgagee, except to the extent resulting from Mortgagee's gross
negligence or wilful misconduct, by reason of (a) ownership of this Mortgage or
the Mortgaged Property or any interest therein; (b) the construction or
renovation of any Improvements; (c) any accident, injury to or death of persons
or loss of or damage to property occurring in, on or about the Mortgaged
Property or any part thereof or on the adjoining sidewalks, curbs, adjacent
property or adjacent parking areas, streets or ways; (d) any use, nonuse or
condition in, on or about the Mortgaged Property or any part thereof or on
adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets
or ways; (e) any failure on the part of Mortgagor to perform or comply with any
of the terms of this Mortgage; (f) performance of any labor or services or the
furnishing of any materials or other property in respect of the Mortgaged
Property or any part thereof; (g) the presence, disposal, escape, seepage,
leakage, spillage, discharge, emission, release, or threatened release of any
Hazardous Materials on, from, or affecting the Mortgaged Property or any other
property; (h) any personal injury (including wrongful death) or property damage
(real or personal) arising out of or related to such Hazardous Materials; (i)
any lawsuit brought or threatened, settlement reached, or government order
relating to such Hazardous Materials; (j) any violation of the Environmental
Laws, which are based upon or in any way related to such Hazardous Materials
including, without limitation, the costs and expenses of any remedial action,
attorney and consultant fees, investigation and laboratory fees, court costs and
litigation expenses; and (k) any failure of the Mortgaged Property to comply
with any Access Laws. Any amounts payable to Mortgagee by reason of the
application of this paragraph 37 shall be secured by this Mortgage and shall
become immediately due and payable and shall bear interest at the Default Rate
from the date any payment is made by Mortgagee hereunder until such payment is
reimbursed by Xxxxxxxxx. The obligations and liabilities of Mortgagor under this
paragraph 37 shall survive any termination, satisfaction or assignment of this
Mortgage, any Transfer and/or any exercise by Mortgagee of any of its rights and
remedies hereunder, including but not limited to, the acquisition of the
Mortgaged Property by foreclosure or a conveyance in lieu of foreclosure.
38. Notices. Any notice, demand, statement, request or consent made
-------
hereunder shall be in writing to the other party hereto at its address set forth
below or at such other address as such party may designate by notice to the
other party hereto and shall be deemed given (i) on receipt, if mailed, by
certified or registered U.S. mail, return receipt requested, postage prepaid;
(ii) on receipt, if delivered, fee prepaid, to a national overnight delivery
service (such as Federal Express, Purolater Courier, U.P.S. Next Day Air); or
(iii) when delivered, if delivered by hand, as evidenced by a signed receipt:
To Mortgagor:
____________________________
____________________________
____________________________
Attention:__________________
Telephone: (____) __________
-25-
with a courtesy copy to:
____________________________
____________________________
____________________________
Attention: _________________
Telephone: (___) ___________
To Mortgagee:
Banco Popular de Puerto Rico
0 Xxxx 00/xx/ Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxxx Xxx
Vice President
Telephone: (000) 000-0000
with a courtesy copy to:
XxXxxxxxx Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
A "Business Day" is any day other than a Saturday or Sunday, or a day on which
banking and savings and loan institutions in the State of New York are
authorized or obligated by law or executive order to remain closed. Refusal to
accept delivery of any notice shall be deemed to be receipt of such notice.
39. Authority. (a) Mortgagor (and the undersigned representative of
---------
Mortgagor, if any) has full power, authority and right to execute, deliver and
perform its obligations pursuant to this Mortgage, and to mortgage, give, grant,
bargain, sell, alien, enfeoff, convey, confirm, pledge, hypothecate and assign
the Mortgaged Property pursuant to the terms hereof and to keep and observe all
of the terms of this Mortgage on Xxxxxxxxx's part to be performed and (b)
Mortgagor represents and warrants that Mortgagor is not a "foreign person"
within the meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986,
as amended and the related Treasury Department regulations, including temporary
regulations.
40. Waiver of Notice. Mortgagor shall not be entitled to any notices of
----------------
any nature whatsoever from Mortgagee except with respect to matters for which
this Mortgage specifically and expressly provides for the giving of notice by
Mortgagee to Mortgagor and except with respect to matters for which Mortgagee is
required by applicable law to give notice, and Mortgagor hereby expressly waives
the right to receive any notice from Mortgagee
-26-
with respect to any matter for which this Mortgage does not specifically and
expressly provide for the giving of notice by Mortgagee to Mortgagor.
41. Sole Discretion of Mortgagee. Wherever pursuant to this Mortgage,
----------------------------
Mortgagee exercises any right given to it to approve or disapprove, or any
arrangement or term is to be satisfactory to Mortgagee, the decision of
Mortgagee to approve or disapprove or to decide that arrangements or terms are
satisfactory or not satisfactory shall be in the sole discretion of Mortgagee
and shall be final and conclusive, except as may be otherwise expressly and
specifically provided herein.
42. Non-Waiver. The failure of Mortgagee to insist upon strict performance
----------
of any term hereof shall not be deemed to be a waiver of any term of this
Mortgage. Mortgagor shall not be relieved of Mortgagor's obligations hereunder
by reason of (a) the failure of Mortgagee to comply with any request of
Mortgagor to take any action to foreclose this Mortgage or otherwise enforce any
of the provisions hereof or of the Note or the other Loan Documents, (b) the
release, regardless of consideration, of the whole or any part of the Mortgaged
Property, or of any person liable for the Debt or any portion thereof or (c) any
agreement or stipulation by Mortgagee extending the time of payment or otherwise
modifying or supplementing the terms of the Note, this Mortgage or the other
Loan Documents. Mortgagee may resort for the payment of the Debt to any other
security held by Mortgagee in such order and manner as Mortgagee, in its
discretion, may elect. Mortgagee may take action to recover the Debt, or any
portion thereof, or to enforce any covenant hereof without prejudice to the
right of Mortgagee thereafter to foreclose this Mortgage. The rights and
remedies of Mortgagee under this Mortgage shall be separate, distinct and
cumulative and none shall be given effect to the exclusion of the others. No act
of Mortgagee shall be construed as an election to proceed under any one
provision herein to the exclusion of any other provision. Mortgagee shall not be
limited exclusively to the rights and remedies herein stated but shall be
entitled to every right and remedy now or hereafter afforded at law or in
equity.
43. No Oral Change. This Mortgage, and any provisions hereof, may not be
--------------
modified, amended, waived, extended, changed, discharged or terminated orally or
by any act or failure to act on the part of Mortgagor or Mortgagee, but only by
an agreement in writing signed by the party against whom enforcement of any
modification, amendment, waiver, extension, change, discharge or termination is
sought.
44. Successors and Assigns. This Mortgage shall be binding upon and inure
----------------------
to the benefit of Mortgagor and Mortgagee and their respective heirs, personal
representatives, successors and assigns forever.
45. Inapplicable Provisions. If any term, covenant or condition of the
-----------------------
Note or this Mortgage is held to be invalid, illegal or unenforceable in any
respect, the Note and this Mortgage shall be construed without such provision.
-27-
46. Headings, etc. The headings and captions of various paragraphs of this
-------------
Mortgage are for convenience of reference only and are not to be construed as
defining or limiting, in any way, the scope or intent of the provisions hereof.
47. Governing Law. This Mortgage shall be governed by and construed in
-------------
accordance with the laws of the State of ___________ without regard to
principles of conflict of laws.
48. Definitions. Unless the context clearly indicates a contrary intent or
-----------
unless otherwise specifically provided herein, words used in this Mortgage may
be used interchangeably in singular or plural form and the word "Mortgagor"
shall mean "each Mortgagor and any subsequent owner or owners of the Mortgaged
Property or any part thereof or any interest therein," the word "Mortgagee"
shall mean "Mortgagee and any subsequent holder of the Note," the word "Note"
shall mean "the Note and any other evidence of indebtedness secured by this
Mortgage," the word "person" shall include an individual, corporation,
partnership, trust, unincorporated association, government, governmental
authority, and any other entity, and the words "Mortgaged Property" shall
include any portion of the Mortgaged Property and any interest therein. Whenever
the context may require, any pronouns used herein shall include the
corresponding masculine, feminine or neuter forms and the singular form of nouns
and pronouns shall include the plural and vice versa.
49. Waiver of Trial by Jury. MORTGAGOR AND MORTGAGEE HEREBY KNOWINGLY,
-----------------------
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED ON THE LOAN EVIDENCED BY THE NOTE OR ARISING
OUT OF, UNDER OR IN CONNECTION WITH THE NOTE, THIS MORTGAGE OR ANY OF THE OTHER
LOAN DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER
VERBAL OR WRITTEN) OR ACTION OF MORTGAGOR OR MORTGAGEE. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR MORTGAGEE'S MAKING OF THE LOAN SECURED BY THIS MORTGAGE
AND THE OTHER LOAN DOCUMENTS.
50. Assignment. Mortgagee shall have the right, exercisable at any time
----------
and from time to time, to sell, transfer or assign the Mortgage and the other
Loan Documents, or grant participations therein, or issue certificates or
securities evidencing a beneficial interest therein in a rated or unrated public
offering or private placement, and Mortgagee may forward to any purchaser,
transferee, assignee, servicer, participant, investor or credit rating agency
rating such securities (collectively, an "Investor") or prospective Investor all
--------
documents and information in Mortgagee's possession with respect to Mortgagor,
the Mortgaged Property and the Loan Documents as such Investor or prospective
Investor may request.
-28-
IN WITNESS WHEREOF, Xxxxxxxxx has executed this Mortgage, intending to be
legally bound, the day and year first above written.
__________________________________,
a _____________________________
By: _______________________________
Name:______________________________
Title:_____________________________
-29-
(ACKNOWLEDGMENT)
EXHIBIT A
LEGAL DESCRIPTION
EXHIBIT K-2(C)
--------------
FORM OF FRANCHISEE LEASED PROPERTY MORTGAGE
-------------------------------------------
LEASEHOLD MORTGAGE, SECURITY AGREEMENT AND
ASSIGNMENT OF LEASES AND RENTS
BY AND BETWEEN
_____________________
_____________________
__________
_______________________
("MORTGAGOR")
AND
BANCO POPULAR DE PUERTO RICO
0 XXXX 00/XX/ XXXXXX
XXX XXXX, XXX XXXX 00000
("MORTGAGEE")
DATED AS OF _________, 199__
LOCATION OF PREMISES:
RECORDING REQUESTED BY AND
WHEN RECORDED - RETURN TO:
Xxxxx X. Xxxxx, Esq.
XxXxxxxxx Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
THIS LEASEHOLD MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF LEASES
AND RENTS (the "Mortgage"), made as of the __ day of _____, 199_, by
--------
__________________________, a __________________, having an office at
____________ _________________________________________________ ("Mortgagor") and
---------
BANCO POPULAR DE PUERTO RICO, having offices at 0 Xxxx 00/xx/ Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000 ("Mortgagee").
---------
W I T N E S S E T H:
- - - - - - - - - -
To secure the payment of an indebtedness in the principal sum of
________________________________ DOLLARS ($___________), lawful money of the
United States of America, to be paid with interest according to a certain note
dated the date hereof made by Mortgagor to Mortgagee (the note together with all
extensions, renewals or modifications thereof being hereinafter collectively
called the "Note") (said indebtedness, interest and all other sums due hereunder
----
and under the Note being collectively called the "Debt"), Xxxxxxxxx has
----
mortgaged, given, granted, bargained, sold, aliened, conveyed, confirmed,
pledged, assigned, and hypothecated and by these presents does hereby mortgage,
give, grant, bargain, sell, alien, convey, confirm, pledge, assign and
hypothecate unto Mortgagee all right, title, interest and estate of Mortgagor
now owned, or hereafter acquired, in and to the following property, rights,
interests and estates (such property, rights, interests and estates being
hereinafter described are collectively referred to herein as the "Mortgaged
---------
Property"):
--------
(a) that certain lease dated _________, 199__, between _________, as
landlord, and Mortgagor, as tenant (the "Lease") affecting the real property
-----
described in Exhibit A attached hereto (the "Property"), and the leasehold
--------- --------
estate created thereby (and all other interests of Mortgagor presently owned or
hereafter acquired in the Property) and all modifications, renewals or
extensions of the Lease and all rights of Mortgagor to renew or extend the term
of the Lease and all of Mortgagor's right, title and interest in and to the
Property;
(b) all machinery, equipment, fixtures, furniture, equipment, cooking
supplies, stoves, refrigerators, dishes, glassware, utensils and inventories and
other property of every kind and nature, whether tangible or intangible,
whatsoever owned by Mortgagor, or in which Mortgagor has or shall have an
interest, now or hereafter located upon the Property, or appurtenant thereto,
and usable in connection with the present or future operation and occupancy of
the Property and all building equipment, materials and supplies and construction
equipment, materials and supplies of any nature whatsoever owned by Mortgagor,
or in which Mortgagor has or shall have an interest, now or hereafter located
upon the Property, or appurtenant thereto, or usable in connection with the
present or future construction, renovation, operation, enjoyment and occupancy
of the Property (hereinafter collectively called the "Equipment"), including the
---------
proceeds of any sale or transfer of the foregoing, and the right, title and
interest of Xxxxxxxxx in and to any of the Equipment which may be subject to any
security interests, as defined in the Uniform Commercial Code, as adopted and
enacted by the
State of ______________ (the "Uniform Commercial Code") superior in lien to the
-----------------------
lien of this Mortgage;
(c) all subleases and other agreements affecting the use, enjoyment
or occupancy of the Land or the Improvements (hereinafter defined) heretofore or
hereafter entered into by Mortgagor (collectively, the "Subleases") and all
---------
income, rents, issues, profits and revenues from the Property (collectively, the
"Rents") and all proceeds from the sale, surrender, termination or other
-----
disposition of the Subleases and the right to receive and apply the Rents to the
payment of the Debt;
(d) all proceeds of and any unearned premiums on any insurance
policies covering the Mortgaged Property, including, without limitation, the
right to receive and apply the proceeds of any insurance, judgments, or
settlements made in lieu thereof, for damage to the Mortgaged Property; and
(e) the right, in the name and on behalf of Xxxxxxxxx, to appear in
and defend any action or proceeding brought with respect to the Mortgaged
Property and to commence any action or proceeding to protect the interest of
Mortgagee in the Mortgaged Property.
TO HAVE AND TO HOLD the above granted and described Mortgaged Property unto
and to the use and benefit of Mortgagee, and the successors and assigns of
Mortgagee, forever.
AND Xxxxxxxxx represents and warrants to and covenants and agrees with Mortgagee
as follows:
1. PAYMENT OF DEBT AND INCORPORATION OF COVENANTS, CONDITIONS AND
--------------------------------------------------------------
AGREEMENTS. Mortgagor will pay the Debt at the time and in the manner provided
----------
in the Note and in this Mortgage. All the covenants, conditions and agreements
contained in (a) the Note and (b) all and any of the documents other than the
Note or this Mortgage now or hereafter executed by Xxxxxxxxx and/or others and
by or in favor of Mortgagee, which wholly or partially secure or guaranty
payment of the Note (collectively, the "Loan Documents"), are hereby made a part
--------------
of this Mortgage to the same extent and with the same force as if fully set
forth herein.
2. THE LEASE. The Lease is in full force and effect and has not been
---------
modified, amended or altered as of the date hereof and there are no defaults by
any party thereto.
3. WARRANTY OF TITLE. Mortgagor warrants that it has good title to the
-----------------
leasehold estate created by the Lease and a good and marketable interest in such
leasehold, and that Mortgagor owns the Equipment, in each case free and clear of
liens, claims and encumbrances.
-2-
4. Insurance.
---------
(a) Mortgagor, at its sole cost and expense, will keep the Mortgaged
Property insured during the entire term of this Mortgage for the mutual benefit
of Mortgagor and Mortgagee against loss or damage by fire and against loss or
damage by other risks and hazards covered by a standard extended coverage
insurance policy including, but not limited to, riot and civil commotion,
vandalism, malicious mischief, burglary and theft. Such insurance shall be in an
amount (i) equal to one hundred percent (100%) of the then replacement cost of
the buildings, structures, fixtures and improvements now or hereafter located on
the Property (collectively, the "Improvements") and the Equipment, without
------------
deduction for physical depreciation and (ii) such that the insurer would not
deem Mortgagor a co-insurer under said policies. The policies of insurance
carried in accordance with this paragraph shall be paid annually in advance and
shall contain the "Replacement Cost Endorsement" with a waiver of depreciation.
(b) Mortgagor, at its sole cost and expense, for the mutual benefit
of Mortgagor and Mortgagee, shall also obtain and maintain during the entire
term of this Mortgage the following policies of insurance:
(i) Flood insurance if any part of the Mortgaged Property is located
in an area identified by the Federal Emergency Management Agency as an area
having special flood hazards and in which flood insurance has been made
available under the National Flood Insurance Act of 1968 (and any successor
act thereto) in an amount at least equal to the outstanding principal
amount of the Note or the maximum limit of coverage available with respect
to the Improvements and Equipment under said Act, whichever is less.
(ii) Comprehensive public liability insurance, including broad form
property damage, blanket contractual and personal injuries (including death
resulting therefrom) coverages in an amount not less than $1,000,000 per
occurrence and $10,000,000 in the aggregate.
(iii) Business interruption insurance in an amount equal to the
aggregate annual amount of all income from, and revenues and rents payable
with respect to, the Mortgaged Property, such business interruption
insurance to cover losses for a period of at least twelve (12) months after
the date of the fire or casualty in question.
(iv) During the course of any construction, renovation or equipping
of the Improvements, builder's completed value risk insurance against "all
risks of physical loss", including collapse and transit coverage, with
deductibles reasonably satisfactory to Mortgagee, in non-reporting form,
covering the total value of work performed and equipment, supplies and
materials furnished. Such policy of insurance shall contain the "permission
to occupy upon completion of work or occupancy" endorsement and a waiver of
co-insurance or an agreed amount endorsement.
-3-
(v) Such other insurance as may from time to time be reasonably
required by Mortgagee in order to protect its interests.
(c) All policies of insurance (the "Policies") required pursuant to
--------
this paragraph 4 shall be issued by an insurer having an A.M. Best rating of A:V
or better and satisfactory to Mortgagee, (ii) shall contain the standard New
York mortgagee non-contribution clause naming Mortgagee as the person to which
all payments made by such insurance company shall be paid, (iii) shall be
maintained throughout the term of this Mortgage without cost to Mortgagee, (iv)
original certificates, or copies thereof, certified to be true and correct,
shall be delivered to Mortgagee, (v) shall contain such provisions as Mortgagee
deems reasonably necessary or desirable to protect its interest including,
without limitation, endorsements providing that neither Mortgagor, Mortgagee nor
any other party shall be a co-insurer under said Policies and that Mortgagee
shall receive at least thirty (30) days prior written notice of any modification
or cancellation, and (vi) shall be satisfactory in form and substance to
Mortgagee and shall be approved by Mortgagee as to amounts, form, risk coverage,
deductibles, loss payees and insureds. All such premiums for such Policies (the
"Insurance Premiums") shall be paid by Mortgagor making payment when due
------------------
directly to the carrier. Not later than thirty (30) days prior to the expiration
date of each of the Policies, Xxxxxxxxx will deliver to Mortgagee satisfactory
evidence of the renewal of each Policy.
(d) If the Mortgaged Property shall be damaged or destroyed, in
whole or in part, by fire or other casualty, Mortgagor shall give prompt written
notice thereof to Mortgagee. Sums paid to Mortgagee by an insurer, after
deduction of Mortgagee's reasonable costs and expenses of collection (after such
deduction, the "Insurance Proceeds"), shall be retained and (i) applied by
------------------
Mortgagee toward payment of the Debt in such priority and proportions as
Mortgagee in its discretion shall deem proper (any such application for
repayment to be without any prepayment consideration, except that if any Event
of Default (hereinafter defined), or an event that with notice and/or the
passage of time, or both, would constitute an Event of Default, has occurred,
then such application shall be subject to the prepayment consideration computed
in accordance with the Note) or, (ii) if the conditions set forth in paragraph
4(f) of this Mortgage are satisfied, as determined by Mortgagee in its sole
discretion, paid to Mortgagor for the restoration and repair of the Mortgaged
Property in accordance with paragraph 4(e) of this Mortgage in whole or in such
lesser amount as is necessary to pay for the costs of such restoration and
repair.
(e) If the Insurance Proceeds are held by Mortgagee to reimburse
Mortgagor for the cost of restoration and repair of the Mortgaged Property, (i)
the Mortgaged Property shall be substantially restored to the equivalent of its
condition prior to such casualty or to such other condition as Mortgagee may
approve in writing, (ii) such restoration and repair shall be done in compliance
with all applicable laws, rules and regulations, and (iii) all reasonable costs
and expenses incurred by Mortgagee in connection with making the Insurance
Proceeds available for such restoration and repair including, without
limitation, counsel fees and inspecting engineers' fees incurred by Mortgagee,
shall be paid by Xxxxxxxxx. Mortgagee may, at Mortgagee's option, condition
disbursement of said proceeds on Mortgagee's approval
-4-
of such plans and specifications of an architect reasonably satisfactory to
Mortgagee, contractor's cost estimates, architect's certificates, waivers of
liens, sworn statements of mechanics and material men and such other evidence of
costs, percentage completion of construction, application of payments, and
satisfaction of liens as Mortgagee may reasonably require. If the Insurance
Proceeds are applied to the payment of the Debt, any such application of
proceeds to principal shall not extend or postpone the maturity date of the Note
or change the amount or the due date of any installment payment under the Note.
