Exhibit 10.03
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") is made as of , 2002 (the
"Closing Date"), by and between GE CAPITAL FRANCHISE FINANCE CORPORATION, a
Delaware corporation ("Lender"), FAMILY STEAK HOUSES OF FLORIDA, INC., a Florida
corporation ("Borrower").
AGREEMENT:
In consideration of the mutual covenants and provisions of this Agreement,
the parties agree as follows:
1. Definitions. The following terms shall have the following meanings
for all purposes of this Agreement:
"ADA" means the Americans with Disabilities Act of 1990, as such act may be
amended from time to time.
"Affiliate" means any Person which directly or indirectly controls, is
under common control with, or is controlled by any other Person. For purposes
of this definition, "controls", "under common control with" and "controlled by"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through
ownership of voting securities or otherwise.
"Anti-Money Laundering Laws" means all applicable BSA laws, regulations and
government guidance on BSA compliance and on the prevention and detection of
money laundering violations under 18 U.S.C. ss ss 1956 and 1957, as amended.
"Applicable Regulations" means all applicable statutes, regulations, rules,
ordinances, codes, licenses, permits, orders and approvals of each Governmental
Authority having jurisdiction over the Premises, including, without limitation,
all health, building, fire, safety and other codes, ordinances and requirements,
all applicable standards of the National Board of Fire Underwriters and the ADA
and all policies or rules of common law, in each case, as amended, and any
judicial or administrative interpretation thereof, including any judicial order,
consent, decree or judgment applicable to any of the Borrower Parties.
"Borrower Parties" means, collectively, Borrower and any guarantors of the
Loans (including, in each case, any predecessors-in-interest).
"BSA" means the Bank Secrecy Act (31 U.S.C. ss ss 5311 et. seq.), as
amended.
"Business Day" means any day on which Lender is open for business other
than a Saturday, Sunday or a legal holiday, ending at 5:00 P.M. Phoenix, Arizona
time.
"Change of Control" means a change in control of any of the Borrower
Parties, including, without limitation, a change in control resulting from
direct or indirect transfers of voting stock or partnership, membership
or other ownership interests, whether in one or a series of transactions. For
purposes of this definition, "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of any of the Borrower Parties, as applicable, and a Change of Control
will occur if any of the following occur: (i) any merger or consolidation by any
of the Borrower Parties, as applicable, with or into any other entity; or
(ii) if any "Person" as defined in Section 3(a)(9) of the Securities and
Exchange Act of 1934, as amended (the "Exchange Act"), and as used in Section
13(d) and 14(d) thereof, including a "group" as defined in Section 13(d) of
the Exchange Act, who, subsequent to the Closing, becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), of securities of any of the
Borrower Parties, as applicable, representing 50% or more of the combined voting
power of Borrower's then outstanding securities (other than indirectly as a
result of the redemption by any of the Borrower Parties, as applicable, of its
securities).
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"Closing" means the disbursement of the Loan Amount by Title Company as
contemplated by this Agreement.
"Code" means Title 11 of the United States Code, 11 U.S.C. Sec. 101 et
seq., as amended.
"Commitment" means that certain Commitment Letter dated August 19, 2002
between Lender and Borrower and any amendments or supplements thereto.
"Default Rate" has the meaning set forth in the Note.
"Environmental Condition" means any condition with respect to soil, surface
waters, groundwaters, land, stream sediments, surface or subsurface strata,
ambient air and any environmental medium comprising or surrounding the Premises,
whether or not yet discovered, which would reasonably be expected to or does
result in any damage, loss, cost, expense, claim, demand, order or liability to
or against any of the Borrower Parties or Lender by any third party (including,
without limitation, any Governmental Authority), including, without limitation,
any condition resulting from the operation of business at the Premises and/or
the operation of the business of any other property owner or operator in the
vicinity of the Premises and/or any activity or operation formerly conducted by
any person or entity on or off the Premises.
"Environmental Indemnity Agreement" means the environmental indemnity
agreement dated as of the date of this Agreement executed by Borrower for the
benefit of the Indemnified Parties and such other parties as are identified in
such agreement with respect to the Premises, as the same may be amended from
time to time.
"Environmental Insurer" means American International Specialty Lines
Insurance Company, or such other environmental insurance company as Lender may
select, and its successors and assigns.
"Environmental Laws" means any present and future federal, state and local
laws, statutes, ordinances, rules, regulations, orders, injunctions and decrees
of Governmental Authorities and common law, relating to Hazardous Materials or
USTs and/or the protection of human health or the environment by reason of a
Release or a Threatened Release of Hazardous Materials or USTs or relating to
liability for or costs of Remediation or prevention of Releases. "Environmental
Laws" includes, but is not limited to, the following statutes, as amended, any
successor thereto, and any regulations, rulings, orders or decrees promulgated
pursuant thereto, and any state or local statutes, ordinances, rules,
regulations, orders, injunctions and decrees of Governmental Authorities: the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
ssss 9601 et seq.; the Emergency Planning and Community Right-to-Know Act, 42
U.S.C. ss 11001 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C.
ss 5101 et seq.; the Resource Conservation and Recovery Act (including but not
limited to Subtitle I relating to USTs), 42 U.S.C. ssss 6901 et seq.; the Clean
Water Act, 33 U.S.C. ssss 1251 et seq.; the Clean Air Act, 42 U.S.C. ssss 7401
et seq.; the Toxic Substances Control Act, 15 U.S.C. ss 2601 et seq.; the Safe
Drinking Water Act, 42 U.S.C. ss ss 7401 et seq.; the Occupational Safety and
Health Act, 29 U.S.C. ss 651 et seq.; the Federal Insecticide, Fungicide and
Rodenticide Act, 7 U.S.C. ss ss 136 et seq.; the Endangered Species Act, 16
U.S.C. ss ss 1531 et seq. and the National Environmental Policy Act, 42 U.S.C.
ss 4321 et seq. "Environmental Laws" also includes, but is not limited to, any
present and future federal, state and local laws, statutes, ordinances, rules,
regulations, orders, injunctions and decrees of Governmental Authorities and
common law: conditioning transfer of property upon a negative declaration or
other approval of a Governmental Authority of the environmental condition of the
property; requiring notification or disclosure of Releases or other
environmental condition of the Premises to any Governmental Authority or other
person or entity, whether or not in connection with transfer of title to or
interest in property; imposing conditions or requirements relating to Hazardous
Materials or USTs in connection with permits or other authorizations required by
Governmental Authorities; relating to the handling and disposal of Hazardous
Materials; relating to nuisance, trespass or other causes of action related to
Hazardous Materials; and relating to wrongful death, personal injury, or
property or other damage in connection with the physical condition or use of the
Premises by reason of the presence of Hazardous Materials or USTs in, on, under
or above the Premises.
"Environmental Lien" has the meaning set forth in Section 5.K(9).
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"Environmental Policy" means the environmental insurance policy issued by
Environmental Insurer to Lender with respect to the Premises, which
Environmental Policy shall be in form and substance satisfactory to Lender in
its sole discretion.
"Event of Default" has the meaning set forth in Section 9.
"FCCR Amount" has the meaning set forth in Section 9.A(7).
"Fee" means an underwriting, site assessment, valuation, processing and
commitment fee equal to 1% of the Loan Amount.
"Fixed Charge Coverage Ratio" has the meaning set forth in Section 6.J.
"Franchise Agreement" means the franchise, license and/or area development
agreement with Franchisor for the conduct of business at the Premises as a
Permitted Concept, together with all amendments, modifications and supplements
thereto.
"Franchisor" means Ryan's Properties, Inc. a Delaware corporation, and its
successors.
"Franchisor Certificate" has the meaning set forth in Section 4.H.
"GAAP" means generally accepted accounting principles consistently applied.
"Governmental Authority" means any governmental authority, agency,
department, commission, bureau, board, instrumentality, court or quasi-
governmental authority having jurisdiction or supervisory or regulatory
authority over the Premises or any of the Borrower Parties.
"Hazardous Materials" means (a) any toxic substance or hazardous waste,
substance, solid waste or related material, or any pollutant or contaminant; (b)
radon gas, asbestos in any form which is or could become friable, urea
formaldehyde foam insulation, transformers or other equipment containing
dielectric fluid having levels of polychlorinated biphenyls in excess of
applicable standards established by any Governmental Authority, or any
petroleum product or additive; (c) any substance, gas, material or chemical
which is now or hereafter defined as or included in the definition of "hazardous
substances," "toxic substances," "hazardous materials," "hazardous wastes,"
"regulated substances" or words of similar import under any Environmental Laws;
and (d) any other chemical, material, gas or substance the exposure to or
release of which is prohibited, limited or regulated by any Governmental
Authority that asserts or may assert jurisdiction over the Premises or the
operations or activity at the Premises, or any chemical, material, gas or
substance that does or is reasonably likely to pose a hazard to the health
and/or safety of the occupants of the Premises or the owners and/or occupants of
property adjacent to or surrounding the Premises.
"Indemnified Parties" means Lender, Environmental Insurer, the trustees
under the Mortgage, if applicable, and any person or entity who is or will have
been involved in the origination of the Loan, any person or entity who is or
will have been involved in the servicing of the Loan, any person or entity in
whose name the encumbrance created by the Mortgage is or will have been
recorded, persons and entities who may hold or acquire or will have held a full
or partial interest in the Loan (including, but not limited to, investors or
prospective investors in any Securitization, Participation or Transfer, as well
as custodians, trustees and other fiduciaries who hold or have held a full or
partial interest in the Loan for the benefits of third parties), as well as the
respective directors, officers, shareholders, partners, members, employees,
lenders, agents, servants, representatives, contractors, subcontractors,
affiliates, subsidiaries, participants, successors and assigns of any and all of
the foregoing (including, but not limited to, any other person or entity who
holds or acquires or will have held a participation or other full or partial
interest in the Loan or the Premises, whether during the term of the Loan or as
a part of or following a foreclosure of the Loan and including, but not limited
to, any successors by merger, consolidation or acquisition of all or a
substantial portion of Lender's assets and business).
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"Indemnity Agreements" means all indemnity agreements executed for the
benefit of any of the Borrower Parties or any prior owner, lessee or occupant of
the Premises in connection with Hazardous Materials or USTs, including, without
limitation, the right to receive payments under such indemnity agreements.
"Lender Entities" means, collectively, Lender (including any predecessor-
in-interest to Lender) and any Affiliate of Lender (including any Affiliate of
any predecessor-in-interest to Lender).
"Loan" means the loan for the Premises, described in Section 2.
"Loan Amount" means $889,000.
"Loan Documents" means, collectively, this Agreement, the Note, the
Mortgage, the Environmental Indemnity Agreement, the UCC-1 Financing Statements
and all other documents, instruments and agreements executed in connection
therewith or contemplated thereby, as the same may be amended from time to time.
"Loan Pool" means:
(i) in the context of a Securitization, any pool or group of loans
that are a part of such Securitization;
(ii) in the context of a Transfer, all loans which are sold,
transferred or assigned to the same transferee; and
(iii) in the context of a Participation, all loans as to which
participating interests are granted to the same participant.
"Material Adverse Effect" means a material adverse effect on (i) the
Premises, including, without limitation, the operation of the Premises as a
Permitted Concept, or (ii) Borrower's ability to perform its obligations
under the Loan Documents.
"Mortgage" means the amended and restated mortgage dated as of the date of
this Agreement executed by Borrower for the benefit of Lender with respect to
the Premises.
