<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED MARCH 31, 2000
COMMISSION FILE NUMBER 1-7697
------------------------
I.C.H. CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 43-6069928
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
9255 TOWNE CENTRE DRIVE 92121
SUITE 600 (Zip code)
SAN DIEGO, CALIFORNIA
(Address of principal executive offices)
</TABLE>
------------------------
Registrant's telephone number, including area code: (858) 587-8533
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes /X/ No / /
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes /X/ No / /
Number of shares of common stock outstanding on March 31, 2000: 2,955,167
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
I.C.H. CORPORATION AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE
NUMBER
--------
<S> <C> <C>
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets--March 31, 2000 and
December 31, 1999........................................... 3
Consolidated Statements of Operations for the Three Months
ended March 31, 2000 and for the Three Months ended
March 31, 1999.............................................. 4
Consolidated Statements of Cash Flows for the Three Months
ended March 31, 2000 and for the Three Months ended
March 31, 1999.............................................. 5
Notes to Consolidated Financial Statements.................. 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 9
Part II.
Item 5. Other Information........................................... 12
Item 6. Exhibits and Reports on Form 8-K............................ 12
Signatures.................................................. 13
</TABLE>
2
<PAGE>
I.C.H. CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
AS OF AS OF
MARCH 31, 2000 DECEMBER 31, 1999
-------------- -----------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................. $ 7,505 $ 15,085
Accounts receivable....................................... 680 735
Inventories............................................... 2,948 2,867
Deferred income taxes..................................... 1,029 1,029
Other current assets, net................................. 2,440 2,769
-------- --------
Total current assets.................................... 14,602 22,485
Property and equipment, net................................. 59,791 54,461
Intangible assets, net...................................... 47,487 47,622
Deferred income taxes....................................... 70 70
Other Assets................................................ 8,514 8,018
-------- --------
Total assets............................................ $130,464 $132,656
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable.......................................... $ 6,810 $ 9,962
Accrued liabilities....................................... 9,274 11,539
Current portion of long-term debt......................... 4,307 4,295
Current portion of capital lease obligations.............. 244 244
-------- --------
Total current liabilities............................... 20,635 26,040
Non-current liabilities:
Long-term debt............................................ 80,411 78,009
Long-term capital lease obligations....................... 2,678 2,174
Other liabilities......................................... 6,898 7,113
-------- --------
Total liabilities....................................... 110,622 113,336
-------- --------
Stockholders' Equity:
Preferred stock, $0.01 par value; 1,000,000 authorized;
none issued and outstanding -- --
Common stock, $0.01 par value; 19,000,000 authorized;
2,955,167 outstanding................................... 30 28
Paid-in-capital........................................... 12,865 12,662
Retained earnings......................................... 6,947 6,630
-------- --------
Total stockholders' equity.............................. 19,842 19,320
-------- --------
Total liabilities and stockholders' equity.............. $130,464 $132,656
======== ========
</TABLE>
The accompanying Notes are an integral part of the Consolidated Financial
Statements.
3
<PAGE>
I.C.H. CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS--UNAUDITED
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31,
---------------------------
2000 1999
------------ ------------
<S> <C> <C>
Restaurant sales............................................ $ 60,673 $ 59,720
Other....................................................... 156 104
--------- ---------
Total Revenues.......................................... 60,829 59,824
Cost and expenses:
Restaurant costs and expenses............................. 52,424 51,609
General and administrative................................ 3,836 3,689
Depreciation and amortization............................. 1,621 1,337
--------- ---------
Operating income............................................ 2,948 3,189
Interest expense.......................................... 2,415 2,001
--------- ---------
Income before income taxes.................................. 533 1,188
Provision for income taxes................................ 216 481
--------- ---------
Net income.................................................. $ 317 $ 707
========= =========
Net income per share:
Basic..................................................... $.11 $.27
Diluted................................................... $.10 $.22
Weighted-average common shares outstanding (see Note 3)
Basic..................................................... 2,883,000 2,667,000
Diluted................................................... 3,319,000 3,280,000
</TABLE>
The accompanying Notes are an integral part of the Consolidated Financial
Statements.