Any surplus Insurance Proceeds, after payment of the Debt, shall be paid to
Mortgagor. If the Mortgaged Property is sold pursuant to paragraph 29 of this
Mortgage or if Mortgagee acquires title to the Mortgaged Property, Mortgagee
shall have all of the right, title and interest of Mortgagor in and to any
insurance policies and unearned premiums thereon and in and to the Insurance
Proceeds resulting from any damage to the Mortgaged Property prior to such sale
or acquisition.
(f) Mortgagee shall not exercise Mortgagee's option to apply
Insurance Proceeds to the payment of the sums secured by this Mortgage if all
the following conditions are met, as determined by Mortgagee in its sole
discretion: (i) no Event of Default is then continuing under this Mortgage, the
Note or any other Loan Document; (ii) Mortgagee determines that there will be
sufficient funds (whether consisting of Insurance Proceeds and/or other sums
made available by Mortgagor for restoration) to restore and repair the Mortgaged
Property to the condition required under paragraph 4(e) above; (iii) the
Franchise Agreement (hereinafter defined) shall not have been terminated as a
result of such damage or destruction and the Franchise Agreement shall continue
in full force and effect notwithstanding such damage or destruction; (iv)
Mortgagee determines that the income of the Mortgaged Property, after
restoration and repair of the Mortgaged Property to the condition required under
paragraph 4(e) above, will be sufficient to meet all operating costs and other
expenses, payments for reserves and loan repayment obligations relating to the
Mortgaged Property; (v) Mortgagee determines that restoration and repair of the
Mortgaged Property to the condition required under paragraph 4(e) above will be
completed within the greater of (A) three (3) months or (B) the period of time
covered by the business interruption insurance, if any, then in effect from the
date of the loss or casualty to the Mortgaged Property; and (vi) Mortgagee shall
have received evidence reasonably satisfactory to it that during the period of
restoration and repair of the Mortgaged Property to the condition required under
subparagraph 4(e) above, the sum of (A) income derived from the Mortgaged
Property, as reasonably determined by Mortgagee, plus (B) proceeds of business
interruption insurance, if any, to be paid, plus (C) amounts that Xxxxxxxxx
demonstrates to Mortgagee's reasonable satisfaction will be made available by
Xxxxxxxxx from other sources during such period will equal or exceed the sum of
(D) expenses in connection with the operation of the Mortgaged Property and (E)
the debt service under the Note.
5. Payment of Taxes, etc.
---------------------
(a) All taxes, assessments and water and sewer rents, now or
hereafter levied or assessed or imposed against the Mortgaged Property or any
part thereof (the "Taxes"") shall be paid when due in the manner provided in
-----
paragraph 6 of this Mortgage. Mortgagor shall pay all ground rents, maintenance
charges, other governmental impositions, and other charges,
-5-
including without limitation vault charges and license fees for the use of
vaults, chutes and similar areas adjoining the Mortgaged Property, now or
hereafter levied or assessed or imposed against the Mortgaged Property or any
part thereof (the "Other Charges") as the same become due and payable. Mortgagor
-------------
will deliver to Mortgagee, promptly upon Mortgagee's request, tax certificates
or receipted tax bills issued by the relevant taxing authority or other evidence
satisfactory to Mortgagee that the Taxes and Other Charges have been so paid or
are not then delinquent. Mortgagor shall not suffer and shall promptly cause to
be paid or discharged any lien or charge whatsoever which may be or become a
lien or charge against the Mortgaged Property, and shall promptly pay for all
utility services provided to the Mortgaged Property. Mortgagor shall furnish to
Mortgagee or its designee receipts for the payment of Taxes and Other Charges
prior to the date the same shall become delinquent.
(b) Mortgagor, at its own expense, may contest by appropriate legal
proceeding, promptly initiated and conducted in good faith and with due
diligence, the amount or validity or application in whole or in part of any of
the Taxes or Other Charges, provided that (i) Mortgagor is not in default under
the Note, this Mortgage or any other Loan Document, (ii) such proceeding shall
be permitted under and be conducted in accordance with the provisions of any
other instrument to which Mortgagor is subject and shall not constitute a
default thereunder, (iii) neither the Mortgaged Property nor any part thereof or
interest therein will be in danger of being sold, forfeited, terminated,
cancelled or lost, (iv) Mortgagor shall have paid the Taxes under protest or set
aside adequate reserves for the payment of the Taxes or Other Charges, together
with all interest and penalties thereon and (v) Mortgagor shall have furnished
such security as may be required in the proceeding, or as may be requested by
Mortgagee to insure the payment of any such Taxes or Other Charges, together
with all interest and penalties thereon.
(c) Upon demand by Mortgagee, Mortgagor, at Mortgagor's sole cost
and expense, shall contest any increase in any assessment for the Mortgaged
Property with respect to Taxes or Other Charges or seek a reduction in such
assessment in the event of a casualty, condemnation or other event which could
result in a reduction of the assessment with respect to Taxes or Other Charges
for the Mortgaged Property by instituting, or causing to be instituted, a
proceeding to reduce such assessment, conducted in accordance with the
recognized procedure therefore (a "Tax Appeal"). If, after demand by Mortgagee,
----------
Mortgagor shall fail to commence a Tax Appeal, Mortgagee shall be
entitled, at its option, to commence, appear in and prosecute any Tax Appeal
either in its own name or in the name of Mortgagor, for which Mortgagee is
hereby appointed as attorney-in-fact for Mortgagor, which appointment, being for
security and coupled with an interest, is irrevocable. If no Event of Default
under this Mortgage or any other Loan Document shall have occurred and be
continuing, Mortgagor shall be entitled to participate with Mortgagee in the
settlement or compromise of any claim in connection with any such Tax Appeal.
Upon the occurrence of an Event of Default and the continuance thereof,
Mortgagee shall be entitled to make any compromise or settlement in connection
with any such Tax Appeal without the participation of Mortgagor. All such
refunds, compensation, awards, damages, rights of action and proceeds awarded to
Xxxxxxxxx, less the reasonable costs and expenses incurred by Xxxxxxxxx in
prosecuting such Tax Appeal (the "Refund Proceeds") are hereby assigned to
---------------
Mortgagee as additional security for the
-6-
payment of Taxes and Other Charges as they become due. Upon the occurrence of an
Event of Default and the continuance thereof, Mortgagee shall be entitled to
apply the Refund Proceeds to the repayment of the Debt in such order and in such
amount as Mortgagee may determine. If there are any excess Refund Proceeds after
repayment of the Debt, Mortgagee shall pay such excess Refund Proceeds to
Mortgagor.
6. Escrow Fund. (a) Mortgagor shall, on the first day of each calendar
-----------
month, pay to Mortgagee one--twelfth (1/12th) of an amount which would be
sufficient to pay the Taxes payable, or estimated by Mortgagee to be payable,
during the next twelve (12) months and also provide for an additional reserve
equal to one-sixth (1/6th) of the Taxes payable (said amounts being hereinafter
called the "Tax Escrow Fund.")
---------------
(b) The Tax Escrow Fund and the payments of interest or principal or
both, payable pursuant to the Note, shall be added together and shall be paid as
an aggregate sum by Mortgagor to Mortgagee. Mortgagor hereby pledges to
Mortgagee any and all monies now or hereafter deposited in the Tax Escrow Fund
as additional security for the payment of the Debt. Mortgagee will apply the Tax
Escrow Fund to payments of Taxes to be made by Mortgagor pursuant to paragraph 5
hereof. If the amount of the Tax Escrow Fund shall exceed the amounts due for
Taxes pursuant to paragraph 5 hereof, Mortgagee shall, in its discretion, return
any excess to Mortgagor or credit such excess against future payments to be made
to the Tax Escrow Fund. In allocating such excess, Mortgagee may deal with the
person shown on the records of Mortgagee to be the owner of the Mortgaged
Property. If the balance in the Tax Escrow Fund on the first day of the month
which is one full month prior to the due date of any Taxes is not sufficient to
pay the Taxes, Mortgagor shall pay to Mortgagee, upon demand, an amount which
Mortgagee shall estimate as sufficient to make up the deficiency. Upon the
occurrence of an Event of Default, Mortgagee may apply any sums then present in
the Tax Escrow Fund to the payment of the following items in any order in its
sole discretion:
(i) Taxes and Other Charges;
(ii) Interest on the unpaid principal balance of the Note;
(iii) Amortization of the unpaid principal balance of the Note; or
(iv) All other sums payable pursuant to the Note, this Mortgage and
the other Loan Documents, including without limitation, advances made by
Mortgagee pursuant to the terms of this Mortgage.
(c) Until expended or applied as above provided, any amounts in the
Tax Escrow Fund shall constitute additional security for the Debt. The Tax
Escrow Fund shall not constitute a trust fund and may be commingled with other
monies held by Mortgagee. No earnings or interest on the Tax Escrow Fund shall
be paid to Mortgagor, unless applicable law requires interest on the Tax Escrow
Fund to be paid to Mortgagor. Any such required interest shall be deposited in
the Tax Escrow Fund as additional security for the payment of the Debt.
-7-
7. Condemnation.
------------
(a) Mortgagor shall promptly give Mortgagee written notice of the
actual or threatened commencement of any condemnation or eminent domain
proceeding and shall deliver to Mortgagee copies of any and all papers served in
connection with such proceedings. Notwithstanding any taking by any public or
quasi-public authority through eminent domain or otherwise (including but not
limited to any transfer made in lieu of or in anticipation of the exercise of
such taking), Xxxxxxxxx shall continue to pay the Debt at the time and in the
manner provided for its payment in the Note, this Mortgage and the other Loan
Documents and the Debt shall not be reduced until any award or payment therefor
shall have been actually received after expenses of collection and applied by
Mortgagee to the discharge of the Debt. Mortgagee shall not be limited to the
interest paid on the award by the condemning authority but shall be entitled to
receive out of the award interest at the rate or rates provided herein and in
the Note. Mortgagor shall cause the award or payment made in any condemnation or
eminent domain proceeding, which is payable to Mortgagor, to be paid directly to
Mortgagee. Sums paid to Mortgagee for such condemnation or action of eminent
domain, after deduction of Mortgagee's reasonable costs and expenses of
collection (after such deduction, the "Condemnation Proceeds"), shall be
---------------------
retained and (i) applied by Mortgagee toward payment of the Debt in such
priority and proportions as Mortgagee in its discretion shall deem proper (any
such application for repayment to be without any prepayment consideration,
except that if any Event of Default, or an event that with notice and/or the
passage of time, or both, would constitute an Event of Default, has occurred,
then such application shall be subject to the prepayment consideration computed
in accordance with the Note), or (ii) if the conditions set forth in paragraph
7(c) of this Mortgage are satisfied, as determined by Mortgagee in its sole
discretion, paid to Mortgagor for the restoration and repair of the Mortgaged
Property in accordance with paragraph 7(b) of this Mortgage in whole or in such
lesser amount as is necessary to pay for the costs of such restoration and
repair. If the Mortgaged Property is sold pursuant to paragraph 29 of this
Mortgage or if Mortgagee acquires title to the Mortgaged Property, Mortgagee
shall have all of the right, title and interest of Mortgagor in and to any
Condemnation Proceeds resulting from any condemnation or eminent domain
proceeding of the Mortgaged Property prior to such sale or acquisition.
(b) If the Condemnation Proceeds are held by Mortgagee to reimburse
Mortgagor for the cost of restoration and repair of the Mortgaged Property, (i)
the Mortgaged Property shall be substantially restored to the equivalent of its
condition prior to such condemnation or to such other condition as Mortgagee may
approve in writing, (ii) such restoration and repair shall be done in compliance
with all applicable laws, rules and regulations, and (iii) all reasonable costs
and expenses incurred by Mortgagee in connection with making the Condemnation
Proceeds available for such restoration and repair including, without
limitation, counsel fees and inspecting engineers' fees incurred by Mortgagee,
shall be paid by Xxxxxxxxx. Mortgagee may, at Mortgagee's option, condition
disbursement of said proceeds on Mortgagee's approval of such plans and
specifications of an architect reasonably satisfactory to Mortgagee,
contractor's cost estimates, architect's certificates, waivers of liens, sworn
statements of mechanics and material men and such other evidence of costs,
percentage
-8-
completion of construction, application of payments, and satisfaction of liens
as Mortgagee may reasonably require. If the Condemnation Proceeds are applied to
the payment of the Debt, any such application of proceeds to principal shall not
extend or postpone the maturity date of the Note or change the amount or the due
date of any installment payment under the Note. Any surplus Condemnation
Proceeds, after payment of the Debt, shall be paid to Mortgagor. If the
Mortgaged Property is sold pursuant to paragraph 29 of this Mortgage or if
Mortgagee acquires title to the Mortgaged Property, Mortgagee shall have all of
the right, title and interest of Mortgagor in and to any Condemnation Proceeds
resulting from any condemnation or eminent domain proceeding of the Mortgaged
Property prior to such sale or acquisition.
(c) Mortgagee shall not exercise Mortgagee's option to apply
Condemnation Proceeds to the payment of the sums secured by this Mortgage if all
the following conditions are met, as determined by Mortgagee in its sole
discretion: (i) no Event of Default is then continuing under this Mortgage, the
Note or any other Loan Document; (ii) Mortgagee determines that there will be
sufficient funds (whether consisting of Condemnation Proceeds and/or other sums
made available by Mortgagor for restoration) to restore and repair the Mortgaged
Property to the condition required under paragraph 7(b) above; (iii) the
Franchise Agreement shall not have been terminated as a result of such
condemnation or eminent domain proceeding and the Franchise Agreement shall
continue in full force and effect notwithstanding such condemnation or eminent
domain proceeding; (iv) Mortgagee determines that the income of the Mortgaged
Property, after restoration and repair of the Mortgaged Property to the
condition required under paragraph 7(b) above, will be sufficient to meet all
operating costs and other expenses, payments for reserves and loan repayment
obligations relating to the Mortgaged Property; (v) Mortgagee determines that
restoration and repair of the Mortgaged Property to the condition required under
paragraph 7(b) above will be completed within the greater of (A) three (3)
months or (B) the period of time covered by the business interruption insurance,
if any, then in effect from the date of the loss or casualty to the Mortgaged
Property; and (vi) Mortgagee shall have received evidence reasonably
satisfactory to it that during the period of restoration and repair of the
Mortgaged Property to the condition required under subparagraph 7(b) above, the
sum of (A) income derived from the Mortgaged Property, as reasonably determined
by Mortgagee, plus (B) proceeds of business interruption insurance, if any, to
be paid, plus (C) amounts that Xxxxxxxxx demonstrates to Mortgagee's reasonable
satisfaction will be made available by Mortgagor from other sources during such
period will equal or exceed the sum of (D) expenses in connection with the
operation of the Mortgaged Property and (E) the debt service under the Note.
-9-
8. Subleases and Rents.
-------------------
(a) Xxxxxxxxx does hereby absolutely and unconditionally assign to
Mortgagee its right, title and interest in all current and future Subleases and
Rents, it being intended by Xxxxxxxxx that this assignment constitutes a
present, absolute assignment and not an assignment for additional security only.
Such assignment to Mortgagee shall not be construed to bind Mortgagee to the
performance of any of the covenants, conditions or provisions contained in any
such Sublease or otherwise to impose any obligation upon Mortgagee. Xxxxxxxxx
agrees to execute and deliver to Mortgagee such additional instruments, in form
and substance reasonably satisfactory to Mortgagee, as may hereafter be
requested by Mortgagee to further evidence and confirm such assignment.
Nevertheless, subject to the terms of this paragraph 8, Mortgagee grants to
Mortgagor a revocable license to operate and manage the Mortgaged Property and
to collect the Rents. Mortgagor shall hold the Rents, or a portion thereof
sufficient to discharge all current sums due on the Debt, in trust for the
benefit of Mortgagee for use in the payment of such sums. Upon an Event of
Default, the license granted to Mortgagor herein shall be automatically revoked
and Mortgagee shall immediately be entitled to possession of all Rents, whether
or not Mortgagee enters upon or takes control of the Mortgaged Property.
Mortgagee is hereby granted and assigned by Xxxxxxxxx the right, at its option,
upon the revocation of the license granted herein to enter upon the Mortgaged
Property in person, by agent or by court-appointed receiver to collect the
Rents. Any Rents collected after the revocation of the license herein granted
may be applied toward payment of the Debt in such priority and proportion as
Mortgagee in its discretion shall deem proper.
(b) Upon request, Mortgagor shall furnish Mortgagee with copies of
all Subleases and all amendments or modifications of any Sublease. All Subleases
shall provide that each such Sublease is subordinate to this Mortgage and that
the sublessee agrees to attorn to Mortgagee. Mortgagor (i) shall observe and
perform all the obligations imposed upon the sublessor under the Subleases and
shall not do or permit to be done anything to impair the value of the Subleases
as security for the Debt; (ii) shall upon request by Mortgagee, send Mortgagee
copies of all notices of default sent or received by Mortgagee under the
Subleases; (iii) shall enforce all of the terms, covenants and conditions
contained in the Subleases on the part of the sublessee thereunder to be
observed or performed; (iv) shall not collect any of the Rents more than one (1)
month in advance (except with respect to collection of the final month's rent as
security); (v) shall not execute any other assignment of sublessor's interest in
the Subleases or the Rents; and (vi) shall execute and deliver at the request of
Mortgagee all such further assurances, confirmations and assignments in
connection with the Mortgaged Property as Mortgagee shall from time to time
require.
(c) Mortgagor shall not, without the prior written consent of
Mortgagee (i) amend or modify any Sublease, (ii) execute a new Sublease, (iii)
permit use of the demised premises under any Sublease for use or uses other than
quick service restaurant use; or (iv) terminate, cancel or accept a surrender of
any Sublease.
9. Maintenance of Mortgaged Property. Mortgagor shall cause the Mortgaged
---------------------------------
Property to be maintained in a good and safe condition and repair. The
Improvements and the
-10-
Equipment shall not be removed, demolished or materially altered (except for
normal replacement of the Equipment) without the written consent of Mortgagee.
Mortgagor shall promptly comply with all laws, orders and ordinances affecting
the Mortgaged Property and the use thereof. Mortgagor shall promptly repair,
replace or rebuild any part of the Mortgaged Property that (i) is damaged or
destroyed by any casualty (subject to the provisions of paragraph 4 hereof),
(ii) becomes damaged, worn or dilapidated, or (iii) is affected by any
proceeding of the character referred to in paragraph 7 hereof (subject to the
provision of such paragraph 7) and Mortgagor shall complete and pay for any
structure at any time in the process of construction, renovation or repair on
the Property. Mortgagor shall not initiate, join in, acquiesce in, or consent to
any change in any private restrictive covenant, zoning law or other public or
private restriction, limiting or defining the uses which may be made of the
Mortgaged Property or any part thereof. If under applicable zoning provisions
the use of all or any portion of the Mortgaged Property is or shall become a
nonconforming use, Mortgagor will not cause or permit such nonconforming use to
be discontinued or abandoned without the express written consent of Mortgagee.
10. Transfer or Encumbrance of the Mortgaged Property.
-------------------------------------------------
(a) Mortgagor acknowledges that Mortgagee has examined and relied on
the creditworthiness of Mortgagor and experience of Mortgagor in owning and
operating properties such as the Mortgaged Property in agreeing to make the Loan
secured hereby, and that Mortgagee will continue to rely on Xxxxxxxxx's
ownership of the Mortgaged Property as a means of maintaining the value of the
Mortgaged Property as security for repayment of the Debt. Mortgagor acknowledges
that Mortgagee has a valid interest in maintaining the value of the Mortgaged
Property so as to ensure that, should Mortgagor default in the repayment of the
Debt, Mortgagee can recover the Debt by a sale of the Mortgaged Property.
Mortgagor shall not, without the prior written consent of Mortgagee, sell,
convey, alien, lease, mortgage, encumber, pledge or otherwise transfer the
Mortgaged Property or any part thereof, or permit the Mortgaged Property or any
part thereof to be sold, conveyed, aliened, leased, mortgaged, encumbered,
pledged or otherwise transferred (any of the foregoing, a "Transfer").
--------
(b) A Transfer of the Mortgaged Property within the meaning of this
paragraph 10 shall be deemed to include:
(i) an installment sales agreement wherein Xxxxxxxxx agrees to sell
the Mortgaged Property or any part thereof for a price to be paid in
installments;
(ii) an agreement by Mortgagor selling, leasing, subleasing,
assigning or otherwise transferring all or a substantial part of the
Mortgaged Property, or a sale, assignment or other transfer of, or the
grant of a security interest in, Xxxxxxxxx's right, title and interest in
and to any Subleases or any Rents; and
(iii) any voluntary or involuntary Transfer of a Control Individual's
(hereinafter defined) Controlling Interests (hereinafter defined) or any
voluntary or involuntary
-11-
event whereby a Control Individual's Controlling Interests are diluted or his
or her Control over Xxxxxxxxx is otherwise diminished.
