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Exhibit (b)
LOAN AGREEMENT
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THIS LOAN AGREEMENT (this "Agreement") is made and entered
into as of this 9th day of July, 1997 by and between (i) XXXXXX'X RESTAURANTS,
INC., an Ohio corporation (the "Borrower"), and (ii) STAR BANK, NATIONAL
ASSOCIATION, a national banking association (the "Bank").
1. REPRESENTATIONS AND WARRANTIES. To induce the Bank to enter
into this Agreement and to agree to make the Loan described in SECTION 4 hereof,
the Borrower makes the following representations and warranties:
(a) EXISTENCE. The Borrower is duly organized, validly
existing and in good standing as a corporation under the laws of the State of
Ohio, and each Subsidiary (as hereinafter defined) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization. The Borrower and each Subsidiary is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction in which
the failure to be so qualified by the Borrower or the Subsidiary would have a
material adverse effect on its business, prospects or financial condition.
"Subsidiary" for purposes hereof means any corporation or other entity the
majority of the voting stock of which is owned, directly or indirectly,
beneficially or of record, by the Borrower or any Subsidiary, or which is
otherwise controlled, directly or indirectly, by the Borrower or any Subsidiary.
(b) AUTHORITY. The Borrower and each Subsidiary has full power
and authority to own its properties and to conduct its business as such business
is now being conducted, and the Borrower has full power and authority to
execute, deliver and perform under this Agreement, the Note (as hereinafter
defined), the Mortgages (as hereinafter defined), the Security Agreements (as
hereinafter defined), the Financing Statements (as hereinafter defined), the
Life Insurance Assignments (as hereinafter defined) and all other documents and
instruments executed in connection with or otherwise relating to this Agreement
or the Loan (collectively, the "Loan Documents").
(c) BORROWING AUTHORIZATION. The execution, delivery and
performance by the Borrower of this Agreement and the other Loan Documents: (i)
have been duly authorized by all requisite corporate action; (ii) do not and
will not violate (A) any provision of any law, statute, rule or regulation, (B)
any order, judgment or decree of any court, arbitrator or other agency of
government, (C) the Articles of Incorporation or Code of Regulations or other
organizational or governing documents of the Borrower, or (D) any provision of
any agreement (including, without limitation, any agreement with stockholders)
to which the Borrower or any Subsidiary is a party or subject, or by which it or
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its properties or assets are bound; (iii) do not and will not result in the
creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the properties or assets of the Borrower or any
Subsidiary, except in favor of the Bank as provided herein; and (iv) do not and
will not require any consent, approval or other action by or any notice to or
filing with any court or administrative or governmental body. This Agreement and
the other Loan Documents have been duly executed and delivered on behalf of the
Borrower and constitute the legal, valid and binding obligations of the
Borrower, enforceable against the Borrower in accordance with their respective
terms.
(d) FINANCIAL INFORMATION AND REPORTS. EXHIBIT A to this
Agreement is a complete list of the financial statements and projected financial
statements furnished by the Borrower to the Bank in connection with the
borrowings to be made hereunder. Each such historical financial statement fairly
presents in accordance with generally accepted accounting principles the
financial condition of the Borrower and its Subsidiaries and the results of
their operations as of the date (or with respect to the period) noted in such
financial statements. Other than any liability incident to any actions described
in EXHIBIT B to this Agreement, neither the Borrower nor any Subsidiary has any
material contingent liabilities required to be disclosed under generally
accepted accounting principles which are not provided for or disclosed in such
financial statements. Each such statement (including any related schedule and/or
notes) is true, correct and complete in all material respects (subject, as to
interim statements, to changes resulting from audits and year-end adjustments)
and has been prepared in accordance with generally accepted accounting
principles consistently followed throughout the periods involved. No such
statement omits to state a material fact necessary to make such statement not
misleading in light of the circumstances under which it was made. Other than the
impairment loss previously disclosed to the Bank resulting from the closing of
fifteen (15) restaurant locations, at this time in the amount of approximately
Four Million Six Hundred Thousand Dollars ($4,600,000), there has been no
material adverse change in the business, operations or condition (financial or
otherwise) of the Borrower or any Subsidiary since the date of the most recent
of such financial statements.
(e) INDEBTEDNESS. Neither the Borrower nor any Subsidiary has
any Indebtedness (as hereinafter defined) other than Permitted Indebtedness (as
hereinafter defined), or has guaranteed the obligations of any other person
(except by endorsement of negotiable instruments payable on sight for deposit or
collection or similar banking transactions in the usual course of business), and
to the best of the Borrower's knowledge after diligent investigation, there
exists no default under the provisions of any instrument evidencing any
Indebtedness of the Borrower or any Subsidiary or of any agreement relating
thereto. "Indebtedness" as
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used herein means all indebtedness for borrowed money which in accordance with
generally accepted accounting principles would be considered as a liability, all
rental obligations under leases required to be capitalized under generally
accepted accounting principles, all guarantees and other contingent obligations
in respect of, or obligations to purchase or otherwise acquire, Indebtedness of
others, and Indebtedness of others secured by any lien on property owned by the
Borrower or any Subsidiary, whether or not the Borrower or such Subsidiary has
assumed such Indebtedness.
(f) ACTIONS. There is no action, suit, investigation or
proceeding pending or, to the knowledge of the Borrower, threatened against or
affecting the Borrower or any Subsidiary before any court, arbitrator or
administrative or governmental agency except for those described in EXHIBIT B to
this Agreement, none of which might result in any material adverse change in the
business, operations or condition (financial or otherwise) of the Borrower or
any Subsidiary, nor, to the best of the Borrower's knowledge after diligent
investigation, is there any basis for any such action which might result in such
a material adverse change.
(g) TITLE TO PROPERTY. The Borrower and each Subsidiary has
good and marketable title to its real properties (other than properties which it
leases as lessee) and good title to all of its other properties and assets,
including the properties and assets reflected in the most recent balance sheet
described in EXHIBIT A hereto (other than properties and assets disposed of in
the ordinary course of business since the date thereof), free and clear of all
liens, mortgages, pledges, security interests, encumbrances or charges of any
kind, including any agreement to give any of the foregoing, any conditional sale
or other title retention agreement or any lease in the nature thereof (each, a
"Lien"), other than the following (each, a "Permitted Lien"): (i) Liens
described on EXHIBIT C hereto, (ii) leases required under generally accepted
accounting principles to be capitalized on the Borrower's or such Subsidiary's
books ("Capitalized Leases") which are permitted under SECTION 2(M) BELOW, and
(iii) Liens in favor of the Bank as provided herein. The Borrower and each
Subsidiary is in undisturbed possession under all leases necessary in any
material respect for the operation of its business, and no such leases contain
any unusual or burdensome provisions which might materially affect or impair the
Borrower's or the Subsidiary's operations thereunder. All such leases are valid
and in full force and effect.
(h) EMPLOYEE BENEFIT PLANS. To the best of the Borrower's
knowledge after diligent investigation, no "reportable event" or "prohibited
transaction," as defined by the Employee Retirement Income Security Act of 1974
("ERISA") has occurred or is continuing, as to any plan of the Borrower or any
of its affiliates which poses a threat of taxes or penalties against or
termination
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of such plans (or trusts related thereto). Neither the Borrower nor any of its
affiliates has violated in any material respect the requirements of any
"qualified pension benefit plan," as defined by ERISA and the Internal Revenue
Code of 1986, or done anything to create any material liability under the
Multi-Employee Pension Plan Amendment Act. Neither the Borrower nor any of its
affiliates has incurred any material liability to the Pension Benefit Guarantee
Corporation (the "PBGC") in connection with such plans, including, but not
limited to, any "funding deficiency" (as defined by ERISA).
(i) PURPOSE OF LOAN. Proceeds of the Loan shall be used only
for the purpose of purchasing, prior to September 1, 1997, shares of the
Borrower's common stock pursuant to an issuer tender offer for an aggregate
purchase price not to exceed Eighteen Million Dollars ($18,000,000) (the "Stock
Purchase"). The Loan is not and shall not be secured, directly or indirectly, by
any stock for the purpose of purchasing or carrying any margin stock or for any
purpose which would violate either Regulation U, 12 C.F.R. Part 221, or
Regulation X, 12 C.F.R. Part 224, promulgated by the Board of Governors of the
Federal Reserve System.
(j) COMPLIANCE. The Borrower and each Subsidiary is in
compliance in all material respects with all laws, statutes, ordinances, rules,
regulations and orders of any governmental entity (including, but not by way of
limitation, any such laws, statutes, ordinances, rules, regulations and orders
related to ecology, human health and the environment) applicable to it.
(k) ADVERSE CONTRACTS AND CONDITIONS. Neither the Borrower nor
any Subsidiary is a party to any contract or agreement, or subject to any
charge, restriction, judgment, decree or order, materially and adversely
affecting its business, property, assets, operations or condition, financial or
otherwise, nor a party to any labor dispute. There are no restrictions
applicable to any Subsidiary which might limit its ability to pay dividends or
make loans to the Borrower.
(l) TAXES. The Borrower and each Subsidiary has filed all
federal, state and local tax returns and other reports which it is required by
law to file, has paid all taxes, assessments and other similar charges that are
due and payable, other than taxes, if any, being contested by the Borrower or a
Subsidiary in good faith and as to which adequate reserves have been established
in accordance with generally accepted accounting principles, and has withheld
all employee and similar taxes which it is required by law to withhold. Federal
income tax returns of the Borrower and each Subsidiary have been examined by the
taxing authorities or closed by applicable statutes and satisfied for all fiscal
years prior to and including the fiscal year ended May 30, 1993.
2. BORROWER'S COVENANTS. The Borrower agrees that,
from the date of this Agreement and until the Loan is paid in full
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and all obligations under this Agreement are fully performed, and the commitment
of the Bank to make the Loan hereunder has terminated:
(a) FINANCIAL COVENANTS. The Borrower shall comply with each
of the financial covenants set forth in EXHIBIT D to this Agreement
(collectively, the "Financial Covenants").
(b) FINANCIAL STATEMENTS; PERIODIC REPORTS. The Borrower shall
furnish to the Bank: (i) as soon as practicable and in any event within ninety
(90) days after the last day of each fiscal year of the Borrower, a copy of the
annual audit report of the Borrower, prepared in accordance with generally
accepted accounting principles applied on a basis consistent with that of the
preceding fiscal year, and consisting of a consolidated balance sheet as at the
end of such fiscal year and consolidated statements of earnings, stockholders'
equity and cash flows of the Borrower and its Subsidiaries for such fiscal year,
setting forth in each case in comparative consolidated form corresponding
consolidated figures from the preceding annual audit, certified by a
nationally-recognized firm of independent certified public accountants, whose
certificate shall be in scope and substance reasonably satisfactory to the Bank
and shall include, without limitation, a certification that in auditing the
Borrower, such accountant has obtained no knowledge of an Event of Default
hereunder, or if any Event of Default exists, specifying the nature and period
of existence thereof, and accompanied by such accountant's management letter
with respect thereto; (ii) as soon as practicable and in any event within
forty-five (45) days after the last day of each of the Borrower's first three
fiscal quarters and by August 10 after the end of each of the Borrower's fourth
fiscal quarters, a copy of the Borrower's unaudited financial statements,
prepared in accordance with generally accepted accounting principles applied on
a basis consistent with that of the preceding fiscal quarter, and consisting of
a consolidated balance sheet as at the end of such fiscal quarter and
consolidated statements of earnings, stockholders' equity and cash flows of the
Borrower and its Subsidiaries for the period from the beginning of the
then-current fiscal year through the end of such fiscal quarter, setting forth
in each case in comparative form figures for the corresponding period in the
preceding fiscal year, and certified by an authorized financial officer of the
Borrower, subject to changes resulting from year-end adjustments; (iii) promptly
upon transmission thereof, copies of all such financial statements, proxy
statements, notices and reports as the Borrower shall send to its stockholders
and copies of all registration statements (without exhibits) and all regulatory
and periodic reports which the Borrower files with the Securities and Exchange
Commission (the "SEC") or any governmental body or agency succeeding to the
functions of the SEC; and (iv) with reasonable promptness, such other financial
data in such form as the Bank may
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reasonably request, provided that the Bank shall keep such data confidential to
the extent required by applicable securities laws.
Together with each delivery of financial statements required
under clauses (i) and (ii) above, the Borrower shall deliver a certificate of
its Chief Financial Officer (A) setting forth the aggregate amount of rental
payments made during such fiscal period by the Borrower or any Subsidiary which
were of the kinds subject to restriction under SECTION 2(M) below, (B) setting
forth the aggregate amount of interest accrued during such fiscal period on
Indebtedness of the Borrower or any Subsidiary and (C) stating that, to the best
of such Chief Financial Officer's knowledge after diligent investigation, no
Event of Default hereunder then exists, or if such an Event of Default hereunder
does then exist, specifying the nature thereof, the period of existence thereof,
and the action the Borrower proposes to take with respect thereto. The Borrower
further agrees that promptly upon the President or Chief Financial Officer of
the Borrower obtaining knowledge of an event that constitutes an Event of
Default hereunder, the Borrower shall deliver to the Bank a certificate
specifying the nature thereof, the period of existence thereof, and the action
the Borrower proposes to take with respect thereto. The Bank is authorized to
deliver a copy of any financial statement or other communication or document
delivered to it pursuant to this SECTION 2(B) to any regulatory body having
jurisdiction over it if such delivery is required by such regulatory body. The
Borrower and each Subsidiary shall permit the Bank and its agents and
representatives, at the expense of the Bank, to inspect its real and personal
property and to verify accounts and inspect and make copies of or extracts from
its books, records and files, and to discuss its affairs, finances and accounts
with its principal officers, all at such reasonable times and as often as the
Bank may reasonably request.
(c) INSURANCE. The Borrower shall, and shall cause each
Subsidiary to, maintain with responsible carriers All Risk coverage for the full
replacement value of all of its real and personal property, except that the
Borrower and each Subsidiary may self-insure risks to its real and personal
property in an amount not to exceed Five Hundred Thousand Dollars ($500,000),
and maintain with responsible carriers general public liability insurance
coverage including Excess liability coverage in an amount not less than
Twenty-Five Million Dollars ($25,000,000), except that the Borrower and each
Subsidiary may self-insure general public liability risks in an amount not to
exceed Five Hundred Thousand Dollars ($500,000) per occurrence during the term
of this Agreement. The Borrower shall deliver to the Bank, together with
delivery of the financial statements required under SECTION 2(B)(I) above, a
certificate specifying the details of all such insurance in effect. The Borrower
shall pay all premiums on the Life Insurance Policies (as hereinafter defined)
on or before the date due and otherwise maintain the Life Insurance Policies in
full
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force and effect, and except for any existing loans as shown on EXHIBIT E
hereto, the Borrower shall not obtain any loans against the Life Insurance
Policies. The Borrower shall promptly notify the Bank as soon as the Borrower is
no longer prohibited by regulatory authorities from assigning to the Bank
policies 0574-5222 and 5743-891 now issued by Confederation Life Insurance
Company, and shall thereupon execute and deliver (or cause to be executed and
delivered) to the Bank Life Insurance Assignments (as hereinafter defined) with
respect thereto. Upon the death of any insured under the Life Insurance
Policies, whether or not an Event of Default hereunder then exists, the Bank
shall have the right to require application of the portion of the insurance
proceeds payable under such Life Insurance Policy which represents the cash
surrender value thereof to the repayment of the Loan.
(d) TAXES. The Borrower shall, and shall cause each Subsidiary
to, file all federal, state and local tax returns and other reports it is
required by law to file, and shall pay when due all taxes, assessments and other
liabilities, except that the Borrower and any Subsidiary shall not be obligated
to pay any taxes or assessments which it is contesting in good faith, provided
that adequate reserves therefor are established in accordance with generally
accepted accounting principles, that such contests will not materially adversely
affect the Borrower's or any Subsidiary's operations or financial condition, and
that such taxes and assessments are promptly paid when the dispute is finally
determined.
(e) EXISTENCE AND STATUS. The Borrower shall, and shall cause
each Subsidiary to, maintain its existence in good standing under the laws of
each jurisdiction described in SECTION 1(A) of this Agreement, provided that the
Borrower or any Subsidiary may change its jurisdiction of incorporation if it
shall remain in good standing under the laws thereof.
(f) MAINTENANCE OF PROPERTY. The Borrower shall, and shall
cause each Subsidiary to, maintain to the extent consistent with good business
practices all of its real and personal property in good condition and repair,
not commit or permit any waste thereof, and not, except in the ordinary course
of business, remove or permit the removal of any improvement, accession or
fixture therefrom that may in any way materially impair the value of said
property.