"Note" means the amended and restated promissory note dated as of the date
of this Agreement in the Loan Amount evidencing the Loan, as the same may be
amended, restated and/or substituted from time to time, including, without
limitation, as a result of the payment of the FCCR Amount pursuant to Section 9.
"Obligations" has the meaning set forth in the Mortgage.
"Other Agreements" means, collectively, all agreements and instruments
between, among or by (1) any of the Borrower Parties and/or any Affiliate of any
of the Borrower Parties (including any Affiliate of any predecessor-in-interest
to any of the Borrower Parties), and, or for the benefit of, (2) any of the
Lender Entities, including, without limitation, promissory notes and guaranties;
provided, however, the term "Other Agreements" shall not include the agreements
and instruments defined as the Loan Documents.
"Participation" means one or more grants by Lender or any of the other
Lender Entities to a third party of a participating interest in notes evidencing
obligations to repay secured or unsecured loans owned by Lender or any of the
other Lender Entities or any or all servicing rights with respect thereto.
"Permitted Amounts" means, with respect to any given level of Hazardous
Materials, that level or quantity of Hazardous Materials in any form or
combination of forms the presence, use, storage, release or handling of which
does not constitute a violation of any Environmental Laws and is customarily
employed in the ordinary course of, or associated with, similar businesses
located in the state in which the Premises is located.
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"Permitted Concept" means a Ryan's Steakhouse restaurant.
"Permitted Exceptions" means those recorded easements, restrictions, liens
and encumbrances set forth as exceptions in the title insurance policy issued by
Title Company to Lender and approved by Lender in its sole discretion in
connection with the closing of the Loan.
"Person" means any individual, corporation, partnership, limited liability
company, trust, unincorporated organization, Governmental Authority or any other
form of entity.
"Personal Property" has the meaning set forth in the Mortgage.
"Premises" means the parcel or parcels of real estate described on Exhibit
A attached hereto, together with all rights, privileges and appurtenances
associated therewith and all buildings, fixtures and other improvements now or
hereafter located thereon (whether or not affixed to such real estate) and the
Personal Property.
"Related Premises" means collectively, the Premises and, following such
financings, all other premises financed by Lender pursuant to the Commitment.
"Questionnaire" means the environmental questionnaire completed on behalf
of the Borrower Parties with respect to the Premises and submitted to
Environmental Insurer in connection with the issuance of the Environmental
Policy.
"Related Premises" means those properties (other than the Premises) which
are the subject of mortgage loans from any of the Lender Entities to any of the
Borrower Parties.
"Release" means any presence, release, deposit, discharge, emission,
leaking, spilling, seeping, migrating, injecting, pumping, pouring, emptying,
escaping, dumping, disposing or other movement of Hazardous Materials or
USTs.
"Remediation" means any response, remedial, removal, or corrective action,
any activity to clean up, detoxify, decontaminate, contain or otherwise
remediate any Hazardous Materials or USTs required by any Environmental Law or
any Governmental Authority, any actions to prevent, cure or mitigate any
Release, any action to comply with any Environmental Laws or with any permits
issued pursuant thereto, any inspection, investigation, study, monitoring,
assessment, audit, sampling and testing, laboratory or other analysis, or any
evaluation relating to any Hazardous Materials or USTs.
"Restoration" has the meaning set forth in the Mortgage.
"Securitization" means one or more sales, dispositions, transfers or
assignments by Lender or any of the other Lender Entities to a special purpose
corporation, trust or other entity identified by Lender or any of the other
Lender Entities of notes evidencing obligations to repay secured or unsecured
loans owned by Lender or any of the other Lender Entities (and, to the extent
applicable, the subsequent sale, transfer or assignment of such notes to
another special purpose corporation, trust or other entity identified by Lender
or any of the other Lender Entities), and the issuance of bonds, certificates,
notes or other instruments evidencing interests in pools of such loans, whether
in connection with a permanent asset securitization or a sale of loans in
anticipation of a permanent asset securitization. Each Securitization shall be
undertaken in accordance with all requirements which may be imposed by the
investors or the rating agencies involved in each such sale, disposition,
transfer or assignment or which may be imposed by applicable securities, tax or
other laws or regulations.
"Substitute Documents" has the meaning set forth in Section 11.
"Substitute Premises" means one or more parcels of real estate substituted
for the Premises in accordance with the requirements of Section 11, together
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with all rights, privileges and appurtenances associated therewith and
all buildings, fixtures and other improvements, equipment, trade fixtures,
appliances and other personal property located thereon (whether or not affixed
to such real estate). For purposes of clarity, where two or more parcels of
real estate comprise a Substitute Premises, such parcels or interests shall be
aggregated and deemed to constitute the Substitute Premises for all purposes of
this Agreement.
"Terrorism Laws" means Executive Order 13224 issued by the President of the
United States of America, the Terrorism Sanctions Regulations (Title 31 Part 595
of the U.S. Code of Federal Regulations), the Terrorism List Governments
Sanctions Regulations (Title 31 Part 596 of the U.S. Code of Federal
Regulations), the Foreign Terrorist Organizations Sanctions Regulations (Title
31 Part 597 of the U.S. Code of Federal Regulations), and the Cuban Assets
Control Regulations (Title 31 Part 515 of the U.S. Code of Federal Regulations),
and all other present and future federal, state and local laws, ordinances,
regulations, policies, lists and any other requirements of any Governmental
Authority (including, without limitation, the United States Department of the
Treasury Office of Foreign Assets Control) addressing, relating to, or
attempting to eliminate, terrorist acts and acts of war, each as hereafter
supplemented, amended or modified from time to time, and the present and future
rules, regulations and guidance documents promulgated under any of the
foregoing, or under similar laws, ordinances, regulations, policies or
requirements of other states or localities.
"Threatened Release" means a substantial likelihood of a Release which
requires action to prevent or mitigate damage to the soil, surface waters,
groundwaters, land, stream sediments, surface or subsurface strata, ambient air
or any other environmental medium comprising or surrounding the Premises which
may result from such Release.
"Title Company" means Lawyers Title Insurance Corporation.
"Transfer" means one or more sales, transfers or assignments by Lender or
any of the other Lender Entities to a third party of notes evidencing
obligations to repay secured or unsecured loans owned by Lender or any of the
other Lender Entities or any or all servicing rights with respect thereto.
"UCC-1 Financing Statements" means such UCC-1 Financing Statements as
Lender shall file with respect to the transactions contemplated by this
Agreement.
"USTs" means any one or combination of below or above ground tanks and
associated piping systems used in connection with the storage, dispensing and
general use of petroleum and petroleum-based substances.
2. Transaction. On the terms and subject to the conditions set forth
in the Loan Documents, Lender shall make the Loan. The Loan will be evidenced
by the Note and secured by the Mortgage. Borrower shall repay the outstanding
principal amount of the Loan together with interest thereon in the manner and in
accordance with the terms and conditions of the Note and the other Loan
Documents. The Loan shall be advanced at the Closing in cash or otherwise
immediately available funds subject to any prorations and adjustments required
by this Agreement.
3. Escrow Agent. Borrower and Lender hereby employ Title Company to
act as escrow agent in connection with the transaction described in this
Agreement. Borrower and Lender will deliver to Title Company all documents, pay
to Title Company all sums and do or cause to be done all other things necessary
or required by this Agreement, in the reasonable judgment of Title Company, to
enable Title Company to comply herewith and to enable any title insurance policy
provided for herein to be issued. Title Company shall not cause the transaction
to close unless and until it has received written instructions from Lender and
Borrower to do so. Title Company is authorized to pay, from any funds held by
it for Lender's or Borrower's respective credit all amounts necessary to procure
the delivery of such documents and to pay, on behalf of Lender and Borrower, all
charges and obligations payable by them, respectively. Borrower will pay all
charges payable by it to Title Company. Title Company is authorized, in the
event any conflicting demand is made upon it concerning these instructions or
the escrow, at its election, to hold any documents and/or funds deposited
hereunder until an action shall be brought in a court of competent jurisdiction
to determine the rights of Borrower and Lender or to interplead such documents
and/or funds in an action brought in any such court. Deposit by Title Company
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of such documents and funds, after deducting therefrom its charges and its
expenses and attorneys' fees incurred in connection with any such court action,
shall relieve Title Company of all further liability and responsibility for such
documents and funds. Title Company's receipt of this Agreement and opening of
an escrow pursuant to this Agreement shall be deemed to constitute conclusive
evidence of Title Company's agreement to be bound by the terms and conditions of
this Agreement pertaining to Title Company. Disbursement of any funds shall be
made by check, certified check or wire transfer, as directed by Borrower and
Lender. Title Company shall be under no obligation to disburse any funds
represented by check or draft, and no check or draft shall be payment to Title
Company in compliance with any of the requirements hereof, until it is advised
by the bank in which such check or draft is deposited that such check or draft
has been honored. Title Company is authorized to act upon any statement
furnished by the holder or payee, or a collection agent for the holder or payee,
of any lien on or charge or assessment in connection with the Premises,
concerning the amount of such charge or assessment or the amount secured by such
lien, without liability or responsibility for the accuracy of such statement.
The employment of Title Company as escrow agent shall not affect any rights of
subrogation under the terms of any title insurance policy issued pursuant to the
provisions thereof.
4. Closing Conditions. The obligation of Lender to consummate the
transaction contemplated by this Agreement is subject to the fulfillment or
waiver of each of the following conditions:
A. Title Insurance Commitments. Lender shall have received for the
Premises a preliminary title report and irrevocable commitment to insure title
in the amount of the Loan, by means of a mortgagee's ALTA extended coverage
policy of title insurance (or its equivalent, in the event such form is not
issued in the jurisdiction where the Premises is located) issued by Title
Company showing Borrower vested with good and marketable fee title in the real
property comprising the Premises, committing to insure Lender's first priority
lien upon and security interest in such real property subject only to Permitted
Exceptions, and containing such endorsements as Lender may require.
B. Survey. Lender acknowledges that it is in possession of a current
ALTA survey of the Premises or its equivalent, the form and substance of which
is satisfactory to Lender. Lender shall have obtained a flood certificate
indicating that the location of the Premises is not within the 100-year flood
plain or identified as a special flood hazard area as defined by the Federal
Emergency Management Agency, or if the Premises is in such a flood plain or
special flood hazard area, Borrower shall have provided Lender with evidence of
flood insurance maintained on the Premises in an amount and on terms and
conditions reasonably satisfactory to Lender.
C. Environmental. Lender shall have completed such environmental due
diligence of the Premises as it deems necessary or advisable in its sole
discretion, including, without limitation, receiving an Environmental Policy
with respect to the Premises, and Lender shall have approved the environmental
condition of the Premises in its sole discretion.
D. Compliance With Representations, Warranties and Covenants. All of
the representations and warranties set forth in Section 5 shall be true, correct
and complete as of the Closing Date, and Borrower shall be in compliance with
each of the covenants set forth in Section 6 as of the Closing Date. No event
shall have occurred or condition shall exist or information shall have been
disclosed by Borrower or discovered by Lender which has had or would be
reasonably likely to have a material adverse effect on the Premises, any of the
Borrower Parties or Lender's willingness to consummate the transaction
contemplated by this Agreement, as determined by Lender in its sole and absolute
discretion.
E. Proof of Insurance. Borrower shall have delivered to Lender
certificates of insurance and copies of insurance policies showing that all
insurance required by the Loan Documents and providing coverage and limits
satisfactory to Lender are in full force and effect.
F. Legal Opinions. Borrower shall have delivered to Lender such legal
opinions as Lender may reasonably require all in form and substance reasonably
satisfactory to Lender and its counsel.