(c) Mortgagee shall not be required to demonstrate any actual
impairment of its security or any increased risk of default hereunder in order
to declare the Debt immediately due and payable upon Xxxxxxxxx's Transfer of the
Mortgaged Property without Mortgagee's consent; this provision shall apply to
every Transfer of the Mortgaged Property regardless of whether voluntary or not,
or whether or not Mortgagee has consented to any previous Transfer of the
Mortgaged Property.
(b) For purposes of this paragraph 10, the following terms shall have
the following meanings: "Control" when used with respect to Mortgagor means the
power to direct the respective management and policies of Mortgagor, directly or
indirectly, whether through the ownership of voting securities, membership
interests, partnership interests or any other beneficial interest, by contract
or otherwise, whether acting alone or with others, but an individual does not
have "Control" if he or she has only the right to take those actions that a
limited partner may take without participating in the business of a limited
partnership, as set forth in Article ______ of the Uniform Limited Partnership
Law of the State of __________, the terms "Controlling" and "Controlled" shall
have the meanings correlative to the foregoing; "Control Individual" shall mean
any one of ______________ or ________________; "Controlling Interests" shall
mean those beneficial interests or contract rights in or with respect to the
Mortgagor (or any entity that has a direct or indirect beneficial interest in
Mortgagor) that give a Control Individual his or her Control over Mortgagor;
"Non-controlling Interests" shall mean any beneficial interests in Mortgagor (or
any entity that has a direct or indirect beneficial interest in the Mortgagor)
that are not Controlling Interests and shall include, without limitation,
limited partnership interests.
11. Estoppel Certificates and No Default Affidavits.
-----------------------------------------------
(a) After request by Mortgagee, Mortgagor shall within ten (10) days
furnish Mortgagee with a statement, duly acknowledged and certified, setting
forth (i) the amount of the original principal amount of the Note, (ii) the
unpaid principal amount of the Note, (iii) the rate of interest of the Note,
(iv) the date installments of interest and/or principal were last paid, (v) any
offsets or defenses to the payment of the Debt, if any and (vi) that the Note
and this Mortgage are valid, legal and binding obligations and have not been
modified or if modified, giving the particulars of such modification.
(b) Within ten (10) days after request by Xxxxxxxxx, Xxxxxxxxx will
request sublessees under the Subleases to furnish Mortgagee with estoppel
certificates as required by such sublessees' respective Sublease and Mortgagor
will use diligent efforts to obtain such estoppel certificates.
12. Changes in the Laws Regarding Taxation. If any law is enacted or
--------------------------------------
adopted or amended after the date of this Mortgage which deducts the Debt from
the value of the Mortgaged Property for the purpose of taxation or which imposes
a tax, either directly or
-12-
indirectly, on the Debt or Mortgagee's interest in the Mortgaged Property,
Mortgagor will pay such tax, with interest and penalties thereon, if any. In the
event Mortgagee is advised by counsel chosen by it that the payment of such tax
or interest and penalties by Xxxxxxxxx would be unlawful or taxable to Mortgagee
or unenforceable or provide the basis for a defense of usury, then in any such
event, Mortgagee shall have the option, by written notice of not less than
ninety (90) days, to declare the Debt immediately due and payable.
13. No Credits on Account of the Debt. Mortgagor will not claim or demand
---------------------------------
or be entitled to any credit or credits on account of the Debt for any part of
the Taxes or Other Charges assessed against the Mortgaged Property, or any part
thereof, and no deduction shall otherwise be made or claimed from the assessed
value of the Mortgaged Property, or any part thereof, for real estate tax
purposes by reason of this Mortgage or the Debt. In the event such claim, credit
or deduction shall be required by law, Mortgagee shall have the option, by
written notice of not less than ninety (90) days, to declare the Debt
immediately due and payable.
14. Documentary Stamps. If at any time the United States of America, the
------------------
State of ______________ or any subdivision thereof shall require revenue or
other stamps to be affixed to the Note or this Mortgage, or impose any other tax
or charge on the same, Mortgagor will pay for the same, with interest and
penalties thereon, if any.
15. Usury Laws. This Mortgage and the Note are subject to the express
----------
condition that at no time shall Mortgagor be obligated or required to pay
interest on the Debt at a rate which could subject Mortgagee to either civil or
criminal liability as a result of being in excess of the maximum interest rate
which Mortgagor is permitted by law to contract or agree to pay. If by the
terms of this Mortgage or the Note, Mortgagor is at any time required or
obligated to pay interest on the Debt at a rate in excess of such maximum rate,
the rate of interest under the same shall be deemed to be immediately reduced to
such maximum rate and the interest payable shall be computed at such maximum
rate and all previous payments in excess of such maximum rate shall be deemed to
have been payments in reduction of the principal and not on account of the
interest due hereunder.
16. Performance of Franchise Agreement and Lease; Security Agreement
----------------------------------------------------------------
(a) Mortgagor will duly comply with the terms and conditions of the
franchise agreement, dated ____________, 199__, between AFC Enterprises, Inc.,
as franchisor, and mortgagor, as franchisee (the "Franchise Agreement") and will
-------------------
faithfully perform all of its obligations under the Franchise Agreement and
promptly cure any default by it under any of the provisions thereof. Mortgagor
shall promptly send to Mortgagee a true and correct copy of any notice, report,
certificate or other communication that Mortgagor is obligated to deliver under
the Franchise Agreement.
(b) Mortgagor will comply with the terms and provisions of the Lease
and will faithfully perform all of its obligations under the Lease and promptly
cure any default by it under any of the provisions thereof. Mortgagor shall
promptly send to Mortgagee a true and
-13-
correct copy of any notice, report, certificate or other communication that
Mortgagor is obligated to deliver in connection with the Lease.
(c) Mortgagor hereby assigns and transfers to Mortgagee and creates a
security interest in all of Xxxxxxxxx's right, title and interest in and to the
consideration, in whatever form delivered, for the sale, transfer or conveyance
of Xxxxxxxxx's interest in the Franchise Agreement and the Lease.
17. Performance of Other Agreements. Mortgagor shall observe and perform
-------------------------------
each and every term to be observed or performed by Mortgagor pursuant to the
terms of any agreement or recorded instrument affecting or pertaining to the
Mortgaged Property.
18. Books and Records; Financial Statements; Financial Covenants.
------------------------------------------------------------
(a) Mortgagor shall keep adequate books and records of account in
accordance with generally accepted accounting principles consistently applied
and shall furnish to Mortgagee (i) within sixty (60) days after the end of each
second (2/nd/) and fourth (4/th/) fiscal quarter of Mortgagor, semiannual
internally-prepared financial statements, certified by the chief financial
officer of Mortgagor; (ii) within ninety (90) days after the end of each fiscal
year of Mortgagor, (x) annual internally-prepared financial statements,
certified by the chief financial officer of Xxxxxxxxx, and (y) a certificate,
executed by a financial officer of Mortgagor acceptable to Mortgagee, as to the
absence of any default or Event of Default hereunder or under any other Loan
Document or under the Franchise Agreement; (iii) copies of Xxxxxxxxx's federal
tax returns (together with any extension filed) within fifteen (15) days after
filing of same but in no event later than April 30 of each year; (x) and (iv)
such other financial information with respect to Xxxxxxxxx, Guarantor
(hereinafter defined) or the Mortgaged Property at may be reasonably requested
by Mortgagee from time to time.
(b) Mortgagor shall cause each of ______________ and ____________
(collectively, "Guarantor") to furnish to Mortgagee (i) within thirty (30) days
---------
after the end of each calendar year, updated annual financial statements in form
similar to that previously provided to Mortgagee; (ii) copies of their federal
tax returns (together with any extensions filed) within fifteen (15) days after
filing of same but in no event later than April 30 of each year; and (iii) such
other financial information with respect to Guarantor as may be reasonably
requested by Mortgagee from time to time.
(c) Mortgagor shall promptly provide Mortgagee with written notice of
any pending or threatened litigation against Mortgagor or any Guarantor or the
commencement of any proceedings or investigations by any governmental or
regulatory agency involving Mortgagor or any Guarantor.
(d) Mortgagor shall maintain a Minimum Cash Flow Coverage Ratio of
not less than ______ for each fiscal year of Mortgagor. The term "Minimum Cash
------------
Flow Coverage Ratio" shall be calculated annually and shall mean:
-------------------
-14-
Cash Flow Before Debt Service
-----------------------------
Debt Service
For purposes of this paragraph 18(d), "Cash Flow Before Debt Service"shall
-----------------------------
mean annual operating income of the Mortgaged Property plus depreciation,
amortization and interest expense. "Debt Service" shall mean the total required
------------
annual principal and interest payments under the Note.
(e) Any and all debt incurred by Mortgagor to its shareholders, officers,
partners, members and/or affiliates shall be incurred only with Mortgagee's
prior written consent and Mortgagor shall cause any such debt approved by
Mortgagee to be expressly subordinated to the Debt.
(f) At any time while all or any portion of the Debt remains outstanding,
Mortgagor shall not, directly or indirectly, convey, transfer or assign any
property or asset of any nature, whether real property, personal property or
mixed, tangible or intangible, or any interest therein, without the prior
written consent of Mortgagee, and any such conveyance, transfer or assignment
shall occur solely in the ordinary course of Xxxxxxxxx's business.
(g) At any time while all or any portion of the Debt remains outstanding,
Mortgagor shall not, directly or indirectly, (i) make any loans to any partners,
shareholders, officers, members or affiliates of Mortgagor, nor guarantee any
indebtedness of any such party without the prior written consent of Mortgagee;
or (ii) make any advances or distributions to Mortgagor or any partners,
shareholders, officers, members or affiliates of Mortgagor.
(h) At any time while all or any portion of the Debt remains outstanding,
Mortgagor shall not enter into any additional Indebtedness (hereinafter defined)
nor guarantee any additional Indebtedness, without the prior written consent of
Mortgagee, other than (i) unsecured Indebtedness constituting trade debt and
(ii) other Indebtedness incurred in the ordinary course of business in
connection with the ownership, management and operation of the Mortgaged
Property.
19. Further Acts, etc. Mortgagor will, at the cost of Xxxxxxxxx, and
------------------
without expense to Mortgagee, do, execute, acknowledge and deliver all and every
such further acts, deeds, conveyances, mortgages, assignments, notices of
assignment, transfers and assurances as Mortgagee shall, from time to time,
require, for the better assuring, conveying, assigning, transferring, and
confirming unto Mortgagee the property and rights hereby mortgaged, given,
granted, bargained, sold, aliened, enfeoffed, conveyed, confirmed, pledged,
assigned and hypothecated or intended now or hereafter so to be, or which
Mortgagor may be or may hereafter become bound to convey or assign to Mortgagee,
or for carrying out the intention or facilitating the performance of the terms
of this Mortgage or for filing, registering or recording this Mortgage.
Xxxxxxxxx, on demand, will execute and deliver and hereby authorizes Mortgagee
to execute in the name of Xxxxxxxxx or without the signature of Mortgagor to the
extent Mortgagee may lawfully do so, one or more financing statements, chattel
mortgages or other instruments, to evidence more effectively the security
interest of Mortgagee in the Mortgaged Property. Mortgagor grants to Mortgagee
an irrevocable power of attorney
-15-
coupled with an interest for the purpose of exercising and perfecting any and
all rights and remedies available to Mortgagee at law and in equity, including
without limitation such rights and remedies available to Mortgagee pursuant to
this paragraph 19.
20. Trust Fund. Mortgagor shall receive the advances secured hereby and
----------
shall hold the right to receive the advances as a trust fund to be applied first
for the purpose of paying the cost of any improvement and shall apply the
advances first to the payment of the cost of any such improvement on the
Mortgaged Property before using any part of the total of the same for any other
purpose.
21. Recording of Mortgage, etc. Mortgagor forthwith upon the execution and
--------------------------
delivery of this Mortgage and thereafter, from time to time, will cause this
Mortgage, and any security instrument creating a lien or security interest or
evidencing the lien hereof upon the Mortgaged Property and each instrument of
further assurance to be filed, registered or recorded in such manner and in such
places as may be required by any present or future law in order to publish
notice of and fully to protect the lien or security interest hereof upon, and
the interest of Mortgagee in, the Mortgaged Property. Mortgagor will pay all
filing, registration or recording fees, and all expenses incident to the
preparation, execution and acknowledgment of this Mortgage, any mortgage
supplemental hereto, any security instrument with respect to the Mortgaged
Property and any instrument of further assurance, and all federal, state, county
and municipal, taxes, duties, imposts, assessments and charges arising out of or
in connection with the execution and delivery of this Mortgage, any mortgage
supplemental hereto, any security instrument with respect to the Mortgaged
Property or any instrument of further assurance, except where prohibited by law
so to do. Mortgagor shall hold harmless and indemnify Mortgagee, its successors
and assigns, against any liability incurred by reason of the imposition of any
tax on the making and recording of this Mortgage.
22. Prepayment. The Debt may be prepaid subject to the terms of paragraph
----------
______ of the Note.
23. Events of Default. The Debt shall become immediately due and payable
-----------------
at the option of Mortgagee, without notice or demand, upon any one or more of
the following events ("Events of Default"):
-------------------
(a) if any portion of the Debt is not paid within five (5) days after
the same is due;
(b) if any of the Taxes or Other Charges is not paid when the same is
due and payable, subject to the provisions of paragraphs 5 and 6;
(c) if the Policies are not kept in full force and effect, or if the
Policies are not delivered to Mortgagee upon request;
(d) if Mortgagor violates or does not comply with any of the
provisions of paragraphs 8, 10, 16, 18(c), 18(d), 18(e), 18(f), 18(g) or 18(h);
-16-
(e) if a default under the Franchise Agreement shall continue beyond
any applicable notice or grace period, or if the Franchise Agreement shall be
modified, amended, terminated, surrendered or assigned without the prior written
consent of Mortgagee;
(f) if a default by Mortgagor under the Lease shall continue beyond
any applicable notice or grace period, or if the Lease shall be modified or
amended, without the prior written consent of Mortgagee, or if the Lease shall
be terminated, surrendered or assigned;
(g) if a default by Mortgagor under any Sublease shall continue
beyond any applicable notice or grace period, or if any Sublease shall be
modified, amended, terminated, surrendered or assigned by Xxxxxxxxx, without the
prior written consent of Mortgagee;
(h) if the Mortgaged Property becomes subject to any mechanic's,
materialman's or other lien other than a lien for local real estate taxes and
assessments not then due and payable and such lien shall remain undischarged of
record (by payment, bonding or otherwise) for a period of thirty (30) calendar
days after the filing of such lien;
(i) if Mortgagor fails to cure promptly any violations of laws or
ordinances affecting the Mortgaged Property and such failure continues for a
period of thirty (30) calendar days after Xxxxxxxxx's receipt of notice thereof;
(j) if any representation or warranty of Mortgagor or any Guarantor,
made herein or in the Environmental Indemnity Agreement, dated as of the date
hereof, made by Mortgagor and Guarantor, jointly and severally, for the benefit
of Mortgagee (the "Environmental Indemnity Agreement"), or by any Guarantor in
---------------------------------
the Guarantee of Payment and Performance, dated as of the date hereof, made by
Guarantor for the benefit of Mortgagee (the "Guarantee"), or in any certificate,
----------
report, financial statement or other instrument or document furnished to
Mortgagee by Mortgagor or any Guarantor shall have been false or misleading in
any material respect when made;
(k) if Mortgagor or any Guarantor shall make an assignment for the
benefit of creditors or if Mortgagor or any Guarantor shall generally not be
paying its debts as they become due;
(l) if a receiver, liquidator or trustee of Mortgagor or any
Guarantor shall be appointed or if Mortgagor or any Guarantor shall be
adjudicated a bankrupt or insolvent, or if any petition for bankruptcy,
reorganization or arrangement pursuant to federal bankruptcy law, or any similar
federal or state law, shall be filed by or against, consented to, or acquiesced
in by, Mortgagor or any Guarantor or if any proceeding for the dissolution or
liquidation of Mortgagor or any Guarantor shall be instituted; however, if such
appointment, adjudication, petition or proceeding was involuntary and not
consented to by Mortgagor or any Guarantor, upon the same not being discharged,
stayed or dismissed within sixty (60) days;
-17-
(m) If Mortgagor or any Guarantor shall be in default (beyond any
applicable grace period) in the payment of any amount of any Indebtedness
(hereinafter defined) other than the Debt; or if Mortgagor or any Guarantor
shall default (beyond any applicable grace period) in the performance of any
agreement under which such Indebtedness is created or evidenced, if the effect
of such default is to cause, or permit the holder of such Indebtedness to cause,
such Indebtedness to become due prior to its stated maturity. The term
"Indebtedness" shall mean, as at any date (i) all indebtedness of Mortgagor or
-------------
any Guarantor for borrowed money or for the deferred purchase price of property
or services (except such indebtedness the existence of which is being contested
by Mortgagor or any Guarantor in good faith and by appropriate action); (ii) all
obligations of Mortgagor or any Guarantor evidenced by bonds, debentures, notes
or other similar instruments; (iii) all obligations under leases which shall
have been or should be, in accordance with generally accepted accounting
principles consistently applied, recorded as capital leases of which Mortgagor
or any Guarantor is liable as lessee (except such obligations the existence of
which is being contested by Mortgagor or any Guarantor in good faith and by
appropriate action); (iv) any Guaranteed Indebtedness (hereinafter defined); and
(v) any other indebtedness required to be recorded as indebtedness on the
financial statements of Mortgagor or any Guarantor in accordance with generally
accepted accounting principles consistently applied. The term "Guaranteed
----------
Indebtedness" shall mean any indebtedness which is guaranteed directly or
------------
indirectly in any manner by Mortgagor or any Guarantor, or in effect guaranteed
directly or indirectly in any manner by Mortgagor or any Guarantor;
(n) (i) if Mortgagor or any Control Individual shall engage in any
"prohibited transaction" (as defined in Section 406 of the Employee Retirement
Income Security Act of 1974, as amended from time to time ("ERISA") or Section
-----
4975 of the Internal Revenue Code of 1986, as amended from time to time (the
"Code") involving any employee benefit plan covered by ERISA (a "Plan"), (ii)
---- ----
any "accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall occur with respect to any Plan or any lien in favor
of the Pension Benefit Guaranty Corporation ("PBGC") or a Plan shall arise on
----
the assets of Mortgagor or any Control Individual, or (iii) a "reportable event"
(as defined in Section 4043(b) of ERISA) shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall be
appointed, to administer or to terminate, any Plan, which reportable event or
commencement of proceedings or appointment of a trustee is, in the reasonable
opinion of Mortgagee, likely to result in the termination of such Plan for
purposes of Title IV of ERISA;
(o) if one or more judgments or decrees shall be entered against
Mortgagor or any Guarantor involving an aggregate liability (not paid or fully
covered by insurance) of $____________ or more, and any such judgment or decree
shall not have been vacated, discharged, stayed or bonded pending appeal within
thirty (30) days from the entry thereof;
(p) Mortgagor shall be in default beyond any applicable notice and
cure period under any other term, covenant or condition of the Note, this
Mortgage or any of the other Loan Documents; or
-18-
(q) if at any time while this Mortgage is of record _____________
and ____________ shall fail to own in the aggregate one hundred percent (100%)
of the ownership interests in Mortgagor or shall cease to have sole
responsibility for the day-to-day management and Control of Mortgagor.
24. Default Interest. Upon the occurrence of any Event of Default,
----------------
Mortgagor shall pay interest on the unpaid principal balance of the Note at the
Default Rate (as defined in the Note). The Default Rate shall be computed from
the occurrence of the Event of Default until the actual receipt and collection
of the Debt. This charge shall be added to the Debt, and shall be deemed secured
by this Mortgage. This clause, however, shall not be construed as an agreement
or privilege to extend the date of the payment of the Debt, nor as a waiver of
any other right or remedy accruing to Mortgagee by reason of the occurrence of
any Event of Default. If the Default Rate is above the maximum rate permitted by
applicable law, the Default Rate shall be the maximum rate permitted by
applicable law.
25. Right to Cure Defaults. Upon the occurrence of any Event of Default or
----------------------
if Mortgagor fails to make any payment or to do any act as herein provided,
Mortgagee may, but without any obligation to do so and without notice to or
demand on Mortgagor and without releasing Mortgagor from any obligation
hereunder, make or do the same in such manner and to such extent as Mortgagee
may deem necessary to protect the security hereof. Mortgagee is authorized to
enter upon the Mortgaged Property for such purposes or appear in, defend, or
bring any action or proceeding to protect its interest in the Mortgaged Property
or to foreclose this Mortgage or collect the Debt, and the reasonable cost and
expense thereof (including reasonable attorneys' fees to the extent permitted by
law and any appraisal fees), with interest calculated at the Default Rate, shall
constitute a portion of the Debt and shall be secured by this Mortgage and the
other Loan Documents and shall be due and payable to Mortgagee upon demand. All
such costs and expenses incurred by Mortgagee in remedying such Event of Default
or in appearing in, defending, or bringing any such action or proceeding shall
bear interest at the Default Rate, for the period after notice from Mortgagee
that such cost or expense was incurred to the date of payment of Mortgagee.