(g) COMPLIANCE WITH LAW. The Borrower shall, and shall cause
each Subsidiary to, comply at all times with all laws, statutes, ordinances,
rules, regulations and orders of any governmental entity (including, but not by
way of limitation, such laws, statutes, ordinances, rules, regulations and
orders relating to ecology, human health and the environment) having
jurisdiction over it or any part of its assets, where such failure to comply
would have a material adverse effect on the Borrower's or any
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Subsidiary's operations or financial condition or the ability of the Borrower to
perform its obligations hereunder. The Borrower and each Subsidiary shall obtain
and maintain all permits, licenses, approvals and other similar documents
required by any such laws, statutes, ordinances, rules, regulations or orders.
(h) NOTICE. The Borrower shall notify the Bank in writing,
promptly upon the Borrower's learning thereof, of: (i) any litigation, suit or
administrative proceeding which may materially affect the operations, financial
condition or business of the Borrower or any Subsidiary, whether or not the
claim is considered by the Borrower to be covered by insurance, unless the
applicable insurer has agreed to defend any such claim and cover the liability
therefor; (ii) the occurrence of any material event described in Section 4043 of
ERISA or any anticipated termination, partial termination or merger of a "Plan"
(as defined in ERISA) or a transfer of the assets of a Plan; (iii) any labor
dispute to which the Borrower or any Subsidiary may become a party; (iv) any
default by the Borrower or any Subsidiary under any note, indenture, loan
agreement, mortgage, lease or other similar agreement to which the Borrower or
any Subsidiary is a party or by which the Borrower or any Subsidiary or its
assets are bound; and (v) any default by any obligor under any material note or
other evidence of debt payable to the Borrower or any Subsidiary.
(i) LIENS. The Borrower shall not, and shall not permit any
Subsidiary to, create, assume or permit to exist any Lien with respect to any of
its assets, whether now owned or hereafter acquired, except Permitted Liens.
(j) INDEBTEDNESS. The Borrower shall not, and shall not permit
any Subsidiary to, create, incur, assume or permit to exist any Indebtedness,
except the following (each, "Permitted Indebtedness"): (i) Indebtedness incurred
under this Agreement and other Indebtedness to the Bank; (ii) outstanding
Indebtedness reflected in the historical financial statements listed in EXHIBIT
A attached hereto (but not any refinancing or refunding of such Indebtedness);
(iii) Indebtedness described in EXHIBIT E attached hereto; and (iv) Indebtedness
incurred in connection with Capitalized Leases permitted under SECTION 2(M)
below.
(k) LOANS; INVESTMENTS. The Borrower shall not, and shall not
permit any Subsidiary to, make or permit to remain outstanding any loan or
advance to, or own or acquire any stock, obligations or securities of, or any
other interest in, or make any capital contribution to, any person or entity,
except that the Borrower or any Subsidiary may: (i) make or permit to remain
outstanding loans or advances to any Subsidiary or the Borrower; (ii) own or
acquire stock, obligations or securities of a Subsidiary or of a corporation
which immediately after such acquisition will be a Subsidiary; (iii) own or
acquire prime commercial paper and certificates of deposit in United States
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commercial banks having capital resources in excess of Fifty Million Dollars
($50,000,000), in each case due within one (1) year from the date of purchase
and payable in United States dollars, obligations of the United States
Government or any agency thereof, and obligations guaranteed by the United
States Government, and repurchase agreements with such banks for terms of less
than one (1) year in respect of the foregoing certificates and obligations; (iv)
make travel advances in the ordinary course of business to officers and
employees or other advances in the ordinary course of business to officers and
employees (excluding advances to employees for relocation purposes) not to
exceed One Hundred Twenty-Five Thousand Dollars ($125,000) in the aggregate at
any time outstanding for the Borrower and all Subsidiaries; (v) make advances to
employees for relocation purposes not to exceed One Hundred Fifty Thousand
Dollars ($150,000) in the aggregate at any time outstanding for the Borrower and
all Subsidiaries; (vi) own or acquire money-market preferred stock in an amount
not to exceed Seven Hundred Fifty Thousand Dollars ($750,000); and (vii) make or
permit to remain outstanding loans or advances to, or own or acquire stock,
obligations or securities of, any other person or entity, provided that the
aggregate principal amount of such loans and advances (excluding loans which are
fully secured by real estate consisting of former restaurant locations), plus
the aggregate amount of the investment (at original cost) in such stock,
obligations and securities, shall not exceed Five Hundred Thousand Dollars
($500,000) at any time outstanding for the Borrower and all Subsidiaries. In
addition, the Borrower shall be permitted to engage in the Stock Purchase.
(l) MERGER AND SALE OF ASSETS. Without the prior written
consent of the Bank, the Borrower shall not, and shall not permit any Subsidiary
to, merge or consolidate with any other corporation, or sell, lease or transfer
or otherwise dispose of any of its assets, including, without limitation, the
stock of any Subsidiary, or sell with recourse or discount or otherwise sell for
less than the face value thereof any of its notes or accounts receivable, except
that without the prior written consent of the Bank: (i) any Subsidiary may merge
or consolidate with the Borrower (provided that the Borrower shall be the
continuing or surviving corporation) or with any one or more other Subsidiaries;
(ii) any Subsidiary may sell, lease, transfer or otherwise dispose of any of its
assets to the Borrower or another Subsidiary; and (iii) the Borrower or any
Subsidiary may otherwise sell, lease, transfer or otherwise dispose of any
inventory in the ordinary course of business and any of its other assets having
a book value of less than Twenty Thousand Dollars ($20,000) provided that the
aggregate book value of all such assets so sold, leased, transferred or
otherwise disposed of by the Borrower and its Subsidiaries during any fiscal
year shall not exceed One Hundred Thousand Dollars ($100,000). The Bank may
condition any required consent to the sale, lease, transfer or other disposition
of assets of the Borrower and its Subsidiaries on the agreement of the Borrower
to
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apply, or cause the application of, all net after-tax proceeds therefrom to
prepayment of the principal balance of the Loan. The Borrower agrees to
diligently pursue the sale of all assets, including the real estate,
improvements, fixtures and equipment, associated with the restaurants located on
the properties described on EXHIBIT F attached hereto (collectively, the
"Designated Properties"), as well as the sale of the Borrower's interest as a
limited partner in the Cincinnati Reds, and to apply, or cause the application
of, all net after-tax proceeds thereof to prepayment of the principal balance of
the Loan, and the Bank agrees that it will not unreasonably withhold its consent
to any such sale.
(m) LEASE/RENTALS. The Borrower shall not, and shall not
permit any Subsidiary to, enter into, or permit to remain in effect, any
agreements to rent or lease (as lessee): (i) any real or personal property
(excluding data processing and office equipment, vehicles, commissary production
equipment and real property used for restaurant facilities) for initial terms
(including options to renew or extend any term, whether or not exercised)
exceeding three (3) years if after giving effect thereto the aggregate amount of
all payments in any fiscal year payable by the Borrower and its Subsidiaries to
lessors under all such leases would exceed Five Hundred Thousand Dollars
($500,000); or (ii) any real property for restaurant facilities if after giving
effect thereto (A) the aggregate amount of all payments, including those
payments which constitute Capitalized Lease obligations or long-term debt, in
any fiscal year payable by the Borrower and its Subsidiaries to lessors under
all such leases would exceed a sum equal to four percent (4%) of the aggregate
sales made by the Borrower and its Subsidiaries from restaurants during the
preceding fiscal year or (B) the aggregate amount of all payments, excluding
those payments which constitute Capitalized Lease obligations or long-term debt,
in any fiscal year payable by the Borrower and its Subsidiaries to lessors under
all such leases would exceed a sum equal to two percent (2%) of the aggregate
sales made by the Borrower and its Subsidiaries from restaurants during the
preceding fiscal year.
(n) RESTRICTIONS ON TRANSACTIONS WITH STOCKHOLDERS AND OTHER
AFFILIATES. Except as otherwise expressly permitted under this Agreement, the
Borrower shall not, and shall not permit any Subsidiary to, enter into or be a
party to any transaction reportable under Item 404(a) of Regulation S-K of the
SEC except in the ordinary course of business, pursuant to the reasonable
requirements of its business, and upon fair and reasonable terms which are fully
disclosed to the Bank and are no less favorable to the Borrower or such
Subsidiary than the Borrower or such Subsidiary could obtain in a comparable
arm's length transaction with an unrelated third party.
(o) BOOKS AND RECORDS. The Borrower shall, and shall cause
each Subsidiary to, keep and maintain complete books of
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accounts, records and files with respect to its business in accordance with
generally accepted accounting principles consistently applied in accordance with
past practices and shall accurately and completely record all transactions
therein.
(p) BUSINESS ACTIVITIES. The Borrower shall, and shall cause
each Subsidiary to, continue to engage in the types of business activities in
which it is currently engaged or other activities involving food service and
wholesaling food and related products, and shall not, and shall not permit any
Subsidiary to, be engaged in any business activities other than the types in
which it is currently engaged or other activities involving food service,
lodging and wholesaling food and related products.
(q) ENVIRONMENTAL MATTERS. The Borrower represents, warrants
and covenants with the Bank that: (i) neither the Borrower nor any of its
Subsidiaries nor, to the best of the Borrower's knowledge, after due
investigation, any other person or entity, has used or permitted any Hazardous
Substances (as hereinafter defined) to be placed, held, stored or disposed of on
any of the Designated Properties, in violation of any Environmental Laws (as
hereinafter defined); (ii) none of the Designated Properties now contains any
Hazardous Substance in violation of any Environmental Laws; (iii) there have
been no complaints, citations, claims, notices, information requests, orders
(including but not limited to clean-up orders) or directives on environmental
grounds made or delivered to, pending or served on, or anticipated by the
Borrower or any of its Subsidiaries, or of which the Borrower, after due
investigation, including consideration of the previous uses of the Designated
Properties and meeting the standard under 42 U.S.C. Section 9601(35)(B)(1986),
is aware or should be aware (A) issued by a governmental department or agency
having jurisdiction over any of the Designated Properties, or (B) issued or
claimed by any persons, agencies or organizations or affecting any of the
Designated Properties; and (iv) neither the Borrower nor any of its
Subsidiaries, so long as any of the Indebtedness under this Agreement remains
unpaid, shall allow any Hazardous Substances to be placed, held, stored or
disposed on any of the Designated Properties or incorporated into any
improvements on any of the Designated Properties in violation of any
Environmental Laws. The term "Hazardous Substance" shall mean any solid,
hazardous, toxic or dangerous waste, substance or material defined as such in or
for the purpose of the Comprehensive Environmental Response, Compensation and
Liability Act, any so-called "Superfund" or "Super-Lien" law, or any other
federal, state or local statute, law, ordinance, code, rule, regulation, order
or decree relating to, or imposing liability or standards of conduct concerning,
any Hazardous Substance (the "Environmental Laws", as now or at any time
hereafter in effect).
The Borrower agrees to indemnify and hold the Bank harmless
from and against any and all losses, liabilities, damages,
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injuries, costs, expenses and claims of any and every kind whatsoever, paid,
incurred or suffered by, or asserted against the Bank for, with respect to, or
as a direct or indirect result of, any of the following: (i) the presence on or
under or the escape, seepage, leakage, spillage, discharge, emission,
discharging or release from any of the Designated Properties of any Hazardous
Substance (including, without limitation, any losses, liabilities, damages,
injuries, costs, expenses or claims asserted or arising under any of the
Environmental Laws); or (ii) any liens against any of the Designated Properties
or any interest or estate in any of the Designated Properties, created,
permitted or imposed by the Environmental Laws, or any actual or asserted
liability of or obligations of the Borrower or any of its Subsidiaries under the
Environmental Laws.
The Borrower shall immediately notify the Bank should the
Borrower become aware of any Hazardous Substance on any of the Designated
Properties in violation of any Environmental Laws or any claim that any of the
Designated Properties may be contaminated by any Hazardous Substance in
violation of any Environmental Laws. The Borrower shall, at its own cost and
expense, be responsible for the cleanup of any Hazardous Substance caused, or
knowingly permitted, by the Borrower or any of its Subsidiaries to be on any of
the Designated Properties which is in violation of any Environmental Laws
including any removal, containment and remedial actions in accordance with all
applicable Environmental Laws. The Borrower's obligations hereunder shall not be
subject to any limitation of liability provided herein or in any of the other
Loan Documents and the Borrower acknowledges that its obligations hereunder are
not conditional and shall continue in effect so long as a valid claim may
lawfully be asserted against the Bank or for so long as this Agreement, any of
the other Loan Documents or any renewal, amendment, extension or modification
thereto remain in effect, whichever extends for a greater period of time.
(r) WAIVER. Any variance from the covenants of the Borrower
pursuant to this SECTION 2 shall be permitted only with the prior written
consent and/or waiver of the Bank. Any such variance by consent and/or waiver
shall relate solely to the variance addressed in such consent and/or waiver, and
shall not operate as the Bank's consent and/or waiver to any other variance of
the same covenant or other covenants, nor shall it preclude the exercise by the
Bank of any power or right under this Agreement, other than with respect to such
variance.
3. CLOSING CONDITIONS. The obligation of the Bank to make the
Loan is subject to the satisfaction of each of the following conditions
precedent:
(a) DEFAULT. Before and after giving effect to the Loan, no
Event of Default (as defined in SECTION 5 of this Agreement) or any event which,
with the passage of time or the
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13
giving of notice, might mature into an Event of Default, shall have occurred and
be continuing.
(b) WARRANTIES. Before and after giving effect to the Loan,
the representations and warranties in SECTION 1 hereof shall be true and correct
as though made on the date of the Loan.
(c) CERTIFICATION. The Borrower shall have delivered to the
Bank a certificate of the President or Chief Financial Officer of the Borrower
dated as of the date of disbursement of the Loan: (i) as to the matters set
forth in SECTIONS 3(A) AND 3(B) above; (ii) to the effect that the resolutions
described in SECTION 3(D) below have not been amended or rescinded and remain in
full force and effect; (iii) as to the incumbency of the individuals authorized
to sign this Agreement and the other Loan Documents (with specimen signatures
attached); and (iv) to the effect that the Articles of Incorporation and Code of
Regulations of the Borrower are in full force and effect in the form delivered
to the Bank.
(d) RESOLUTIONS. The Borrower shall have delivered to the Bank
copies of the resolutions of the Borrower's Board of Directors authorizing the
borrowing hereunder and the execution and delivery of this Agreement and the
other Loan Documents.
(e) ARTICLES AND REGULATIONS. The Borrower shall have
delivered to the Bank true and correct copies of its Articles of Incorporation
and Code of Regulations.
(f) NOTE. The Borrower shall have delivered the Note to the
Bank with all blanks appropriately completed and duly executed on behalf of the
Borrower.
(g) MORTGAGES. There shall have been delivered to the Bank a
mortgage covering each of the Designated Properties in substantially the form of
EXHIBIT G attached hereto, duly executed and with all blanks and exhibits
appropriately completed and in recordable form under the laws of the
jurisdiction in which such Designated Property is located (collectively, the
"Mortgages"), and the Bank shall have received title reports on each Designated
Property evidencing only such encumbrances and restrictions on title as are
acceptable to the Bank in its discretion (collectively, the "Title Reports")
and, at the option of the Bank, surveys of each Designated Property.
(h) SECURITY AGREEMENT. There shall have been delivered to the
Bank Security Agreements covering the fixtures and equipment located at each of
the Designated Properties, as well as the proceeds of sale of all assets
associated with the Designated Properties and of sale of the Borrower's interest
as a limited partner in the Cincinnati Reds, in substantially the form of
EXHIBIT H attached hereto, duly executed and with all blanks and
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14
exhibits appropriately completed (collectively, the "Security Agreements"),
together with UCC-1 financing statements covering such property, duly executed
and in appropriate form for filing in all jurisdictions in which a financing
statement is required to be filed in order to perfect the security interest in
such property (collectively, the "Financing Statements"), and the Bank shall
have received UCC Search Reports from all jurisdictions in which a financing
statement is required to be filed in order to perfect a security interest in
such property which evidence no security interests in such property which could
have priority over the security interest of the Bank (collectively, the "UCC
Search Reports").
(i) LIFE INSURANCE POLICY. There shall have been delivered to
the Bank Assignments of Life Insurance Policy as Collateral in substantially the
form of EXHIBIT I attached hereto covering the life insurance policies described
on EXHIBIT I-A attached hereto (the "Life Insurance Policies"), other than
policies 0574-5222 and 5743-891 issued by Confederation Life Insurance Company,
duly executed and with all blanks appropriately completed (collectively, the
"Life Insurance Assignments"), together with the originals of such life
insurance policies (the "Life Insurance Policies").