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G. Fee and Closing Costs. Borrower shall have paid the Fee to Lender
and shall have paid all costs of the transactions described in this Agreement,
including, without limitation, the cost of title insurance premiums and all
endorsements required by Lender, survey charges, UCC and litigation search
charges, the attorneys' fees of Borrower, reasonable attorneys' fees and
expenses of Lender, the cost of the environmental due diligence undertaken
pursuant to Section 4.C, including, without limitation, the cost of the
Environmental Policy, Lender's site inspection costs and fees, stamp taxes,
mortgage taxes, transfer fees, escrow, filing and recording fees and UCC filing
and recording fees (including preparation, filing and recording fees for UCC
continuation statements). Borrower shall have also paid all real and personal
property and other applicable taxes and assessments and other charges relating
to the Premises which are due and payable on or prior to the Closing Date as
well as taxes and assessments due and payable subsequent to the Closing Date but
which Title Company requires to be paid at Closing as a condition to the
issuance of the title insurance policy described in Section 4.A.
H. Franchise Agreement. Lender shall have received a certificate (the
"Franchisor Certificate") from Franchisor in form and substance acceptable to
Lender which provides that the Franchise Agreement is valid, binding and in full
force and effect and no events have occurred which could constitute a default
thereunder, and, to the extent Franchisor has a right of first refusal in the
Franchise Agreement that extends to the sale, transfer or conveyance of the
Premises, Franchisor waives all such rights of first refusal set forth in the
Franchise Agreement as to Lender and its successors and assigns.
I. Closing Documents. At or prior to the Closing Date, Lender and/or
the Borrower Parties, as may be appropriate, shall have executed and delivered
or shall have caused to be executed and delivered to Lender, or as Lender may
otherwise direct, the Loan Documents and such other documents, payments,
instruments and certificates, as Lender may require in form acceptable to
Lender.Upon fulfillment or waiver of all of the above conditions, Lender shall
deposit funds necessary to close this transaction with the Title Company and
this transaction shall close in accordance with the terms and conditions of this
Agreement.
5. Representations and Warranties of Borrower. The representations and
warranties of Borrower contained in this Section are being made by Borrower as
of the Closing Date to induce Lender to enter into this Agreement and consummate
the transactions contemplated herein and shall survive the Closing. Borrower
represents and warrants to Lender (and Environmental Insurer solely with respect
to Section 5.K) as follows:
A. Financial Information. Borrower has delivered to Lender certain
financial statements and other information concerning the Borrower Parties in
connection with the transaction described in this Agreement (collectively, the
"Financial Information"). The Financial Information is true, correct and
complete in all material respects; there have been no amendments to the
Financial Information since the date such Financial Information was prepared or
delivered to Lender. Borrower understands that Lender is relying upon the
Financial Information and Borrower represents that such reliance is reasonable.
All financial statements included in the Financial Information were prepared in
accordance with GAAP and fairly present as of the date of such financial
statements the financial condition of each individual or entity to which they
pertain. No change has occurred with respect to the financial condition of any
of the Borrower Parties and/or the Premises as reflected in the Financial
Information which has not been disclosed in writing to Lender or has had, or
could reasonably be expected to result in, a Material Adverse Effect.
B. Organization and Authority. Each of the Borrower Parties (other
than individuals), as applicable, is duly organized or formed, validly existing
and in good standing under the laws of its state of incorporation or formation.
Borrower is qualified as a foreign corporation, partnership or limited liability
company, as applicable, to do business in the state where the Premises is
located and each of the Borrower Parties is qualified as a foreign corporation,
partnership or limited liability company, as applicable, to do business in any
other jurisdiction where the failure to be qualified would reasonably be
expected to result in a Material Adverse Effect. All necessary action has been
taken to authorize the execution, delivery and performance by the Borrower
Parties of this Agreement and the other Loan Documents. The person(s) who have
executed this Agreement on behalf of Borrower are duly authorized so to do.
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Borrower is not a "foreign corporation", "foreign partnership", "foreign trust",
"foreign estate" or "foreign person" (as those terms are defined by the Internal
Revenue Code of 1986, as amended). Borrower's U.S. Federal Tax Identification
number, Organization Identification number and principal place of business are
correctly set forth on the signature page of this Agreement. None of the
Borrower Parties, and no individual or entity owning directly or indirectly any
interest in any of the Borrower Parties, is an individual or entity whose
property or interests are subject to being "blocked" under any of the Terrorism
Laws or is otherwise in violation of any of the Terrorism Laws.
C. Enforceability of Documents. Upon execution by the Borrower
Parties, this Agreement and the other Loan Documents shall constitute the legal,
valid and binding obligations of the Borrower Parties, enforceable against the
Borrower Parties in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, liquidation,
reorganization and other laws affecting the rights of creditors generally and
general principles of equity.
D. Litigation. There are no suits, actions, proceedings or
investigations pending, or to the best of its knowledge, threatened against or
involving the Borrower Parties or the Premises before any arbitrator or
Governmental Authority, except for such suits, actions, proceedings or
investigations which, individually or in the aggregate, have not had, and would
not reasonably be expected to result in, a Material Adverse Effect.
E. Absence of Breaches or Defaults. The Borrower Parties are not, and
the authorization, execution, delivery and performance of this Agreement and the
other Loan Documents will not result, in any breach or default under any other
document, instrument or agreement to which any of the Borrower Parties is a
party or by which any of the Borrower Parties, the Premises or any of the
property of any of the Borrower Parties is subject or bound, except for such
breaches or defaults which, individually or in the aggregate, have not had, and
would not reasonably be expected to result in, a Material Adverse Effect. The
authorization, execution, delivery and performance of this Agreement and the
other Loan Documents will not violate any applicable law, statute, regulation,
rule, ordinance, code, rule or order. The Premises is not subject to any right
of first refusal, right of first offer or option to purchase or lease granted to
a third party.
F. Utilities. Adequate public utilities are available at the Premises
to permit utilization of the Premises as a Permitted Concept and all utility
connection fees and use charges will have been paid in full prior to
delinquency.
G. Zoning; Compliance With Laws. The Premises is in compliance with
all applicable zoning requirements, and the use of the Premises as a Permitted
Concept does not constitute a nonconforming use under applicable zoning
requirements. The Borrower Parties and the Premises are in compliance with all
Applicable Regulations except for such noncompliance, which has not had, and
would not reasonably be expected to result in, a Material Adverse Effect.
H. Area Development; Wetlands. No condemnation or eminent domain
proceedings affecting the Premises have been commenced or, to the best of
Borrower's knowledge, are contemplated. Neither the Premises nor, to the best
of Borrower's knowledge, the real property bordering the Premises are designated
by any Governmental Authority as a wetlands.
I. Licenses and Permits; Access. All required licenses and permits,
both governmental and private, to use and operate the Premises as a Permitted
Concept are in full force and effect, except for such licenses and permits the
failure of which to obtain has not had, and would not reasonably be expected to
result in, a Material Adverse Effect. Adequate rights of access to public roads
and ways are available to the Premises for unrestricted ingress and egress and
otherwise to permit utilization of the Premises for their intended purposes, and
all such public roads and ways have been completed and dedicated to public use.
J. Condition of Premises. The Premises, including the Personal
Property, is in good condition and repair and well-maintained, ordinary wear and
tear excepted, fully equipped and operational, free from structural defects,
safe and properly lighted.
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K. Environmental. Except as disclosed in the Questionnaire:
(1) Neither the Premises nor any of the Borrower Parties are in
violation of, or subject to, any pending or, to Borrower's actual
knowledge, threatened investigation or inquiry by any Governmental
Authority or to any remedial obligations under any Environmental Laws, and
this representation and warranty would continue to be true and correct
following disclosure to the applicable Governmental Authorities of all
relevant facts, conditions and circumstances, if any, pertaining to the
Premises;
(2) All permits, licenses or similar authorizations required to
construct, occupy, operate or use any buildings, improvements, fixtures and
equipment forming a part of the Premises by reason of any Environmental
Laws have been obtained;
(3) No Hazardous Materials have been used, handled, manufactured,
generated, produced, stored, treated, processed, transferred, disposed of
or otherwise Released in, on, under, from or about the Premises, except in
Permitted Amounts;
(4) The Premises does not contain Hazardous Materials, except in
Permitted Amounts, and all USTs located on or about the Premises, if any,
are in full compliance with all Environmental Laws;
(5) There is no threat of any Release migrating to the Premises in
excess of Permitted Amounts;
(6) There is no past or present non-compliance with Environmental
Laws, or with permits issued pursuant thereto, in connection with the
Premises;
(7) None of the Borrower Parties has received any written or oral
notice or other communication from any person or entity (including but not
limited to a Governmental Authority) relating to Hazardous Materials or
USTs or Remediation thereof in excess of Permitted Amounts, of possible
liability of any person or entity pursuant to any Environmental Law, other
environmental conditions in connection with the Premises, or any actual or
potential administrative or judicial proceedings in connection with any of
the foregoing;
(8) All information known to any of the Borrower Parties or
contained in the files of any of the Borrower Parties relating to any
Environmental Condition or Releases of Hazardous Materials in, on,
under or from the Premises, other than in Permitted Amounts, has been
provided to Lender, including, without limitation, information relating to
all prior Remediation;
(9) The Premises has been kept free and clear of all liens and other
encumbrances imposed pursuant to any Environmental Law (the "Environmental
Liens"); and none of the Borrower Parties has allowed any tenant or other
user of the Premises to do any act that materially increased the dangers to
human health or the environment, posed an unreasonable risk of harm to any
person or entity (whether on or off the Premises), impaired the value of
the Premises in any material respect, is contrary to any requirement of any
insurer, constituted a public or private nuisance, constituted waste, or
violated any covenant, condition, agreement or easement applicable to the
Premises;
(10) The information and disclosures in the Questionnaire are true,
correct and complete in all material respects, and the person or persons
executing the Questionnaire were duly authorized to do so.
Lender has charged Borrower a fee for the Environmental Policy. Borrower
acknowledges that the Environmental Policy is for the sole protection of Lender
and will not protect Borrower or provide Borrower with any coverage thereunder.
Borrower acknowledges and agrees that Environmental Insurer may rely on the
environmental representations and warranties set forth in this subsection K,
that Environmental Insurer is an intended third-party beneficiary of such
representations and warranties and that Environmental Insurer shall have all
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rights and remedies available at law or in equity as a result of a breach of
such representations and warranties, including, to the extent applicable, the
right of subrogation.
L. Title to Premises; First Priority Lien. Fee title to the real
property comprising the Premises is vested in Borrower, free and clear of all
liens, encumbrances, charges and security interests of any nature whatsoever,
except the Permitted Exceptions. Borrower is the owner of all Personal
Property, free and clear of all liens, encumbrances, charges and security
interests of any nature whatsoever, and no Affiliate of Borrower owns any of the
Personal Property. Upon Closing, Lender shall have a first priority lien upon
and security interest in the Premises pursuant to the Mortgage and the UCC-1
Financing Statements.
M. No Mechanics' Liens. There are no delinquent accounts payable or
mechanics' liens in favor of any materialman, laborer, or any other person or
entity in connection with labor or materials furnished to or performed on any
portion of the Premises; and no work has been performed or is in progress nor
have materials been supplied to the Premises or agreements entered into for work
to be performed or materials to be supplied to the Premises prior to the date
hereof, which will be delinquent on or before the Closing Date.