26. Late Payment Charge. If any portion of the Debt is not paid within
-------------------
fifteen (15) calendar days after the date on which it is due, Mortgagor shall
pay to Mortgagee upon demand a late charge equal to the lesser of two percent
(2%) of such unpaid portion of the Debt or the maximum amount permitted by
applicable law, to defray the expense incurred by Mortgagee in handling and
processing such delinquent payment and to compensate Mortgagee for the loss of
the use of such delinquent payment, and such amount shall be secured by this
Mortgage.
27. Prepayment After Event of Default. If following the occurrence of any
---------------------------------
Event of Default, Mortgagor shall tender payment of an amount sufficient to
satisfy the Debt at any time prior to a sale of the Mortgaged Property either
through foreclosure or the exercise of other remedies available to Mortgagee
under this Mortgage, such tender by Mortgagor shall be deemed to be a voluntary
prepayment under the Note and this Mortgage in the amount
-19-
tendered, and Mortgagor shall, in addition to the entire Debt, also pay to
Mortgagee the applicable prepayment consideration specified in paragraph ___ of
the Note.
28. Right of Entry. Mortgagee and its agents shall have the right to enter
--------------
and inspect the Mortgaged Property at all reasonable times.
29. Remedies.
--------
(a) Upon the occurrence of any Event of Default, Mortgagee may take
such action, without notice or demand, as it deems advisable to protect and
enforce its rights against Mortgagor and in and to the Mortgaged Property,
including, but not limited to, the following actions, each of which may be
pursued concurrently or otherwise, at such time and in such order as Mortgagee
may determine, in its sole discretion, without impairing or otherwise affecting
the other rights and remedies of Mortgagee:
(i) declare the entire Debt to be immediately due and payable;
(ii) institute proceedings for the complete foreclosure of this
Mortgage, in which case the Mortgaged Property or any interest therein may
be sold for cash or upon credit in one or more parcels or in several
interests or portions and in any order or manner;
(iii) with or without entry, to the extent permitted and pursuant to
the procedures provided by applicable law, institute proceedings for the
partial foreclosure of this Mortgage for the portion of the Debt then due
and payable, subject to the continuing lien of this Mortgage for the
balance of the Debt not then due;
(iv) sell for cash or upon credit the Mortgaged Property or any part
thereof and all estate, claim, demand, right, title and interest of
Mortgagor therein and rights of redemption thereof, pursuant to power of
sale or otherwise, at one or more sales, as an entity or in parcels, at
such time and place, upon such terms and after such notice thereof as may
be required or permitted by law;
(v) institute an action, suit or proceeding in equity for the
specific performance of any covenant, condition or agreement contained
herein or in the Note;
(vi) recover judgment on the Note either before, during or after any
proceedings for the enforcement of this Mortgage;
(vii) apply for the appointment of a receiver of the Mortgaged
Property, without notice and without regard for the adequacy of the
security for the Debt and without regard for the solvency of the Mortgagor
or of any person, firm or other entity liable for the payment of the Debt;
(viii) enforce Mortgagee's interest in the Leases and Rents and enter
into or upon the Mortgaged Property, either personally or by its agents,
nominees or attorneys
-20-
and dispossess Mortgagor and its agents and servants therefrom, and
thereupon Mortgagee may (A) use, operate, manage, control, insure,
maintain, repair, restore and otherwise deal with all and every part of the
Mortgaged Property and conduct the business thereat; (B) make alterations,
additions, renewals, replacements and improvements to or on the Mortgaged
Property; (C) exercise all rights and powers of Mortgagor with respect to
the Mortgaged Property, whether in the name of Mortgagor or otherwise,
including, without limitation, the right to make, cancel, enforce or modify
Leases, obtain and evict tenants, and demand, sue for, collect and receive
all earnings, revenues, rents, issues, profits and other income of the
Mortgaged Property and every part thereof; and (D) apply the receipts from
the Mortgaged Property to the payment of the Debt, after deducting
therefrom all reasonable expenses (including reasonable attorneys' fees)
incurred in connection with the aforesaid operations and all amounts
necessary to pay the Taxes, assessments, insurance and Other Charges in
connection with the Mortgaged Property, as well as just and reasonable
compensation for the services of Mortgagee, its counsel, agents and
employees; or
(ix) pursue such other rights and remedies as may be available at law
and in equity.
In the event of a sale, by foreclosure or otherwise, of less than all of
the Mortgaged Property, this Mortgage shall continue as a lien on the remaining
portion of the Mortgaged Property.
(b) The proceeds of any sale made under or by virtue of this
paragraph, together with any other sums which then may be held by Mortgagee
under this Mortgage, whether under the provisions of this paragraph or
otherwise, shall be applied by Mortgagee to the payment of the Debt in such
priority and proportion as Mortgagee in its discretion shall deem proper.
(c) To the extent permitted by applicable law, Mortgagee may adjourn
from time to time any sale by it to be made under or by virtue of this Mortgage
by announcement at the time and place appointed for such sale or for such
adjourned sale or sales; and, except as otherwise provided by any applicable
provision of law, Mortgagee, without further notice or publication, may make
such sale at the time and place to which the same shall be so adjourned.
(d) Upon the completion of any sale or sales made by Mortgagee under
or by virtue of this paragraph, Mortgagee, or an officer of any court empowered
to do so, shall execute and deliver to the accepted purchaser or purchasers a
good and sufficient instrument, or good and sufficient instruments, conveying,
assigning and transferring all estate, right, title and interest in and to the
property and rights sold. Mortgagee is hereby irrevocably appointed the true and
lawful attorney of Xxxxxxxxx, in its name and stead, to make all necessary
conveyances, assignments, transfers and deliveries of the Mortgaged Property and
rights so sold and for that purpose Mortgagee may execute all necessary
instruments of conveyance, assignment and transfer, and may substitute one or
more persons with like power, Mortgagor hereby ratifying and confirming all that
its said attorney or such substitute or substitutes shall
-21-
lawfully do by virtue hereof. Any such sale or sales made under or by virtue of
this paragraph shall operate to divest all the estate, right, title, interest,
claim and demand whatsoever, whether at law or in equity, of Mortgagor in and to
the properties and rights so sold, and shall be a perpetual bar both at law and
in equity against Mortgagor and against any and all persons claiming or who may
claim the same, or any part thereof from, through or under Mortgagor.
(e) Upon any sale made under or by virtue of this paragraph,
Mortgagee may bid for and acquire the Mortgaged Property or any part thereof and
in lieu of paying cash therefor may make settlement for the purchase price by
crediting upon the Debt the net sales price after deducting therefrom the
expenses of the sale and costs of the action and any other sums which Mortgagee
is authorized to deduct under this Mortgage.
(f) No recovery of any judgment by Xxxxxxxxx and no levy of an
execution under any judgment upon the Mortgaged Property or upon any other
property of Mortgagor shall affect in any manner or to any extent the lien of
this Mortgage upon the Mortgaged Property or any part thereof, or any liens,
rights, powers or remedies of Mortgagee hereunder, but such liens, rights,
powers and remedies of Mortgagee shall continue unimpaired as before.
30. Reasonable Use and Occupancy. In addition to the rights which
----------------------------
Mortgagee may have herein, upon the occurrence of any Event of Default,
Mortgagee, at its option, may require Mortgagor to pay monthly in advance to
Mortgagee, or any receiver appointed to collect the Rents, the fair and
reasonable rental value for the use and occupation of such part of the Mortgaged
Property as may be occupied by Mortgagor or may require Mortgagor to vacate and
surrender possession of the Mortgaged Property to Mortgagee or to such receiver
and, in default thereof, Mortgagor may be evicted by summary proceedings or
otherwise.
31. Security Agreement. This Mortgage is both a real property mortgage and
------------------
a "security agreement" within the meaning of the Uniform Commercial Code. The
Mortgaged Property includes both real and personal property and all other rights
and interests, whether tangible or intangible in nature, of Mortgagor in the
Mortgaged Property. Mortgagor by executing and delivering this Mortgage has
granted and hereby grants to Mortgagee, as security for the Debt, a security
interest in the Mortgaged Property to the full extent that the Mortgaged
Property may be subject to the Uniform Commercial Code (said portion of the
Mortgaged Property so subject to the Uniform Commercial Code being called in
this paragraph 30 the "Collateral"). If an Event of Default shall occur,
----------
Mortgagee, in addition to any other rights and remedies which it may have, shall
have and may exercise immediately and without demand, any and all rights and
remedies granted to a secured party upon default under the Uniform Commercial
Code, including, without limiting the generality of the foregoing, the right to
take possession of the Collateral or any part thereof, and to take such other
measures as Mortgagee may deem necessary for the care, protection and
preservation of the Collateral. Upon the request or demand of Mortgagee,
Mortgagor shall at its expense assemble the Collateral and make it available to
Mortgagee at a convenient place acceptable to Mortgagee. Mortgagor shall pay to
Mortgagee on demand any and all expenses, including legal expenses and
reasonable attorneys' fees, incurred or paid by Mortgagee in protecting the
interest in the Collateral and in enforcing the rights hereunder with respect to
the Collateral. Any notice of
-22-
sale, disposition or other intended action by Mortgagee with respect to the
Collateral sent to Mortgagor in accordance with the provisions hereof at least
ten (10) days prior to such action, shall constitute commercially reasonable
notice to Mortgagor. The proceeds of any disposition of the Collateral, or any
part thereof, may be applied by Mortgagee to the payment of the Debt in such
priority and proportions as Mortgagee in its discretion shall deem proper.
32. Actions and Proceedings. Mortgagee has the right to appear in and
-----------------------
defend any action or proceeding brought with respect to the Mortgaged Property
and to bring any action or proceeding, in the name and on behalf of Mortgagor,
which Mortgagee, in its discretion, decides should be brought to protect their
interest in the Mortgaged Property. Mortgagee shall, at its option, be
surrogated to the lien of any mortgage or other security instrument discharged
in whole or in part by the Debt, and any such subrogation rights shall
constitute additional security for the payment of the Debt.
33. Waiver of Counterclaim. Mortgagor hereby waives the right to assert a
----------------------
counterclaim, other than a mandatory or compulsory counterclaim, in any action
or proceeding brought against it by Mortgagee.
34. Recovery of Sums Required to Be Paid. Mortgagee shall have the right
------------------------------------
from time to time to take action to recover any sum or sums which constitute a
part of the Debt as the same become due, without regard to whether or not the
balance of the Debt shall be due, and without prejudice to the right of
Mortgagee thereafter to bring an action of foreclosure, or any other action, for
a default or defaults by Mortgagor existing at the time such earlier action was
commenced.
35. Marshalling and Other Matters. Mortgagor hereby waives, to the extent
-----------------------------
permitted by law, the benefit of all appraisement, valuation, stay, extension,
reinstatement and redemption laws now or hereafter in force and all rights of
marshalling in the event of any sale hereunder of the Mortgaged Property or any
part thereof or any interest therein. Further, Mortgagor, to the extent
permitted by law, hereby expressly waives any and all rights of redemption from
sale under any order or decree of foreclosure of this Mortgage on behalf of
Mortgagor, and on behalf of each and every person acquiring any interest in or
title to the Mortgaged Property subsequent to the date of this Mortgage and on
behalf of all persons to the extent permitted by applicable law.
36. Hazardous Waste and Asbestos. Mortgagor hereby represents and warrants
----------------------------
to Mortgagee that (a) the Mortgaged Property is not in direct or indirect
violation of any local, state, federal or other governmental authority, statute,
ordinance, code, order, decree, law, rule or regulation pertaining to or
imposing liability or standards of conduct concerning environmental regulation,
contamination or clean-up including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act, as amended ("CERCLA"),
------
the Resource Conservation and Recovery Act, as amended ("RCRA"), and any state
----
super-lien and environmental clean-up statutes (collectively, "Environmental
-------------
Laws"); (b) the Mortgaged Property is not subject to any private or governmental
----
lien or judicial or administrative notice or action relating to hazardous and/or
toxic, dangerous and/or regulated,
-23-
substances, wastes, materials, pollutants or contaminants, petroleum, tremolite,
anthlophylie or actinolite or polychlorinated biphenyls (including, without
limitation, any raw materials which include hazardous constituents) and any
other substances or materials which are included under or regulated by
Environmental Laws (collectively, "Hazardous Materials"); (c) no Hazardous
-------------------
Materials are or have been, prior to Mortgagor's acquisition of the Mortgaged
Property, discharged, generated, treated, disposed of or stored on, incorporated
in, or removed or transported from the Mortgaged Property otherwise than in
compliance with all Environmental Laws and (d) there is no asbestos present in,
and no underground storage tanks exist on, any of the Mortgaged Property. So
long as Mortgagor owns or is in possession of the Mortgaged Property, Mortgagor
shall keep or cause the Mortgaged Property to be kept free from Hazardous
Materials and in compliance with all Environmental Laws, shall promptly notify
Mortgagee if Mortgagor shall become aware of any Hazardous Materials on the
Mortgaged Property and/or if Mortgagor shall become aware that the Mortgaged
Property is in direct or indirect violation of any Environmental Laws and
Mortgagor shall remove such Hazardous Materials and/or cure such violations, as
applicable, as required by law, promptly after Xxxxxxxxx becomes aware of same,
at Xxxxxxxxx's sole expense. Nothing herein shall prevent Mortgagor from
recovering such expenses from any other party that may be liable for such
removal or cure. The obligations and liabilities of Mortgagor under this
paragraph 35 shall survive any termination, satisfaction, or assignment of this
Mortgage, any Transfer and/or any exercise by Mortgagee of any of its rights or
remedies hereunder, including but not limited to, the acquisition of the
Mortgaged Property by foreclosure or a conveyance in lieu of foreclosure.
37. Handicapped Access.
------------------
(a) Xxxxxxxxx agrees that the Mortgaged Property shall at all times
comply to the extent applicable with the requirements of the Americans with
Disabilities Act of 1990, all state and local laws and ordinances related to
handicapped access and all rules, regulations, and orders issued pursuant
thereto including, without limitation, the Americans with Disabilities Act
Accessibility Guidelines for Buildings and Facilities (collectively, "Access
------
Laws").
----
(b) Xxxxxxxxx agrees to give prompt notice to Mortgagee of the
receipt by Xxxxxxxxx of any complaints related to violations of any Access Laws
and of the commencement of any proceedings or investigations which relate to
compliance with applicable Access Laws.
38. Indemnification. In addition to any other indemnifications provided
---------------
herein or in the Note or the other Loan Documents, Mortgagor shall protect,
defend, indemnify and save harmless Mortgagee from and against all liabilities,
obligations, claims, demands, damages, penalties, causes of action, losses,
fines, costs and expenses (including, without limitation, reasonable attorneys'
fees and expenses) imposed upon or incurred by or asserted against Mortgagee,
except to the extent resulting from Mortgagee's gross negligence or wilful
misconduct, by reason of (a) ownership of this Mortgage or the Mortgaged
Property or any interest therein; (b) the construction or renovation of any
Improvements; (c) any accident,
-24-
injury to or death of persons or loss of or damage to property occurring in, on
or about the Mortgaged Property or any part thereof or on the adjoining
sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways;
(d) any use, nonuse or condition in, on or about the Mortgaged Property or any
part thereof or on adjoining sidewalks, curbs, adjacent property or adjacent
parking areas, streets or ways; (e) any failure on the part of Mortgagor to
perform or comply with any of the terms of this Mortgage; (f) performance of any
labor or services or the furnishing of any materials or other property in
respect of the Mortgaged Property or any part thereof; (g) the presence,
disposal, escape, seepage, leakage, spillage, discharge, emission, release, or
threatened release of any Hazardous Materials on, from, or affecting the
Mortgaged Property or any other property; (h) any personal injury (including
wrongful death) or property damage (real or personal) arising out of or related
to such Hazardous Materials; (i) any lawsuit brought or threatened, settlement
reached, or government order relating to such Hazardous Materials; (j) any
violation of the Environmental Laws, which are based upon or in any way related
to such Hazardous Materials including, without limitation, the costs and
expenses of any remedial action, attorney and consultant fees, investigation and
laboratory fees, court costs and litigation expenses; and (k) any failure of the
Mortgaged Property to comply with any Access Laws. Any amounts payable to
Mortgagee by reason of the application of this paragraph 37 shall be secured by
this Mortgage and shall become immediately due and payable and shall bear
interest at the Default Rate from the date any payment is made by Mortgagee
hereunder until such payment is reimbursed by Xxxxxxxxx. The obligations and
liabilities of Mortgagor under this paragraph 37 shall survive any termination,
satisfaction or assignment of this Mortgage, any Transfer and/or any exercise by
Mortgagee of any of its rights and remedies hereunder, including but not limited
to, the acquisition of the Mortgaged Property by foreclosure or a conveyance in
lieu of foreclosure.
39. Notices. Any notice, demand, statement, request or consent made
-------
hereunder shall be in writing to the other party hereto at its address set forth
below or at such other address as such party may designate by notice to the
other party hereto and shall be deemed given (i) on receipt, if mailed, by
certified or registered U.S. mail, return receipt requested, postage prepaid;
(ii) on receipt, if delivered, fee prepaid, to a national overnight delivery
service (such as Federal Express, Purolater Courier, U.P.S. Next Day Air); or
(iii) when delivered, if delivered by hand, as evidenced by a signed receipt:
To Mortgagor:
__________________________
__________________________
__________________________
Attention:________________
Telephone: (____) ________
with a courtesy copy to:
__________________________
__________________________
__________________________
-25-
Attention: _______________
Telephone: (___) _________
To Mortgagee:
Banco Popular de Puerto Rico
0 Xxxx 00/xx/ Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxxx Xxx
Vice President
Telephone: (000) 000-0000
with a courtesy copy to:
XxXxxxxxx Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
A "Business Day" is any day other than a Saturday or Sunday, or a day on which
banking and savings and loan institutions in the State of New York are
authorized or obligated by law or executive order to remain closed. Refusal to
accept delivery of any notice shall be deemed to be receipt of such notice.
40. Authority. (a) Mortgagor (and the undersigned representative of
---------
Mortgagor, if any) has full power, authority and right to execute, deliver and
perform its obligations pursuant to this Mortgage, and to mortgage, give, grant,
bargain, sell, alien, enfeoff, convey, confirm, pledge, hypothecate and assign
the Mortgaged Property pursuant to the terms hereof and to keep and observe all
of the terms of this Mortgage on Xxxxxxxxx's part to be performed and (b)
Mortgagor represents and warrants that Mortgagor is not a "foreign person"
within the meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986,
as amended and the related Treasury Department regulations, including temporary
regulations.
41. Waiver of Notice. Mortgagor shall not be entitled to any notices of
----------------
any nature whatsoever from Mortgagee except with respect to matters for which
this Mortgage specifically and expressly provides for the giving of notice by
Mortgagee to Mortgagor and except with respect to matters for which Mortgagee is
required by applicable law to give notice, and Mortgagor hereby expressly waives
the right to receive any notice from Mortgagee with respect to any matter for
which this Mortgage does not specifically and expressly provide for the giving
of notice by Mortgagee to Mortgagor.
42. Sole Discretion of Mortgagee. Wherever pursuant to this Mortgage,
----------------------------
Mortgagee exercises any right given to it to approve or disapprove, or any
arrangement or term is to be
-26-
satisfactory to Mortgagee, the decision of Mortgagee to approve or disapprove or
to decide that arrangements or terms are satisfactory or not satisfactory shall
be in the sole discretion of Mortgagee and shall be final and conclusive, except
as may be otherwise expressly and specifically provided herein.
43. Non-Waiver. The failure of Mortgagee to insist upon strict performance
----------
of any term hereof shall not be deemed to be a waiver of any term of this
Mortgage. Mortgagor shall not be relieved of Mortgagor's obligations hereunder
by reason of (a) the failure of Mortgagee to comply with any request of
Mortgagor to take any action to foreclose this Mortgage or otherwise enforce any
of the provisions hereof or of the Note or the other Loan Documents, (b) the
release, regardless of consideration, of the whole or any part of the Mortgaged
Property, or of any person liable for the Debt or any portion thereof or (c) any
agreement or stipulation by Mortgagee extending the time of payment or otherwise
modifying or supplementing the terms of the Note, this Mortgage or the other
Loan Documents. Mortgagee may resort for the payment of the Debt to any other
security held by Mortgagee in such order and manner as Mortgagee, in its
discretion, may elect. Mortgagee may take action to recover the Debt, or any
portion thereof, or to enforce any covenant hereof without prejudice to the
right of Mortgagee thereafter to foreclose this Mortgage. The rights and
remedies of Mortgagee under this Mortgage shall be separate, distinct and
cumulative and none shall be given effect to the exclusion of the others. No act
of Mortgagee shall be construed as an election to proceed under any one
provision herein to the exclusion of any other provision. Mortgagee shall not be
limited exclusively to the rights and remedies herein stated but shall be
entitled to every right and remedy now or hereafter afforded at law or in
equity.