(j) OPINION. The Borrower shall have delivered to the Bank the
opinion of Cohen, Todd, Kite & Stanford, dated as of the date of disbursement of
the Loan, to the effect that: (i) the Borrower is duly organized, validly
existing and in good standing as a corporation under the laws of the State of
Ohio; (ii) the Borrower has full power and authority to execute and deliver this
Agreement and the other Loan Documents and to perform its obligations
thereunder; (iii) the execution and delivery by the Borrower of this Agreement
and the other Loan Documents, and the performance by the Borrower of its
obligations thereunder, have been duly authorized by all necessary corporate
action, and are not in conflict with any provision of law or of the Articles of
Incorporation or Code of Regulations of the Borrower, nor in conflict with any
agreement, order or decree binding upon the Borrower of which such counsel has
knowledge; (iv) this Agreement and the other Loan Documents are the legal, valid
and binding obligations of the Borrower, enforceable against the Borrower in
accordance with their respective terms, except as the same may be affected by
bankruptcy, insolvency, moratorium or similar laws now or hereafter in effect,
or by legal or equitable principles relating to or limiting creditors' rights
generally, or other rules of law or equity limiting the availability of specific
performance or injunctive relief; (v) each of the Mortgages is sufficient to
create a valid lien in favor of the Bank on the interest of the grantor in the
real property covered thereby and is in recordable form under the laws of the
jurisdiction in which such real property is located; and (vi) upon the filing of
the Financing Statements in the respective offices noted thereon, the Bank will
have a
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15
perfected security interest in such of the property of the debtors thereunder in
which a security interest may be perfected by the filing of financing
statements.
(k) STOCK PURCHASE. The Bank shall have received satisfactory
evidence that the Stock Purchase will be accomplished and of the manner in which
it will be accomplished, together with a written disbursement request in form
and substance satisfactory to the Bank detailing the number of shares of the
Borrower's common stock that will be purchased pursuant thereto and the purchase
price thereof.
(l) 1996 AGREEMENT AMENDMENT. The Amended and Restated Loan
Agreement between the Borrower and the Bank dated as of August 29, 1996 (the
"1996 Agreement") shall have been amended in a manner consistent with the terms
of this Agreement and the letter dated as of June 25, 1997 executed by the
Borrower and the Bank with respect to the matters contemplated hereunder.
4. LOAN.
(a) LOAN. Subject to the terms and conditions of this
Agreement, and subject to there being no Event of Default (or event which might,
with the giving of notice or the passage of time, mature into an Event of
Default) by the Borrower hereunder, the Bank agrees to lend to the Borrower, on
any date that is prior to September 1, 1997 (the "Disbursement Date"), a
principal sum of up to Eighteen Million Dollars ($18,000,000) hereunder (the
"Loan"). The Loan shall be evidenced by a Promissory Note given by the Borrower
to the Bank in substantially the form of EXHIBIT J attached hereto (the "Note").
The Loan shall mature and be payable in full on the date that is two (2) years
from the Disbursement Date (the "Maturity Date"), unless accelerated as
described herein and subject to required principal and interest payments as
provided herein.
(b) INTEREST. Subject to the terms hereof, the Borrower shall
from time to time have the option of designating that portions of the principal
balance of the Loan bear interest at a rate per annum equal to (i) the One-Month
LIBOR-Based Rate (as hereinafter defined) for a one (1) month period (the
"One-Month LIBOR-Based Rate Period") and (ii) the Two-Month LIBOR-Based Rate (as
hereinafter defined) for a two (2) month period (the "Two-Month LIBOR-Based Rate
Period"). Any portion of the Loan with respect to which a One-Month LIBOR-Based
Rate or a Two-Month LIBOR-Based Rate is not in effect shall bear interest at a
rate per annum equal to the Prime-Based Rate (as hereinafter defined), with such
rate to be adjusted on the effective date of any change in the Prime Rate (as
hereinafter defined) by the Bank.
The "One-Month LIBOR-Based Rate" shall mean the sum of (i) the
annual rate, determined solely by the Bank, as the British
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16
Banking Association 11:00 a.m. Fix offered rate obtained from Telerate Systems
Incorporated, Bloomberg Financial Systems or any other electronic media deemed
appropriate by the Bank (rounded upwards, if necessary, to the nearest 1/10000
of one percent), for deposits in immediately available Dollars in the London
Interbank Market (as hereinafter defined) at or about 11:00 a.m., London time,
for the applicable One-Month LIBOR-Based Rate Period on the day two (2) London
Business Days (as hereinafter defined) preceding the first day of such One-Month
LIBOR-Based Rate Period, PLUS (ii) the LIBOR-Based Rate Spread (as hereinafter
defined), and adjusted for Reserve Percentages (as hereinafter defined) and any
other regulatory and/or governmental costs incurred by the Bank from
eurocurrency liabilities. The "Two-Month LIBOR-Based Rate" shall mean the sum of
(i) the annual rate, determined solely by the Bank, as the British Banking
Association 11:00 a.m. Fix offered rate obtained from Telerate Systems
Incorporated, Bloomberg Financial Systems or any other electronic media deemed
appropriate by the Bank (rounded upwards, if necessary, to the nearest 1/10000
of one percent), for deposits in immediately available Dollars in the London
Interbank Market at or about 11:00 a.m., London time, for the applicable
Two-Month LIBOR-Based Rate Period on the day two (2) London Business Days
preceding the first day of such Two-Month LIBOR-Based Rate Period, PLUS (ii) the
LIBOR-Based Rate Spread, and adjusted for Reserve Percentages and any other
regulatory and/or governmental costs incurred by the Bank from eurocurrency
liabilities. In the event that Telerate Systems Incorporated, Bloomberg
Financial Systems or any other electronic media selected by the Bank ceases to
quote such rates, the Bank shall, in its discretion, select an alternative rate
source. The One-Month LIBOR-Based Rate and the Two-Month LIBOR-Based Rate are
each sometimes referred to herein as a "LIBOR-Based Rate," and the One- Month
LIBOR-Based Rate Period and the Two-Month LIBOR-Based Rate Period are each
sometimes referred to herein as a "LIBOR-Based Rate Period."
The "LIBOR-Based Rate Spread" shall initially be one hundred
fifty (150) basis points, and shall be adjusted as follows: If on or before the
date that is one (1) year after the Disbursement Date (the "Disbursement
Anniversary Date"), the outstanding principal balance of the Loan shall have
been reduced to less than Seven Million Five Hundred Thousand Dollars
($7,500,000) (the "Designated Level"), the LIBOR-Based Rate Spread shall,
commencing on the date of such reduction, be one hundred twenty-five (125) basis
points, and if by the Disbursement Anniversary Date the outstanding principal
balance of the Loan shall not have been reduced to the Designated Level, the
LIBOR- Based Rate Spread shall, commencing on the Disbursement Anniversary Date,
be one hundred seventy-five (175) basis points.
"London Interbank Market" shall mean the London eurodollar
interbank market where rates are offered to the Bank by prime banks for deposits
of immediately available Dollars. "London
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17
Business Day" shall mean any day other than a Saturday, Sunday or holiday on
which banks in London, England are authorized by law to close.
"Reserve Percentages" shall mean the total maximum reserve
percentages for determining the reserves to be maintained by member banks of the
Federal Reserve System for eurocurrency liabilities, as defined in Federal
Reserve Board Regulation D, rounded upward to the nearest 1/100 of one percent,
and includes, but is not limited to, marginal, emergency, supplemental, special
and other reserve percentages. The amount of the adjustment for Reserve
Percentages and regulatory and/or governmental costs shall be based upon the
assumption that the Bank funded one hundred percent (100%) of the Loan or
portion thereof bearing interest at a LIBOR-Based Rate in the London Interbank
Market.
The "Prime Rate" shall mean that rate announced by the Bank as
its prime rate, which rate is determined solely by the Bank pursuant to market
factors and its own operating needs and is not necessarily the Bank's best or
most favorable rate for commercial or other loans. The "Prime-Based Rate" shall
initially be the Prime Rate, and shall be adjusted as follows: If on or before
the Disbursement Anniversary Date the outstanding principal balance of the Loan
shall have been reduced to the Designated Level, the Prime-Based Rate shall,
commencing on the date of such reduction, be the Prime Rate MINUS twenty-five
(25) basis points, and if on or before the Disbursement Anniversary Date the
outstanding principal balance of the Loan shall not have been reduced to the
Designated Level, the Prime-Based Rate shall, commencing on the Disbursement
Anniversary Date, be the Prime Rate PLUS twenty-five (25) basis points.
Interest on any portion of the Loan bearing interest at the
Prime-Based Rate shall be payable monthly, in arrears, commencing on the last
day of the calendar month in which the Loan is disbursed and on the last day of
each calendar month thereafter, and when the Loan is due (whether by reason of
acceleration or otherwise). Interest on any portion of the Loan bearing interest
at a LIBOR-Based Rate shall be payable, in arrears, on the last day of the
LIBOR-Based Rate Period applicable thereto, and when the Loan is due (whether by
reason of acceleration or otherwise). Interest on the Loan shall be computed on
the basis of a year consisting of three hundred sixty (360) days but applied to
the actual number of days elapsed. At the option of the Bank, (a) prior to
acceleration of the Loan, in the event that any interest on or principal of the
Loan remains unpaid past thirty (30) days of the date due, and/or (b) upon the
occurrence of any other Event of Default hereunder or upon the acceleration of
the Loan, interest (computed and adjusted in the same manner, and with the same
effect, as interest on the Loan prior to maturity) on the outstanding balance of
the Loan shall be payable on demand at the Prime Rate PLUS an additional three
percent (3%) per annum up to
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18
any maximum rate permitted by law, in all cases until paid and whether before or
after the entry of any judgment thereon. In addition, in the event that the
Borrower should fail to make any payment hereunder within ten (10) days of the
date due, the Borrower shall pay the Bank a fee in an amount of up to five
percent (5%) of the amount of such payment, but in no event less than fifty
dollars ($50.00), which fee shall be immediately due and payable without notice
or demand.
In electing computation of interest on the Loan or any portion
thereof at a LIBOR-Based Rate, the Borrower shall provide the Bank with not less
than three (3) Business Days (by not later than 10:00 a.m., Cincinnati, Ohio
time) prior notice of such election (which notice may be given by telephone but
shall be promptly followed by written confirmation from the Borrower to the
Bank), which notice and confirmation shall include (i) the type of LIBOR-Based
Rate so elected, (ii) the amount of the principal balance of the Loan to which
such LIBOR-Based Rate shall be applied (which shall be a minimum amount of Two
Million Dollars ($2,000,000) and in increments of One Million Dollars
($1,000,000) thereafter), (iii) the starting date for such LIBOR-Based Rate
(which date must be a London Business Day) and (iv) the irrevocable commitment
of the Borrower to accept and be bound by its election of such LIBOR-Based Rate
for the applicable LIBOR-Based Period. Anything to the contrary contained herein
notwithstanding, in no event may the Borrower elect computation of interest on
the Loan or any portion thereof at a LIBOR-Based Rate which has a LIBOR-Based
Rate Period extending past the Maturity Date. Upon the expiration of any
LIBOR-Based Rate Period, the Loan or portion thereof subject to a LIBOR-Based
Rate shall bear interest at the Prime-Based Rate, unless the Borrower has made
another election in the manner provided hereunder for interest thereon at a
LIBOR-Based Rate.
(c) PRINCIPAL PAYMENTS. The Borrower shall prepay the
outstanding principal balance of the Loan in an amount equal to the net
after-tax proceeds from the sale of any assets of the Borrower or any of its
Subsidiaries (other than sales of any assets as described in SECTION 2(L)(II) or
SECTION 2(L)(III) above) on the date of receipt of such proceeds (provided that
if prepayment on such date would cause the Borrower to be subject to a charge
pursuant to SECTION 4(F) below because of repayment of a portion of the Loan
bearing interest at a LIBOR-Based Rate prior to the expiration of the
LIBOR-Based Rate Period applicable hereto, then, at the option of the Borrower,
such proceeds shall not be applied to the prepayment of the Loan on such date,
but instead shall be deposited into a non-interest bearing account at the Bank
under the sole control of the Bank and shall be applied to prepayment of the
Loan at the expiration of such LIBOR-Based Rate Period), and the Borrower shall
prepay the outstanding principal balance of the Loan by at least Five Million
Five Hundred Thousand Dollars ($5,500,000), whether from the proceeds of asset
sales or otherwise, on or before the Disbursement Anniversary Date. Unless
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19
sooner due and payable as provided hereunder, the entire outstanding principal
balance of the Loan shall be due and payable in full on the Maturity Date.
(d) RECORDING. The Bank will not record or file the Mortgages
or the Financing Statements if the outstanding principal balance of the Loan has
been reduced to the Designated Level on or before the Disbursement Anniversary
Date and so long as no Event of Default hereunder shall have occurred. If the
outstanding principal balance of the Loan has not been reduced to the Designated
Level on or before the Disbursement Anniversary Date, or if an Event of Default
hereunder shall have occurred, the Bank shall at any time thereafter have the
right, at its option, to record and file the Mortgages and the Financing
Statements, or any of them, at the expense of the Borrower, in the appropriate
recording and filing offices, and upon request by the Bank, the Borrower shall
promptly provide the Bank, at the expense of the Borrower, with title insurance
policies insuring the lien of any such recorded Mortgages which reflect no
encumbrances or restrictions on title other than as may be reflected in the
Title Reports, together with any endorsements thereto as may be deemed
appropriate by the Bank.
(e) CHANGES IN LAWS AND CIRCUMSTANCES; ILLEGALITY.
(i) In the event of (A) any change in the reserve
requirements and/or the assessment rates of the FDIC which are applicable to the
Bank in making the Loan or any portion thereof at a LIBOR-Based Rate or (B) any
change in circumstances affecting the interbank market, and the result of any
such event described in clause (A) or (B) above is to increase the cost to the
Bank of making the Loan, the Borrower shall promptly pay the Bank any additional
amounts, upon demand accompanied by a reasonably detailed statement as to such
additional amounts (which statement shall be conclusive in the absence of
manifest error), which will reasonably compensate the Bank for such costs.
(ii) If by reason of circumstances affecting the
interbank market adequate and reasonable means do not exist in the reasonable
judgment of the Bank for ascertaining a LIBOR-Based Rate at any time, the Bank
shall forthwith give notice thereof to the Borrower. Unless and until such
notice has been withdrawn by the Bank, the Borrower may not thereafter elect to
have any portion of the Loan bear interest at a LIBOR-Based Rate.
(iii) If any law, rule, regulation, treaty,
guideline, order or directive or any change therein or in the interpretation or
application thereof shall make it unlawful for the Loan to bear interest at a
LIBOR-Based Rate, the Bank shall notify the Borrower thereof and no portion of
the Loan may thereafter bear interest at a LIBOR-Based Rate. If required by law,
any portion of the Loan then bearing interest at a LIBOR-Based
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20
Rate shall cease to bear interest at the LIBOR-Based Rate and shall bear
interest at the Prime-Based Rate.
(f) PREPAYMENTS. The Borrower may, at its option, from time to
time repay or prepay part or all of the outstanding principal balance of the
Loan bearing interest at the Prime-Based Rate without premium. The Loan or any
portion thereof bearing interest at a LIBOR-Based Rate may only be repaid
without charge at the expiration of the LIBOR-Based Rate Period applicable
thereto, and any repayment of the Loan or any portion thereof bearing interest
at a LIBOR-Based Rate at any time prior to the expiration of the LIBOR-Based
Rate Period applicable thereto shall be subject to a charge in an amount
determined by the Bank in its reasonable discretion, such charge to compensate
the Bank for loss of bargain with respect to the Loan or portion thereof being
so paid, and not as a penalty, payable upon demand accompanied by a reasonably
detailed statement as to such charge (which statement shall be conclusive in the
absence of manifest error).
(g) PAYMENTS. All payments of principal and interest hereunder
shall be made in immediately available funds to the Bank at 000 Xxxxxx Xxxxxx,
Xxxxxxxx 0000, Xxxxxxxxxx, Xxxx 00000, or at such other place as may be
designated by the Bank to the Borrower in writing. The Bank is authorized by the
Borrower to enter from time to time the balance of the Loan and all payments and
prepayments thereon on the reverse of the Note or in the Bank's regularly
maintained data processing records, and the aggregate unpaid amount of the Loan
set forth thereon or therein shall be presumptive evidence of the amount owing
to the Bank and unpaid thereon.