N. Franchisor Provisions. Borrower has delivered to Lender a true,
correct and complete copy of the Franchise Agreement. The Franchise Agreement
is the only agreement in effect with Franchisor with respect to the Premises.
The Franchise Agreement is in full force and effect and constitutes the legal,
valid and binding obligations of the parties to the Franchise Agreement
enforceable in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, liquidation, reorganization and
other laws affecting the rights of creditors generally and general principles of
equity. None of the Borrower Parties has assigned, transferred, mortgaged,
hypothecated or otherwise encumbered the Franchise Agreement or any rights
thereunder or any interest therein, and none of the Borrower Parties has
received any notice that Franchisor has made any assignment, pledge or
hypothecation of all or any part of its rights or interest in the Franchise
Agreement. No notice of default from Franchisor has been received under the
Franchise Agreement which has not been cured and no notice of default to
Franchisor has been given under the Franchise Agreement, which has not been
cured. No event has occurred and no condition exists which, with the giving of
notice or the lapse of time or both, would constitute a default under the
Franchise Agreement.
O. Money Laundering. (1) Borrower has taken all reasonable measures,
in accordance with all applicable Anti-Money Laundering Laws, with respect to
each holder of a direct or indirect interest in the Borrower Parties, to assure
the funds invested by such holders in the Borrower Parties are derived from
legal sources.
(2) To Borrower's knowledge after making due inquiry, neither any of
the Borrower Parties nor any holder of a direct or indirect interest in the
Borrower Parties (a) is under investigation by any Governmental Authority for,
or has been charged with or convicted of, any violation of any Anti-Money
Laundering Laws, or drug trafficking, terrorist-related activities or other
money laundering predicated crimes or a violation of the BSA, (b) has been
assessed civil penalties under these or related laws, or (c) has had any of its
funds seized or forfeited in an action under these or related laws.
(3) Borrower has taken reasonable steps, consistent with industry
practice for comparable organizations and in any event as required by law, to
ensure that the Borrower Parties are and shall be in compliance with all Anti-
Money Laundering Laws and laws, regulations, and government guidance for the
prevention of terrorism, terrorist financing and drug trafficking.
6. Covenants. Borrower covenants to Lender (and Environmental Insurer
solely with respect to Section 6.F) from and after the Closing Date and until
all of the Obligations are satisfied in full, as follows:
A. Payment of the Note. Borrower shall punctually pay, or cause to be
paid, the principal, interest and all other sums to become due in respect of the
Note and the other Loan Documents in accordance with the Note and the other Loan
Documents. Borrower shall authorize Lender to establish arrangements whereby
11
all scheduled payments made in respect of the Obligations are transferred by
Automated Clearing House Debit initiated by Lender directly from an account at a
U.S. bank in the name of Borrower to such account as Lender may designate or as
Lender may otherwise designate.
B. Title. Borrower shall maintain good and marketable fee simple title
to the real property comprising the Premises and title to the Personal Property
and the remainder of the Premises, free and clear of all liens, encumbrances,
charges and other exceptions to title, except the Permitted Exceptions. Lender
shall have a valid first lien upon and security interest in the Premises,
including the Personal Property, pursuant to the Mortgage and the UCC-1
Financing Statements.
C. Organization and Status of Borrower; Preservation of Existence.
Each of the Borrower Parties (other than individuals), as applicable, shall be
validly existing and in good standing under the laws of its state of
incorporation or formation. Borrower shall be qualified as a foreign
corporation, partnership or limited liability company to do business in the
state where the Premises is located, and each of the Borrower Parties shall be
qualified as a foreign corporation, partnership or limited liability company in
any other jurisdiction where the failure to be qualified would reasonably be
expected to result in a Material Adverse Effect. Borrower shall preserve its
current form of organization and shall not change its legal name, its state of
formation, nor, in one transaction or a series of related transactions, merge
with or into, or consolidate with, any other entity without providing, in each
case, Lender with 30 days' prior written notice and obtaining Lender's prior
written consent (to the extent such consent is required under Section 7 of this
Agreement). In addition, Borrower shall require, and shall take reasonable
measures to comply with the requirement, that no individual or entity owning
directly or indirectly any interest in any of the Borrower Parties is an
individual or entity whose property or interests are subject to being blocked
under any of the Terrorism Laws or is otherwise in violation of any of the
Terrorism Laws.
D. Licenses and Permits. All required licenses and permits, both
governmental and private, to use and operate the Premises as a Permitted Concept
shall be maintained in full force and effect.
E. Compliance With Laws Generally. The use and occupation of the
Premises, and the condition thereof, including, without limitation, any
Restoration, shall comply with all Applicable Regulations now or hereafter in
effect. In addition, the Borrower Parties shall comply with all Applicable
Regulations now or hereafter in effect, including, without limitation, the
Terrorism Laws and Anti-Money Laundering Laws. Without limiting the generality
of the other provisions of this Section, Borrower shall comply with the ADA, and
all regulations promulgated thereunder, as it affects the Premises.
F. Compliance With Environmental Laws. (1) The Premises, the Borrower
Parties and any other operator or user of the Premises shall not be in violation
of or subject to any investigation or inquiry by any Governmental Authority or
subject to any Remediation obligations under any Environmental Laws.
(2) All uses and operations on or of the Premises, whether by Borrower
or any other person or entity, shall be in compliance with all Environmental
Laws and permits issued pursuant thereto.
(3) There shall be no Releases or Hazardous Materials in, on, under or
from the Premises, except in Permitted Amounts.
(4) Borrower shall keep the Premises, or cause the Premises to be kept,
free and clear of all Environmental Liens.
(5) Borrower shall not do or allow any tenant or other user of the
Premises to do any act that (a) materially increases the dangers to human health
or the environment, (b) poses an unreasonable risk of harm to any person or
entity (whether on or off the Premises), (c) impairs or is reasonably likely to
impair the value of the Premises, (d) is contrary to any requirement of any
insurer, (e) constitutes a public or private nuisance or constitutes waste, or
(f) violates any covenant, condition, agreement or easement applicable to the
Premises.
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(6) Borrower shall immediately notify Lender in writing upon Borrower
obtaining actual knowledge of:
(a) any presence of Releases or Threatened Releases in, on, under,
from or migrating towards the Premises, in excess of Permitted Amounts,
including, without limitation, the presence on or under the Premises of any
Hazardous Materials, apparent or real, in excess of Permitted Amounts;
(b) any non-compliance with any Environmental Laws related in any
way to the Premises;
(c) any Environmental Lien or any act or omission which could
reasonably be expected to result in the imposition of an Environmental
Lien;
(d) any required or proposed Remediation of environmental
conditions relating to the Premises, including, without limitation, any and
all enforcement, clean-up, remedial, removal or other governmental or
regulatory actions threatened, instituted or completed pursuant to any of
the Environmental Laws affecting the Premises;
(e) any written or oral notice or other communication of which any
of the Borrower Parties becomes aware from any source whatsoever (including
but not limited to a Governmental Authority) relating in any way to
Hazardous Materials, USTs or Remediation thereof, possible liability of any
person or entity pursuant to any Environmental Law, other environmental
conditions in connection with the Premises, or any actual or potential
administrative or judicial proceedings in connection with anything
referred to in this Agreement; or
(f) any investigation or inquiry initiated by any Governmental
Authority relating to the Environmental Condition of the Premises.
(7) If required by any Environmental Law or upon any reasonable
suspicion by Borrower or Lender of a Release, a Threatened Release or a
violation of any Environmental Law, Borrower shall, at its sole cost and
expense:
(a) perform any environmental site assessment or other
investigation of environmental conditions in connection with the Premises
as may be reasonably requested by Lender (including but not limited to
sampling, testing and analysis of soil, water, air, building materials and
other materials and substances whether solid, liquid or gas), and share
with Lender and Environmental Insurer the reports and other results
thereof, and Lender, Environmental Insurer and other Indemnified Parties
shall be entitled to rely on such reports and other results thereof; and
(b) have the Premises inspected as may be required by any
Environmental Laws for seepage, spillage and other environmental concerns.
(8) Borrower shall, at its sole cost and expense, and without limiting
the rights of Lender under any other provision of this Agreement, comply with
all reasonable written requests of Lender to:
(a) reasonably effectuate Remediation of any condition (including
but not limited to a Release) in, on, under or from the Premises;
(b) comply with any Environmental Law;
(c) comply with any directive from any Governmental Authority; and
(d) take any other reasonable action necessary or appropriate for
protection of human health or the environment.
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(9) Lender, Environmental Insurer and any other person or entity
designated by Lender, including but not limited to any receiver, any
representative of a Governmental Authority, and any environmental consultant,
shall have the right, but not the obligation, to enter upon the Premises during
normal business hours or at any time in the event of an emergency (including
without limitation in connection with any Securitization, Participation or
Transfer contemplated by this Agreement or in connection with the exercise of
any remedies set forth in the Mortgage or the other Loan Documents) to assess
any and all aspects of the environmental condition of the Premises and its use,
including but not limited to conducting any environmental assessment or audit
(the scope of which shall be determined in Lender's sole and absolute
discretion) and taking samples of soil, groundwater or other water, air, or
building materials, and conducting other invasive testing. Borrower shall
cooperate with and provide access to Lender, Environmental Insurer and any such
person or entity designated by Lender. Any such assessment and investigation
shall be at Borrower's sole cost and expense if, at the time Lender undertakes
such assessment or investigation, Lender has a reasonable basis for believing
that a Release has occurred at the Premises in excess of Permitted Amounts or if
an Event of Default has occurred and is continuing. Otherwise, any such
assessment and investigation shall be at Lender's sole cost and expense.
G. Financial Statements. Within 45 days after the end of each fiscal
quarter and within 120 days after the end of each fiscal year of Borrower,
Borrower shall deliver to Lender (a) complete financial statements of the
Borrower Parties including a balance sheet, profit and loss statement, statement
of cash flows and all other related schedules for the fiscal period then ended;
(b) income statements for the business at the Premises; and (c) such other
financial information as Lender may reasonably request in order to establish
compliance with the financial covenants in the Loan Documents, including,
without limitation, Section 6.J of this Agreement. All such financial
statements shall be prepared in accordance with GAAP from period to period, and
shall be certified to be accurate and complete by Borrower (or the Treasurer or
other appropriate officer of Borrower). In the event the property and business
at the Premises is ordinarily consolidated with other business for financial
statement purposes, such financial statements shall be prepared on a
consolidated basis showing separately the sales, profits and losses, pertaining
to the Premises with the basis for allocation of overhead of other charges being
clearly set forth. The financial statements delivered to Lender need not be
audited, but Borrower shall deliver to Lender copies of any audited financial
statements of Borrower which may be prepared, as soon as they are available.
Borrower shall also cause to be delivered to Lender copies of any financial
statements required to be delivered to Borrower by any tenants of the Premises.
H. Lost Note. Borrower shall, if the Note is mutilated, destroyed,
lost or stolen (a "Lost Note"), promptly deliver to Lender, upon receipt from
Lender of an affidavit and indemnity in a form reasonably acceptable to Lender
and Borrower stipulating that the Note has been mutilated, destroyed, lost or
stolen, in substitution therefor, a new promissory note containing the same
terms and conditions as such Lost Note with a notation thereon of the unpaid
principal and accrued and unpaid interest. Borrower shall provide fifteen (15)
days' prior notice to Lender before making any payments to third parties in
connection with a Lost Note.