44. No Oral Change. This Mortgage, and any provisions hereof, may not be
--------------
modified, amended, waived, extended, changed, discharged or terminated orally or
by any act or failure to act on the part of Mortgagor or Mortgagee, but only by
an agreement in writing signed by the party against whom enforcement of any
modification, amendment, waiver, extension, change, discharge or termination is
sought.
45. Successors and Assigns. This Mortgage shall be binding upon and inure
----------------------
to the benefit of Mortgagor and Mortgagee and their respective heirs, personal
representatives, successors and assigns forever.
46. Inapplicable Provisions. If any term, covenant or condition of the
-----------------------
Note or this Mortgage is held to be invalid, illegal or unenforceable in any
respect, the Note and this Mortgage shall be construed without such provision.
47. Headings, etc. The headings and captions of various paragraphs of this
-------------
Mortgage are for convenience of reference only and are not to be construed as
defining or limiting, in any way, the scope or intent of the provisions hereof.
48. Governing Law. This Mortgage shall be governed by and construed in
-------------
accordance with the laws of the State of ___________ without regard to
principles of conflict of laws.
-27-
49. Definitions. Unless the context clearly indicates a contrary intent or
-----------
unless otherwise specifically provided herein, words used in this Mortgage may
be used interchangeably in singular or plural form and the word "Mortgagor"
shall mean "each Mortgagor and any subsequent owner or owners of the Mortgaged
Property or any part thereof or any interest therein," the word "Mortgagee"
shall mean "Mortgagee and any subsequent holder of the Note," the word "Note"
shall mean "the Note and any other evidence of indebtedness secured by this
Mortgage," the word "person" shall include an individual, corporation,
partnership, trust, unincorporated association, government, governmental
authority, and any other entity, and the words "Mortgaged Property" shall
include any portion of the Mortgaged Property and any interest therein. Whenever
the context may require, any pronouns used herein shall include the
corresponding masculine, feminine or neuter forms and the singular form of nouns
and pronouns shall include the plural and vice versa.
50. Waiver of Trial by Jury. MORTGAGOR AND MORTGAGEE HEREBY KNOWINGLY,
-----------------------
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED ON THE LOAN EVIDENCED BY THE NOTE OR ARISING
OUT OF, UNDER OR IN CONNECTION WITH THE NOTE, THIS MORTGAGE OR ANY OF THE OTHER
LOAN DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER
VERBAL OR WRITTEN) OR ACTION OF MORTGAGOR OR MORTGAGEE. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR MORTGAGEE'S MAKING OF THE LOAN SECURED BY THIS MORTGAGE
AND THE OTHER LOAN DOCUMENTS.
51. Assignment. Mortgagee shall have the right, exercisable at any time
----------
and from time to time, to sell, transfer or assign the Mortgage and the other
Loan Documents, or grant participations therein, or issue certificates or
securities evidencing a beneficial interest therein in a rated or unrated public
offering or private placement, and Mortgagee may forward to any purchaser,
transferee, assignee, servicer, participant, investor or credit rating agency
rating such securities (collectively, an "Investor") or prospective Investor all
--------
documents and information in Mortgagee's possession with respect to Mortgagor,
the Mortgaged Property and the Loan Documents as such Investor or prospective
Investor may request.
-28-
IN WITNESS WHEREOF, Xxxxxxxxx has executed this Mortgage, intending to be
legally bound, the day and year first above written.
_________________________________,
a ____________________________
By: _____________________________
Name:____________________________
Title:___________________________
-29-
(ACKNOWLEDGMENT)
EXHIBIT A
LEGAL DESCRIPTION
EXHIBIT K-2(d)
FORM OF FRANCHISEE ASSIGNMENT OF CONTRACTS,
LICENSES, PERMITS AND AGREEMENTS
--------------------------------
ASSIGNMENT OF CONTRACTS, LICENSES,
PERMITS AND AGREEMENTS
This ASSIGNMENT OF CONTRACTS, LICENSES, PERMITS AND AGREEMENTS (the
"Assignment"), dated as of the ___ day of ______, 199__ by and between
__________________, a _____________________, having an office at
__________________________________________ ("Assignor") and BANCO POPULAR DE
PUERTO RICO, having an office at 0 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
("Assignee"). All capitalized terms appearing herein and not defined herein
shall have the meanings set forth in that certain Mortgage, Security Agreement
and Assignment of Leases and Rents, dated as of the date hereof, made by
Assignor to Assignee (the "Mortgage").
RECITALS
--------
A. [Assignor is the actual, record and beneficial owner of the real
property more particularly described in Schedule A attached hereto and by this
----------
reference made a part hereof (the "Land"), together with the improvements
located thereon (the "Improvements"; the Land and the Improvements,
collectively, the "Premises")./Assignor is the actual, record and beneficial
owner of the leasehold interest in the real property more particularly described
in Schedule A attached hereto and by this reference made a part hereof (the
----------
"Property"), together with the improvements located thereon (the "Improvements";
the Property and the Improvements, collectively, the "Premises") pursuant to
that certain lease dated __________, 199__ (the "Lease") between ___________, as
landlord, and Assignor, as tenant.]
B. Assignee has agreed to make a loan to Assignor in the maximum
principal amount of $_________ (the "Loan") to, among other things, finance
Assignor's acquisition of the Premises.
C. The Loan will be evidenced by the Note and secured by, among other
things, the Mortgage.
X. Xxxxxxxx is the owner and holder of the Note and the Mortgage.
E. Assignor will derive substantial benefit from the Loan.
X. Xxxxxxxx may, from time to time, enter into written agreements
relating to or pertaining to services to the Premises or the management,
operation, sale, leasing, construction
or renovation of the Premises (hereinafter, the aforesaid agreements are
collectively referred to as the "Agreements").
G. To induce Assignee to make the Loan to Assignor, and as a precondition
thereof, Assignee requires that Assignor assign to Assignee all of its right,
title and interest in and to the Agreements as additional security for the Note
and the Mortgage on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and other good and valuable consideration, receipt of which is
hereby acknowledged, Xxxxxxxx agrees as follows:
1. For the purpose set forth below and subject to the terms of this
Assignment, Assignor hereby assigns and transfers to Assignee, to the extent the
same are assignable, all of Assignor's rights, privileges, and interests under,
in and to (i) the Agreements, (ii) any existing or future licenses, operating
agreements or certificates Assignor may enter into with or receive from any
Governmental Authority (the "Licenses"), and (iii) any existing or future
permits, approvals or agreements Assignor may enter into with or receive from
any Governmental Authority (the "Permits"). Assignor agrees that it will timely
perform all of its obligations with respect to the Licenses and Permits and that
it will use its best efforts to keep the Licenses and Permits in full force and
effect to the extent such Licenses and Permits are required in connection with
the ownership, use, operation or occupancy of the Premises.
2. This Assignment is given for the purpose of further securing the
performance by Assignor of all of its obligations to Assignee under the Note,
the Mortgage and the other Loan Documents, and accordingly, upon the payment in
full of all indebtedness evidenced by the Note, and satisfaction of all of
Assignor's other obligations to Assignee under the Note, the Mortgage and the
other Loan Documents, this Assignment shall automatically become null and void;
provided, however, that Assignee shall execute and deliver to Assignor such
documents as may be reasonably requested by Assignor to evidence such
termination.
3. Prior to the earlier to occur of: (i) performance in full of the
Agreements by Assignor or (ii) Assignee's acquisition of title to the Premises,
by foreclosure or otherwise, Assignor agrees that it will timely perform all of
its obligations under the Agreements in accordance with the terms of the
Agreements unless Assignor shall then be contesting the same in good faith and
by appropriate proceedings.
4. For the purposes and subject to the terms set forth herein, this
Assignment is an absolute, unconditional and presently effective assignment from
Assignor to Assignee of all of Assignor's rights under, in and to the
Agreements, the Licenses and the Permits. Notwithstanding the foregoing, prior
to any Event of Default by Assignor under the Note, the Mortgage or any other
Loan Document, Assignor shall, subject to the terms and conditions of this
Assignment, have the right to use, employ and enforce its rights under the
Agreements, the Licenses and the Permits.
2
5. Upon the occurrence and during the continuance of any Event of Default
by Assignor under the Note, the Mortgage or any other Loan Document, Assignee
shall be entitled to exercise all or any of its remedies under the Note, the
Mortgage or under this Assignment, or as may otherwise be available to Assignee
at law or in equity, in such order as Assignee may elect.
6. Notwithstanding any legal presumption to the contrary, it is not the
intent that Assignee shall be obligated by reason of acceptance of this
Assignment to perform any obligation of Assignor under the Agreements, the
Licenses or the Permits, and Assignor hereby agrees to indemnify Assignee and
save it harmless from and against any loss, liability or damage in connection
with any claim arising out of the said Agreements, the Licenses, the Permits or
this Assignment which arise or accrue during the period of Assignor's ownership
of the Premises and prior to the time, if any, that Assignee becomes a
mortgagee-in-possession, except for Assignee's gross negligence or willful
misconduct. However, Assignee may, at its option, and without releasing Assignor
from any obligation hereunder, discharge any obligation which Assignor fails to
discharge within any applicable cure period under said Agreements, Licenses or
Permits, including, without limitation, defending any legal action unless
Assignor shall then be contesting the same in good faith and by appropriate
proceedings, and Assignor agrees to pay immediately upon demand all reasonable
sums expended by Assignee in connection therewith, including reasonable counsel
fees, together with interest thereon at the Default Rate (as defined in the
Note), and the same shall be added to the indebtedness evidenced by the Note and
secured by the Mortgage.
7. Assignor hereby represents and warrants to Assignee that:
(a) Assignor has not executed any prior assignment of any of its
rights under the Agreements, the Licenses or the Permits, except to Assignee
pursuant to this Assignment.
(b) The Agreements now existing are in full force and effect and
unmodified, and there are no defaults, or events which with the giving of notice
or passage of time, or both, would constitute a default under any Agreement
except as heretofore disclosed to Assignee;
(c) Assignor's interest in the Agreements is not subject to any
claims, setoffs, encumbrances or deductions;
(d) All covenants, conditions and agreements have been performed as
required by the Agreements by all parties thereto, except those which are not
due to be performed until after the date of this Assignment; and
(e) The Licenses and Permits now existing are in full force and
effect and have not been rescinded or terminated.
3
8. This Assignment shall be binding upon Assignor and its successors and
assigns, including any subsequent owner of the Premises and shall inure to the
benefit of Assignee and its successors and assigns.
9. All notices or demands hereunder shall be in accordance with the
provisions of Section ___ of the Mortgage.
10. This Assignment shall be construed, interpreted, and enforced
according to the laws of the State of New York without regard to principles of
conflict of laws.
11. No term or condition of this Assignment may be waived, changed,
terminated, or modified orally, by course of conduct or in any manner other than
by an agreement in writing signed by the party against whom enforcement is
sought.
IN WITNESS WHEREOF, Assignor has duly executed this Assignment the day and
year first above written.
__________________________,
a_________________________
By:______________________________________
Name:____________________________________
Title:___________________________________
4
SCHEDULE A
----------
[LEGAL DESCRIPTION]
5
EXHIBIT K-2(E)
FORM OF FRANCHISEE GUARANTEE OF PAYMENT
AND PERFORMANCE
------------------------------------
GUARANTEE OF PAYMENT AND PERFORMANCE
------------------------------------
THIS GUARANTEE OF PAYMENT AND PERFORMANCE ("Guarantee") dated as of the ___
---------
day of ______, 199_, made jointly and severally by _______________________ AND
____________________, (collectively, the "Guarantor") for the benefit of BANCO
---------
POPULAR DE PUERTO RICO, having offices at 0 Xxxx 00/xx/ Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 ("Lender"). All capitalized terms appearing herein and not defined
------
herein shall have the meanings set forth in the Mortgage, Security Agreement and
Assignment of Leases and Rents, dated as of the date hereof (the "Mortgage"),
--------
made by _____________________ ("Borrower") in favor of Lender.
--------
R E C I T A L S
- - - - - - - -
A. [Borrower is the actual, record and beneficial owner of the real
property more particularly described in Schedule A attached hereto and by this
----------
reference made a part hereof (the "Land"), together with the improvements
----
located thereon (the "Improvements"; the Land and the Improvements,
------------
collectively, the "Premises")./Borrower is the actual, record and beneficial
--------
owner of the leasehold interest in the real property more particularly described
in Schedule A attached hereto and by this reference made a part hereof (the
----------
"Property"), together with the improvements located thereon (the
--------
"Improvements"; the Property and the Improvements, collectively, the "Premises")
------------ --------
pursuant to that certain lease dated _________, 199_ (the "Lease") between
-----
__________, as landlord, and Xxxxxxxx, as tenant.]
X. Xxxxxxxx has requested that Xxxxxx make a loan to Borrower in the
maximum principal amount of $_____________ (the "Loan") to, among other things,
----
finance Xxxxxxxx's acquisition of the Premises.
C. The Loan will be evidenced by the Note and secured by, among other
things, the Mortgage.
D. The Guarantors are the sole [shareholders/partners/members of
Borrower] [and own in the aggregate one hundred percent (100%) of the ownership
interests in Borrower] and will benefit materially from the granting of the Loan
by Xxxxxx to Borrower.
E. To induce Lender to make the Loan and accept the Note and the
Mortgage, each Guarantor has agreed to execute and deliver this Guarantee, which
Guarantee is to be binding
upon each Guarantor, and their respective heirs, personal representatives,
successors and assigns.
X. Xxxxxx has refused to make the Loan or accept the Note and the
Mortgage unless this Guarantee is executed by each Guarantor and delivered to
Lender.
NOW, THEREFORE, in consideration of the Loan, and for other good and
valuable consideration, the receipt whereof is xxxxxx acknowledged, each
Guarantor, for [himself/herself], [his/her] heirs, personal representatives,
successors and assigns, hereby covenants and agrees with Xxxxxx for the benefit
of Xxxxxx, its indorsees, successors and assigns, as follows:
1. Guarantee. Each Guarantor unconditionally and irrevocably guarantees
---------
to Lender (A) the prompt, absolute and unconditional payment of (i) the
principal sum evidenced by the Note which may be outstanding from time to time,
(ii) interest on the outstanding principal sum evidenced by the Note, whether
such interest accrues at the Applicable Interest Rate or at the Default Rate (as
such terms are defined in the Note) and whether such interest accrues prior to
or after the Maturity Date (as defined in the Note), (iii) late charges,
prepayment fees and premiums, and interest accruing on the Note after any
petition under the applicable federal bankruptcy laws, as the same shall become
due and payable under the Note; and (iv) all fees, charges and expenses now or
hereafter due to Lender under the Note, the Mortgages or any other Loan
Document, including, without limitation, any and all costs and expenses incurred
by Lender in connection with the collection and enforcement of the Note, the
Mortgage or any other Loan Document, including, without limitation, all
attorney's fees and expenses, investigative costs and all court costs, whether
or not suit is filed thereon, or whether at maturity or by acceleration; and (B)
the prompt and punctual performance of all covenants and agreements of Borrower
under the Note, the Mortgage and the other Loan Documents; irrespective of the
validity, regularity or enforceability of the Note or such obligations, or any
instrument evidencing any of the obligations, or of any collateral therefor or
of the existence of such collateral. All of the obligations guaranteed or
undertaken by Guarantor in this Section 1 are hereinafter referred to as the
"Obligations".
-----------
2. Representations, Warranties and Covenants. Each Guarantor hereby
-----------------------------------------
represents, warrants and covenants each as to himself as follows:
(a) Each Guarantor is of legal age and under no legal disability.
(b) This Guarantee has been duly executed and delivered by each
Guarantor and constitutes the valid and binding obligations of each Guarantor
and is enforceable against each Guarantor in accordance with its terms.
-2-
(c) The consummation of the transactions contemplated hereby and the
performance by Guarantor of his obligations under this Guarantee will not result
in any breach of, give rise to a lien under, or constitute a default under, any
mortgage, deed of trust, lease, bank loan or credit agreement, partnership
agreement, corporate charter, by-laws or other agreement or instrument to which
any Guarantor is a party or by which he may be bound or affected.
(d) Each Guarantor will promptly comply with all conditions of this
Guarantee. Each Guarantor will promptly (upon transmittal or receipt) deliver to
Lender copies of all notices and correspondence with respect to: (i) this
Guarantee, (ii) any material adverse change in the financial condition of any
Guarantor, (iii) Lender's security and (iv) any violation or potential violation
of any approval, authorization, or permit issued in regard to the Premises. Each
Guarantor will promptly and fully respond to any inquiry of Xxxxxx made with
respect to any of the matters described in the preceding sentence and will
permit Lender, upon Xxxxxx's written request, to participate in any inquiry,
hearing or meeting with regard to any of the foregoing.
(e) Each Guarantor agrees to pay on written demand all expenses
(including reasonable legal services of every kind and cost of any insurance,
any payment of taxes or other charges) of, or incidental to, or in any way
relating to the enforcement or protection of the rights of Lender hereunder.
(f) Each Guarantor hereby acknowledges receipt and approval of the
Note, the Mortgage and the other Loan Documents.
(g) Each Guarantor is deriving or expects to derive a financial or
other advantage from each and every Obligation incurred by Borrower to Lender.
(h) Each Guarantor shall provide to Lender (i) within thirty (30)
days after the end of each calendar year, updated annual financial statements in
form similar to that previously provided to Lender; (ii) copies of federal tax
returns (together with any extension filed) within fifteen (15) days after
filing of same but in no event later than April 30 of each year; and (iii) such
other financial information relating to Guarantor as may be reasonably requested
from time to time by Xxxxxx.
(i) Each Guarantor shall promptly provide Lender with written notice
of any pending or threatened litigation involving claims against any Guarantor
or the commencement of any proceedings or investigations by any governmental or
regulatory agency with respect to any Guarantor.
-3-
(j) Each Guarantor shall not incur any indebtedness, nor guarantee
any indebtedness (other than pursuant to this Guarantee), without the prior
written consent of Lender.
(k) Each Guarantor shall not transfer, sell or assign any real or
personal property without the prior written consent of Xxxxxx, and any transfer,
sale or assignment shall occur only in the ordinary course of such Guarantor's
business.
(l) [Additional financial covenants].
3. Defaults. The following shall constitute a default hereunder (each,
--------
an "Event of Default"):
----------------
(a) If any Guarantor shall fail to timely perform, or cause to be
timely performed, any Obligation and such failure is not cured by Guarantor
within ten (10) days of written notice of such failure;
(b) If any Guarantor shall fail to comply with any of the covenants
made by it in this Guarantee, or if at any time any representation or warranty
made by any Guarantor to Lender in this Guarantee or in any certificate or
statement delivered in connection herewith shall be false or misleading to an
extent deemed by Lender, in its reasonable judgment, to be material and such
failure is not cured by Guarantor within ten (10) days of written notice of such
failure, provided that if such failure is not curable within such ten (10) day
period, then Guarantor shall have such time as is reasonably required to cure
same, provided (x) Guarantor promptly commences the cure within such ten (10)
day period, (y) thereafter Guarantor diligently attempts to cure such default,
and (z) Lender, in its reasonable judgment, determines that a cure may be
effectuated during such additional period; or
(c) If at any time any Guarantor shall revoke or attempt to revoke,
disavow, contest, commence any action or raise any defense against her
obligations hereunder.
4. Lien on Personal Property. To secure the liabilities of Guarantor
-------------------------
under this Guarantee, each Guarantor hereby grants to Lender a security interest
in and a lien upon any personal property of each Guarantor or in which any
Guarantor may have an interest, which is now or may at any time hereafter come
into the lawful possession or control of Lender, or of any third party acting on
behalf of Xxxxxx, whether for the express purpose of being used by Lender for
collateral security or for safekeeping or for any other or different purpose,
including such personal property as may be in transit by mail or carrier for any
purpose or covered or affected by any documents in Xxxxxx's possession or
control, or in the possession or control of any third party acting on its behalf
(such property and interests in property, referred to collectively as the
"Collateral").