5. EVENTS OF DEFAULT. If any of the following events (each, an
"Event of Default") shall occur, then the Bank may, without further notice or
demand, accelerate the Loan and declare it to be, and thereupon the Loan shall
become, immediately due and payable (except that the Loan shall become
automatically due and payable upon the occurrence of an event described in
SECTIONS 5(J), (K) AND (L) below), AND, to the extent the Loan has not yet been
drawn by the Borrower, terminate the Borrower's ability to do so, AND the Bank
shall have all rights provided herein or in any of the other Loan Documents or
otherwise provided by law to realize on any collateral or security for the Loan:
(a) The Borrower does not pay the Bank any interest on the
Loan within ten (10) days after the date due, whether by reason of acceleration
or otherwise, or does not pay or repay to the Bank any principal of the Loan or
any other obligation hereunder when due, whether by reason of acceleration or
otherwise; or
(b) The Borrower defaults in the performance or observance of
any agreement contained in SECTION 2(B), 2(C), 2(D), 2(E), 2(F), 2(G), 2(H) OR
2(O) hereof and such default has not been
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21
cured by the Borrower within ten (10) days after the occurrence thereof, or the
Borrower defaults in the performance or observance of any other agreement
contained in SECTION 2 hereof; or
(c) There shall have occurred any other violation or breach of
any covenant, agreement or condition contained herein or in any other Loan
Document which has not been cured by the Borrower within thirty (30) days after
the earlier to occur of the date the Borrower has knowledge thereof and the date
the Bank gives the Borrower notice thereof; or
(d) The Borrower does not pay when due or prior to the
expiration of the applicable cure period, if any, any principal or interest on
any other Indebtedness in excess of One Hundred Thousand Dollars ($100,000), or
the Borrower defaults in the performance or observance of any other term or
condition contained in any agreement or instrument under which such Indebtedness
is created, and the holder of such other Indebtedness declares, or may declare,
such Indebtedness due prior to its stated maturity because of the Borrower's
default thereunder; or
(e) There shall have occurred any violation or breach of any
covenant, agreement or condition contained in any other agreement between the
Borrower and the Bank which has not been cured by the Borrower prior to the
expiration of the applicable cure period, if any, including, without limitation,
the 1996 Agreement and the Loan Agreement between the Borrower and the Bank
dated as of December 31, 1992; or
(f) The Borrower does not perform its obligations under any
agreement material to its business, and the other party to such agreement
declares, or may declare, such agreement in default; or
(g) Any representation or warranty made herein or in any other
Loan Document or writing furnished in connection with this Agreement shall be
false or misleading in any material respect when made; or
(h) The Borrower is generally not paying its debts as they
become due; or
(i) With respect to the plans referred to in SECTION 1(H)
above, or any other similar plan, a "reportable event" or "prohibited
transaction" pursuant to ERISA has occurred which results in the imposition of
material taxes or penalties against the Borrower or the termination of such
plans (or trusts related thereto), or the Borrower incurs any material liability
to the PBGC in connection with such plans; or
(j) The Borrower makes an assignment of a material part of its
assets for the benefit of creditors; or
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22
(k) The Borrower applies for the appointment of a trustee or
receiver for a material part of its assets or commences any proceedings relating
to the Borrower under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or other liquidation law of any jurisdiction;
or any such application is filed, or any such proceedings are commenced, against
the Borrower, and the Borrower indicates its approval, consent or acquiescence
thereto; or an order is entered appointing such trustee or receiver, or
adjudicating the Borrower bankrupt or insolvent, or approving the petition in
any such proceedings, and such order remains in effect for sixty (60) days; or
(l) Any order is entered in any proceedings against the
Borrower decreeing the dissolution of the Borrower; or
(m) Any material part of the Borrower's operations shall
cease, other than temporary or seasonal cessations which are experienced by
other companies in the same line of business and which would not have a material
adverse effect on the Borrower's operations or financial condition or its
ability to perform its obligations hereunder; or
(n) Any final non-appealable judgment which, together with
other outstanding judgments against the Borrower, causes the aggregate of such
judgments in excess of confirmed insurance coverage satisfactory to the Bank to
exceed Seven Hundred Fifty Thousand Dollars ($750,000), shall be rendered
against the Borrower; or
(o) Xxxx X. Xxxxx, Xxxxxxx X. Xxxxx and Xxxxx X. Xxxxx and
members of their families shall fail to beneficially own, in the aggregate, at
least thirty percent (30%) of the outstanding common stock of the Borrower, with
full voting rights.
The above recitation of Events of Default shall be interpreted
in all respects in favor of the Bank. To the extent any cure-of-default period
is provided above and the Loan has not yet been drawn by the Borrower, the Bank
may nevertheless, at its option pending completion of such cure, suspend its
obligation to consider disbursement of the Loan.
6. GENERAL.
(a) REASONABLE ACTIONS. The Bank agrees that in taking any
action which it is permitted or empowered to take under this Agreement, it will
act reasonably under what it believes are the facts and circumstances existing
at such time.
(b) DELAY. No delay, omission or forbearance on the part of
the Bank in the exercise of any power or right shall operate as a waiver
thereof, nor shall any single or partial delay, omission or forbearance in the
exercise of any other power or
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23
right. The rights and/or remedies of the Bank herein provided are cumulative,
shall be interpreted in all respects in favor of the Bank and are not exclusive
of any other rights and/or remedies provided by law.
(c) NOTICE. Except as otherwise expressly provided in this
Agreement, any notice hereunder shall be in writing and shall be deemed to be
given when personally delivered or when sent by certified mail, postage prepaid,
and addressed to the parties at their addresses set forth below:
Bank: Star Bank, National Association
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Senior Vice President
With a copy to: Xxxxxxxxx X. Xxxxxxxx, Esq.
Xxxx, Stettinius & Hollister
1800 Star Bank Center
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Borrower: Xxxxxx'x Restaurants, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxx
Vice President-Finance
With copies to: Xxxxx X. Xxxxx, President
Xxxxxx'x Restaurants, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
and
W. Xxxx Xxxx, Esq.
Xxxxxx'x Restaurants, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
The Borrower or the Bank may, by written notice to the other as provided herein,
designate another address for purposes hereunder.
(d) EXPENSES; INDEMNITY. The Borrower agrees to pay all
reasonable out-of-pocket expenses of the Bank and its employees (including
attorney's fees and legal expenses, but excluding the salaries of the Bank's own
employees, as well as all search, filing and recording fees, and title report
and insurance fees) incurred by the Bank in entering into and closing this
Agreement and preparing the documentation in connection herewith, administering
- 23 -
24
the obligations of the Borrower hereunder or under any of the other Loan
Documents, and enforcing the obligations of the Borrower hereunder or under any
of the other Loan Documents, and the Borrower agrees to pay the Bank upon demand
for the same. The Borrower agrees to defend, indemnify and hold the Bank
harmless from any liability, obligation, cost, damage or expense (including
reasonable attorney's fees and legal expenses) for taxes (other than income
taxes), fees or third party claims which may arise or be related to the
execution, delivery or performance of this Agreement or any of the other Loan
Documents, except in the case of negligence or wilful misconduct on the part of
the Bank. The Borrower further agrees to indemnify and hold harmless the Bank
from any loss or expense which the Bank may sustain or incur as a consequence of
default by the Borrower in payment of any principal of or interest on the Loan,
including, without limitation, any such loss or expense arising from interest or
fees payable by the Bank to lenders of funds obtained by it in order to maintain
interest rates on the Loan or any portion thereof at a LIBOR-Based Rate.
(e) SURVIVAL. All covenants and agreements of the Borrower
made herein or otherwise in connection with the transactions contemplated hereby
shall survive the execution and delivery of this Agreement and the other Loan
Documents, and shall remain in effect so long as any obligations of the Borrower
are outstanding hereunder or under any of the other Loan Documents.
(f) SEVERABILITY. Any provision of this Agreement or any of
the other Loan Documents which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition of enforceability without invalidating the remaining portions
hereof or affecting the validity or enforceability of such provision in any
other jurisdiction.
(g) LAW. IMPORTANT: The Loan shall be deemed made in Ohio and
this Agreement and all other Loan Documents, and all of the rights and
obligations of the Borrower and the Bank hereunder and thereunder, shall in all
respects be governed by and construed in accordance with the laws of the State
of Ohio, including all matters of construction, validity and performance.
Without limitation on the ability of the Bank to initiate and prosecute any
action or proceeding in any applicable jurisdiction related to loan repayment,
the Borrower and the Bank agree that any action or proceeding commenced by or on
behalf of the parties arising out of or relating to the Loan and/or this
Agreement and/or any of the other Loan Documents shall be commenced and
maintained exclusively in the District Court of the United States for the
Southern District of Ohio, or any other court of applicable jurisdiction located
in Cincinnati, Ohio. The Borrower and the Bank also agree that a summons and
complaint commencing an action or proceeding in any such Ohio courts by or on
behalf of such parties shall be properly served and shall confer personal
jurisdiction on a party
- 24 -
25
to which said party consents, if (i) served personally or by certified mail to
the other party at any of its addresses noted herein, or (ii) as otherwise
provided under the laws of the State of Ohio. The interest rates and all other
terms of the Loan negotiated with the Borrower are, in part, related to the
aforesaid provisions on jurisdiction, which the Bank deems a vital part of this
loan arrangement.
(h) SUCCESSORS. This Agreement shall be binding upon and inure
to the benefit of the Borrower and the Bank and their respective successors and
assigns. The Borrower shall not assign its rights or delegate its duties
hereunder without the prior written consent of the Bank.
(i) AMENDMENT. Except as otherwise expressly provided herein,
this Agreement may not be modified or amended except in writing signed by
authorized officers of the Bank and the Borrower.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers thereunto as of the
date first set forth above.
STAR BANK, NATIONAL XXXXXX'X RESTAURANTS, INC.
ASSOCIATION
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxxx
------------------------ -------------------------
Xxxxxx X. Xxxxxxx Xxxxxx X. Xxxxxx
Senior Vice President Vice President-Finance
- 25 -
26
LIST OF EXHIBITS
----------------
A - Financial Information and Reports
B - Actions
C - Permitted Liens
D - Financial Covenants
E - Permitted Indebtedness
F - Designated Properties
G - Form of Mortgage
H - Form of Security Agreement
I - Form of Life Insurance Assignment
I-A - Life Insurance Policies
J - Form of Note
- 26 -
27
EXHIBIT A
---------
FINANCIAL INFORMATION AND REPORTS
---------------------------------
1. Annual Report for the year ended June 2, 1996
2. Form 10-Q for the period ended March 9, 1997
28
EXHIBIT B
---------
ACTIONS
-------
1. FRISCH'S, ET. AL. VS. HARTFORD, ET. AL. (CLASS ACTION TO RECOVER
OVERCHARGES OF WORKERS COMPENSATION PREMIUMS IN TEXAS). No new developments.
2. XXXX XXXXXXXX VS. XXXXXX'X (#41 WALNUT HILLS - RACE AND SEX
DISCRIMINATION).
We are awaiting the Court's scheduling order.
3. KOPIES, INC. VS. XXXXXXX KODAK COMPANY (CLASS ACTION FOR ANTITRUST
VIOLATIONS IN SALES AND RENTALS OF COPIERS).
No new developments.
4. XXXXXXX LONGEST AND XXXX XXXXXX VS. FRISCH'S (#85 ROCKVILLE - SEXUAL
HARASSMENT SUIT).
Discovery has been completed. Dispositive motions are due July
15th.
5. XXXXXX XXXXX VS. FRISCH'S (#5 XXXXXXXX - RACE AND SEX
DISCRIMINATION).
We are awaiting the decision of the Sixth Circuit.
6. XXXX XXXXXX VS. FRISCH'S, ET. AL. (#192 XXXXXXXXXXXX - EMPLOYMENT
DISCRIMINATION UNDER THE ADA).
No new developments.
7. XXXXXXX XXX VS. XXXXXX'X (#72 RICHMOND #2 - ADMINISTRATIVE COMPLAINT
FILED WITH INDIANA CIVIL RIGHTS COMMISSION FOR "RETALIATION" TERMINATION IN
1992, BASED ON 1991 INCIDENT OF ALLEGED DISABILITY DISCRIMINATION).
We are awaiting the decision of the Administrative
Law Judge of the Indiana Civil Rights Commission.
8. XXXXXX XXXXX VS. FRISCH'S (#49 SPRING GROVE - DISCRIMINATION SUIT).
Discovery is continuing.
9. XXXXX XXXXX AND XXXX XXXXXXXX VS. XXXXXX'X, ET. AL. (#173 TOWNE MALL
- SEXUAL HARASSMENT SUIT).
Discovery is continuing.
29
EXHIBIT C
---------
PERMITTED LIENS
---------------
Balance
Lien July 8, 1997
--------------------------------------------------------------------------------
Industrial Revenue Bonds: $200,000
State of Ohio Economic Development Revenue
Bonds (Security: Commissary and General
Office leaseholds and equipment)
Other secured obligations: 11,985
Xxxxxxx and Xxxxxxx Xxxx Note dated July
21, 1994 (Security: Xxxxxx Road Big Boy
real estate)
Loans against cash surrender values of life insurance policies:
Company Policy No. Amount
------- ---------- ------
Great West Life Assurance 1231-348 74,865
Great West Life Assurance 1511-228 23,608
Great West Life Assurance 0000-000 000,417
Great West Life Assurance 1724-573 96,928
The Hartford R559-474L 100,000
Lincoln National Life 00-0000000 75,648
Lincoln National Life 00-0000000 6,535
Lincoln National Life 00-0000000 16,376
Lincoln National Life 00-0000000 21,212
Lincoln National Life 00-0000000 6,891
Lincoln National Life 00-0000000 50,944
Lincoln National Life 00-0000000 24,369 602,793
--------- ----------
$814,778
==========
And any liens on property which is described above that replace any liens
described above, provided that the obligations secured by such liens do not
exceed the amounts described above.
30
EXHIBIT D
---------
FINANCIAL COVENANTS
-------------------
The Borrower agrees that it shall:
(a) TANGIBLE NET WORTH. Not permit the Borrower's tangible net worth,
on a consolidated basis, to be less than the following amounts (each, a "Base
Tangible Net Worth") at any time during any of the following periods (each, a
"TNW Year"):
TNW YEAR BASE TANGIBLE NET WORTH
-------- -----------------------
the period commencing with the $45,000,000
last day of the fiscal year ended
June 1, 1997, through the next to
last day of the next fiscal year
("FY 98")
any period commencing with the the Base Tangible Net
last day of a fiscal year, Worth for the
beginning with the period immediately
commencing on the last day preceding TNW Year
of FY 98, through the next plus $1,500,000
to last day of the next
fiscal year
"Tangible net worth" for purposes hereof shall mean the total of book net worth
less any assets, except capitalized leases, considered intangible under
generally accepted accounting principles.
(b) INTEREST COVERAGE RATIO. Not permit the Borrower's Interest
Coverage Ratio to be less than 1.5 to 1 for any period commencing on the first
day of the then-current fiscal year of the Borrower and ending on the last day
of the most recent of the Borrower's fiscal quarters during such year. "Interest
Coverage Ratio" for purposes hereof shall mean the Borrower's ratio, on a
consolidated basis, of (i) its earnings before total interest expense (as
required to be reflected in audited financial statements prepared in accordance
with generally accepted accounting principles) and current and deferred taxes,
to (ii) its total interest expense (as required to be reflected in audited
financial statements prepared in accordance with generally accepted accounting
principles).
31
EXHIBIT E
---------
PERMITTED INDEBTEDNESS
----------------------
Balance
JULY 8, 1997
------------
Loan Agreement dated December 31, 1992 (as amended)
payable to Star Bank, N.A. $ 8,250,000
Loan Agreement dated August 30, 1993 (as amended)
payable to Star Bank, N.A. and KeyBank N.A. 12,000,000
-----------
$20,250,000
===========
Contingent liability as assignor/guarantor of the following leases:
Remaining
Location Assignee Lease Term
-------- -------- ----------
Dayton, OH (HS Needmore) S & L Fast Foods, Inc. 9/30/98
Silver Springs, FL Xxxxxxxx Foods, Inc. 1/31/00
Ocala, FL Xxxxxxxx Foods, Inc. 8/1/00
Blue Ash, OH (HS Blue Ash) S & L Fast Foods, Inc. 9/30/00
Florence, KY (P & W) Olive Garden 12/31/01
Houston, TX (Westheimer) Xxxxxx Companies 10/31/03
Orlando, FL (Pershing) Angel's Diner of America 3/31/06
Lease liability for closed restaurants & other non-operating property
(lease not presently assigned)
Remaining Rent Per
Location Lease Term Month
-------- ---------- -----
Frankfort, KY 10/31/97 $1,650
Indianapolis, IN (Ky. Ave.) 6/4/00 (ground lease) $3,000
Muncie, IN 10/1/01 (ground lease) $3,125
Indianapolis office space 1/31/00 $2,240
Plus indebtedness secured by permitted liens as described on Exhibit C and
indebtedness replacing the indebtedness secured by the permitted liens as
described on Exhibit C, provided that no such replacement indebtedness shall
exceed the amount being replaced as shown on Exhibit C.