I. Inspections. Borrower shall, during normal business hours (or at
any time in the event of an emergency), (1) provide Lender and Lender's
officers, employees, agents, advisors, attorneys, accountants, architects, and
engineers with access to the Premises, all drawings, plans, and specifications
for the Premises in possession of the Borrower Parties, all engineering reports
relating to the Premises in the possession of the Borrower Parties, the files,
correspondence and documents relating to the Premises, and the financial books
and records, including lists of delinquencies, relating to the ownership,
operation, and maintenance of the Premises (including, without limitation, any
of the foregoing information stored in any computer files), (2) allow such
persons to make such inspections, tests, copies, and verifications as Lender
considers necessary, and (3) if Borrower is in breach of the Fixed Charge
Coverage Ratio requirement set forth in the following subsection J, pay expenses
reasonably incurred by Lender from time to time in conducting such inspections,
tests, copies and verifications upon demand (such amounts to bear interest at
the Default Rate if not paid upon demand until paid).
J. Fixed Charge Coverage Ratio. Commencing on January 1, 2003,
Borrower shall maintain an aggregate Fixed Charge Coverage Ratio at all of the
Related Premises of at least 1.25:1, determined as of the last day of each
fiscal year of Borrower. For purposes of this Section, the term "Fixed Charge
14
Coverage Ratio" shall mean with respect to the twelve month period of time
immediately preceding the date of determination, the ratio calculated for such
period of time, each as determined in accordance with GAAP, of (a) the sum of
Net Income, Depreciation and Amortization, Interest Expense and Operating Lease
Expense, less a corporate overhead allocation in an amount equal to 5% of Gross
Sales (or, with respect to the Related Premises located in Neptune Beach,
Florida (the "Neptune Premises"), $0), to (b) the sum of the Lender Payments,
Operating Lease Expense and the Equipment Payment Amount.
For purposes of this Section, the following terms shall be defined as set
forth below:
"Capital Lease" shall mean any lease of any property (whether real,
personal or mixed) with respect to one or more of the Related Premises which
lease would, in conformity with GAAP, be required to be accounted for on a
balance sheet as a capital lease. The term "Capital Lease" shall not include
any operating lease.
"Debt" shall mean as directly related to all of the Related Premises and
the period of determination (i) indebtedness for borrowed money, (ii)
obligations evidenced by bonds, indentures, notes or similar instruments, (iii)
obligations to pay the deferred purchase price of property or services, (iv)
obligations under leases which should be, in accordance with GAAP, accounted for
as Capital Leases, and (v) obligations under direct or indirect guarantees in
respect of, and obligations (contingent or otherwise) to purchase or otherwise
acquire, or otherwise to assure a creditor against loss in respect of,
indebtedness or obligations of others of the kinds referred to in clauses (i)
through (iv) above.
"Depreciation and Amortization" shall mean with respect to all of the
Related Premises the depreciation and amortization accruing during any period of
determination with respect to Borrower as determined in accordance with GAAP.
"Equipment Payment Amount" shall mean for any period of determination the
sum of all amounts payable during such period of determination under all (i)
leases for equipment located at one or more of the Related Premises and (ii) all
loans secured by equipment located at one or more of the Related Premises.
"Gross Sales" shall mean the sales or other income arising from all
business conducted at all of the Related Premises during the period of
determination, less sales tax and any amounts received from not-for-profit sales
of all non-food items approved for use in connection with promotional campaigns,
if any, pursuant to the applicable franchise agreements.
"Interest Expense" shall mean for any period of determination, the sum of
all interest accrued or which should be accrued in respect of all Debt allocable
to one or more of the Related Premises and all business operations thereon
during such period (including interest attributable to Capital Leases), as
determined in accordance with GAAP.
"Lender Payments" shall mean with respect to the period of determination,
the sum of all amounts payable under the notes in favor of Lender with respect
to the Related Premises.
"Net Income" shall mean with respect to the period of determination, the
aggregate net income or net loss allocable to all business conducted at all of
the Related Premises. In determining the amount of Net Income, (i) adjustments
shall be made for nonrecurring gains and losses allocable to the period of
determination, (ii) deductions shall be made for Depreciation and Amortization,
Interest Expense and Operating Lease Expense allocable to the period of
determination, and (iii) no deductions shall be made for (x) income taxes or
charges equivalent to income taxes allocable to the period of determination, as
determined in accordance with GAAP, or (y) corporate overhead expense allocable
to the period of determination.
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"Operating Lease Expense" shall mean the sum of all payments and expenses
incurred under any operating leases with respect to one or more of the Related
Premises and the business operations thereon during the period of determination,
as determined in accordance with GAAP.
K. Affiliate Transactions. Unless otherwise approved by Lender, all
transactions between Borrower and any of its Affiliates shall be on terms
substantially as advantageous to Borrower as those which could be obtained by
Borrower in a comparable arm's length transaction with a non-Affiliate of
Borrower.
L. Compliance Certificates. Within 120 days after the end of each
fiscal year of Borrower, Borrower shall deliver a compliance certificate to
Lender in a form to be provided by Lender in order to establish that Borrower is
in compliance in all material respects with all of its obligations, duties and
covenants under the Loan Documents.
M. Corporate Fixed Charge Coverage Ratio. Borrower shall maintain a
Corporate Fixed Charge Coverage Ratio of at least 1.25:1, determined as of the
last day of each fiscal year of Borrower. For purposes of this Section, the
term "Corporate Fixed Charge Coverage Ratio" shall mean with respect to the
twelve month period of time immediately preceding the date of determination, the
ratio calculated for such period of time, each as determined in accordance with
GAAP, of (a) the sum of Net Income, Depreciation and Amortization, Interest
Expense and Operating Lease Expense, minus income taxes or charges equivalent to
income taxes allocable to the period of determination, to (b) the sum of
Operating Lease Expense, scheduled principal payments of long term Debt,
scheduled maturities of all Capital Leases and Interest Expense (excluding non-
cash interest expense and amortization of non-cash financing expenses).
For purposes of this Section, the following terms shall be defined as set
forth below:
"Capital Lease" shall mean all leases of any property, whether real,
personal or mixed, by Borrower or any of the other Borrower Parties, as
applicable, which lease would, in conformity with GAAP, be required to be
accounted for as a capital lease on the balance sheet of Borrower. The term
"Capital Lease" shall not include any operating lease.
"Debt" shall mean with respect to Borrower and the other Borrower Parties,
collectively, and for the period of determination (i) indebtedness for borrowed
money, (ii) obligations evidenced by bonds, indentures, notes or similar
instruments, (iii) obligations to pay the deferred purchase price of property or
services, (iv) obligations under leases which should be, in accordance with
GAAP, recorded as Capital Leases, and (v) obligations under direct or indirect
guarantees in respect of, and obligations (contingent or otherwise) to purchase
or otherwise acquire, or otherwise to assure a creditor against loss in respect
of, indebtedness or obligations of others of the kinds referred to in clauses
(i) through (iv) above.
"Depreciation and Amortization" shall mean the depreciation and
amortization accruing during any period of determination with respect to
Borrower and the other Borrower Parties, collectively, as determined in
accordance with GAAP.
"Interest Expense" shall mean for any period of determination, the sum of
all interest accrued or which should be accrued in respect of all Debt of
Borrower and the other Borrower Parties, collectively, as determined in
accordance with GAAP.
"Net Income" shall mean with respect to the period of determination, the
net income or net loss of Borrower and the other Borrower Parties, collectively.
In determining the amount of Net Income, (i) adjustments shall be made for
nonrecurring gains and losses or non-cash items allocable to the period of
determination, (ii) deductions shall be made for, among other things,
Depreciation and Amortization, Interest Expense, Operating Lease Expense and
actual corporate overhead expense allocable to the period of determination, and
(iii) no deductions shall be made for income taxes or charges equivalent to
income taxes allocable to the period of determination, as determined in
accordance with GAAP.
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"Operating Lease Expense" shall mean the sum of all payments and expenses
incurred by Borrower and the other Borrower Parties, collectively, under any
operating leases during the period of determination, as determined in accordance
with GAAP.
N. Franchise Agreement. The Franchise Agreement shall be maintained in
full force and effect. No event shall occur nor shall any condition exist
which, with the giving of notice or the lapse of time or both, would constitute
a breach or default under the Franchise Agreement. Borrower shall give prompt
notice to Lender of any claim of default by or to the franchisee under the
Franchise Agreement and shall provide Lender with a copy of any default notice
given or received by the franchisee under the Franchise Agreement and any
information submitted or referenced in support of such claim of default.
Borrower shall also give prompt notice to Lender of any extensions or renewals
of the Franchise Agreement and the expiration or termination of the Franchise
Agreement.
O. Terrorism Law Policies. Borrower shall adopt and maintain adequate
policies, procedures and controls to ensure that the Borrower Parties are in
compliance with all Terrorism Laws ("Borrower Terrorism Laws Policies"), which
Borrower Terrorism Laws Policies shall be satisfactory to Lender in its
reasonable discretion. Borrower shall immediately notify Lender in writing if
any individual or entity owning directly or indirectly any interest in any of
the Borrower Parties or any director, officer, member, manager or partner of any
such holders is an individual or entity whose property or interests are subject
to being blocked under any of the Terrorism Laws or is otherwise in violation of
any of the Terrorism Laws, or is under investigation by any Governmental
Authority for, or has been charged with or convicted of, drug trafficking,
terrorist-related activities or any violation of Anti-Money Laundering Laws, has
been assessed civil penalties under these or related laws, or has had funds
seized or forfeited in an action under these or related laws. Borrower further
agrees to make the Borrower Terrorism Laws Policies, together with the
information collected thereby concerning the Borrower Parties or any individual
or entity owning directly or indirectly any interest in any of the Borrower
Parties, available to Lender upon request.
7. Prohibition on Change of Control and Pledge. Without limiting the
terms and conditions of Section 3.09 of the Mortgage, Borrower agrees that, from
and after the Closing Date and until all of the Obligations are satisfied in
full, without the prior written consent of Lender: (1) no Change of Control
shall occur; and (2) no interest in any of the Borrower Parties shall be
pledged, encumbered, hypothecated or assigned as collateral for any obligation
of any of the Borrower Parties (each, a "Pledge"). In addition, no interest in
any of the Borrower Parties, or in any individual or person owning directly or
indirectly any interest in any of the Borrower Parties, shall be transferred,
assigned or conveyed to any individual or person whose property or interests are
subject to being blocked under any of the Terrorism Laws and/or who is in
violation of any of the Terrorism Laws, and any such transfer, assignment or
conveyance shall not be effective until the transferee has provided written
certification to Borrower and Lender that (A) the transferee or any person who
owns directly or indirectly any interest in transferee, is not an individual or
entity whose property or interests are subject to being blocked under any of the
Terrorism Laws or is otherwise in violation of the Terrorism Laws, and (B) the
transferee has taken reasonable measures to assure that any individual or entity
who owns directly or indirectly an interest in transferee, is not an individual
or entity whose property or interests are subject to being blocked under any of
the Terrorism Laws or is otherwise in violation of the Terrorism Laws. Lender's
consent to a Change of Control and/or Pledge shall be subject to the
satisfaction of such conditions as Lender shall determine in its sole
discretion, including, without limitation, (i) the execution and delivery of
such modifications to the terms of the Loan Documents as Lender shall request,
(ii) the proposed Change of Control and/or Pledge having been approved by each
of the rating agencies which have issued ratings in connection with any
Securitization of the Loan as well as any other rating agency selected by
Lender, and (iii) the proposed transferee having agreed to comply with all of
the terms and conditions of the Loan Documents (including any modifications
requested by Lender pursuant to clause (i) above). In addition, any such
consent shall be conditioned upon payment by Borrower to Lender of (x) a fee
equal to one percent (1%) of the then outstanding principal balance of the Note
and (y) all out-of-pocket costs and expenses incurred by Lender in connection
with such consent, including, without limitation, reasonable attorneys' fees.