----------
-4-
5. Remedies. Upon the occurrence of a default hereunder, in addition to
--------
any other remedy provided for under this Guarantee or at law or in equity, each
Guarantor hereby authorizes Xxxxxx, in Xxxxxx's sole discretion, at any time:
(a) To appropriate and apply upon any of the liabilities of Guarantor
hereunder any of the Collateral;
(b) At any time, or from time to time, without notice to Guarantor or
to any other person, any such notice being hereby expressly waived, immediately
to set off and appropriate and apply any and all deposits (general or special)
at any time held by or owing to Lender, if any, which are given to secure the
obligations and liabilities of Guarantor hereunder to or for the credit or the
account of Guarantor against and on account of the obligations and liabilities
of Guarantor hereunder;
(c) To foreclose nonjudicially or judicially against any real or
personal property security it holds for the Obligations or any part thereof, or
exercise any other remedy against Guarantor or any security; and
(d) To exercise all other rights and remedies of a secured party
under the Uniform Commercial Code as in effect in New York and [jurisdiction in
which Premises is located], and, without limiting the generality of the
foregoing, Lender may immediately, without demand of performance and without
advertisement, all of which are hereby expressly waived, and upon ten (10) days'
prior written notice to Guarantor, sell at public or private sale, grant options
to purchase or otherwise realize upon in the State of New York or the State of
[jurisdiction in which Premises is located], the whole or from time to time any
part of the Collateral upon which Lender shall have a security interest and lien
as aforesaid, and after deducting from the proceeds of sale or other disposition
of the Collateral all expenses (including all reasonable expenses for legal
services of every kind and other expenses as set forth below) shall apply the
residue of such proceeds toward the payment of any of the liabilities of
Guarantor hereunder in such order as Lender shall elect, Guarantor remaining
liable for any deficiency remaining unpaid after such application. If notice of
any sale or other disposition is required by law to be given, each Guarantor
hereby agrees that a notice sent in accordance with this Guarantee at least ten
(10) calendar days before the time of any intended public sale or of the time
after which any private sale or other disposition of the said collateral is to
be made, shall be reasonable notice of such sale or other disposition. At any
such sale or other disposition, Lender may itself purchase the whole or any part
of the Collateral sold, free from any right of redemption on the part of any
Guarantor, which right is hereby waived and released.
6. Waiver of Election of Remedies. Each Guarantor waives any right to
------------------------------
require or compel Lender to (a) proceed against or exhaust any security for the
Obligations; or (b) pursue any other remedy in Xxxxxx's power whatsoever; and
failure of Lender to do any of the
-5-
foregoing shall not exonerate, release or discharge any Guarantor from his
absolute, unconditional and independent liabilities to Lender hereunder. Each
Guarantor hereby waives any and all legal requirements that Lender shall
institute any action or proceedings at law or in equity in respect of the Loan
or any other Loan Document or resort to or seek to realize upon the security
held by Xxxxxx, as a condition precedent to bringing an action against Guarantor
upon this Guarantee.
7. Right of Separate Actions. Lender may bring and prosecute a separate
-------------------------
action against Guarantor to enforce its liabilities hereunder, whether or not
any action is brought against any other person and whether or not any other
person is joined in any such action or actions. Nothing shall prohibit Lender
from exercising its rights against Guarantor, any security for the Obligations,
and any other person simultaneously, jointly and/or severally.
8. Waiver of Rights of Subrogation. Each Guarantor hereby irrevocably
-------------------------------
waives any rights to be subrogated to the rights of Lender with respect to the
Obligations. No failure on the part of Lender to exercise, and no delay in
exercising, any right, remedy or power hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise by Lender of any right, remedy
or power hereunder preclude any other or future exercise of any other right,
remedy or power.
9. Waiver of Notice, Consent, Etc. (a) This Guarantee shall be
-------------------------------
construed as a continuing, absolute and unconditional guarantee of payment and
performance.
(a) Each Guarantor hereby waives notice of acceptance of this
Guarantee by Xxxxxx and of presentment, demand, protest, notice of protest and
of dishonor, notices of default (except as otherwise expressly provided herein)
and all other notices relative to this Guarantee of every kind and description
now or hereafter provided by any agreement between Borrower and Lender or any
statute or rule of law.
(b) Each Guarantor waives any and all notice of the creation,
renewal, extension or accrual of any of the Obligations or of the reliance by
Lender upon this Guarantee. Said Obligations, and each of them, shall
conclusively be deemed to have been created, contracted, or incurred in reliance
upon this Guarantee and all dealings between Borrower and Lender shall likewise
be conclusively presumed to have been made or consummated in reliance upon this
Guarantee.
(c) Each Guarantor hereby agrees that the terms, covenants and
provisions contained in the Note, the Mortgage or in any other Loan Document may
be altered, extended, modified, waived, released or canceled by Xxxxxx, and each
Guarantor agrees that this Guarantee and his liability hereunder shall be in no
way affected, diminished or released by any such alteration, extension,
modification, release, waiver or cancellation.
-6-
10. Waiver of Priority of Collateral. Each Guarantor hereby agrees that,
--------------------------------
in the event that any of his property is or may be hypothecated with other
property of Borrower, as security for any obligations of Borrower under any
other Loan Document, any right of Guarantor to have such other property of
Borrower first applied to the discharge of such obligations is hereby
irrevocably waived by each Guarantor. Each Guarantor hereby expressly
recognizes that any of his property which is or may be hereafter hypothecated
pursuant to the Mortgage is security for such obligations and is not security
for this Guarantee.
11. No Discharge; Remedies Cumulative. No Guarantor shall be discharged,
---------------------------------
released or exonerated, in any way, from his absolute, unconditional and
independent liabilities hereunder, even though any rights or defenses which any
Guarantor may have against Lender or others may be destroyed, diminished or
otherwise affected by:
(a) Any declaration by Xxxxxx of a default in respect of any of the
Obligations;
(b) The exercise by Lender of any rights or remedies against Borrower
or any other person under any other Loan Document;
(c) The failure of Lender to exercise any rights or remedies against
Borrower or any other person under any other Loan Document;
(d) The sale or enforcement of, or realization upon (through judicial
foreclosure, power of sale or any other means) any security for any of the
Obligations, even though (i) recourse may not thereafter be had against Borrower
under any other Loan Document for any deficiency, or (ii) Lender fails to pursue
any such recourse which might otherwise be available, whether by way of
deficiency judgment following judicial foreclosure or otherwise; and
no such action by Lender will release or limit the liability of Guarantor to
Lender. All rights and remedies of Lender hereunder or under any of the Loan
Documents shall be cumulative and may be exercised singularly or concurrently
against the party to whom enforcement is sought. The rights of Lender under
this Guarantee are in addition to and not in diminution of the rights of Lender
under any other Loan Document.
12. Continuing Guarantee. Until all obligations of Borrower to Lender are
--------------------
fulfilled to the satisfaction of Lender and each and every of the terms,
covenants and conditions of this Guarantee are fully performed and Lender fully
repaid, Guarantor shall not be released by any act or thing which might, but for
this provision, be deemed a legal or equitable discharge of a surety, or by
reason of any waiver, extension, modification, forbearance or delay or other act
or omission of Lender or its failure to proceed promptly or otherwise, or by
reason of any action taken or omitted or circumstance which may or might vary
the risk or affect the rights
-7-
or remedies of Guarantor or by reason of any further dealings between Xxxxxxxx
and Xxxxxx, whether relating to the Loan or otherwise, and each Guarantor hereby
expressly waives and surrenders any defenses to its liability hereunder based
upon any of the foregoing acts, omissions, things or agreements or waivers of
Lender; it being the purpose and intent of the parties hereto that the
obligations of each Guarantor hereunder are absolute and unconditional under any
and all circumstances.
13. Notices. Any notice, demand, statement, request or consent made
-------
hereunder shall be in writing to the other party hereto at its address set forth
below or at such other address as such party may designate by notice to the
other party hereto and shall be deemed given (i) on receipt, if mailed, by
certified or registered U.S. mail, return receipt requested, postage prepaid;
(ii) on receipt, if delivered, fee prepaid, to a national overnight delivery
service (such as Federal Express, Purolater Courier, U.P.S. Next Day Air); or
(iii) when delivered, if delivered by hand, as evidenced by a signed receipt:
To Guarantor:
_____________________
_____________________
_____________________
and
______________________
______________________
______________________
With a courtesy copy to:
______________________
______________________
______________________
To Lender:
Banco Popular de Puerto Rico
0 Xxxx 00/xx/ Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxxx Xxx
Vice President
-8-
With a courtesy copy to:
XxXxxxxxx Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
A "Business Day" is any day other than a Saturday or Sunday, or a day on which
------------
banking and savings and loan institutions in the State of New York are
authorized or obligated by law or executive order to remain closed. Refusal to
accept delivery of any notice shall be deemed to be receipt of such notice.
14. Entire Agreement. This Guarantee represents the entire agreement
----------------
between Guarantor and Lender with respect to the matters referred to herein, and
no waiver or modification hereof or thereof shall be effective unless in writing
and signed by Xxxxxx and Guarantor.
15. GOVERNING LAW. THIS GUARANTEE AND THE RIGHTS AND OBLIGATIONS OF THE
-------------
PARTIES HEREUNDER SHALL BE CONSTRUED, ENFORCED, AND INTERPRETED ACCORDING TO THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE IN AND PERFORMED IN
THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. UNLESS
THE TEXT OTHERWISE REQUIRES, ALL TERMS USED HEREIN SHALL HAVE THE MEANING
SPECIFIED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN THE STATES OF NEW YORK
AND _____________ AT THE DATE HEREOF.
16. Successors and Assigns. This Guarantee shall be binding upon each
----------------------
Guarantor and upon their respective heirs, personal representatives, successors
and assigns and shall inure to the benefit of Xxxxxx and its indorsees,
successors and assigns.
17. Joint and Several. The representations, warranties, covenants and
-----------------
other obligations of Guarantor hereunder are made and undertaken jointly and
severally by each of the Guarantors.
18. Time of the Essence. Time shall be of the essence with regard to the
-------------------
performance by each Guarantor of his obligations under this Guarantee.
19. Waiver of Trial by Jury. Lender and each Guarantor shall and hereby
-----------------------
do waive trial by jury in any action, proceeding or counterclaim brought by any
of the parties hereto
-9-
against the other on any matters arising out of or in any way connected to the
Loan, this Guarantee or any of the other Loan Documents.
20. Counterparts. This Guarantee may be executed in several counterparts,
------------
each of which shall constitute but one and the same instrument.
IN WITNESS WHEREOF, this Guarantee has been executed by the undersigned as
of the date first above written.
_______________________________
_______________________________
-10-
EXHIBIT K-2(F)
FORM OF FRANCHISEE ENVIRONMENTAL INDEMNITY AGREEMENT
----------------------------------------------------
ENVIRONMENTAL INDEMNITY AGREEMENT
---------------------------------
THIS ENVIRONMENTAL INDEMNITY AGREEMENT ("Agreement") dated as of the __ day
of ________, 199__, made by ____________________________, a
_____________________ having an office at ______________________________________
(the "Borrower") and ________________, an individual having an address at
______________ (the "Individual Indemnitor"; Borrower and the Individual
Indemnitor(s) are sometime hereinafter collectively referred to as the
"Indemnitor"), for the benefit of BANCO POPULAR DE PUERTO RICO, having offices
at 0 Xxxx 00/xx/ Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Lender"). All capitalized
terms appearing herein and not defined herein shall have the meanings set forth
in the Mortgage, Security Agreement and Assignment of Leases and Rents, dated as
of the date hereof, made by Borrower in favor of Xxxxxx (the "Mortgage").
R E C I T A L S
- - - - - - - -
A. [Borrower is the actual, record and beneficial owner of the real
property more particularly described in Schedule A attached hereto and by this
----------
reference made a part hereof (the "Land"), together with the improvements
located thereon (the "Improvements"; the Land and the Improvements,
collectively, the "Premises")./Borrower is the actual, record and beneficial
owner of the leasehold interest in the real property more particularly described
in Schedule A attached hereto and by this reference made a part hereof (the
----------
"Property"), together with the improvements located thereon (the "Improvements";
the Property and the Improvements, collectively, the "Premises") pursuant to
that certain lease dated _________, 199__ (the "Lease") between __________, as
landlord, and Xxxxxxxx, as tenant.]
X. Xxxxxx has agreed to make a loan to Borrower in the maximum principal
amount of $_________ ( the "Loan") to, among other things, finance Xxxxxxxx's
acquisition of the Premises.
C. The Loan will be evidenced by the Note and secured by, among other
things, the Mortgage.
D. The Individual Indemnitor(s) is/are the sole [shareholder(s)/
partner(s)/member(s)] of Borrower [and own in the aggregate one hundred percent
(100%) of the ownership interests in Borrower] and each Indemnitor will benefit
materially from the granting of the Loan by Xxxxxx to Borrower.
E. To induce Xxxxxx to make the Loan and to accept the Note and Mortgage,
each Indemnitor has agreed to execute and deliver this Agreement, which
Agreement is to be
executed by each Indemnitor and to be binding upon each Indemnitor and its
respective heirs, personal representatives, successors and assigns.
X. Xxxxxx has refused to make the Loan or accept the Note and Mortgage
unless this Agreement is executed by each Indemnitor and delivered to Lender.
NOW, THEREFORE, in consideration of the Loan, and for other good and
valuable consideration, the receipt whereof is xxxxxx acknowledged, each
Indemnitor, for itself or himself/herself, and its respective heirs, personal
representatives, successors and assigns, hereby covenants and agrees with Xxxxxx
for the benefit of Xxxxxx, its indorsees, successors and assigns, as follows:
1. Guarantee. Each Indemnitor unconditionally guarantees to Lender
---------
(i) the prompt payment, when due, of all "Claims and Costs" (as defined in
paragraph 2(a) of this Agreement) and (ii) the timely performance of all of the
obligations of Indemnitor under this Agreement. All of the obligations
guaranteed or undertaken by each Indemnitor in clauses (i) and (ii) of this
paragraph 1 are hereinafter collectively referred to as the "Obligations".
2. Indemnity. (a) Each Indemnitor unconditionally agrees to
---------
indemnify and hold harmless Lender, its directors, officers, employees, agents,
counsel, successors and assigns from and against any and all losses, claims,
damages, penalties, liabilities, costs and expenses (including reasonable
attorneys' fees and court costs), fines, injuries, penalties, response costs
(including the cost of any required or necessary investigation, testing,
monitoring, repair, cleanup, detoxification, preparation of any closure or other
required plans, or other removal, response or remedial action at or relating to
the Premises) (collectively, the "Claims and Costs"), with respect to, as a
direct or indirect result of, or arising out of any of the following: (i) any
law, ordinance or regulation, lawsuit (brought or threatened), settlement,
agreement, consent order or judgment, injunction, restraining order, or
requirement of any insurer of the Premises or any portion thereof, relating to
the generation, presence, management, disposal, release (or threatened release),
escape, seepage, leakage or clean-up of any Hazardous Materials (as hereinafter
defined) at, on, in, from or under all or a portion of the Premises or any other
real property owned by Borrower in violation of any applicable Environmental Law
(as hereinafter defined); (ii) the migration of Hazardous Materials from the
Premises to any other property or onto the Premises from any property or area
adjacent to the Premises or any other real property owned by Borrower in
violation of any applicable Environmental Law; (iii) the past treatment,
disposal or storage of Hazardous Materials or the transportation of Hazardous
Materials onto or from the Premises or any other real property owned by
Indemnitor in violation of any applicable Environmental Law; or (iv) the
incorporation, whether prior or future, of any Hazardous Materials into the
Premises in violation of any applicable Environmental Law, except to the extent
that any of the foregoing are caused by Lender or Xxxxxx's designee after Lender
or Xxxxxx's designee has taken possession of or acquired title to the Premises
by foreclosure or other means.
(b) For the purpose of this Agreement, the term "Hazardous Materials"
shall include, but not be limited to, (i) any substances defined as "hazardous
substances," "pollutants,"
2
"contaminants," "hazardous materials," "hazardous wastes," or "hazardous or
toxic substances" or related materials as now or hereafter defined in any
applicable federal, state or local law, regulation, ordinance or directive
(collectively, "Environmental Laws"), including but not limited to the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C.
(S) 9601, et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. (S)
------
1801, et seq.; the Toxic Substances Control Act, 15 U.S.C. (S) 2601, et seq.;
------ ------
the Resource Conservation and Recovery Act, as amended, 42 U.S.C. (S) 9601, et
--
seq.; the Clean Water Act, 33 U.S.C. (S) 1251 et seq.; the Clean Air Act, 42
--- ------
U.S.C. (S) 7412 et seq.; [local environmental laws to be added]; as any such
------
acts may be amended, modified or supplemented; (ii) those substances listed or
otherwise identified in the regulations adopted and publications issued, as may
be amended, modified or supplemented, pursuant to any of the above referenced
statutes; (iii) lead-based or lead-containing paint; and (iv) any friable
asbestos, airborne asbestos, or any substance or material containing asbestos.
The term "Hazardous Materials" shall specifically not include the emission,
discharge, generation, processing, storage or transportation of any hazardous
substances or hazardous materials pursuant to, and in accordance with, a valid
federal or state permit, license or order or otherwise in accordance with
applicable Environmental Laws.
3. Required Action of Each Indemnitor. Each Indemnitor shall comply
----------------------------------
with any law, ordinance, regulation, settlement, agreement, consent order,
decree, judgment, injunction or directive, affecting the Premises, or any
requirement of any insurer of the Premises or any portion thereof, and shall
timely perform, or cause to be performed, any investigation, testing,
monitoring, repair, cleanup, detoxification, preparation of any closure or other
required plans, or other removal, response or remedial action relating to (i)
the presence, management, disposal, release or threatened release, escape,
seepage or leakage of any Hazardous Materials at, on, in, from or under all or a
portion of the Premises or any other real property owned by Borrower in
violation of Environmental Laws; (ii) the migration of Hazardous Materials from
the Premises to any other property, or onto the Premises from any property or
area adjacent to the Premises or any other real property owned by Borrower in
violation of Environmental Laws; (iii) the generation, transportation, storage
or disposal of Hazardous Materials onto or from the Premises or any other real
property owned by Borrower in violation of Environmental Laws; or (iv) the
incorporation, whether prior or future, of any Hazardous Materials into the
Premises in violation of Environmental Laws.
4. Representations, Warranties and Covenants. Each Indemnitor hereby
-----------------------------------------
represents, warrants and covenants each as to himself/herself or itself as
follows:
(a) Indemnitor is a corporation duly organized and validly
existing under the laws of ___________, is fully authorized to do business in
the State of [jurisdiction where Premises is located], and has full power and
authority to consummate the transactions contemplated hereby.
(b) [Each of] the Individual Indemnitor[s] is of legal age and
under no legal disability.
3
(c) This Agreement has been duly executed and delivered by each
Indemnitor and constitutes the valid and binding obligations of each Indemnitor
and is enforceable against each Indemnitor in accordance with its terms.
(d) The consummation of the transactions contemplated hereby and
the performance by each Indemnitor of its obligations under this Agreement will
not result in any breach of, give rise to a lien under, or constitute a default
under, any mortgage, deed of trust, lease, bank loan or credit agreement,
partnership agreement, corporate charter, by-laws or other agreement or
instrument to which any Indemnitor is a party or by which it may be bound or
affected.
(e) Each Indemnitor will promptly comply with all conditions of
this Agreement. Indemnitor will promptly (upon transmittal or receipt) deliver
to Lender copies of all notices and correspondence with respect to: (i) this
Agreement, (ii) any material adverse change in the financial condition of any
Indemnitor, (iii) Lender's security and (iv) any violation or potential
violation of any approval, authorization, or permit issued in regard to the
Premises. Each Indemnitor will promptly and fully respond to any inquiry of
Xxxxxx made with respect to any of the matters described in the preceding
sentence and will permit Lender, upon Xxxxxx's written request, to participate
in any inquiry, hearing or meeting with regard to any of the foregoing.
(f) Each Indemnitor agrees to pay on written demand all expenses
(including reasonable legal services of every kind and cost of any insurance,
any payment of taxes or other charges) of, or incidental to, or in any way
relating to the enforcement or protection of the rights of Lender hereunder.
(g) Each Indemnitor is deriving or expects to derive a financial
or other advantage from each and every Obligation incurred by Indemnitor to
Lender.
(h) Each Indemnitor acknowledges receipt and approval of the
Note, the Mortgage and the other Loan Documents.
5. Defaults. The following shall constitute a default hereunder
--------
(each, an "Event of Default"):
(a) If any Indemnitor shall fail to timely perform, or cause to
be timely performed, any Obligation and such failure is not cured by Indemnitor
within ten (10) days of written notice of such failure, provided that if such
failure is not curable within such ten (10) day period, then Indemnitor shall
have such time as is reasonably required to cure same, provided (x) Indemnitor
promptly commences the cure within such ten (10) day period, (y) thereafter
Indemnitor diligently attempts to cure such default, and (z) Lender, in its
reasonable judgment, determines that a cure may be effectuated during such
additional period;
(b) If any Indemnitor shall fail to comply with any of the
covenants made by it in this Agreement, or if at any time any representation or
warranty made by any
4
Indemnitor to Lender in this Agreement or in any certificate or statement
delivered in connection herewith shall be false or misleading to an extent
deemed by Lender, in its reasonable judgment, to be material and such failure is
not cured by Indemnitor within ten (10) days of written notice of such failure,
provided that if such failure is not curable within such ten (10) day period,
then Indemnitor shall have such time as is reasonably required to cure same,
provided (x) Indemnitor promptly commences the cure within such ten (10) day
period, (y) thereafter Indemnitor diligently attempts to cure such default, and
(z) Lender, in its reasonable judgment, determines that a cure may be
effectuated during such additional period; or
(c) If at any time any Indemnitor shall revoke or attempt to
revoke, disavow, contest, commence any action or raise any defense against its
obligations hereunder .