32
EXHIBIT F
---------
DESIGNATED PROPERTIES
---------------------
(See attached)
33
EXHIBIT F
---------
Store # Street Address County
------- -------------- ------
16 0000 Xxxx Xxxxx, Xxxxxxxxxxxx , XX 00000 Xxxxxx
21 0000 Xxxxxxxxx Xxx, Xxxxxxxxxx, XX 00000 Xxxxxxxxx
55 0000 X. Xxxxxxxx Xxx., Xxxxxxxxxxxx, XX 00000 Xxxxxx
56 00 Xxxx Xxx, Xxxxxxxxx, XX 00000 Xxxxxxx
59 000 Xxxxxxxxx Xx., Xxxxxx, XX 00000 Madison
85 0000 Xxxxxxxxx Xx., Xxxxxxxxxxxx, XX 00000 Xxxxxx
93 0000 Xxxx 00xx Xx., Xxxxxxx, XX 00000 Xxxxxxxx
96 0000 Xxxxxx Xxx., Xxxxxxxxxx, XX 00000 Darke
113 00000 X.X. Xx. 00, Xxxxxxxxxxx, XX 00000 Pickaway
137 0000 Xxxx Xxxxx Xx., Xxxxxxx, XX 00000 Xxxxx
189 000 Xxxxx Xxxxx Xxxxx, Xxxxxxxxxxx, XX 00000 Xxxxxxxx
190 0000 Xxxxxxxx Xxx., Xxxxxxxxxxxx, XX 00000 Xxxxxx
191 000 X. Xxxxxx Xx., Xxxxxxxx, XX 00000 Xxxxxxx
192 0000 Xxxxxxxx Xxxxx Xx., Xxxxxxxxxxxxx, XX 00000 Jefferson
193 0000 Xxxxx Xxxx Xx., Xxxxxxxxxxxxx, XX 00000 Xxxxx
34
EXHIBIT G
---------
[To be appropriately modified for
Companies other than Xxxxxx'x
Restaurants, Inc. which own
Designated Properties and for
state recording requirements]
OPEN-END MORTGAGE
-----------------
MAXIMUM PRINCIPAL AMOUNT $______________
----------------------------------------
WHEREAS, STAR BANK, NATIONAL ASSOCIATION, a national banking
association having an address of 000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx Xxxxxx,
Xxxx 00000 ("Mortgagee"), pursuant to that certain Loan Agreement (as defined
below), anticipates making a certain loan to XXXXXX'X RESTAURANTS, INC., an Ohio
corporation, having an address of 0000 Xxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxx 00000
("Mortgagor"), the principal amount of which loan shall not exceed at any given
time $_____________ (the "Loan") subject to certain conditions, one of which is
that this instrument shall have been duly executed and delivered; and
WHEREAS, the Loan is or shall be evidenced by and made pursuant to that
certain Loan Agreement dated as of July 9, 1997 between Mortgagor and Mortgagee
(as amended, modified, extended or renewed from time to time, the "Loan
Agreement"), that certain Promissory Note in the principal amount of
$_______________ dated as of _____ __, 1997 executed by Mortgagor in favor of
Mortgagee (as amended, modified, extended or renewed from time to time, the
"Note"), and the other Loan Documents, as defined in the Loan Agreement (all of
the indebtedness and other obligations of Mortgagor to Mortgagee under the Loan
Agreement, the Note and the other Loan Documents being referred to collectively
as the "Obligations");
NOW, THEREFORE, Mortgagor, for good and valuable consideration, grants,
bargains, sells and conveys unto Mortgagee, having its tax-mailing address at
______________________________________________________________________________,
_______________ its successors and assigns:
All of the estate, right, title and interest of Mortgagor in and to the
real property situate in _______________ County, ____________ and described in
EXHIBIT A attached hereto and made a part of this instrument (the "Property");
TOGETHER with all buildings, structures and other improvements now or
hereafter located on the Property; all the easements and appurtenances thereto,
whether now owned or hereafter acquired, including all rights of ingress and
egress to and from adjoining property; all machinery, fittings, fixtures and
personal property
35
attached to the Property or used in the operation or maintenance thereof,
together with all additions and accessions thereto and replacements thereof;
Mortgagor's interest as lessor or lessee in and to all leases of or relating to
the Property, or any part thereof, heretofore or hereafter made, intending that
in case of a foreclosure sale, the interest of Mortgagor in any such leases then
in force shall pass to the purchaser at such sale as part of the Property,
subject to election by such purchaser to terminate or enforce any of such leases
hereafter made; all awards as a result of the exercise of the right of eminent
domain, the alteration of the grade of any street, or any other injury to,
taking of, or decrease in the value of any of the Property; and all proceeds
under insurance policies and proceeds thereof on or with respect to the
Property, to the extent of the Obligations.
All the foregoing encumbered by this Mortgage are collectively referred
to herein as the "Premises".
TO HAVE AND TO HOLD the Premises unto Mortgagee, its successors and
assigns, forever.
Mortgagor covenants with Mortgagee (l) that Mortgagor is lawfully
seized of the Premises in fee simple, (2) that Mortgagor has full power, right
and authority to convey and mortgage the same, (3) that, except for those
matters (the "Permitted Exceptions") listed in EXHIBIT B attached hereto and
incorporated herein, upon filing for recording with the Recorder of the county
in which the Premises are located, the lien of this Mortgage shall constitute a
first and best lien on the Premises, (4) that the Property and the Premises are
free and clear of all encumbrances and any interest of any other person
whatsoever, except for the Permitted Exceptions, and (5) that it does warrant
and will defend the title to the same against the claims of all persons
whomsoever except those claiming by, through or under the Permitted Exceptions.
MORTGAGOR FURTHER COVENANTS AND AGREES:
l. SUM SECURED; REPAYMENT. This Mortgage is given by Mortgagor to
secure the Obligations, including indebtedness in the principal amount
outstanding from time to time under the Note, not to exceed the principal amount
of _____________________ DOLLARS ($____________) at any particular time,
together with interest thereon, amounts advanced by Mortgagee to pay taxes on
the Premises, for insurance on the Premises and for the protection of the
Premises, amounts Mortgagee is permitted to advance under this Mortgage and all
other sums which may be advanced or otherwise become due to Mortgagee under the
Loan Documents, or any extension, renewal, or modification thereof. The
Obligations include all indebtedness of Mortgagor in connection with the Loan
Agreement to Mortgagee, its successors and assigns, whether Mortgagee is acting
for its own account, as agent or trustee, or a combination of the foregoing. The
Loan Documents may be renewed, restated, extended, supplemented, amended or
modified and new Loan Documents may be executed (except for an increase in the
maximum principal amount) without in any way affecting this Mortgage or the
36
Obligations. Mortgagor agrees to perform and keep free from default all other
agreements affecting the Premises, if any, and to perform or cause to be
performed when due all of the Obligations. All payments received by Mortgagee
shall be applied by Mortgagee first to charges and other sums (except principal
and interest) due under or in connection with the Loan Documents, then to
interest payable on the Loan and then to the unpaid principal amount of the
Loan, and otherwise in whatever order Mortgagee, exercising its sole discretion,
may elect. The Obligations currently have a final maturity date of
__________________, 1999.
2. CONDITION OF THE PREMISES. Mortgagor shall keep the Premises in good
condition and repair, and shall not commit or permit anything which may in any
way impair the value of the Premises; neither shall Mortgagor remove, alter or
permit the removal from the Premises or alteration of, any building, improvement
or fixture included in the Premises. If the Premises shall be damaged in whole
or in part by casualty, Mortgagor shall promptly restore the Premises to their
original condition, or if the Premises shall be damaged by condemnation of a
part thereof, Mortgagor shall restore the same to a condition satisfactory to
Mortgagee. Mortgagor shall cause the Premises to comply continuously with all
laws, regulations, environmental controls, permits and other requirements of any
governmental authority having jurisdiction relating to the Premises. Mortgagor
further covenants that there shall be no construction on the Property or on any
adjoining land now or in the future owned or controlled by Mortgagor or any
entity controlling, controlled by or under common control with Mortgagor unless
the plans and specifications for such construction shall have been first
submitted to and approved by Mortgagee.
3. TAXES, ASSESSMENTS, LIENS AND JUDGMENTS. Mortgagor shall pay, on or
before the date that they become due and payable without penalty, all taxes,
liens, judgments or assessments which may accrue, be levied or assessed upon the
Premises, or any part thereof, or which may be or become a lien upon the
Premises, and Mortgagor, upon ten (10) days notice, will deliver to Mortgagee,
at its request, the official receipt or receipts evidencing such payment;
provided, however, that if Mortgagor shall in good faith, and by proper legal
action, contest any such taxes, liens, judgments or assessments or other
charges, or the validity thereof, and shall have furnished to Mortgagee, at
Mortgagee's option, a bond satisfactory to Mortgagee issued by a surety
satisfactory to Mortgagee to secure the payment thereof and any interest and
penalties thereon, in such amount as Mortgagee may require, and, at the option
of Mortgagee, shall have taken such other actions as Mortgagee in its sole
discretion shall deem appropriate to protect the Premises and the priority of
the lien of this Mortgage, then Mortgagor shall not be required to pay the same
as long as such contest operates to prevent collection and foreclosing of any
such lien or judgment, and is maintained and prosecuted with diligence, and
shall not have been terminated or discontinued adversely to Mortgagor.
4. INSURANCE. Mortgagor shall keep the Premises insured against
casualty with an all risk policy of casualty insurance and with such
37
other policies against such other hazards as are commonly maintained by
companies similarly situated to Mortgagor and as may be required by Mortgagee,
from time to time, for its replacement cost, and if this Mortgage is assigned by
Mortgagee, against such other hazards as such assignee may from time to time
require; and, at Mortgagee's option, shall deliver to Mortgagee policies for
such insurance in form and amount, and written by companies satisfactory to
Mortgagee and first payable in case of loss to Mortgagee, full power being
hereby given to Mortgagee as Mortgagor's attorney-in-fact, coupled with an
interest, to settle and comPromise claims or bring suit to recover thereunder,
to apply the net proceeds therefrom, after deducting all costs of collection,
including attorney fees, in reduction of the indebtedness hereby secured,
whether or not the same is then due and payable, or, at its option, toward the
repair, reconstruction or restoration of the Premises, and in the event of
foreclosure to assign each such policy to the transferee of the Premises. Such
policies of insurance shall be issued by insurers chosen by Mortgagor and
acceptable to Mortgagee, and at Mortgagee's option, such policies shall contain
a standard mortgagee endorsement and shall provide that the policy may not be
cancelled without 30 days prior written notice to Mortgagee, whether as a result
of nonpayment by Mortgagor or any other fault of Mortgagor. Mortgagor shall also
obtain and maintain a policy of general public liability insurance covering all
liabilities incident to the ownership, possession, occupancy and operation of
the Property as required under the Loan Agreement, and at Mortgagee's option,
naming Mortgagee as an additional insured thereunder. Except as otherwise
provided herein, all premiums for such insurance policies shall be paid by
Mortgagor making payment, on or before the due date thereof, directly to the
insurance carrier. In the event of loss, Mortgagor shall give prompt notice to
the insurance carrier and Mortgagee, and Mortgagee may make proof of loss if not
made promptly by Mortgagor. Each insurance company concerned is hereby
authorized and directed to make payments for such loss (up to the amounts
secured hereby) directly to Mortgagee, instead of to Mortgagor and Mortgagee
jointly.
5. ESCROW. At the option of Mortgagee, if an Event of Default should
occur and be continuing hereunder, Mortgagor shall deposit monthly with
Mortgagee an amount, as estimated by Mortgagee, which, when added to such other
deposits, will be sufficient to pay when due all ground rents, if any, taxes,
assessments, insurance premiums and similar charges relating to the Premises
which next become due with respect to the Premises and to pay such additional
amount as may be necessary to make up any deficiency in the funds available to
pay the same on or before thirty (30) days before the date when such ground
rents, taxes, assessments, premiums and charges become due and payable. All such
deposits shall be held by Mortgagee without interest and free of any lien or
claim of Mortgagor's creditors, to be used by Mortgagee to pay such ground
rents, taxes, assessments, premiums and other charges as the same become due and
payable. Any excess in such deposits shall be credited on subsequent deposits to
be made hereunder. Monthly accruals of real estate taxes shall be based upon
one-twelfth (l/12th) of the estimated annual real estate taxes on the Premises.
If at any time the deposits held by Mortgagee are insufficient to pay any ground
rents, taxes, assessments,
38
insurance premiums or other charges, Mortgagor, upon receipt of notice thereof,
shall deposit with Mortgagee such additional funds as may be necessary, in the
judgment of Mortgagee, to remove such deficiency. Mortgagee shall not be liable
for any unintentional delay or error in paying any ground rents, taxes,
assessments, insurance premiums or other charges.
6. OTHER ENCUMBRANCES. Mortgagor shall pay any debt, claim or other
charge for repairs or improvements that may have been made or may hereafter be
made on, and which may become a lien against, the Premises or any part thereof,
and shall not permit any lien or encumbrance of any kind or claim thereof,
whether prior or subordinate to this Mortgage, except the Permitted Exceptions,
to accrue or remain on or affect the Premises or any part thereof. If Mortgagor,
without the prior written approval of Mortgagee, shall further encumber the
Premises or permit the Premises to be further encumbered by another mortgage,
lien, lease or other encumbrance, or permit any claim of mechanic's lien to
remain of record more than thirty (30) days after its filing, Mortgagee, at its
option, without limiting its other rights and remedies, may declare the entire
indebtedness secured hereby immediately due and payable.
7. EMINENT DOMAIN. In the event that the Premises, or any portion
thereof, are taken or damaged by eminent domain, or conveyed in lieu thereof,
the proceeds of any condemnation award shall, at the option of Mortgagee, (i) be
applied to the reduction of the indebtedness secured by this Mortgage, whether
or not such indebtedness is then due, or (ii) be disbursed by Mortgagee to pay
for the costs of restoration of the portion of the Premises not taken, if any.
No such condemnation award shall be applied to the reduction of the indebtedness
secured hereby if, in the sole opinion of Mortgagee, the taking does not
adversely and materially affect the operation of the Premises as previously
conducted or Mortgagee's security (hereunder or otherwise).
8. RENTS, ISSUES AND PROFITS. The rents, issues and profits of the
Premises are hereby pledged as additional security for the Obligations, and
Mortgagee shall have the right, at any time after an Event of Default in the
payment or in the performance of any of the Obligations, without regard to the
adequacy of any security for the Obligations and with or without the appointment
of a receiver, to enter upon and take possession of the Premises and to collect
such rents, issues and profits, and apply the same less the cost of curing such
default and less the cost of operation, maintenance and repair, and reasonable
collection, management and attorney fees, in reduction of the Obligations.
9. LEASES OF PREMISES. Upon Mortgagee's request, from time to time,
Mortgagor shall furnish Mortgagee with a statement, in affidavit form and in
such reasonable detail as Mortgagee may require, of all leases (for a period of
more than two weeks) of the Premises, if any, and, on demand, furnish Mortgagee
with executed counterparts of any and all such leases. Mortgagor shall, as
requested by Mortgagee, assign to Mortgagee by specific assignment any leases,
now or hereafter executed with respect to the Premises, in which Mortgagor,
39
its successors or assigns are lessor, and Mortgagee may give written notice of
such assignments to the lessees therein named.
10. INSPECTIONS. Mortgagee shall have the right, at reasonable times,
to inspect the books and records relating to the operation of the Premises and
make copies thereof, which books and records shall be kept at the Premises or at
0000 Xxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxx. Mortgagee shall also have the right, at
any time, to inspect the Premises.
11. CHANGE IN LAW. In the event of the enactment after this date of any
law of the state or the locality in which the Premises are located deducting
from the value of the land for the purpose of taxation the amount of any lien
thereon, or imposing upon Mortgagee the payment of the whole or any part of the
taxes or assessments or charges or liens herein required to be paid by
Mortgagor, or changing in any way the laws relating to the taxation of mortgages
or debts secured by mortgages or Mortgagor's interest in the property, or the
manner or collection of taxes, so as to affect this Mortgage or any other Loan
Documents, then, and in any such event, Mortgagor upon demand by Mortgagee,
shall pay such taxes or assessments, or reimburse Mortgagee therefor; provided,
however, that if in the opinion of counsel for Mortgagee such payment might
result in the imposition of interest beyond the maximum amount permitted by law,
then and in such event, Mortgagee may elect, by notice in writing given to
Mortgagor, to declare all of the indebtedness secured hereby to become due and
payable sixty (60) days from the giving of such notice.