Lender shall not be required to demonstrate any actual impairment of its
security or any increased risk of default hereunder in order to declare the
Obligations immediately due and payable upon a Change of Control or Pledge in
violation of this Section. The provisions of this Section shall apply to every
Change of Control or Pledge regardless of whether voluntary or not, or whether
or not Lender has consented to any previous Change of Control or Pledge.
17
8. Transaction Characterization. A. It is the intent of the parties
hereto that this Agreement and the other Loan Documents are a contract to extend
a financial accommodation (as such term is used in the Code) for the benefit of
Borrower.
B. It is the intent of the parties hereto that the business
relationship created by the Loan Documents is solely that of creditor and debtor
and has been entered into by both parties in reliance upon the economic and
legal bargains contained in the Loan Documents. None of the agreements
contained in the Loan Documents is intended, nor shall the same be deemed or
construed, to create a partnership (either de jure or de facto) between Borrower
and Lender, to make them joint venturers, to make Borrower an agent, legal
representative, partner, subsidiary or employee of Lender, nor to make Lender in
any way responsible for the debts, obligations or losses of Borrower.
9. Default and Remedies. A. Each of the following shall be deemed an
event of default by Borrower (each, an "Event of Default"):
(1) If any representation or warranty of any of the Borrower Parties
set forth in any of the Loan Documents is false in any material respect, or if
any of the Borrower Parties renders any statement or account which is false in
any material respect.
(2) If any principal, interest or other monetary sum due under the
Note, the Mortgage or any other Loan Document is not paid within five days after
the date when due; provided, however, notwithstanding the occurrence of such an
Event of Default, Lender shall not be entitled to exercise its rights and
remedies set forth below unless and until Lender shall have given Borrower
notice thereof and a period of five days from the delivery of such notice shall
have elapsed without such Event of Default being cured.
(3) If Borrower fails to observe or perform any of the other covenants
(except with respect to a breach of the Fixed Charge Coverage Ratio, which
breach is addressed in subitem (7) below), conditions, or obligations of this
Agreement; provided, however, if any such failure does not involve the payment
of any monetary sum, is not willful or intentional, does not place any rights or
interest in collateral of Lender in immediate jeopardy, and is within the
reasonable power of Borrower to promptly cure after receipt of notice thereof,
all as determined by Lender in its reasonable discretion, then such failure
shall not constitute an Event of Default hereunder, unless otherwise expressly
provided herein, unless and until Lender shall have given Borrower notice
thereof and a period of 30 days shall have elapsed, during which period Borrower
may correct or cure such failure, upon failure of which an Event of Default
shall be deemed to have occurred hereunder without further notice or demand of
any kind being required. If such failure cannot reasonably be cured within such
30-day period, as determined by Lender in its reasonable discretion, and
Borrower is diligently pursuing a cure of such failure, then Borrower shall have
a reasonable period to cure such failure beyond such 30-day period, which shall
not exceed 90 days after receiving notice of the failure from Lender. If
Borrower shall fail to correct or cure such failure within such 90-day period,
an Event of Default shall be deemed to have occurred hereunder without further
notice or demand of any kind being required.
(4) If any of the Borrower Parties becomes insolvent within the meaning
of the Code, files or notifies Lender that it intends to file a petition under
the Code, initiates a proceeding under any similar law or statute relating to
bankruptcy, insolvency, reorganization, winding up or adjustment of debts
(collectively, an "Action"), becomes the subject of either a petition under the
Code or an Action, or is not generally paying its debts as the same become
due.
(5) If there is an "Event of Default" or a breach or default, after the
passage of all applicable notice and cure or grace periods, under any other Loan
Document or any of the Other Agreements.
(6) If a final, nonappealable judgment is rendered by a court against
any of the Borrower Parties which (i) has a material adverse effect on the
operation of the Premises as a Permitted Concept, or (ii) is in an amount
greater than $100,000.00 and not covered by insurance, and, in either case, is
not discharged or provision made for such discharge within 60 days from the date
of entry of such judgment.
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(7) If there is a breach of the Fixed Charge Coverage Ratio requirement
and Lender shall have given Borrower notice thereof and Borrower shall have
failed within a period of 30 days from the delivery of such notice to (i) pay to
Lender the FCCR Amount (without premium or penalty) with respect to such of the
Premises (starting with the Related Premises with the lowest Fixed Charge
Coverage Ratio and proceeding in ascending order to the Related Premises with
the next lowest Fixed Charge Coverage Ratio) as is necessary to cure the breach
of the Fixed Charge Coverage Ratio requirement and for which the then Fixed
Charge Coverage Ratio (with the definitions in Section 6.J being deemed to be
modified as applicable to provide for the calculation of the Fixed Charge
Coverage Ratio for each such Premises on an individual basis rather than on an
aggregate basis with respect to the Related Premises) is below 1.25:1 (each, a
"Subject Premises"), (ii) prepay the Note or Notes corresponding to the Subject
Premises in whole but not in part (without premium or penalty) or (iii) notify
Lender of Borrower's election to substitute a Substitute Premises for each
Subject Premises in accordance with the terms of Section 11 (the failure of
Borrower to complete such substitution within 60 days after Lender shall have
given the notice discussed above shall be deemed to be an Event of Default
without further notice or demand of any kind being required). For purposes of
the preceding sentence, "FCCR Amount" means that sum of money which, when
subtracted from the outstanding principal amount of the Note corresponding to a
Subject Premises, and assuming the resulting principal balance is reamortized in
equal monthly payments over the remaining term of such Note at the rate of
interest set forth therein, will result in an adjusted aggregate Fixed Charge
Coverage Ratio for all of the Premises of at least 1.25:1 based on the prior
year's operations. Promptly after Borrower's payment of the FCCR Amount,
Borrower and Lender shall execute an amendment to each such Note in form and
substance reasonably acceptable to Lender reducing the principal amount payable
to Lender under such Note and reamortizing the principal amount of such Note in
equal monthly payments over the then remaining term of such Note at the rate of
interest set forth therein. Notwithstanding the foregoing, in the event of a
breach of the Fixed Charge Coverage Ratio that would not have been a breach had
the Neptune Premises not have been included in the calculation of such Fixed
Charge Coverage Ratio, it shall not be an Event of Default so long the Fixed
Charge Coverage Ratio (with the definitions in Section 6.J being deemed to be
modified as applicable to provide for the calculation of the Fixed Charge
Coverage Ratio for the Neptune Premises on an individual basis rather than on an
aggregate basis with the Related Premises) for the Premises be greater than
1.0:1.
(8) If there is a breach or default, after the passage of all
applicable notice and cure or grace periods, under the Franchise Agreement, or
if the Franchise Agreement terminates or expires prior to the payment in full of
the Note in accordance with its terms and a substitute agreement for the
terminated or expired agreement is not entered into with Franchisor prior to
such expiration or termination, which substitute agreement shall be in form and
substance reasonably satisfactory to Lender and shall expire after the scheduled
maturity date of the Note.
B. Upon the occurrence and during the continuance of an Event of
Default, subject to the limitations set forth in subsection A, Lender may
declare all or any part of the obligations of Borrower under the Note, this
Agreement and any other Loan Document to be due and payable, and the same shall
thereupon become due and payable without any presentment, demand, protest or
notice of any kind except as otherwise expressly provided herein, and Borrower
hereby waives notice of intent to accelerate the obligations secured by the
Mortgage and notice of acceleration. Thereafter, Lender may exercise, at its
option, concurrently, successively or in any combination, all remedies available
at law or in equity, including without limitation any one or more of the
remedies available under the Note, the Mortgage or any other Loan Document.
Neither the acceptance of this Agreement nor its enforcement shall prejudice or
in any manner affect Lender's right to realize upon or enforce any other
security now or hereafter held by Lender, it being agreed that Lender shall be
entitled to enforce this Agreement and any other security now or hereafter held
by Lender in such order and manner as it may in its absolute discretion
determine. No remedy herein conferred upon or reserved to Lender is intended to
be exclusive of any other remedy given hereunder or now or hereafter existing at
law or in equity or by statute. Every power or remedy given by any of the Loan
Documents to Lender, or to which Lender may be otherwise entitled, may be
exercised, concurrently or independently, from time to time and as often as may
be deemed expedient by Lender.
10. Indemnity; Release. A. Borrower shall, at its sole cost and
expense, protect, defend, indemnify, release and hold harmless each of the
Indemnified Parties for, from and against any and all claims, suits, liabilities
(including, without limitation, strict liabilities), actions, proceedings,
19
obligations, debts, damages, losses, costs, expenses, diminutions in value,
fines, penalties, charges, fees, expenses, judgments, awards, amounts paid in
settlement and damages of whatever kind or nature (including, without
limitation, attorneys' fees, court costs and other costs of defense)
(collectively, "Losses) (excluding Losses suffered by an Indemnified Party
directly arising out of such Indemnified Party's gross negligence or willful
misconduct; provided, however, that the term "gross negligence" shall not
include gross negligence imputed as a matter of law to any of the Indemnified
Parties solely by reason of Borrower's interest in the Premises or Borrower's
failure to act in respect of matters which are or were the obligation of
Borrower under the Loan Documents), and costs of Remediation (whether or not
performed voluntarily), engineers' fees, environmental consultants' fees, and
costs of investigation (including but not limited to sampling, testing, and
analysis of soil, water, air, building materials and other materials and
substances whether solid, liquid or gas) imposed upon or incurred by or asserted
against any Indemnified Parties, and directly or indirectly arising out of or in
any way relating to any one or more of the following:
(1) any presence of any Hazardous Materials or USTs in, on, above, or
under the Premises;
(2) any past, present or Threatened Release in, on, above, under or
from the Premises;
(3) any activity by Borrower, any person or entity affiliated with
Borrower or any tenant or other user of the Premises in connection with any
actual, proposed or threatened use, treatment, storage, holding, existence,
disposition or other Release, generation, production, manufacturing, processing,
refining, control, management, abatement, removal, handling, transfer or
transportation to or from the Premises of any Hazardous Materials or USTs at any
time located in, under, on or above the Premises;
(4) any activity by Borrower, any person or entity affiliated with
Borrower or any tenant or other user of the Premises in connection with any
actual or proposed Remediation of any Hazardous Materials or USTs at any time
located in, under, on or above the Premises, whether or not such Remediation is
voluntary or pursuant to court or administrative order, including but not
limited to any removal, remedial or corrective action;
(5) any past, present or threatened non-compliance or violations of any
Environmental Laws (or permits issued pursuant to any Environmental Law) in
connection with the Premises or operations thereon, including but not limited to
any failure by Borrower, any person or entity affiliated with Borrower or any
tenant or other user of the Premises to comply with any order of any
Governmental Authority in connection with any Environmental Laws;
(6) the imposition, recording or filing or the threatened imposition,
recording or filing of any Environmental Lien encumbering the Premises;
(7) any administrative processes or proceedings or judicial proceedings
in any way connected with any matter addressed in this Agreement;
(8) any past, present or threatened injury to, destruction of or loss
of natural resources in any way connected with the Premises, including but not
limited to costs to investigate and assess such injury, destruction or loss;
(9) any acts of Borrower, any person or entity affiliated with Borrower
or any tenant or other user of the Premises in arranging for disposal or
treatment, or arranging with a transporter for transport for disposal or
treatment, of Hazardous Materials or USTs owned or possessed by Borrower, any
person or entity affiliated with Borrower or any tenant or other user, at any
facility or incineration vessel owned or operated by another person or entity
and containing such or similar Hazardous Materials or USTs;
(10) any acts of Borrower, any person or entity affiliated with
Borrower or any tenant or other user of the Premises, in accepting any Hazardous
Materials or USTs for transport to disposal or treatment facilities,
incineration vessels or sites selected by Borrower, any person or entity
affiliated with Borrower or any tenant or other user of the Premises, from which
there is a Release, or a Threatened Release of any Hazardous Materials which
causes the incurrence of costs for Remediation;
20
(11) any personal injury, wrongful death, or property damage arising
under any statutory or common law or tort law theory, including but not limited
to damages assessed for the maintenance of a private or public nuisance or for
the conducting of an abnormally dangerous activity on or near the Premises; or
(12) any misrepresentation or inaccuracy in any representation or
warranty or material breach or failure to perform any covenants or other
obligations pursuant to this Agreement.