6. Lien on Personal Property. To secure the liabilities of
-------------------------
Indemnitor under this Agreement, each Indemnitor hereby grants to Lender a
security interest in and a lien upon any personal property of Indemnitor or in
which any Indemnitor may have an interest, which is now or may at any time
hereafter come into the lawful possession or control of Lender, or of any third
party acting on behalf of Xxxxxx, whether for the express purpose of being used
by Lender for collateral security or for safekeeping or for any other or
different purpose, including such personal property as may be in transit by mail
or carrier for any purpose or covered or affected by any documents in Xxxxxx's
possession or control, or in the possession or control of any third party acting
on its behalf (such property and interests in property, referred to collectively
as the "Collateral").
7 Remedies. Upon the occurrence of a default hereunder, in addition
--------
to any other remedy provided for under this Agreement or at law or in equity,
each Indemnitor hereby authorizes Xxxxxx, in Xxxxxx's sole discretion, at any
time:
(a) To appropriate and apply upon any of the liabilities of
Indemnitor hereunder any of the Collateral;
(b) At any time, or from time to time, without notice to
Indemnitor or to any other person, any such notice being hereby expressly
waived, immediately to set off and appropriate and apply any and all deposits
(general or special) at any time held by or owing to Lender, if any, which are
given to secure the obligations and liabilities of Indemnitor hereunder to or
for the credit or the account of Indemnitor against and on account of the
obligations and liabilities of Indemnitor hereunder;
(c) To foreclose nonjudicially or judicially against any real or
personal property security it holds for the Obligations or any part thereof, or
exercise any other remedy against Indemnitor or any security; and
(d) To exercise all other rights and remedies of a secured party
under the Uniform Commercial Code as in effect in New York and [jurisdiction
where Premises is located] and, without limiting the generality of the
foregoing, Lender may immediately,
5
without demand of performance and without advertisement, all of which are hereby
expressly waived, and upon ten (10) days' prior written notice to Indemnitor,
sell at public or private sale, grant options to purchase or otherwise realize
upon in the States of New York and ______________, the whole or from time to
time any part of the Collateral upon which Lender shall have a security interest
and lien as aforesaid, and after deducting from the proceeds of sale or other
disposition of the Collateral all expenses (including all reasonable expenses
for legal services of every kind and other expenses as set forth below) shall
apply the residue of such proceeds toward the payment of any of the liabilities
of Indemnitor hereunder in such order as Lender shall elect, each Indemnitor
remaining liable for any deficiency remaining unpaid after such application. If
notice of any sale or other disposition is required by law to be given, each
Indemnitor hereby agrees that a notice sent in accordance with this Agreement at
least ten (10) calendar days before the time of any intended public sale or of
the time after which any private sale or other disposition of the said
collateral is to be made, shall be reasonable notice of such sale or other
disposition. At any such sale or other disposition, Lender may itself purchase
the whole or any part of the Collateral sold, free from any right of redemption
on the part of any Indemnitor, which right is hereby waived and released.
8. Equitable Relief; Specific Performance. Each Indemnitor acknowledges
--------------------------------------
and agrees that it may be impossible to measure accurately the damages to Lender
resulting from a breach of Indemnitor's covenant to satisfy the Obligations and
that such a breach will cause irreparable injury to Xxxxxx and that Lender may
not have an adequate remedy at law in respect of such breach and, as a
consequence, agrees that such covenant shall be specifically enforceable against
each Indemnitor and hereby waives and agrees not to assert any defense against
an action for specific performance of such covenant. This clause shall not
prejudice Xxxxxx's rights to assert any and all claims for damages incurred as a
result of Indemnitor's default hereunder, and Xxxxxx may, before, during, or
after any foreclosure of the Mortgage, hold each Indemnitor jointly and
severally liable for any deficiency arising from Indemnitor's default hereunder
and for all losses and damages sustained and expenses incurred by reason of
Indemnitor failing to satisfy the Obligations.
9. Waiver of Election of Remedies. Each Indemnitor waives any right to
------------------------------
require or compel Lender to (a) proceed against or exhaust any security for the
Obligations; or (b) pursue any other remedy in Lender's power whatsoever; and
failure of Lender to do any of the foregoing shall not exonerate, release or
discharge any Indemnitor from its absolute, unconditional and independent
liabilities to Xxxxxx xxxxxxxxx. Each Indemnitor hereby waives any and all
legal requirements that Lender shall institute any action or proceedings at law
or in equity in respect of the Loan or any other Loan Document or resort to or
seek to realize upon the security held by Xxxxxx, as a condition precedent to
bringing an action against Indemnitor upon this Agreement.
10. Right of Separate Actions. Each Lender may bring and prosecute a
-------------------------
separate action against Indemnitor to enforce its liabilities hereunder, whether
or not any action is brought against any other person and whether or not any
other person is joined in any such action or actions. Nothing shall prohibit
Lender from exercising its rights against Indemnitor, any security for the
Obligations, and any other person simultaneously, jointly and/or severally.
6
11. Waiver of Rights of Subrogation. Each Indemnitor hereby irrevocably
-------------------------------
waives any rights to be subrogated to the rights of Lender with respect to the
Obligations. No failure on the part of Lender to exercise, and no delay in
exercising, any right, remedy or power hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise by Lender of any right, remedy
or power hereunder preclude any other or future exercise of any other right,
remedy or power.
12. Waiver of Notice, Consent, Etc. (a) This Agreement shall be
-------------------------------
construed as a continuing, absolute and unconditional indemnity.
(b) Each Indemnitor hereby waives notice of acceptance of this
Agreement by Xxxxxx and of presentment, demand, protest, notice of protest and
of dishonor, notices of default (except as otherwise expressly provided herein)
and all other notices relative to this Agreement of every kind and description
now or hereafter provided by any other agreement between Indemnitor and Lender
or any statute or rule of law.
(c) Each Indemnitor waives any and all notice of the creation,
renewal, extension or accrual of any of the Obligations or of the reliance by
Lender upon this Agreement. Said Obligations, and each of them, shall
conclusively be deemed to have been created, contracted, or incurred in reliance
upon this Agreement and all dealings between Borrower and Lender shall likewise
be conclusively presumed to have been made or consummated in reliance upon this
Agreement.
(d) Each Indemnitor hereby agrees that the terms, covenants and
provisions contained in the Note, the Mortgage or in any other Loan Document may
be altered, extended, modified, waived, released or canceled by Xxxxxx, and each
Indemnitor agrees that this Agreement and its liability hereunder shall be in no
way affected, diminished or released by any such alteration, extension,
modification, release, waiver or cancellation.
13. Waiver of Priority of Collateral. Each Indemnitor hereby agrees that,
--------------------------------
in the event that any of its property is or may be hypothecated with other
property of Borrower, as security for any obligations of Borrower under any
other Loan Document, any right of Indemnitor to have such other property first
applied to the discharge of such obligations is hereby irrevocably waived by
each Indemnitor. Each Indemnitor hereby expressly recognizes that any of its
property which is or may be hereafter hypothecated pursuant to the Mortgage is
security for such obligations and is not security for this Agreement.
14. No Discharge; Remedies Cumulative. No Indemnitor shall be discharged,
---------------------------------
released or exonerated, in any way, from its absolute, unconditional and
independent liabilities hereunder, even though any rights or defenses which any
Indemnitor may have against Lender or others may be destroyed, diminished or
otherwise affected by:
(a) Any declaration by Xxxxxx of a default in respect of any of the
Obligations;
7
(b) The exercise by Lender of any rights or remedies against Borrower
or any other person under any other Loan Document;
(c) The failure of Lender to exercise any rights or remedies against
Borrower or any other person under any other Loan Document;
(d) The sale or enforcement of, or realization upon (through judicial
foreclosure, power of sale or any other means) any security for any of the
Obligations, even though (i) recourse may not thereafter be had against Borrower
under any other Loan Document for any deficiency, or (ii) Lender fails to pursue
any such recourse which might otherwise be available, whether by way of
deficiency judgment following judicial foreclosure or otherwise; and
no such action by Xxxxxx will release or limit the liability of each Indemnitor
to Lender. All rights and remedies of Lender hereunder or under any of the Loan
Documents shall be cumulative and may be exercised singularly or concurrently
against the party to whom enforcement is sought. The rights of Lender under
this Agreement are in addition to and not in diminution of the rights of Lender
under any other Loan Document.
15. Survival. Each and every of the terms, covenants and conditions of
--------
this Agreement shall survive the repayment of Borrower's obligations under the
Loan Documents, and no Indemnitor shall be released by any act or thing which
might, but for this provision, be deemed a legal or equitable discharge of a
surety, or by reason of any waiver, extension, modification, forbearance or
delay or other act or omission of Lender or its failure to proceed promptly or
otherwise, or by reason of any action taken or omitted or circumstance which may
or might vary the risk or affect the rights or remedies of Indemnitor or by
reason of any further dealings between Borrower and Lender, whether relating to
the Loan or otherwise, and each Indemnitor hereby expressly waives and
surrenders any defenses to its liability hereunder based upon any of the
foregoing acts, omissions, things or agreements or waivers of Lender; it being
the purpose and intent of the parties hereto that the obligations of Indemnitor
hereunder shall survive the repayment of Borrower's obligations under the Loan
Documents and are absolute and unconditional under any and all circumstances.
16. Notices. Any notice, demand, statement, request or consent made
-------
hereunder shall be in writing to the other party hereto at its address set forth
below or at such other address as such party may designate by notice to the
other party hereto and shall be deemed given (i) on receipt, if mailed, by
certified or registered U.S. mail, return receipt requested, postage prepaid;
(ii) on receipt, if delivered, fee prepaid, to a national overnight delivery
service (such as Federal Express, Purolater Courier, U.P.S. Next Day Air); or
(iii) when delivered, if delivered by hand, as evidenced by a signed receipt:
8
To Indemnitor:
___________________________
___________________________
_________________________
_________________________
Attention:_________________
and
__________________________
__________________________
__________________________
Attention:__________________
With a courtesy copy to:
___________________________
___________________________
___________________________
___________________________
Attention: __________________
To Lender:
Banco Popular de Puerto Rico
0 Xxxx 00/xx/ Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxxx Xxx
Vice President
With a courtesy copy to:
XxXxxxxxx Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
A "Business Day" is any day other than a Saturday or Sunday, or a day on which
------------
banking and savings and loan institutions in the State of New York are
authorized or obligated by law or executive order to remain closed. Refusal to
accept delivery of any notice shall be deemed to be receipt of such notice.
17. Entire Agreement. This Agreement represents the entire agreement
----------------
between Indemnitor and Lender with respect to the matters referred to herein,
and no waiver or
9
modification hereof or thereof shall be effective unless in writing and signed
by Xxxxxx and Indemnitor.
18. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
-------------
PARTIES HEREUNDER SHALL BE CONSTRUED, ENFORCED, AND INTERPRETED ACCORDING TO THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE IN AND PERFORMED IN
THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. UNLESS
THE TEXT OTHERWISE REQUIRES, ALL TERMS USED HEREIN SHALL HAVE THE MEANING
SPECIFIED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN THE STATES OF NEW YORK
AND __________ AT THE DATE HEREOF.
19. Successors and Assigns. This Agreement shall be binding upon each
----------------------
Indemnitor and upon their respective heirs, personal representatives, successors
and assigns and shall inure to the benefit of Xxxxxx and its indorsees,
successors and assigns.
20. Joint and Several. The representations, warranties, covenants and
-----------------
other obligations of Indemnitor hereunder are made and undertaken jointly and
severally by each of the Indemnitors.
21. Time of the Essence. Time shall be of the essence with regard to the
-------------------
performance by each Indemnitor of its obligations under this Agreement.
22. Waiver of Trial by Jury. Lender and each Indemnitor shall and hereby
-----------------------
do waive trial by jury in any action, proceeding or counterclaim brought by any
of the parties hereto against the other on any matters arising out of or in any
way connected to the Loan, this Agreement or any of the other Loan Documents.
23. Counterparts. This Agreement may be executed in several counterparts,
------------
each of which shall constitute but one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed by the undersigned as
of the date first above written.
________________________________,
a ______________________________
By:_____________________________
Name:__________________________
Title:___________________________
________________________________
________________________________
10
SCHEDULE A
LEGAL DESCRIPTION
SCHEDULE 1
----------
EXISTING CREDIT FACILITY
------------------------
FINANCIAL COVENANTS
-------------------
Note: Capitalized terms appearing herein shall have the meanings ascribed to
----
such terms in the Appendix of Defined Terms annexed hereto. To the
extent not so defined in the Appendix, capitalized terms shall have
the meanings ascribed in Section 1.1 of the Agreement.
A. MINIMUM CASH INTEREST COVERAGE. Borrower shall not permit the ratio
------------------------------
(the "CASH INTEREST COVERAGE RATIO") of (i) Consolidated EBITDA to
----------------------------
(ii) Consolidated Cash Interest Expense for any four-fiscal quarter
period ending as of the dates set forth below to be less than the
correlative ratio indicated:
======================================
FISCAL MINIMUM
QUARTER CASH INTEREST
ENDING COVERAGE
RATIO
--------------------------------------
--------------------------------------
09/07/97 2.25:1.00
--------------------------------------
12/28/97 2.25:1.00
--------------------------------------
03/22/98 2.25:1.00
--------------------------------------
06/14/98 2.25:1.00
--------------------------------------
09/06/98 2.25:1.00
--------------------------------------
12/27/98 2.25:1.00
--------------------------------------
03/21/99 2.50:1.00
--------------------------------------
06/13/99 2.50:1.00
--------------------------------------
09/05/99 2.50:1.00
--------------------------------------
12/26/99 2.50:1.00
--------------------------------------
03/19/00 2.75:1.00
--------------------------------------
06/11/00 2.75:1.00
--------------------------------------
09/03/00 2.75:1.00
--------------------------------------
12/31/00 2.75:1.00
--------------------------------------
03/25/01 3.00:1.00
--------------------------------------
06/17/01 3.00:1.00
--------------------------------------
09/09/01 3.00:1.00
--------------------------------------
--------------------------------------
12/30/01 3.00:1.00
--------------------------------------
03/24/02 3.00:1.00
--------------------------------------
06/16/02 3.00:1.00
--------------------------------------
B. MAXIMUM LEVERAGE RATIO. Borrower shall not permit the ratio (the
"(LEVERAGE RATIO") of (i) Consolidated Total Debt as of the dates set
--------------
forth below to (ii) Consolidated EBITDA for the four-fiscal quarter period
ending on such date to exceed the correlative ratio indicated:
======================================
FISCAL MINIMUM
QUARTER LEVERAGE
ENDING RATIO
--------------------------------------
--------------------------------------
09/07/97 4.00:1.00
--------------------------------------
12/28/97 4.00:1.00
--------------------------------------
03/22/98 4.00:1.00
--------------------------------------
06/14/98 4.00:1.00
--------------------------------------
09/06/98 4.00:1.00
--------------------------------------
12/27/98 4.00:1.00
--------------------------------------
03/21/99 3.75:1.00
--------------------------------------
06/13/99 3.75:1.00
--------------------------------------
09/05/99 3.75:1.00
--------------------------------------
12/26/99 3.75:1.00
--------------------------------------
03/19/00 3.75:1.00
--------------------------------------
06/11/00 3.75:1.00
--------------------------------------
09/03/00 3.75:1.00
--------------------------------------
12/31/00 3.75:1.00
--------------------------------------
03/25/01 3.50:1.00
--------------------------------------
06/17/01 3.50:1.00
--------------------------------------
09/09/01 3.50:1.00
--------------------------------------
12/30/01 3.50:1.00
--------------------------------------
03/24/02 3.50:1.00
--------------------------------------
06/16/02 3.50:1.00
======================================
2
C. MINIMUM FIXED CHARGE COVERAGE RATIO. Borrower shall not permit the ratio
(the ("FIXED CHARGE COVERAGE RATIO") of (i) Consolidated EBITDA to (ii)
---------------------------
Consolidated Fixed Charges for any four-fiscal quarter period ending on the
dates set forth below to be less than the correlative ratio indicated:
======================================
FISCAL MINIMUM
QUARTER FIXED CHARGE
ENDING COVERAGE
--------------------------------------
--------------------------------------
09/07/97 1.20:1.00
--------------------------------------
12/28/97 1.20:1.00
--------------------------------------
03/22/98 1.25:1.00
--------------------------------------
06/14/98 1.25:1.00
--------------------------------------
09/06/98 1.25:1.00
--------------------------------------
12/27/98 1.25:1.00
--------------------------------------
03/21/99 1.30:1.00
--------------------------------------
06/13/99 1.30:1.00
--------------------------------------
09/05/99 1.30:1.00
--------------------------------------
12/26/99 1.30:1.00
--------------------------------------
03/19/00 1.35:1.00
--------------------------------------
06/11/00 1.35:1.00
--------------------------------------
09/03/00 1.35:1.00
--------------------------------------
12/31/00 1.35:1.00
--------------------------------------
03/25/01 1.40:1.00
--------------------------------------
06/17/01 1.40:1.00
--------------------------------------
09/09/01 1.40:1.00
--------------------------------------
12/30/01 1.40:1.00
--------------------------------------
03/24/02 1.40:1.00
--------------------------------------
06/16/02 1.40:1.00
======================================
D. CAPITAL EXPENDITURES.
1. CONSOLIDATED CAPITAL EXPENDITURES. Except as set forth in
subparagraph 2 of this Paragraph D, Borrower shall not, and shall not
permit its Subsidiaries to,
3
make or incur Consolidated Capital Expenditures, in any fiscal year or
period indicated below, in an aggregate amount in excess of the
corresponding amount (the ("MAXIMUM CONSOLIDATED CAPITAL EXPENDITURES
-----------------------------------------
AMOUNT") set forth in the chart below opposite such fiscal year or
------
period; provided that with respect to the Maximum Consolidated Capital
--------
Expenditure Amount for any fiscal year or period, at Borrower=s option
such amount may be increased (a) by a portion (not to exceed 20%) of
the Maximum Consolidated Capital Expenditure amount for the
immediately preceding fiscal year which was not utilized during such
preceding fiscal year, and (b) by a portion (not to exceed 15%) of the
amount of Maximum Consolidated Capital Expenditure Amount for the
immediately succeeding year (which, to the extent of such increase
shall reduce the amount of the Maximum Consolidated Capital
Expenditure Amount for such succeeding year), provided that in no
--------
event shall the aggregate amount of the increases to the Maximum
Consolidated Capital Expenditure Amount pursuant to the foregoing
clauses (a) and (b) in any fiscal year or period exceed $10,000,000;
provided further that the Maximum Consolidated Capital Expenditure
-------- -------
Amount for each fiscal year set forth below shall be increased by the
amount of Consolidated Excess Cash flow for the immediately preceding
fiscal year not required to be used to prepay Loans pursuant to
subsection 2.4B(iii)(f) of the Existing Credit Facility Loan
Agreement.
==============================================
MAXIMUM CONSOLIDATED
FISCAL CAPITAL EXPENDITURES
YEAR/PERIOD AMOUNT
----------------------------------------------
5/21/97 to end
of 1997 fiscal year $40,000,000
----------------------------------------------
1998 $35,000,000
----------------------------------------------
1999 $35,000,000
----------------------------------------------
2000 $35,000,000
----------------------------------------------
2001 $35,000,000
----------------------------------------------
2002 $35,000,000
----------------------------------------------
; provided that each of the Maximum Consolidated Capital Expenditure Amounts
--------
provided for above shall be increased by an aggregate amount equal to 15% of the
purchase price paid by Company in connection with any Permitted Acquisition;
provided further that such aggregate amount shall be allocated pro rata among
-------- -------
the remaining periods set forth above after the consummation of the Permitted
Acquisition.
2. In addition to the foregoing, Borrower may make Consolidated Capital
Expenditures (i) in connection with Permitted Acquisitions, (ii) with the
proceeds
4
of Specified Asset Sales and (iii) committed to be made prior to May
21, 1997 but made after May 21, 1997, and such Consolidated Capital
Expenditures made pursuant to this Paragraph (D)(2) shall not be
included for the purposes of calculating the Maximum Consolidated
Capital Expenditures set forth in Paragraph (D)(1).
E. SALES AND LEASE-BACKS. Borrower shall not, and shall not permit any of its
---------------------
Subsidiaries to, directly or indirectly, become or remain liable as lessee
or as a guarantor or other surety with respect to any lease, whether an
Operating Lease or a Capital Lease, of any property (whether real, personal
or mixed), whether now owned or hereafter acquired, (i) which Borrower or
any of its Subsidiaries has sold or transferred or is to sell or transfer
to any other Person (other than Borrower or any of its Subsidiaries) or
(ii) which Borrower or any of its Subsidiaries intends to use for
substantially the same purpose as any other property which has been or is
to be sold or transferred by Borrower or any of its Subsidiaries to any
Person (other than Borrower or any of its Subsidiaries) in connection with
such lease; provided that the foregoing shall not apply with respect to
--------
(i) any sale leaseback transaction consummated prior to May 21, 1997 and
(ii)any property acquired after May 21, 1997; provided that (y) the sale
--------
of such property constitutes a Specified Asset Sale and (z) the aggregate
sale price paid to Borrower with respect to all sales or transfers of such
property shall not exceed $15,000,000.