12. RIGHT TO CURE DEFAULT; PROTECTION OF SECURITY. Upon failure of
Mortgagor to comply with any of the provisions hereof or any of the provisions
of the other Loan Documents, Mortgagee may enter upon the Premises (but without
any obligation so to do) and make repairs, procure insurance, pay taxes and
assessments and pay any debt, claim or other charge which Mortgagor should have
made, procured or paid (the receipt of the creditor or proper tax official being
conclusive evidence of the amount, validity and the fact of payment thereof), or
cure any default under any Loan Document. In addition, if any action or
proceeding is threatened or commenced which may or does materially and adversely
affect Mortgagor's or Mortgagee's interest in the Premises, including, but not
limited to, eminent domain, insolvency or arrangements or proceedings involving
a bankrupt, then Mortgagee, at its option, may make such appearances, disburse
such sums and take such action as Mortgagee considers necessary to protect its
interest, including, but not limited to, disbursement of reasonable attorney's
fees and entry upon the Premises to make repairs. All sums so paid or expenses
incurred by Mortgagee in exercising its rights under this paragraph 12 shall be
immediately due and payable by Mortgagor, shall bear interest at the highest
rate permitted to be charged on delinquent installments of principal and
interest under the Loan Documents, and shall be hereby secured. Nothing
contained in this paragraph 12 shall (i) require Mortgagee to incur any expense
or do any act hereunder or (ii) limit any other rights or remedies Mortgagee may
have under this Mortgage or otherwise.
40
13. CHANGE OF OWNERSHIP. If the Premises or any part thereof are sold,
transferred, conveyed, encumbered, leased or assigned or placed under contract
to do any of the foregoing, without the prior written consent of Mortgagee or
except to the extent permitted pursuant to the Loan Agreement, Mortgagee, at its
option, may declare the entire indebtedness secured hereby immediately due and
payable and may exercise any other rights it may have under this Mortgage or at
law or in equity.
14. EXPENSES OF MORTGAGEE. Mortgagor shall indemnify Mortgagee against,
hold Mortgagee harmless from and pay all sums, including costs and attorney
fees, which Mortgagee may incur in any proceedings to defend the title or
possession of the Premises or to prevent the commission of waste or to establish
or preserve the lien of this Mortgage or its priority, or in connection with any
suit to enforce this Mortgage or any of the Loan Documents or recover the
indebtedness hereby secured. All such sums shall be immediately due and payable
by Mortgagor, shall bear interest at the highest rate permitted to be charged on
delinquent installments of principal and interest under the Loan Documents and
shall be secured hereby.
15. OBLIGATIONS AS TO LEASES. Mortgagor covenants that it will not
hereafter lease or enter into any agreement to lease any portion of the
Premises or enter into or agree to any alteration, modification, amendment,
extension, assignment, sub-leasing or termination of any existing lease (for a
term of more than two weeks) relating to the Premises, without first submitting
such lease or agreement to lease or such alteration, modification, amendment,
extension, assignment, sub-leasing or termination to Mortgagee and obtaining its
written consent thereto. Mortgagor will perform all of its obligations as lessor
under all leases and any sub-lease of the Premises, will not consent to any
subletting or assignment without Mortgagee's consent, or do or fail to do any
act which might create in any lessee the right to cease payment of rent or
terminate its lease, and agrees that approval by Mortgagee of any lease,
amendment to lease, assignment or subletting shall not relieve Mortgagor from
the obligations of these covenants. Mortgagor will comply with each and every
obligation imposed upon it by any lease of the Premises.
16. DEFAULT. The occurrence of an Event of Default under the Loan
Agreement shall constitute an Event of Default hereunder. Upon the occurrence of
an Event of Default, at the option of Mortgagee (or automatically under the
circumstances described in the Loan Agreement), the entire indebtedness secured
by this instrument shall immediately become due and payable and shall bear
interest at the highest default rate permitted to be charged under the Loan
Agreement, and this Mortgage shall become absolute and the rights, title and
interest of Mortgagor in, to and under the Premises shall become subject to
foreclosure; and Mortgagee, in addition to all other remedies available under
the Loan Documents or at law or in equity, shall have the right and power to do
any one or more of the following: (l) sell the Premises if permitted by law, (2)
institute judicial proceedings to foreclose the interest of Mortgagor in the
Premises, (3) apply without notice, the same being hereby waived, for the
appointment of a receiver for the Premises and the rents and profits
41
thereof or (4) enter upon and take possession of the Premises and let the
Premises and receive the rents, issues and profits thereof, make repairs and
apply said rentals and profits thereto, and apply said rentals and profits,
after payment of all necessary or proper charges and expenses, on account of the
amount hereby secured. At Mortgagee's option, Mortgagor, immediately after any
Event of Default, will vacate the Premises within three (3) days after written
demand has been made therefor by Mortgagee by delivering such demand at the
Premises, and upon Mortgagor's failure so to do Mortgagee shall forthwith be
entitled to recover possession of the Premises by action of forcible entry and
detainer, or otherwise. Upon proceedings being commenced for the foreclosure of
the interest of Mortgagor in the Premises, Mortgagee shall be at liberty to
apply for the appointment of a receiver as a matter of right without
consideration of the value of the Premises as security for the amount due
Mortgagee or the solvency of any person or persons liable for the payment of
such amount.
17. ENVIRONMENTAL CONDITION OF PREMISES. Mortgagor hereby confirms
those representations, warranties, covenants and indemnities set forth in the
Loan Agreement with respect to the Premises hereunder.
18. NON-WAIVER. The delay or the failure of Mortgagee to exercise any
of its options to accelerate the indebtedness secured hereby, or to exercise its
other rights or remedies in connection with any violation of the conditions,
agreements or covenants of this Mortgage or the other Loan Documents shall not
constitute a waiver of the right to exercise such rights because of any
subsequent violation, and in determining whether a default has occurred, time
shall be considered to be of the essence of this agreement.
19. COSTS OF COLLECTING OR SECURING THE INDEBTEDNESS. All costs of
collecting, securing or attempting to collect or secure the Obligations,
including attorneys fees if permitted by law to be included, shall be deemed a
part of the indebtedness secured hereby. The validity of the provisions in the
Loan Documents relating to the collection of attorney fees, and other expenses
incident to collecting or securing the indebtedness hereby, or enforcing or
protecting the security for such indebtedness, shall be enforceable to the
fullest extent permitted by law, any law or decision to the contrary being
hereby waived by Mortgagor to the extent permitted by law.
20. EXTENSION. Extension of the time for payment or modification of the
required amortization of the sums secured by this Mortgage granted by Mortgagee
to Mortgagor or to any successor in interest shall not operate to release, in
any manner, the liability of the original mortgagor hereunder for the
indebtedness secured hereby.
21. CUMULATIVE EFFECT. All remedies provided in this Mortgage are
distinct and cumulative to any other rights or remedies provided in the other
Loan Documents, or afforded by law or equity, and may be exercised concurrently,
independently or successively with such other rights or remedies. Mortgagor
acknowledges that Mortgagee has acquired, and may in the future acquire,
security interests in other
42
real and personal property as security for the Obligations. Acquisition,
modification, compromise or release of other security shall not release or
impair in any way this Mortgage or any of Mortgagor's obligations hereunder. In
the event of default, Mortgagee may exercise any available remedy in such order,
successively or concurrently, as Mortgagee may determine in its absolute
discretion, any marshalling of liens or other principle of law which might limit
the time or manner in which Mortgagee exercises its remedies being hereby waived
by Mortgagor.
22. BINDING EFFECT AND CAPTIONS. The covenants and agreements herein
contained shall bind, and the rights hereunder shall inure to, the respective
successors and assigns of Mortgagor and Mortgagee; provided that the terms of
this paragraph 22 shall not be deemed to limit, in any way, the provisions of
paragraph 13 hereof. The captions and headings of the paragraphs of this
Mortgage are for convenience only and are not to be used to interpret or define
the provisions hereof.
23. NOTICES. Any notice, demand or other communication provided for in
this Mortgage shall be in writing and shall be deemed to be given when
personally delivered or when sent by certified mail, postage prepaid, and
addressed to the parties at their addresses set forth below:
If To Mortgagee:
----------------
Star Bank, National Association
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Senior Vice President
with a copy to:
Xxxxxxxxx X. Xxxxxxxx, Esq.
Xxxx, Stettinius & Hollister
1800 Star Bank Center
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000-0000
If to Mortgagor:
---------------
Xxxxxx'x Restaurants, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxx
Vice President-Finance
with copies to:
Xxxxx X. Xxxxx, President
Xxxxxx'x Restaurants, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
43
and
W. Xxxx Xxxx, Esq.
Xxxxxx'x Restaurants, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Mortgagor and Mortgagee may, by written notice to the other as provided
hereunder, designate another address for purposes hereunder.
24. SEVERABILITY. In the event that any provision or clause of this
Mortgage or the other Loan Documents conflicts with applicable law, such
conflict shall not affect other provisions of this Mortgage or the other Loan
Documents which can be given effect without the conflicting provision, and to
this end the provisions of this Mortgage and the other Loan Documents are
declared to be severable.
25. SECURITY INTEREST. If any of the property herein mortgaged is of a
nature such that a security interest therein can be perfected under the Uniform
Commercial Code, this instrument shall also constitute the grant of a security
interest therein to Mortgagee and serve as a Security Agreement, and Mortgagor
agrees to execute any Financing Statements and to execute any other instruments
that may be required for the further specification, perfection or renewal of
such security interest.
PROVIDED, ALWAYS, that if the Obligations shall be fully kept and
performed, then these presents and the estate hereby granted shall cease,
determine and be void.
IN WITNESS WHEREOF, Mortgagor has executed this Mortgage effective as
of this ____ day of ____________, 1997.
Signed and acknowledged in XXXXXX'X RESTAURANTS, INC.
the presence of: an Ohio corporation
By:
-------------------------- -------------------------------
Printed Name:
Printed name: ---------------------
------------- Title:
----------------------------
--------------------------
Printed name:
-------------
44
STATE OF )
----------------------------) ss:
COUNTY OF )
---------------------------
The foregoing instrument was acknowledged before me this ____ day of
____________, 1997, by __________________, the __________________ of Xxxxxx'x
Restaurants, Inc., a corporation organized and existing under the laws of the
State of Ohio, on behalf of the corporation.
----------------------------------------
Notary Public
My Commission expires: _____________
This instrument prepared by:
Xxxxxx X. Xxxxx, Esq.
Xxxx, Xxxxxxxxxx & Xxxxxxxxx
1800 Star Bank Center
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
(000) 000-0000
45
EXHIBIT A
Legal Description
46
EXHIBIT B
Permitted Exceptions
1. The lien of nondelinquent real property taxes and installments of
assessments.
2. [List other exceptions as may be permitted by Mortgagee, in its sole
discretion.]
47
EXHIBIT H
---------
[To be appropriately modified for
Companies other than Xxxxxx'x
Restaurants, Inc. which
own Designated Properties]
SECURITY AGREEMENT
------------------
THIS SECURITY AGREEMENT (this "Agreement") is made and entered into as
of this _____ day of ______________, 1997, by and between STAR BANK, NATIONAL
ASSOCIATION, a national banking association with an address at 000 Xxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxx 00000 ("Bank"), and XXXXXX'X RESTAURANTS, INC., an Ohio
corporation whose address is 0000 Xxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxx 00000
("Company"), and is as follows:
1. DEFINITIONS. Whenever the following terms are used herein, they
shall be defined as follows:
(A) Any capitalized term not defined herein shall have the
meaning ascribed thereto in the Loan Agreement dated as of July 9, 1997 between
Company and Bank (as the same may be amended, modified, renewed or extended from
time to time, the "Loan Agreement"), unless the context requires otherwise.
(B) "Collateral" shall mean all of the following, whether now
owned or existing or hereafter arising or acquired: (i) all of Company's now
owned and hereafter acquired equipment and fixtures, including without
limitation furniture, machinery, vehicles, computers and associated hardware and
equipment and trade fixtures, now or hereafter located at or used in connection
with the Company's restaurant operations at the locations described on EXHIBIT A
attached hereto (the "Designated Properties"), together with any and all
attachments, accessions, parts and appurtenances thereto, substitutions therefor
and replacements thereof (the "Equipment"); (ii) all proceeds of sale of any of
the Equipment or any of Company's other assets associated with the Designated
Properties and all proceeds of sale of Company's interest as a limited partner
in the Cincinnati Reds; (iii) all of Company's books and records related to the
foregoing; and (iv) all proceeds, including without limitation insurance
proceeds, of any and all of the foregoing.
(C) "Event of Default" shall have the meaning set forth in
Paragraph 9 hereof.
(D) Any accounting terms used in this Agreement which are not
specifically defined shall have the meanings customarily given them in
accordance with generally accepted accounting principles. All other terms
contained in this Agreement shall, unless the context indicates otherwise, have
the meanings provided for by the Uniform
48
Commercial Code (the "Code") as adopted in the jurisdiction in which any of the
Collateral is located to the extent the same are defined therein.
2. GRANT OF SECURITY. As security for all obligations of Company to
Bank under the Loan Agreement, the Promissory Note dated as of ____________,
1997 given by Company to Bank (as the same may be amended, modified, renewed or
extended from time to time, the "Note") and the other Loan Documents, as defined
in the Loan Agreement (collectively, the "Obligations"), Company hereby grants
to Bank a security interest in all of the Collateral.
3. PERFECTION AND PROTECTION OF SECURITY INTEREST; DUTY OF CARE.
(A) Until all Obligations have been fully satisfied and the
Loan Agreement has been terminated, this Agreement and Bank's security interest
in the Collateral, and all proceeds thereof, shall continue in full force and
effect. Company shall not permit any lien, claim or encumbrance (other than
Permitted Liens, as provided in the Loan Agreement) to remain against any of the
Collateral and Company shall perform any and all steps requested by Bank to
perfect, maintain and protect Bank's security interest in the Collateral,
including, without limitation, executing and filing financing and continuation
statements in form and substance satisfactory to Bank. Bank may file one or more
financing statements disclosing Bank's security interest under this Agreement
without Company's signature appearing thereon, and Company shall pay the costs
of, or incidental to, any recording or filing of any financing statements
concerning the Collateral. Company agrees that a carbon, photographic,
photostatic or other reproduction of this Agreement or of a financing statement
is sufficient as a financing statement. Company shall pay or cause to be paid
all taxes, assessments and governmental charges levied or assessed or imposed
upon or with respect to the Collateral or any part thereof. If Company fails to
pay such taxes, assessments and governmental charges, Bank may (but shall not be
required to) pay the same and charge the cost to Company's account as part of
the Obligations payable on demand and secured by the Collateral. In order to
protect or perfect the security interest which Bank is granted hereunder, Bank
may, in its sole discretion, discharge any lien or encumbrance or bond the same,
pay any insurance, maintain guards, pay any service bureau and obtain any record
and charge the same to Company's account as an advance hereunder and part of the
Obligations, payable on demand and secured by the Collateral.
(B) Bank shall have no duty of care with respect to the
Collateral except that Bank shall exercise reasonable care with respect to the
Collateral in Bank's custody, but shall be deemed to have exercised reasonable
care if such property is accorded treatment substantially equal to that which
Bank accords its own property, or if Bank takes such action with respect to the
Collateral as Company shall request in writing, but no failure to comply with
any such request nor any omission to do any such act requested by Company shall
be deemed a failure to exercise reasonable care, nor shall Bank's failure to
take steps to preserve rights against any parties or
49
property be deemed to be failure to exercise reasonable care with respect to the
Collateral in Bank's custody.
4. BANK AS COMPANY'S ATTORNEY. Company hereby appoints Bank, or any
other person whom Bank may designate, as Company's attorney, with power to do
all things necessary to perfect Bank's security interest in the Collateral, to
preserve and protect the Collateral and to otherwise carry out this Agreement,
all at the cost of Company, and Company hereby ratifies and approves all acts of
such attorney. Provided Bank acts in a commercially reasonable manner, neither
Bank nor the attorney will be liable for any acts or omissions or error of
judgment or mistake of fact or law. This power, being coupled with an interest,
is irrevocable until the Obligations have been fully satisfied and this
Agreement terminated, whichever shall later occur. Company agrees to execute and
deliver promptly to Bank all instruments necessary or appropriate, as determined
in Bank's discretion, to further Bank's exercise of the rights and powers
granted in this Paragraph 4.
5. EXAMINATION OF COLLATERAL AND RECORDS. Bank shall at all times have
access to and the right to examine and inspect the Collateral and all of
Company's books and records relating thereto.