B. Borrower fully and completely releases, waives and covenants not to
assert any claims, liabilities, actions, defenses, challenges, contests or other
opposition against Lender and Environmental Insurer, however characterized,
known or unknown, foreseen or unforeseen, now existing or arising in the future,
relating to this Agreement and any Hazardous Materials, USTs, Releases and/or
Remediation on, at or affecting the Premises.
11. Substitution. Borrower shall have the right to obtain a release of
all liens granted in favor of Lender with respect to the Premises by
substituting a Substitute Premises for the Premises if permitted by the terms
of Section 9.A(7), subject to fulfillment of the following conditions:
(1) Borrower shall provide Lender with notice of its intention to
substitute a Substitute Premises within the applicable 30 day period
contemplated by Section 9.A(7) and the closing of the substitution shall take
place within the applicable 60 day period contemplated by such subsection.
(2) Borrower must provide for the substitution of a Substitute
Premises, and the proposed Substitute Premises must:
(a) be a Permitted Concept, in good condition and repair, ordinary
wear and tear excepted;
(b) have for the twelve-month period preceding the date of the
closing of such substitution a Fixed Charge Coverage Ratio at least equal
to the Fixed Charge Coverage Ratio for the Premises being replaced and the
substitution must cure the breach of the Fixed Charge Coverage Ratio
requirement;
(c) be owned in fee simple by Borrower;
(d) Borrower's right, title and interest in and to the proposed
Substitute Premises shall be free and clear of all liens, restrictions,
easements and encumbrances, except such matters as are acceptable to Lender
(the "Substitute Premises Permitted Exceptions");
(e) have a fair market value no less than the greater of the then
fair market value of the Premises or the fair market value of the Premises
as of the Closing, all as reasonably determined by Lender's in-house
inspectors and underwriters.
(3) Lender shall have inspected and approved the Substitute Premises
utilizing such site inspection and underwriting approval criteria that would be
used by a prudent institutional mortgage loan lender. Borrower shall have paid
all costs and expenses resulting from such proposed substitution, including,
without limitation, the cost of title insurance premiums and all endorsements
required by Lender, survey charges, UCC and litigation search charges, the
attorneys' fees of Borrower, reasonable attorneys' fees and expenses of Lender,
the cost of the environmental due diligence undertaken pursuant to subsection
(6) below, including, without limitation, the cost of environmental insurance,
Lender's site inspection costs and fees, stamp taxes, mortgage taxes, transfer
fees, escrow, filing and recording fees and UCC filing and recording fees
(including preparation, filing and recording fees for UCC continuation
statements).
(4) Lender shall have received a preliminary title report and
irrevocable commitment to insure title in the amount of the then outstanding
principal balance of the Loan by means of a mortgagee's ALTA extended coverage
policy of title insurance (or its equivalent, in the event such form is not
21
issued in the jurisdiction where the proposed Substitute Premises is located)
for the proposed Substitute Premises issued by Title Company showing
Borrower vested with good and marketable title in the real property comprising
the Substitute Premises and committing to insure Lender's first priority lien
upon and security interest in the proposed Substitute Premises, subject only to
the Substitute Premises Permitted Exceptions and containing endorsements
substantially comparable to those required by Lender at the Closing.
(5) Lender shall have received a current ALTA survey of the proposed
Substitute Premises or its equivalent, the form of which shall be comparable to
those received by Lender at the Closing and sufficient to cause the standard
survey exceptions set forth in the title policy referred to in the preceding
subsection to be deleted, and disclosing no matters other than the Substitute
Premises Permitted Exceptions.
(6) Lender shall have completed such environmental due diligence of the
proposed Substitute Premises as it deems necessary or advisable in its sole
discretion, including, without limitation, receiving an environmental insurance
policy with respect to the proposed Substitute Premises in a form and substance
and issued by such environmental insurance company as is acceptable to Lender,
and Lender shall have approved the environmental condition of the Substitute
Premises based on such environmental due diligence as Lender deems necessary or
advisable in its sole discretion; provided, however, if such proposed
substitution shall occur from and after such time as the Loan is included in a
Securitization, this subitem (6) shall be modified to read as follows: Lender
shall have completed such environmental due diligence of the proposed Substitute
Premises as a prudent institutional mortgage loan lender deems necessary or
advisable, including, without limitation, receiving an environmental insurance
policy with respect to the proposed Substitute Premises in a form and substance
and issued by such environmental insurance company as is acceptable to a prudent
institutional mortgage loan lender, and Lender shall have approved the
environmental condition of the Substitute Premises based on such environmental
due diligence as a prudent institutional mortgage loan lender would deem
necessary or advisable.
(7) Borrower shall deliver, or cause to be delivered, such legal
opinions as Lender may reasonably require with respect to the proposed
substitution, all in a form and substance which would be satisfactory to a
prudent institutional mortgage loan lender and its counsel. If the Loan is part
of a Securitization, such opinions shall include, without limitation, an opinion
of counsel to the rating agencies which have issued ratings in connection with
such Securitization that the substitution does not constitute a "significant
modification" of such Loan under Section 1001 of the Internal Revenue Code or
otherwise cause a tax to be imposed on a "prohibited transaction" by any REMIC
Trust.
(8) no Event of Default shall have occurred and be continuing under any
of the Loan Documents.
(9) The Borrower Parties shall have executed such documents as are
comparable to the security documents executed and delivered at Closing, as
applicable (but with such revisions as may be reasonably required by Lender to
address matters unique to the Substitute Premises) or amendments to such
documents, including, without limitation, a Mortgage and UCC-1 Financing
Statements (the "Substitute Documents"), to provide Lender with a first priority
lien on the proposed Substitute Premises, subject only to the Substitute
Premises Permitted Exceptions, and all other rights, remedies and benefits with
respect to the proposed Substitute Premises which Lender holds in the Premises,
all of which documents shall be in a form and substance which would be
satisfactory to a prudent institutional mortgage loan lender.
(10) the representations and warranties set forth in the Substitute
Documents and Section 6 of this Agreement applicable to the proposed Substitute
Premises shall be true and correct in all material respects as of the date of
substitution, and Borrower shall have delivered to Lender an officer's
certificate to that effect.
(11) Borrower shall have delivered to Lender certificates of insurance
and insurance policies showing that all insurance required by the Substitute
Documents is in full force and effect.
Upon satisfaction of the foregoing conditions with respect to the release of the
Premises: (a) the proposed Substitute Premises shall be deemed substituted for
the Premises; (b) the Loan Amount for the Substitute Premises shall be the
22
same as for the Premises; (c) the Substitute Premises shall be referred to
herein as the "Premises" and shall secure the same Obligations as were secured
by the replaced Premises; (d) the Substitute Documents shall be dated as of
the date of the substitution; and (e) Lender will release, or cause to be
released, the lien of the Mortgage, UCC-1 Financing Statements and any other
Loan Documents encumbering the replaced Premises.
12. Miscellaneous Provisions.
A. Notices. All notices, consents, approvals or other instruments
required or permitted to be given by either party pursuant to this Agreement or
any of the other Loan Documents shall be in writing and given by (i) hand
delivery, (ii) facsimile, (iii) express overnight delivery service or (iv)
certified or registered mail, return receipt requested, and shall be deemed to
have been delivered upon (a) receipt, if hand delivered, (b) transmission, if
delivered by facsimile, (c) the next Business Day, if delivered by express
overnight delivery service, or (d) the third Business Day following the day of
deposit of such notice with the United States Postal Service, if sent by
certified or registered mail, return receipt requested. Notices shall be
provided to the parties and addresses (or facsimile numbers, as applicable)
specified below:
If to Borrower: Family Steak Houses of Florida, Inc.
0000 Xxxxxxx Xxxxxxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Lender: GE Capital Franchise Finance Corporation
00000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: General Counsel
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
B. Real Estate Commission. Lender and Borrower represent and warrant
to each other that they have dealt with no real estate or mortgage broker,
agent, finder or other intermediary in connection with the transactions
contemplated by this Agreement or the other Loan Documents. Lender and Borrower
shall indemnify and hold each other harmless from and against any costs, claims
or expenses, including attorneys' fees, arising out of the breach of their
respective representations and warranties contained within this Section.
C. Waiver and Amendment; Document Review. (1) No provisions of this
Agreement or the other Loan Documents shall be deemed waived or amended except
by a written instrument unambiguously setting forth the matter waived or amended
and signed by the party against which enforcement of such waiver or amendment is
sought. Waiver of any matter shall not be deemed a waiver of the same or any
other matter on any future occasion.
(2) In the event Borrower makes any request upon Lender requiring
Lender or Lender's attorneys to review and/or prepare (or cause to be reviewed
and/or prepared) any documents, plans, specifications or other submissions in
connection with or arising out of this Agreement or any of the other Loan
Documents, then Borrower shall (x) reimburse Lender promptly upon Lender's
demand for all out-of-pocket costs and expenses incurred by Lender in connection
with such review and/or preparation, including, without limitation, reasonable
attorneys' fees, and (y) pay Lender a reasonable processing and review fee.
D. Captions. Captions are used throughout this Agreement and the other
Loan Documents for convenience of reference only and shall not be considered in
any manner in the construction or interpretation hereof.
E. Lender's Liability. Notwithstanding anything to the contrary
provided in this Agreement or the other Loan Documents, it is specifically
understood and agreed, such agreement being a primary consideration for the
23
execution of this Agreement and the other Loan Documents by Lender, that (1)
there shall be absolutely no personal liability on the part of any shareholder,
director, officer or employee of Lender, with respect to any of the terms,
covenants and conditions of this Agreement or the other Loan Documents, (2)
Borrower waives all claims, demands and causes of action against Lender's
officers, directors, employees and agents in the event of any breach by Lender
of any of the terms, covenants and conditions of this Agreement or the other
Loan Documents to be performed by Lender and (3) Borrower shall look solely to
the assets of Lender for the satisfaction of each and every remedy of Borrower
in the event of any breach by Lender of any of the terms, covenants and
conditions of this Agreement or the other Loan Documents to be performed by
Lender, such exculpation of liability to be absolute and without any exception
whatsoever.
F. Severability. The provisions of this Agreement and the other Loan
Documents shall be deemed severable. If any part of this Agreement or the other
Loan Documents shall be held invalid, illegal or unenforceable, the remainder
shall remain in full force and effect, and such invalid, illegal or
unenforceable provision shall be reformed by such court so as to give maximum
legal effect to the intention of the parties as expressed therein.