F. SALE OR DISCOUNT OF RECEIVABLES. Borrower shall not, and shall not permit
-------------------------------
any of its Subsidiaries to, directly or indirectly, sell with recourse, or
discount or otherwise sell for less than the face value thereof, any of its
notes or accounts receivable.
G. DISPOSAL OF SUBSIDIARY STOCK. Except for any sale of any Regulatory Shares
----------------------------
or 100% of the capital stock or other equity Securities of any of its
Subsidiaries in compliance with the provisions of subsection 7.7(iv) of the
Existing Credit Facility Loan Agreement, Borrower shall not:
(i) directly or indirectly sell, assign, pledge or otherwise encumber
or dispose of any shares of capital stock or other equity
Securities of any of its Subsidiaries, except to qualify
directors if required by applicable law; or
(ii) permit any of its Subsidiaries directly or indirectly to sell,
assign, pledge or otherwise encumber or dispose of any shares of
capital stock or other equity Securities of any of its
Subsidiaries (including such Subsidiary), except to Borrower,
another Subsidiary of Borrower, or to qualify directors if
required by applicable law.
H. AMENDMENTS OF DOCUMENTS RELATING TO SUBORDINATED INDEBTEDNESS. Borrower
-------------------------------------------------------------
shall not, and shall not permit any of its Subsidiaries to, amend or
otherwise change the terms of the Unsecured Subordinated Note Indenture or
the Unsecured Subordinated Notes, or make any payment consistent with an
amendment thereof or change thereto, if the effect of such amendment or
change is to increase the interest rate on the Unsecured Subordinated
Notes, change (to earlier dates) any dates upon which payments of principal
or interest are due thereon, change any event of default or condition to an
event of default
5
(other than to eliminate any such event of default), change the redemption,
prepayment or defeasance provisions thereof, change the subordination
provisions thereof (or of any guaranty thereof), or if the effect of such
amendment or change, together with all other amendments or changes made, is
to increase materially the obligations of the obligor thereunder or to
confer any additional rights on the holders of the Unsecured Subordinated
Notes (or a trustee or other representative on their behalf) which would be
adverse to Borrower or Lenders (as defined in the Existing Credit Facility
Loan Agreement). Borrower shall not designate any Indebtedness as
ADesignated Senior Indebtedness@ under the terms of the Unsecured Note
Indenture without the prior written consent of Administrative Agent and
Requisite Lenders (as defined in the Existing Credit Facility Loan
Agreement).
6
APPENDIX OF DEFINED TERMS
APPEARING IN SCHEDULE 1
-----------------------
"ADMINISTRATIVE AGENT" means Canadian Imperial Bank of Commerce (acting
through its New York Agency) in its capacity as administrative agent for Lenders
and also means and includes any successor Administrative Agent appointed
pursuant to Subsection 9.5.A of the Existing Credit Facility Loan Agreement.
"ASSET SALE" means the sale by Borrower or any of its Subsidiaries to any
Person of (i) any of the stock of any of Borrower's Subsidiaries, (ii)
substantially all of the assets of any division or line of business of Borrower
or any of its Subsidiaries, or (iii) any other assets (whether tangible or
intangible) of Borrower or any of its Subsidiaries outside of the ordinary
course of business excluding tangible personal property that in the reasonable
judgment of Xxxxxxxx, has become uneconomic, obsolete or worn out and which is
disposed of in the ordinary course of business; and (iii) any other such assets
to the extent that the aggregate amount of sales of such assets during any
fiscal year is equal to or less than $1,000,000.
"CAPITAL LEASE", as applied to any Person, means any lease of any property
(whether real, personal or mixed) by that person as lessee that, in conformity
with GAAP, is accounted for as a capital lease on the balance sheet of that
Person.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the sum of (i)
the aggregate of all expenditures (whether paid in cash or other consideration
or accrued as a liability and including that portion of Capital Leases which is
capitalized on the consolidated balance sheet of Borrower and its Subsidiaries)
by Borrower and its Subsidiaries during that period that, in conformity with
GAAP, are included in "additions" to property, plant or equipment" or comparable
items reflected in the consolidated statement of cash flows of Borrower and its
Subsidiaries plus (ii) to the extent not covered by clause (i) of this
----
definition, the aggregate of all expenditures by Borrower and its Subsidiaries
during that period to acquire (by purchase or otherwise) (a) the business,
property or fixed assets of any Person, or (b) stock or other evidence of
beneficial ownership of any Person to the extent the purchase price of such
stock or other evidence of beneficial ownership of such Person is appropriately
allocated to property, plant, or equipment in accordance with GAAP; provided,
--------
however, Consolidated Capital Expenditures shall not include expenditures made
-------
from the proceeds of any insurance or condemnation payments (or payments made in
lieu of condemnation) received by Borrower and its Subsidiaries and used to
repair or replace the damaged property with respect to which such proceeds were
received.
"CONSOLIDATED CASH INTEREST EXPENSE" means, for any period, Consolidated
Interest Expense for such period excluding, however, any interest expense not
--------- -------
payable in cash (including amortization of discount and amortization of debt
issuance costs).
"CONSOLIDATED CURRENT ASSETS" means, as at any date of determination, the
total assets of Borrower and its Subsidiaries on a consolidated basis which may
properly be classified as current assets in conformity with GAAP excluding cash
and cash equivalents.
"CONSOLIDATED CURRENT LIABILITIES" means, as at any date of determination,
the total liabilities of Borrower and its Subsidiaries on a consolidated basis
which may properly be classified as current liabilities in conformity with GAAP
excluding, however, the current portion of long-term Indebtedness.
"CONSOLIDATED EBITDA" means, for any period, the sum of the amounts for
such period of (i) Consolidated Net Income, (ii) Consolidated Interest Expense,
(iii) provisions for taxes based on income, (iv) total depreciation expense, (v)
total amortization expense, (vi) other non-cash items reducing Consolidated Net
Income (excluding any such non-cash charge to the extent that it represents an
accrual of or reserve for cash expenditures in any future period) and (vii) to
the extent deducted in determining Consolidated Net Income fees, expenses and
similar transaction costs paid in connection with Permitted Acquisitions less
----
(viii) other non-cash items increasing Consolidated Net Income, all of the
foregoing as determined on a consolidated basis for Borrower and its
Subsidiaries in conformity with GAAP.
"CONSOLIDATED EXCESS CASH FLOW" means, for any period, an amount (if
positive) equal to (i) the sum, without duplication, of the amounts for such
period of (a) Consolidated EBITDA and (b) the Consolidated Working Capital
Adjustment minus (ii) the sum, without duplication, of the amounts for such
-----
period of (a) voluntary, mandatory and scheduled repayments of Consolidated
Total Debt (excluding repayments of revolving loans except to the extent the
revolving loan commitments are permanently reduced in connection with such
repayments and mandatory repayments of the loans made pursuant to subsection
2.4B.(iii) of the Existing Credit Facility Loan Agreement), (b) Consolidated
Capital Expenditures (net of any proceeds of any related financings with respect
to such expenditures or equity contributions applied to finance such
expenditures), (c) Consolidated Cash Interest Expense, (d) provisions for
current taxes based on income of Borrower and its Subsidiaries and payable in
cash with respect to such period, (e) to the extent not included in Consolidated
Capital Expenditures, payments made in connection with Permitted Acquisitions
(net of any proceeds of any related financing with respect to such expenditures
or equity contributions applied to finance such expenditures) and (f) to the
extent not otherwise deducted in calculating Consolidated Net Income or included
in Consolidated Capital Expenditures, payments made under Permitted Earnout
Agreements.
"CONSOLIDATED FIXED CHARGES" means, for any period, an amount equal to the
sum of the amounts for such period of (i) scheduled repayments of principal of
all Indebtedness (as reduced as a result of prepayments pursuant to subsection
2.4B of the Existing Credit Facility Loan Agreement in the case of Indebtedness
thereunder), (ii) Consolidated Cash Interest Expense, (iii) Capital Expenditures
for repair or maintenance of property, plant or equipment (net of related
financings) and (iv) the portion of taxes based on income actually paid in cash
(excluding taxes
2
on extraordinary gains) all as determined for Borrower and its Subsidiaries on a
consolidated basis in conformity with GAAP.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, (i) total interest
expense (including that portion attributable to Capital Leases in accordance
with GAAP) and capitalized interest including, without limitation, all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance and net costs under Interest Rate Agreements,
but excluding that portion attributable to (a) amortization expense associated
with the Transaction Costs, (b) the write-off of unamortized deferred financing
costs taken by Borrower in connection with the refinancings of Borrower and its
Subsidiaries on a consolidated basis with respect to all outstanding
Indebtedness of Borrower and its Subsidiaries, and (c) any amounts referred to
in subsection 2.3 of the Existing Credit Facility Loan Agreement payable to
Arranging Agent, Syndication Agent, Administrative Agent or Lenders (as such
terms are defined in the Existing Credit Facility Loan Agreement) on or before
May 21, 1997, minus (ii) total interest income of Borrower and its Subsidiaries
-----
on a consolidated basis.
"CONSOLIDATED MAINTENANCE CAPITAL EXPENDITURES" means, for any period, the
aggregate amount of all Consolidated Capital Expenditures actually paid by
Borrower and its Subsidiaries during that period for repair or maintenance of
property, plant or equipment.
"CONSOLIDATED NET INCOME" means, for any period, the net income (or loss)
of Borrower and its Subsidiaries on a consolidated basis for such period taken
as a single accounting period determined in conformity with GAAP; provided that
--------
there shall be excluded (i) the income (or loss) of any Person (other than a
Subsidiary of Borrower) in which any other Person (other than Borrower or any of
its Subsidiaries) has an equity or similar interest, except to the extent of the
amount of dividends or other distributions actually paid to Borrower or any of
its Subsidiaries by such Person during such period, (ii) the income (or loss) of
any Person accrued prior to the date it becomes a Subsidiary of Borrower or is
merged into or consolidated with Borrower or any of its Subsidiaries or that
Person's assets are acquired by Borrower or any of its Subsidiaries, (iii) the
income of any Subsidiary of Borrower to the extent that the declaration or
payment of dividends or similar distributions by that Subsidiary of that income
is not at the time permitted by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary (other than such restriction contained
in documents governing Indebtedness of such Subsidiary permitted under the
Existing Credit Facility Loan Agreement), (iv) any after-tax gains or losses
attributable to Asset Sales or returned surplus assets of any Plan, and (v) (to
the extent not included in clauses (i) through (iv) above) any net extraordinary
gains or net non-cash extraordinary losses.
"CONSOLIDATED TOTAL DEBT" means, as at any date of determination, the
aggregate stated balance sheet amount of all Indebtedness of Borrower and its
Subsidiaries, less an amount equal to the cash balances of Borrower and its
----
Subsidiaries (net of any overdraft balances), determined on a consolidated basis
in accordance with GAAP.
3
"CONSOLIDATED WORKING CAPITAL" means, as at any date of determination, the
amount (which may be a negative number) obtained by subtracting Consolidated
Current Liabilities from Consolidated Current Assets.
"CONSOLIDATED WORKING CAPITAL ADJUSTMENT" means, for any fiscal year, the
amount (which may be a negative number) obtained by subtracting (i) Consolidated
Working Capital as of the end of such fiscal year from (ii) Consolidated Working
Capital as of the beginning of such fiscal year.
"FAR WEST DIVISION" means the cooking and restaurant kitchen equipment
manufacturing division of Borrower.
"INTEREST RATE AGREEMENT" means any interest rate swap agreement, interest
rate cap agreement, interest rate collar agreement or other similar agreement or
arrangement designed to protect Borrower or any of its Subsidiaries against
fluctuations in interest rates.
"OPERATING LEASE" means, as applied to any Person, any lease (including
without limitation, leases that may be terminated by the lessee at any time) of
any property (whether real, personal or mixed) that is not a Capital Lease other
than any such lease under which that Person is the lessor.
"PERMITTED ACQUISITIONS" means the acquisition (whether by means of equity
or asset purchase acquisition) by Borrower or its Subsidiaries, of a business or
a series of related businesses; provided that (i) the businesses acquired are
--------
suitable for franchising; (ii) with respect to any such acquisition financed
with the proceeds of Acquisition Loans (as defined in the Existing Credit
Facility Loan Agreement) after giving effect to such acquisition, Borrower and
its Subsidiaries shall be in compliance, on a Pro Forma Basis, with the
financial covenants as required under subsection 7.6E of the Existing Credit
Facility Loan Agreement; and (iii) concurrently with such acquisition the
Administrative Agent, on behalf of Lenders, shall be granted a first priority
security interest in the businesses and assets acquired (to the extent available
under applicable law).
"PERMITTED EARNOUT AGREEMENTS" shall mean (x) the agreements set forth
in Schedule 1.1D of the Existing Credit Facility Loan Agreement and (y) any
-------------
other agreement by Borrower or one of its Subsidiaries to pay the seller or
sellers of any Person or assets acquired in accordance with the provisions of
subsection 7.7(vi) of the Existing Credit Facility Loan Agreement at any time
following the consummation of such acquisition by reference to the financial
performance of the assets acquired; provided that the aggregate amount of all
--------
such payments which may be owed under such agreements contemplated by this
clause (y) at any time shall not exceed $10,000,000.
"REGULATORY SHARES" means, with respect to any Person, shares of such
Person required to be issued as qualifying shares to directors or persons
similarly situated or shares issued to
4
Persons other than Borrower or a Wholly Owned Subsidiary of Borrower in response
to regulatory requirements of foreign jurisdictions pursuant to a resolution of
the Board of Directors of such Person, so long as such shares do not exceed one
percent of the total outstanding shares of equity such Person and any owners of
such shares irrevocably covenant with Borrower to remit to Borrower or waive any
dividends or distributions paid or payable in respect of such shares.
"SECURITIES" means any stock, shares, partnership interests, voting trust
certificates, certificates of interest or participation in any profit-sharing
agreement or arrangement, options, warrants, bonds, debentures, notes, or other
evidences of indebtedness, secured or unsecured, convertible, subordinated or
otherwise, or in general any instruments commonly known as "securities"" or any
certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing.
"SPECIFIED ASSET SALES" means Asset Sales with respect to (i) sale-
leaseback transactions completed within one year following the acquisition of
the subject asset; (ii) sales, leases or transfers of restaurant properties to
franchisees pursuant to Borrower's "turnkey"" development programs, (iii) sales,
leases or transfers of franchises and related assets and properties repossessed
or reacquired by Borrower from franchisees and subsequently resold to new
franchisees all in the ordinary course of business, (iv) sales or dispositions
of restaurant-related properties and assets that are no longer in operation and
are surplus to Xxxxxxxx's needs in the ordinary course of business in an amount
not in excess of $5,000,000 in any twelve month period, (v) exchanges of
properties or assets for other properties or assets (other than cash or cash
equivalents) that (1) are useful in the business of Borrower and its
Subsidiaries as then being conducted and (2) have a fair market value at least
equal to the fair market value of the assets or properties being exchanged (as
evidenced by a resolution of the directors of Borrower in the case of
transactions having a fair market value in excess of $1,000,000) in the ordinary
course of business, (vi) the Far West Division and (vii) sales of restaurant
related properties in connection with a market relocation program.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, association, joint venture or other business entity of which more
than 50% of the total voting power of shares of stock or other ownership
interests entitled (without regard to the occurrence of any contingency) to vote
in the election of the Person or Persons (whether directors, managers, trustees
or other Persons performing similar functions) having the power to direct or
cause the direction of the management and policies thereof is at the time owned
or controlled, directly or indirectly, by that Person or one or more of the
other Subsidiaries of that Person or a combination thereof.
"TRANSACTION COSTS" means the call premiums, fees, costs and expenses
payable by Borrower pursuant to the Existing Credit Facility Loan Agreement and
other fees, costs and expenses payable by Borrower in connection with (i) the
Refinancings (as defined in the Existing
5
Credit Facility Loan Agreement), (ii) the issuance of the Unsecured Subordinated
Notes and (iii) the execution and delivery of the Existing Credit Facility Loan
Agreement and related documents.
"UNSECURED SUBORDINATED NOTE INDENTURE" means the indenture pursuant to
which the Unsecured Subordinated Notes were issued as of May 21, 1997, as such
indenture may be amended from time to time to the extent permitted under
Subsection 7.15 of the Existing Credit Facility Loan Agreement.
"UNSECURED SUBORDINATED NOTES" means the $175,000,000 aggregate principal
amount of Borrower's 10-1/4% senior subordinated notes due 2007 issued pursuant
to the Unsecured Subordinated Note Indenture.
"WHOLLY OWNED SUBSIDIARY" means, with respect to any Person, a Subsidiary
of such Person all of the outstanding capital stock or other ownership interests
of which (other than Regulatory Shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person or by such
Person and one or more Wholly Owned Subsidiaries of such Person.
6
SCHEDULE 2
----------
INSURANCE REQUIREMENTS
(a) Borrower, at its sole cost and expense, will keep the Properties
insured during the entire term of this Agreement for the mutual benefit of
Borrower and Lender against loss or damage by fire and against loss or damage
by other risks and hazards covered by a standard extended coverage insurance
policy including, but not limited to, riot and civil commotion, vandalism,
malicious mischief, burglary and theft. Such insurance shall be in an amount
(i) equal to one hundred percent (100%) of the then replacement cost of the
Stores and the furniture, fixtures, equipment and other personal property
contained therein (the "Equipment"), without deduction for physical depreciation
---------
and (ii) such that the insurer would not deem Borrower a co-insurer under said
policies. The policies of insurance carried in accordance with this paragraph
shall be paid annually in advance and shall contain the "Replacement Cost
Endorsement" with a waiver of depreciation.
(b) Borrower, at its sole cost and expense, for the mutual benefit of
Borrower and Lender, shall also obtain and maintain during the entire term of
this Agreement the following policies of insurance:
(i) Flood insurance on a per-Store basis if any part of the
Properties is located in an area identified by the Federal Emergency
Management Agency as an area having special flood hazards and in which
flood insurance has been made available under the National Flood Insurance
Act of 1968 (and any successor act thereto) in an amount at least equal to
the outstanding principal amount of the Loans advanced under this Agreement
with respect to such Property or the maximum limit of coverage available
with respect to the Stores and Equipment under said Act, whichever is less.
(ii) Comprehensive public liability insurance, including broad form
property damage, blanket contractual and personal injuries (including death
resulting there from) coverages in an amount not less than $1,000,000 per
occurrence and $10,000,000 in the aggregate on a per-Store basis.
(iii) During the course of any construction, renovation or equipping
of the Stores, builder's completed value risk insurance against "all risks
of physical loss", including collapse and transit coverage, with
deductibles reasonably satisfactory to Lender, in non-reporting form,
covering the total value of work performed and equipment, supplies and
materials furnished. Such policy of insurance shall contain the "permission
to occupy upon completion of work or occupancy" endorsement and a waiver of
co-insurance or an agreed amount endorsement.
(iv) Such other insurance as may from time to time be required under
the laws of the various states in which the Properties are located.
1
(c) All policies of insurance (the "Policies") required pursuant to this
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Schedule shall be issued by an insurer having an A.M. Best rating of A:V or
better and satisfactory to Lender, (ii) shall contain the standard New York
mortgagee non-contribution clause naming Lender as the person to which all
payments made by such insurance company shall be paid, (iii) shall be maintained
throughout the term of this Agreement without cost to Lender, (iv) original
certificates, or copies thereof, certified to be true and correct, shall be
delivered to Lender, (v) shall contain such provisions as Lender deems
reasonably necessary or desirable to protect its interest including, without
limitation, endorsements providing that neither Borrower, Lender nor any other
party shall be a co-insurer under said Policies and that Lender shall receive at
least thirty (30) days prior written notice of any modification or cancellation,
and (vi) shall be satisfactory in form and substance to Lender and shall be
approved by Lender as to amounts, form, risk coverage, deductibles, loss payees
and insureds. All such premiums for such Policies (the "Insurance Premiums")
-----------------
shall be paid by Borrower making payment when due directly to the carrier. Not
later than thirty (30) days prior to the expiration date of each of the
Policies, Borrower will deliver to Lender satisfactory evidence of the renewal
of each Policy.
2
SCHEDULE 3
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LITIGATION
NONE.
SCHEDULE 4
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ACQUISITIONS AND DISPOSITIONS
SINCE 12/19/96
1. Sale of 100 Church's(R) restaurants in eight markets: Indianapolis
(12), Chicago (29), St. Louis (21), Richmond (4), Detroit (19), Dayton
(5), Columbus (3), Cleveland (7) to Atlanta Franchise Development
Corporation.
2. Sale of 47 Church's(R) restaurants in California to Best Hospitality
Corporation.
3. Acquisition of Chesapeake Bagel Bakery, the third largest bagel
restaurant system.