6. WARRANTIES AND REPRESENTATIONS. Company warrants and represents
that: (A) (i) The principal place of business of Company and the office where
its chief executive officers and accounting offices are located is set forth on
EXHIBIT B attached hereto, (ii) the offices where Company keeps its records
concerning the Collateral are at the locations set forth on EXHIBIT C attached
hereto, (iii) Company's registered office is at the location set forth on
EXHIBIT D attached hereto, and (iv) all of the Equipment is at the locations set
forth on EXHIBIT E attached hereto; (B) Company has executed UCC financing
statements, containing sufficient descriptions of the Collateral and otherwise
in form and substance sufficient for filing in every governmental, municipal or
other office in every jurisdiction necessary to perfect Bank's security interest
in the Collateral, and Company hereby irrevocably authorizes Bank to file the
same; and (C) Company has good, indefeasible and merchantable title to and
ownership of the Collateral, free and clear of all liens, claims, security
interests and encumbrances whatsoever, except Permitted Liens.
7. COVENANTS. Until the Obligations are fully paid, performed and
satisfied and this Agreement is terminated, Company covenants that it shall: (A)
Defend in good faith the Collateral against the claims and demands of all
persons; (B) Advise Bank in writing, at least thirty (30) days prior thereto, of
any change in Company's principal place of business or registered office, or any
change in Company's name, or any change in location of the Equipment, and, in
such event, Company shall promptly execute and deliver to Bank (and Company
agrees that Bank may execute and deliver the same as Company's irrevocable
attorney-in-fact) new UCC financing statements describing the Collateral
specified herein and otherwise in form and substance sufficient for recordation
wherever necessary or appropriate, as determined in Bank's sole discretion, to
perfect or continue perfected Bank's security interest in the Collateral based
upon such change, and
50
Company shall pay all filing and recording fees and taxes in connection with the
filing or recordation of such financing statements and shall immediately
reimburse Bank therefor if Bank pays the same; (C) Immediately notify Bank in
writing of any information which Company has or may receive with respect to the
Collateral which might in any manner materially and adversely affect the value
thereof or the rights of Bank with respect thereto; (D) Maintain the Equipment
in good operating condition and repair, make all necessary replacements thereof
so that the value and operating efficiency thereof shall at all times be
maintained and preserved, promptly inform Bank of any additions to or deletions
from the Equipment and immediately upon demand therefor by Bank, deliver to Bank
any and all evidences of ownership of the Equipment; and if Company fails to
keep and maintain the Equipment in good operating condition and repair or to
make necessary replacements thereof, Bank may (but shall not be required to) so
maintain, repair or replace all or any part of the Equipment and charge the cost
thereof to Company's account as part of the Obligations payable on demand and
secured by the Collateral; (E) Insure the Collateral against loss or damage by
fire, theft, burglary, pilferage, loss in transit and such other hazards as Bank
may specify in amounts and under policies by insurers acceptable to Bank, and
all premiums thereon shall be paid by Company and the policies or a certificate
thereof signed by the insurer shall, at Bank's option, be delivered to Bank upon
the issuance of the policies to Company and at least fifteen (15) days prior to
the expiration date thereof; at Bank's option, each such policy shall name Bank
(and no other party) as a named insured, shall contain a lender's loss payable
clause acceptable to Bank and shall provide that such policy may not be amended
or cancelled without thirty (30) days prior written notice to Bank; and if
Company fails to do so, Bank may (but shall not be required to) procure such
insurance and charge the cost to Company's account as part of the Obligations
payable on demand and secured by the Collateral; (F) Not permit any part of the
Collateral or any of the records concerning the same to be removed from the
locations referred to in Paragraph 6(A) above or any other location at which any
of the same may hereafter be located and shall not move or change its principal
place of business or registered office, without notification to Bank as provided
in Paragraph 7(B) above; (G) Not permit any of the Equipment to become a fixture
to real property not mortgaged to Bank or an accession to other personal
property not constituting part of the Collateral; and (H) Not, except as
otherwise provided herein or in the Loan Agreement, encumber, pledge, mortgage,
grant a security interest in, assign, sell, lease or otherwise dispose of or
transfer, whether by sale, merger, consolidation, liquidation, dissolution or
otherwise, any of the Collateral, the Designated Properties or Company's
interest in the Cincinnati Reds.
8. TERM. This Agreement shall terminate on the later to occur of (i)
the full performance, payment and satisfaction of the Obligations and (ii) the
termination of the Loan Agreement.
9. EVENTS OF DEFAULT. The occurrence of any Event of Default under the
Loan Agreement shall constitute an Event of Default hereunder.
51
10. BANK'S RIGHTS AND REMEDIES.
(A) If any Event of Default shall occur, Bank shall have, in
addition to all other rights provided herein, in the Loan Agreement and the
other Loan Documents and available at law and in equity, the rights and remedies
of a secured party under the Code, and further, Bank may, without notice, demand
or legal process of any kind (except as may be required by law), all of which
Company waives, at any time or times, take physical possession of the Collateral
and maintain such possession on Company's premises at no cost to Bank, or remove
the Collateral, or any part thereof, to such other place(s) as Bank may desire,
or Company shall, upon Bank's demand, at Company's own cost and expense,
assemble the Collateral and make it available to Bank, at a place reasonably
convenient to Company and Bank, and Bank may sell and deliver any or all
Collateral held by or for Bank at public or private sale(s), for cash, upon
credit or otherwise, at such prices and upon such terms as Bank deems advisable,
at Bank's sole discretion, and may, if Bank deems it reasonable, postpone or
adjourn any sale of the Collateral from time to time by an announcement at the
time and place of sale or by announcement at the time and place of such
postponed or adjourned sale, without being required to give a new notice of
sale. Company agrees that Bank has no obligation to preserve rights to the
Collateral against prior parties. Company acknowledges that portions of the
Collateral could be difficult to preserve and dispose of and further subject to
complex maintenance and management. Accordingly, Bank shall have the widest
possible latitude to preserve and protect the Collateral and Bank's security
interest therein, and Bank, at its option, shall have the unqualified right to
appoint a receiver, without notice or hearing, for the preservation, possession,
protection and disposition of all or part of the Collateral and the collection
and protection for Bank of any proceeds of use or disposition of the Collateral
and to do any other thing and exercise any other right or remedy which Bank may,
with or without judicial process, do or exercise. Any requirement of reasonable
notice shall be met if such notice is mailed postage prepaid to Company at least
five (5) days before the time of sale or other disposition. The proceeds of sale
shall be applied first to all costs and expenses of sale, including attorneys'
fees, and second to the payment (in whatever order Bank elects) of the
Obligations. Bank will return any excess to Company or such other party as may
be legally entitled thereto and Company shall remain liable to Bank for any
deficiency. Bank's rights and remedies under this Agreement shall be cumulative
and not exclusive of any other right or remedy which Bank may have.
(B) Company shall pay to Bank, on demand and as part of the
Obligations, all costs and expenses, including court costs, attorneys' fees and
costs of sale, incurred by Bank in exercising any of its rights or remedies
hereunder.
11. WAIVER; AMENDMENTS; SUCCESSORS AND ASSIGNS.
(A) Any and all of Bank's rights with respect to the
Collateral and the security interest granted hereunder shall continue
unimpaired, notwithstanding the release or substitution of any Collateral at any
time(s), or of any rights or interests therein, or
52
any delay, extension of time, renewal, compromise or other indulgence granted by
Bank in reference to any Obligations, and Company hereby waives all notice of
any such delay, extension, release, substitution, renewal, compromise or other
indulgence.
(B) Failure by Bank to exercise any right, remedy or option
under this Agreement or any present or future supplement hereto or in any other
agreement between Company and Bank or delay by Bank in exercising the same will
not operate as a waiver by Bank of its right to exercise any such right, remedy
or option. No waiver by Bank will be effective unless it is in writing and then
only to the extent specifically stated.
(C) This Agreement cannot be changed or terminated orally.
(D) Company may not assign, transfer or otherwise dispose of
any of its rights or obligations hereunder, by operation of law or otherwise.
All of the rights, privileges, remedies and options given to Bank hereunder
shall inure to the benefit of Bank's successors and assigns, and all the terms,
conditions, covenants, provisions and warranties of this Agreement shall inure
to the benefit of and shall bind the representatives, successors and assigns of
Company and Bank, respectively.
12. MISCELLANEOUS.
(A) Wherever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
(B) This Agreement shall be interpreted and the rights and
liabilities of the parties hereto determined in accordance with the laws of the
State of Ohio and all other laws of mandatory application, including without
limitation the laws of any state in which any of the Collateral may be located.
(C) All of the Obligations shall constitute one loan secured
by Bank's security interest in the Collateral and by all other security
interests, mortgages, liens, claims and encumbrances now and from time to time
hereafter granted by Company to Bank. Bank may, in its sole discretion, (i)
exchange, enforce, waive or release any such security or portion thereof, (ii)
apply such security and direct the order or manner of sale thereof as Bank may,
from time to time, determine, and (iii) settle, compromise, collect or otherwise
liquidate any such security in any manner following the occurrence of any Event
of Default without affecting or impairing its right to take any other further
action with respect to any security or any part thereof.
(D) Any notice or notification required, permitted or
contemplated hereunder shall be in writing and shall be deemed to be given when
personally delivered or when sent by certified mail, postage prepaid, and
addressed to the parties at their addresses set forth below:
53
Bank: Star Bank, National Association
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Senior Vice President
with copy to: Xxxxxxxxx X. Xxxxxxxx
Xxxx, Xxxxxxxxxx & Xxxxxxxxx
1800 Star Bank Center
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000-0000
Company: Xxxxxx'x Restaurants, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxx
Vice President-Finance
with copies to: Xxxxx X. Xxxxx, President
Xxxxxx'x Restaurants, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
and
W. Xxxx Xxxx, Esq.
Xxxxxx'x Restaurants, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Company or Bank may, by written notice to the other as provided herein,
designate another address for purposes hereunder.
IN WITNESS WHEREOF, this Agreement has been duly executed by Company as
of the _____ day of ____________, 1997.
XXXXXX'X RESTAURANTS, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Accepted as of _________________, 1997:
STAR BANK, NATIONAL ASSOCIATION
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
54
EXHIBIT I
---------
LIFE INSURANCE ASSIGNMENT
-------------------------
(See attached)
55
FORM APPROVED BY
BANK MANAGEMENT COMMISSION
AMERICAN BANKERS ASSOCIATION
EXHIBIT I
---------
ASSIGNMENT OF LIFE INSURANCE POLICY AS COLLATERAL
A. FOR VALUE RECEIVED the undersigned hereby assign, transfer and set over
to STAR BANK, NATIONAL ASSOCIATION of 000 XXXXXX XXXXXX, XXXXXXXXXX,
XXXX 00000 its successors and assigns, (herein called the "Assignee")
Policy No. _____________________________ issued by the ________________
______________________________________________ (herein called the
"Insurer") and any supplementary contracts issued in connection
therewith (said policy and contracts being herein called the "Policy"),
upon the life of __________________ _________________________ of
_____________________________ and all claims, options, privileges,
rights, title and interest therein and thereunder (except as provided
in Paragraph C hereof), subject to all the terms and conditions of the
Policy and to all superior liens if any, which the Insurer may have
against the Policy. The undersigned by this instrument jointly and
severally agree and the Assignee by the acceptance of this assignment
agrees to the conditions and provisions herein set forth.
B. It is expressly agreed that, without detracting from the generality of
the foregoing, the following specific rights are included in assignment
and pass by virtue hereof:
1. The sole right to collect from the Insurer the net proceeds of
the Policy when it becomes a claim by death or maturity;
2. The sole right to surrender the Policy and receive the
surrender value thereof at any time provided by the terms of
the Policy and at such other times as the Insurer may allow;
3. The sole right to obtain one or more loans or advances on the
Policy, either from the Insurer or, at any time, from other
persons, and to pledge or assign the Policy as security for
such loans or advances;
4. The sole right to collect and receive all distributions or
shares of surplus, dividend deposits or additions to the
Policy now or hereafter made or apportioned thereto, and to
exercise any and all options contained in the Policy with
respect thereto; provided, that unless and until the Assignee
shall notify the Insurer in writing to the contrary, the
distributions or shares of surplus, dividend deposits and
additions shall continue on the plan in force at the time of
this assignment; and
5. The sole right to exercise all nonforfeiture rights permitted
by the terms of the Policy or allowed by the Insurer and to
receive benefits and advantages derived therefrom.
C. It is expressly agreed that the following specific rights, so long as
the Policy has not been surrendered, are reserved and excluded from
this assignment and do not pass by virtue hereof:
1. The right to collect from the Insurer any disability benefit
payable in cash that does not reduce the amount of insurance;
2. The right to designate and change the beneficiary;
3. The right to elect any optional mode of settlement permitted
by the Policy or allowed by the Insurer; but the reservation
of these rights shall in no way impair the right of the
Assignee to surrender the Policy completely with all its
incidents or impair any other right of the Assignee hereunder,
and any designation or change of beneficiary or election of a
mode of settlement shall be made subject to this assignment
and to the rights of the Assignee hereunder.
D. This assignment is made and the Policy is to be held as collateral
security for any and all liabilities of the undersigned, or any of
them, to the Assignee, either now existing or that may hereafter arise
in the ordinary course of business between any of the undersigned and
the Assignees (all of which liabilities secured or to become secured
are herein called "Liabilities").
E. The Assignee covenants and agrees with the undersigned as follows:
1. That any balance of sums received hereunder from the Insurer
remaining after payment of the then existing Liabilities,
matured or unmatured, shall be paid by the Assignee to the
persons entitled thereto under the terms of the Policy had
this assignment been executed;
2. That the Assignee will not exercise either the right to
surrender the Policy or (except for the purpose of paying
premiums) the right to obtain policy loans from the Insurer,
until there has been default in any of the Liabilities or a
failure to pay any premium when due, nor until twenty days
after the Assignee shall have mailed, by first-class mail, to
the undersigned at the addresses last supplied in writing to
the Assignee specifically referring to this assignment,
notice of intention to exercise such right; and
3. That the Assignee will upon request forward without
unreasonable delay to the Insurer the Policy for endorsement
of any designation or change of beneficiary or any election of
an optional mode of settlement.
56
F. The Insurer is hereby authorized to recognize the Assignee's claims to
rights hereunder without investigation the reason for any action taken
by the Assignee, or the validity or the amount of the Liabilities or
the existence of any default therein, or the giving of any notice under
Paragraph E (2) above or otherwise, or the application to be made by
the Assignee of any amounts to be paid to the Assignee. The sole
signature of the Assignee shall be sufficient for the exercise of any
rights under the Policy assigned hereby and the sole receipt of the
Assignee for any sums received shall be a full discharge and release
therefor to the Insurer. Checks for all or any part of the sums payable
under the Policy and assigned herein, shall be drawn to the exclusive
order of the Assignee if, when, and in such amounts as may be,
requested by the Assignee.
G. The Assignee shall be under no obligation to pay any premium, or the
principal of or interest on any loans or advances on the Policy whether
or not obtained by the Assignee, or any other charges on the Policy,
but any such amounts so paid by the Assignee from its own funds, shall
become a part of the Liabilities hereby secured, shall be due
immediately, and shall draw interest at a rate fixed by the Assignee
from time to time not exceeding 6% per annum.
H. The exercise of any right, option, privilege or power given herein to
the Assignee shall be at the option of the Assignee, but (except as
restricted by Paragraph E (2) above) the Assignee may exercise any such
right, option, privilege or power without notice to, or assent by, or
affecting the liability of, or releasing any interest hereby assigned
by the undersigned, or any of them.
I. The Assignee may take or release other security, may release any party
primarily or secondarily liable for any of the of Liabilities, may
grant extensions, renewals or indulgences with respect to the
Liabilities, or may apply to the Liabilities in such order as the
Assignee may determine, the proceeds of the Policy hereby assigned or
any amount received on account of the Policy by the exercise of any
right permitted under this assignment, without resorting or regard to
other security.
J. In the event of any conflict between the provisions of this assignment
and provisions of the note or other evidence of any Liability, with
respect to the Policy or rights of collateral security therein, the
provisions of this assignment shall prevail.
K. Each of the undersigned declares that no proceedings in bankruptcy are
pending against him and that his property is not subject to assignment
for the benefit of creditors.
Signed and sealed this day of , 1997
--------- -----------
---------------------------------- -------------------------------(L.S.)
Witness Insured or Owner
---------------------------------- -------------------------------
Address
---------------------------------- -------------------------------(L.S.)
Witness Beneficiary
--------------------------------- -------------------------------
Address
57
INDIVIDUAL ACKNOWLEDGMENT
STATE OF _____________}
}SS:
COUNTY OF ____________}
On the ______________ day of _______________ 1997, before me personally
came _________________, to me known to be the individual _____________________
described in and who executed the assignment on the reverse side hereof and
acknowledged to me that ______________ be ____________ executed the same.