G. Construction Generally. This Agreement and the other Loan Documents
have been entered into by parties who are experienced in sophisticated and
complex matters similar to the transaction contemplated by this Agreement and
the other Loan Documents and are entered into by both parties in reliance upon
the economic and legal bargains contained therein and shall be interpreted and
construed in a fair and impartial manner without regard to such factors as the
party which prepared the instrument, the relative bargaining powers of the
parties or the domicile of any party. Borrower and Lender were each represented
by legal counsel competent in advising them of their obligations and liabilities
hereunder.
H. Further Assurances. Borrower will, at its sole cost and expense,
do, execute, acknowledge and deliver or cause to be done, executed, acknowledged
and delivered all such further acts, documents, conveyances, notes, mortgages,
deeds of trust, assignments, security agreements, financing statements and
assurances as Lender shall from time to time reasonably require or deem
advisable to carry into effect the purposes of this Agreement and the other Loan
Documents, to perfect any lien or security interest granted in any of the Loan
Documents and for the better assuring and confirming of all of Lender's rights,
powers and remedies under the Loan Documents.
I. Attorneys' Fees. In the event of any judicial or other adversarial
proceeding between the parties concerning this Agreement or the other Loan
Documents, the prevailing party shall be entitled to recover its attorneys' fees
and other costs in addition to any other relief to which it may be entitled.
J. Entire Agreement. This Agreement and the other Loan Documents,
together with any other certificates, instruments or agreements to be delivered
in connection therewith, constitute the entire agreement between the parties
with respect to the subject matter hereof, and there are no other
representations, warranties or agreements, written or oral, between Borrower and
Lender with respect to the subject matter of this Agreement and the other Loan
Documents. Notwithstanding anything in this Agreement and the other Loan
Documents to the contrary, with respect to the Premises, upon the execution and
delivery of this Agreement by Borrower and Lender, any bid proposals or loan
commitments with respect to the transactions contemplated by this Agreement
shall be deemed null and void and of no further force and effect and the terms
and conditions of this Agreement shall control notwithstanding that such terms
and conditions may be inconsistent with or vary from those set forth in such bid
proposals or loan commitments.
K. Forum Selection; Jurisdiction; Venue; Choice of Law. Borrower
acknowledges that this Agreement and the other Loan Documents were substantially
negotiated in the State of Arizona, this Agreement and the other Loan Documents
were executed by Lender in the State of Arizona and delivered by Borrower in the
State of Arizona, all payments under the Note will be delivered in the State of
Arizona and there are substantial contacts between the parties and the
transactions contemplated herein and the State of Arizona. For purposes of any
action or proceeding arising out of this Agreement or any of the other Loan
Documents, the parties hereto hereby expressly submit to the jurisdiction of all
federal and state courts located in the State of Arizona and Borrower consents
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that it may be served with any process or paper by registered mail or by
personal service within or without the State of Arizona in accordance with
applicable law. Furthermore, Borrower waives and agrees not to assert in any
such action, suit or proceeding that it is not personally subject to the
jurisdiction of such courts, that the action, suit or proceeding is brought in
an inconvenient forum or that venue of the action, suit or proceeding is
improper. It is the intent of the parties hereto that all provisions of this
Agreement and the Note shall be governed by and construed under the laws of the
State of Arizona, without giving effect to its principles of conflicts of law.
To the extent that a court of competent jurisdiction finds Arizona law
inapplicable with respect to any provisions of this Agreement or the Note, then,
as to those provisions only, the laws of the state where the Premises is located
shall be deemed to apply. Nothing in this Section shall limit or restrict the
right of Lender to commence any proceeding in the federal or state courts
located in the state in which the Premises is located to the extent Lender deems
such proceeding necessary or advisable to exercise remedies available under this
Agreement or the other Loan Documents.
L. Counterparts. This Agreement and the other Loan Documents may be
executed in one or more counterparts, each of which shall be deemed an original.
M. Assignments by Lender; Binding Effect. Lender may assign in whole
or in part its rights under this Agreement, including, without limitation, in
connection with any Transfer, Participation and/or Securitization. Upon any
unconditional assignment of Lender's entire right and interest hereunder, Lender
shall automatically be relieved, from and after the date of such assignment, of
liability for the performance of any obligation of Lender contained herein.
This Agreement and the other Loan Documents shall be binding upon and inure to
the benefit of Borrower and Lender and their respective successors and permitted
assigns, including, without limitation, any United States trustee, any debtor in
possession or any trustee appointed from a private panel.
N. Survival. Except for the conditions of Closing set forth in Section
4, which shall be satisfied or waived as of the Closing Date, all
representations, warranties, agreements, obligations and indemnities of Borrower
and Lender set forth in this Agreement and the other Loan Documents shall
survive the Closing.
O. Waiver of Jury Trial and Punitive, Consequential, Special and
Indirect Damages. BORROWER AND LENDER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO
ANY AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM
BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER OR ITS SUCCESSORS WITH
RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, ANY
OF THE OTHER LOAN DOCUMENTS OR ANY DOCUMENT CONTEMPLATED HEREIN OR RELATED
HERETO. THIS WAIVER BY THE PARTIES HERETO OF ANY RIGHT EITHER MAY HAVE TO A
TRIAL BY JURY HAS BEEN NEGOTIATED AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.
FURTHERMORE, BORROWER AND LENDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE THE RIGHT EITHER MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND
INDIRECT DAMAGES FROM THE OTHER AND ANY OF THE OTHER'S AFFILIATES, OFFICERS,
DIRECTORS OR EMPLOYEES OR ANY OF THEIR SUCCESSORS WITH RESPECT TO ANY AND ALL
ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY
EITHER PARTY AGAINST THE OTHER OR ANY OF THE OTHER'S AFFILIATES, OFFICERS,
DIRECTORS OR EMPLOYEES OR ANY OF THEIR SUCCESSORS WITH RESPECT TO ANY MATTER
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, ANY OF THE OTHER LOAN
DOCUMENTS OR ANY DOCUMENT CONTEMPLATED HEREIN OR RELATED HERETO. THE WAIVER BY
BORROWER AND LENDER OF ANY RIGHT THEY MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL,
SPECIAL AND INDIRECT DAMAGES HAS BEEN NEGOTIATED BY THE PARTIES HERETO AND IS AN
ESSENTIAL ASPECT OF THEIR BARGAIN.
P. Transfers, Participations and Securitizations. (1) A material
inducement to Lender's willingness to complete the transactions contemplated by
the Loan Documents is Borrower's agreement that Lender may, at any time,
complete a Transfer, Participation or Securitization with respect to the Note,
Mortgage and/or any of the other Loan Documents or any or all servicing rights
with respect thereto.
(2) Borrower agrees to cooperate in good faith with Lender in
connection with any such Transfer, Participation and/or Securitization of the
Note, Mortgage and/or any of the other Loan Documents, or any or all
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servicing rights with respect thereto, including, without limitation (i)
providing such documents, financial and other data, and other information and
materials (the "Disclosures") which would typically be required with respect to
the Borrower Parties by a purchaser, transferee, assignee, servicer,
participant, investor or rating agency involved with respect to such Transfer,
Participation and/or Securitization, as applicable; provided, however, the
Borrower Parties shall not be required to make Disclosures of any confidential
information or any information which has not previously been made public unless
required by applicable federal or state securities laws; and (ii) amending the
terms of the transactions evidenced by the Loan Documents to the extent
necessary so as to satisfy the requirements of purchasers, transferees,
assignees, servicers, participants, investors or selected rating agencies
involved in any such Transfer, Participation or Securitization, so long as such
amendments would not have a material adverse effect upon the Borrower Parties or
the transactions contemplated hereunder. Lender shall be responsible for
preparing at its expense any documents evidencing the amendments referred to in
the preceding subitem (ii).
(3) Borrower consents to Lender providing the Disclosures, as well as
any other information which Lender may now have or hereafter acquire with
respect to the Premises or the financial condition of the Borrower
Parties to each purchaser, transferee, assignee, servicer, participant, investor
or rating agency involved with respect to each Transfer, Participation and/or
Securitization, as applicable. Lender and Borrower (and their respective
Affiliates) shall each pay their own attorneys' fees and other out-of-pocket
expenses incurred in connection with the performance of their respective
obligations under this Section.
(4) Notwithstanding anything to the contrary contained in this
Agreement or the other Loan Documents: (a) an Event of Default or a breach or
default, after the passage of all applicable notice and cure or grace periods,
under any Loan Document or Other Agreement which relates to a loan or
sale/leaseback transaction which has not been the subject of a Securitization,
Participation or Transfer shall not constitute an Event of Default or a breach
or default, as applicable, under any Loan Document or Other Agreement which
relates to a loan which has been the subject of a Securitization, Participation
or Transfer; (b) an Event of Default or a breach or default, after the passage
of all applicable notice and cure or grace periods, under any Loan Document or
Other Agreement which relates to a loan which is included in any Loan Pool shall
not constitute an Event of Default or a breach or default, as applicable, under
any Loan Document or Other Agreement which relates to a loan which is included
in any other Loan Pool; (c) the Loan Documents and Other Agreements
corresponding to the loans in any Loan Pool shall not secure the obligations of
any of the Borrower Parties contained in any Loan Document or Other Agreement
which does not correspond to a loan in such Loan Pool; and (d) the Loan
Documents and Other Agreements which do not correspond to a loan in any Loan
Pool shall not secure the obligations of any of the Borrower Parties
contained in any Loan Document or Other Agreement which does correspond to a
loan in such Loan Pool.
Q. Estoppel Certificate. At any time, and from time to time, each
party agrees, promptly and in no event later than fifteen (15) days after a
request from the other party, to execute, acknowledge and deliver to the other
party a certificate in the form supplied by the other party, certifying: (a) to
its knowledge, whether there are then any existing defaults by it or the other
party in the performance of their respective obligations under this Agreement or
any of the other Loan Documents, and, if there are any such defaults, specifying
the nature and extent thereof; (b) that no notice of default has been given or
received by it under this Agreement or any of the other Loan Documents which has
not been cured, except as to defaults specified in the certificate; (c) the
capacity of the person executing such certificate, and that such person is duly
authorized to execute the same on behalf of it; and (d) any other information
reasonably requested by the other party in connection with this Agreement and
the other Loan Documents.
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IN WITNESS WHEREOF, Borrower and Lender have entered into this Agreement as
of the date first above written.
LENDER:
GE CAPITAL FRANCHISE FINANCE
CORPORATION, a Delaware corporation
By __________________________________
Printed Name ________________________
Its _________________________________
BORROWER:
FAMILY STEAK HOUSES OF FLORIDA, INC., a
Florida corporation
By __________________________________
Printed Name ________________________
Its _________________________________
U.S. Federal Tax Identification Number:
_______________________________________
Organization Identification Number:
_______________________________________
Principal Place of Business:
Xxxxxxx Xxxxx, XX
00
XXXXX XX XXXXXXX )
) SS.
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me on _________________,
2002 by ___________________________________, _______________________________
of GE Capital Franchise Finance Corporation, a Delaware corporation, on behalf
of the corporation.
______________________________
Notary Public
My Commission Expires:
___________________________________
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me on ______________, 2002
by _______________________, ________________________ of Family Steak Houses of
Florida, Inc., a Florida corporation, on behalf of the corporation.
______________________________
Notary Public
My Commission Expires:
___________________________________
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EXHIBIT A
DESCRIPTION OF PREMISES
29