--------------------------------
Notary Public
My commission expires ________________
CORPORATE ACKNOWLEDGMENT
STATE OF _____________}
}SS:
COUNTY OF ____________}
On the ______________ day of _______________ 1997, before me personally
came ____________________________________________, who being by me duly sworn,
did depose and say that he resides in __________________________________________
that he is the ____________________ of ___________________________________, the
corporation described in and which executed the assignment on the reverse side
hereof; that he knows the seal of said corporation; that the seal affixed to
said assignment is such corporate seal; that it was so affixed by order of the
Board of Directors of said corporation, and that he signed his name thereto by
like order.
--------------------------------
Notary Public
My commission expires ________________
----------
Duplicate received and filed at the home office of the Insurer in _____________,
this ___________ day of ___________ 1997
-------------------------------------------
By:
----------------------------------
Authorized Officer
----------
NOTE: When received by a corporation, the corporate seal should be affixed and
there should be attached to the assignment a certified copy of the resolutions
of the Board of Directors authorized the signing officer to execute and deliver
the assignment in the name and on behalf of the corporations.
RELEASE OF ASSIGNMENT
The debt which this assignment was given to secure having been paid in
full, we hereby release all our right, title and interest in and to the policy
thereby assigned to us.
This ______ day of ________, 1997
By:
-------------------------------
By:
-------------------------------
STATE OF _____________}
}SS:
COUNTY OF ____________}
I, _______________________________________, Notary Public in and for
said county and state, do hereby certify that __________________________________
and _________________________________ ,the persons whose names have been signed
to the foregoing instrument, appeared before me this day in person and
acknowledged that having read the said instrument, they signed, sealed and
delivered the same as their free and voluntary act and as the deed and pursuant
to authority conferred upon them by _________________________________________ .
Given under my hand and notarial seal this _____ day of ________, 1997.
My commission expires _______________ --------------------------- (Seal)
Notary Public
58
EXHIBIT I-A
-----------
LIFE INSURANCE POLICIES
-----------------------
(See attached)
59
EXHIBIT I-A
-----------
XXXXXX'X RESTAURANTS, INC.
LIFE INSURANCE POLICIES
INSURED INSURANCE POLICY
------- COMPANY NUMBER
------- ------
XXXXXX X. XXXXXX GREAT WEST 1950802
XXXXXX X. XXXXXX GREAT WEST 4107-093
XXXXXX X. XXXXXX PROVIDENT 727-065
XXXXXXX X. XXXXXX GREAT WEST 4107-090
XXXXXXX X. XXXXXX SECURITY LIFE 989044
X. XXXXXXX XXXXXXX XXXXX XXXX 0000-000
X. XXXXXXX XXXXXXX XXXXXXXXX X0000-000
XXXXXX X. XXXXXX GREAT WEST 4107-092
XXXXXX X. XXXXXX PROVIDENT X0000-000
XXXXX X. XXXXX XXXXX XXXX 4107-094
XXXXX X. XXXXX PROVIDENT X0000-000
X. XXXX XXXX SECURITY LIFE 989047
XXXXX X. XXXXX PROVIDENT 1179583
XXXXXX X. XXXXXX PROVIDENT 1184544
XXXXXX X. XXXXXX PROVIDENT G3507-866
XXXXXX X. XXXXXXXX SECURITY LIFE 989043
XXXX X. XXXXX CONNECTICUT NAT'L 2A-7010852
XXXX X. XXXXX GREAT WEST LIFE 1231 - 348
XXXX X. XXXXX GREAT WEST LIFE 1511 - 228
XXXX X. XXXXX GREAT WEST LIFE 1629 - 356
XXXX X. XXXXX GREAT WEST LIFE 1724 - 573
XXXX X. XXXXX GREAT WEST LIFE 1996 - 512
XXXX X. XXXXX GREAT WEST LIFE 1801 - 750
XXXX X. XXXXX CONFEDERATION LIFE 5743 - 891
XXXX X. XXXXX HARTFORD LRO559 - 474
XXXX X. XXXXX LINCOLN NATIONAL 64-1471 - 679
XXXX X. XXXXX LINCOLN NATIONAL 66-1099 - 177
XXXX X. XXXXX LINCOLN NATIONAL 66-1154 - 063
XXXX X. XXXXX LINCOLN NATIONAL 66-1183 - 154
XXXX X. XXXXX LINCOLN NATIONAL 64-1592 - 945
XXXX X. XXXXX LINCOLN NATIONAL 64-1273 - 454
XXXX X. XXXXX LINCOLN NATIONAL 64-1351 - 694
XXXX X. XXXXX PRUDENTIAL LIFE 14-690 - 257
XXXXX X. XXXXX PROVIDENT LIFE G3508 - 287
XXXXX X. XXXXX CONFEDERATION LIFE 0574 - 5222
XXXXX X. XXXXX PACIFIC MUTUAL 1A-222 - 57820
XXXX X. XXXXX GREAT WEST 4831 - 065
60
EXHIBIT J
---------
PROMISSORY NOTE
---------------
$___________________ Cincinnati, Ohio
__________, 1997
XXXXXX'X RESTAURANTS, INC., an Ohio corporation (the "Borrower"), for
value received, hereby promises to pay to the order of STAR BANK, NATIONAL
ASSOCIATION, a national banking association (the "Bank"), or it successors or
assigns, on or before ____________, 1999, the principal sum of _________________
($____________), together with interest thereon as hereinafter provided.
This Note evidences the loan (the "Loan") made under the Loan Agreement
dated as of July 9, 1997 between the Borrower and the Bank, as amended from time
to time (the "Loan Agreement"), and is subject to the terms and conditions
thereof, including, without limitation, the terms thereof providing for
acceleration of maturity of the Loan. If any term or condition of this Note
conflicts with the express terms or conditions of the Loan Agreement, the terms
and conditions of the Loan Agreement shall control. Terms used herein shall have
the same meanings as in the Loan Agreement.
Subject to the terms of the Loan Agreement, the Borrower shall from
time to time have the option of designating that portions of the principal
balance of the Loan bear interest at a rate per annum equal to (i) the One-Month
LIBOR-Based Rate (as hereinafter defined) for a one (1) month period (the
"One-Month LIBOR-Based Rate Period") and (ii) the Two-Month LIBOR-Based Rate (as
hereinafter defined) for a two (2) month period (the "Two-Month LIBOR-Based Rate
Period"). Any portion of the Loan with respect to which a One-Month LIBOR-Based
Rate or a Two-Month LIBOR-Based Rate is not in effect shall bear interest at a
rate per annum equal to the Prime-Based Rate (as hereinafter defined), with such
rate to be adjusted on the effective date of any change in the Prime Rate (as
hereinafter defined) by the Bank.
The "One-Month LIBOR-Based Rate" shall mean the sum of (i) the annual
rate, determined solely by the Bank, as the British Banking Association 11:00
a.m. Fix offered rate obtained from Telerate Systems Incorporated, Bloomberg
Financial Systems or any other electronic media deemed appropriate by the Bank
(rounded upwards, if necessary, to the nearest 1/10000 of one percent), for
deposits in immediately available Dollars in the London Interbank Market (as
hereinafter defined) at or about 11:00 a.m., London time, for the applicable
One-Month LIBOR-Based Rate Period on the day two (2) London Business Days (as
hereinafter defined) preceding the first day of such One-Month LIBOR-Based Rate
Period, PLUS (ii) the LIBOR-Based Rate Spread (as hereinafter defined), and
adjusted for Reserve Percentages (as hereinafter defined) and any other
61
regulatory and/or governmental costs incurred by the Bank from eurocurrency
liabilities. The "Two-Month LIBOR-Based Rate" shall mean the sum of (i) the
annual rate, determined solely by the Bank, as the British Banking Association
11:00 a.m. Fix offered rate obtained from Telerate Systems Incorporated,
Bloomberg Financial Systems or any other electronic media deemed appropriate by
the Bank (rounded upwards, if necessary, to the nearest 1/10000 of one percent),
for deposits in immediately available Dollars in the London Interbank Market at
or about 11:00 a.m., London time, for the applicable Two-Month LIBOR-Based Rate
Period on the day two (2) London Business Days preceding the first day of such
Two-Month LIBOR-Based Rate Period, PLUS (ii) the LIBOR-Based Rate Spread, and
adjusted for Reserve Percentages and any other regulatory and/or governmental
costs incurred by the Bank from eurocurrency liabilities. In the event that
Telerate Systems Incorporated, Bloomberg Financial Systems or any other
electronic media selected by the Bank ceases to quote such rates, the Bank
shall, in its discretion, select an alternative rate source. The One-Month
LIBOR-Based Rate and the Two-Month LIBOR-Based Rate are each sometimes referred
to herein as a "LIBOR-Based Rate," and the One-Month LIBOR-Based Rate Period
and the Two-Month LIBOR-Based Rate Period are each sometimes referred to herein
as a "LIBOR-Based Rate Period."
The "LIBOR-Based Rate Spread" shall initially be one hundred fifty
(150) basis points, and shall be adjusted as follows: If on or before the date
that is one (1) year after the date hereof (the "Disbursement Anniversary
Date"), the outstanding principal balance of the Loan shall have been reduced to
less than Seven Million Five Hundred Thousand Dollars ($7,500,000) (the
"Designated Level"), the LIBOR-Based Rate Spread shall, commencing on the date
of such reduction, be one hundred twenty-five (125) basis points, and if by the
Disbursement Anniversary Date the outstanding principal balance of the Loan
shall not have been reduced to the Designated Level, the LIBOR-Based Rate Spread
shall, commencing on the Disbursement Anniversary Date, be one hundred
seventy-five (175) basis points.
"London Interbank Market" shall mean the London eurodollar interbank
market where rates are offered to the Bank by prime banks for deposits of
immediately available Dollars. "London Business Day" shall mean any day other
than a Saturday, Sunday or holiday on which banks in London, England are
authorized by law to close.
"Reserve Percentages" shall mean the total maximum reserve percentages
for determining the reserves to be maintained by member banks of the Federal
Reserve System for eurocurrency liabilities, as defined in Federal Reserve Board
Regulation D, rounded upward to the nearest 1/100 of one percent, and includes,
but is not limited to, marginal, emergency, supplemental, special and other
reserve percentages. The amount of the adjustment for Reserve Percentages and
regulatory and/or governmental costs shall be based upon the assumption that the
Bank funded one hundred percent (100%) of the Loan or portion thereof bearing
interest at a LIBOR-Based Rate in the London Interbank Market.
62
The "Prime Rate" shall mean that rate announced by the Bank as its
prime rate, which rate is determined solely by the Bank pursuant to market
factors and its own operating needs and is not necessarily the Bank's best or
most favorable rate for commercial or other loans. The "Prime-Based Rate" shall
initially be the Prime Rate, and shall be adjusted as follows: If on or before
the Disbursement Anniversary Date the outstanding principal balance of the Loan
shall have been reduced to the Designated Level, the Prime-Based Rate shall,
commencing on the date of such reduction, be the Prime Rate MINUS twenty-five
(25) basis points, and if on or before the Disbursement Anniversary Date the
outstanding principal balance of the Loan shall not have been reduced to the
Designated Level, the Prime-Based Rate shall, commencing on the Disbursement
Anniversary Date, be the Prime Rate PLUS twenty-five (25) basis points.
Interest on any portion of the Loan bearing interest at the Prime-Based
Rate shall be payable monthly, in arrears, commencing on _________________,
1997, and on the last day of each calendar month thereafter, and when this Note
is due (whether by reason of acceleration or otherwise). Interest on any portion
of the Loan bearing interest at a LIBOR-Based Rate shall be payable, in arrears,
on the last day of the LIBOR-Based Rate Period applicable thereto, and when this
Note is due (whether by reason of acceleration or otherwise). Interest on this
Note shall be computed on the basis of a year consisting of three hundred sixty
(360) days but applied to the actual number of days elapsed. At the option of
the Bank, (a) prior to acceleration of this Note, in the event that any interest
on or principal of this Note remains unpaid past thirty (30) days of the date
due, and/or (b) upon the occurrence of any other Event of Default under the Loan
Agreement or upon the acceleration of this Note, interest (computed and adjusted
in the same manner, and with the same effect, as interest on this Note prior to
maturity) on the outstanding balance of this Note shall be payable on demand at
the Prime Rate PLUS an additional three percent (3%) per annum up to any maximum
rate permitted by law, in all cases until paid and whether before or after the
entry of any judgment thereon. In addition, in the event that the Borrower
should fail to make any payment hereunder within ten (10) days of the date due,
the Borrower shall pay the Bank a fee in an amount of up to five percent (5%) of
the amount of such payment, but in no event less than fifty dollars ($50.00),
which fee shall be immediately due and payable without notice or demand.
The Borrower shall prepay the outstanding principal balance of the Loan
in an amount equal to the net after-tax proceeds from the sale of any assets of
the Borrower or any of its Subsidiaries (other than sales of any assets as
described in SECTION 2(L)(II) or SECTION 2(L)(III) of the Loan Agreement) on the
date of receipt of such proceeds (provided that if prepayment on such date would
cause the Borrower to be subject to a charge hereunder because of repayment of a
portion of the Loan bearing interest at a LIBOR-Based Rate prior to the
expiration of the LIBOR-Based Rate Period applicable hereto, then, at the option
of the Borrower, such proceeds shall not be applied to the prepayment of the
Loan on such
63
date, but instead shall be deposited into a non-interest bearing account at the
Bank under the sole control of the Bank and shall be applied to prepayment of
the Loan at the expiration of such LIBOR-Based Rate Period), and the Borrower
shall prepay the outstanding principal balance of the Loan by at least Five
Million Five Hundred Thousand Dollars ($5,500,000), whether from the proceeds of
asset sales or otherwise, on or before the Disbursement Anniversary Date. Unless
sooner due and payable as provided hereunder, the entire outstanding principal
balance of this Note shall be due and payable in full on ______________, 1999.
All payments of principal and interest hereunder shall be made in
immediately available funds to the Bank at 000 Xxxxxx Xxxxxx, Xxxxxxxx 0000,
Xxxxxxxxxx, Xxxx 00000, or at such other place as may be designated by the Bank
to the Borrower in writing. The Bank is authorized by the Borrower to enter from
time to time the balance of this Note and all payments and prepayments thereon
on the reverse of this Note or in the Bank's regularly maintained data
processing records, and the aggregate unpaid amount set forth thereon or therein
shall be presumptive evidence of the amount owing to the Bank and unpaid on this
Note.
The Borrower may, at its option, from time to time repay or prepay part
or all of the outstanding principal balance of the Loan bearing interest at the
Prime-Based Rate without premium. The Loan or any portion thereof bearing
interest at a LIBOR-Based Rate may only be repaid without charge at the
expiration of the LIBOR-Based Rate Period applicable thereto, and any repayment
of the Loan or any portion thereof bearing interest at a LIBOR-Based Rate at any
time prior to the expiration of the LIBOR-Based Rate Period applicable thereto
shall be subject to a charge in an amount determined by the Bank in its
reasonable discretion, such charge to compensate the Bank for loss of bargain
with respect to the Loan or portion thereof being so paid, and not as a penalty,
payable upon demand accompanied by a reasonably detailed statement as to such
charge (which statement shall be conclusive in the absence of manifest error).
IMPORTANT: This Note shall be deemed made in Ohio and shall in all
respects be governed by and construed in accordance with the laws of the State
of Ohio, including all matters of construction, validity and performance.
Without limitation on the ability of the Bank to initiate and prosecute any
action or proceeding in any applicable jurisdiction related to loan repayment,
the Borrower and the Bank agree that any action or proceeding commenced by or on
behalf of the parties arising out of or relating to this Note shall be commenced
and maintained exclusively in the District Court of the United States for the
Southern District of Ohio, or any other court of applicable jurisdiction located
in Cincinnati, Ohio. The Borrower and the Bank also agree that a summons and
complaint commencing an action or proceeding in any such Ohio courts by or on
behalf of such parties shall be properly served and shall confer personal
jurisdiction on a party to which said party consents, if (a) served personally
or by certified mail to the other party at any of its addresses noted herein, or
(b) as otherwise provided under the laws of the State of Ohio. The interest
rates and all
64
other terms of this Note negotiated with the Borrower are, in part, related to
the aforesaid provisions on jurisdiction, which the Bank deems a vital part of
this loan arrangement.
Presentment for payment, notice of dishonor, protest and notice of
protest are hereby waived.
XXXXXX'X RESTAURANTS, INC.
By:
--------------------------------------
Title:
-----------------------------------
Address: 0000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