4
<PAGE>
I.C.H. CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS--UNAUDITED
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31,
---------------------------
2000 1999
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income.................................................. $ 317 $ 707
Adjustments to reconcile net income to cash from operating
activities
Depreciation and amortization............................. 1,621 1,337
Deferred income taxes..................................... -- (206)
Changes in current assets and liabilities:
Accounts receivable....................................... 55 201
Inventories............................................... (81) 81
Accounts payable and accrued expenses..................... (5,417) (489)
Other, net................................................ 163 104
------- -------
Net cash provided (used) by operating activities...... (3,342) 1,735
------- -------
Cash flows from investing activities:
Capital expenditures...................................... (4,953) (2,838)
Proceeds from disposition of property and equipment....... -- --
Acquisition of restaurant properties...................... -- (58)
Other, net................................................ (888) (635)
------- -------
Net cash used by investing activities................. (5,841) (3,531)
------- -------
Cash flows from financing activities:
Proceeds from issuance of long-term debt and capital lease
obligations, net........................................ 2,550 1,645
Repayment of long-term debt and capital lease
obligations............................................. (1,152) (668)
-------
Other, net................................................ 205 --
-------
Net cash provided by financing activities............. 1,603 977
-------
Net changes in cash and cash equivalents.................... (7,580) (819)
Cash and cash equivalents at beginning of period............ 15,085 9,235
------- -------
Cash and cash equivalents at end of period.................. $ 7,505 $ 8,416
======= =======
</TABLE>
The accompanying Notes are an integral part of the Consolidated Financial
Statements.
5
<PAGE>
I.C.H. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
NOTE 1. BUSINESS
PREPARATION OF INTERIM FINANCIAL STATEMENTS
The Consolidated Interim Financial Statements of I.C.H. Corporation (the
"Company") and Subsidiaries have been prepared in accordance with the rules and
regulations of the Securities and Exchange Commission ("SEC"). Certain amounts
have been reclassified from previous presentations. These Consolidated Interim
Financial Statements include estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent assets and
liabilities and the amounts of revenues and expenses. Actual results could
differ from those estimates. In the opinion of management, these statements
include all adjustments necessary for a fair presentation of the results of all
interim periods reported herein. All adjustments are of a normal recurring
nature unless otherwise disclosed. Certain information and footnote disclosures
prepared in accordance with generally accepted accounting principles have been
either condensed or omitted pursuant to SEC rules and regulations. The Company
believes, however, that the disclosures made are adequate for a fair
presentation of results of operations, financial position and cash flows. These
Consolidated Interim Financial Statements should be read in conjunction with the
Consolidated Financial Statements and accompanying notes included in the
Company's latest annual report on Form 10-K.
BUSINESS AND PRESENTATION
The accompanying Consolidated Interim Financial Statements include the
accounts of the Company and its wholly-owned subsidiaries, principally
Sybra, Inc. ("Sybra") and Lyon's of California, Inc. ("Lyon's"). All significant
intercompany accounts and transactions have been eliminated.
NOTE 2. SEGMENT INFORMATION
The Company operates entirely in the food service industry with
substantially all of its revenues flowing from the sale of menu products at the
restaurants operated by its wholly-owned subsidiaries. At March 31, 2000, Sybra
owned and operated 191 Arby's restaurants and Lyon's owned and operated 72
Lyon's restaurants. The Company considers each subsidiary a reportable segment.
Amounts described as "Corporate and other" relate to revenues, expenses and
assets associated with non-segmented operations.
The Company evaluates performance based on several factors, of which the
primary financial measure is business segment operating income before interest,
taxes, depreciation, amortization and charges for (recoveries of) restructuring
and impairment ("EBITDA as defined").
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
2000 1999
-------- --------
<S> <C> <C>
SALES
Sybra................................................... $ 37,921 $ 34,547
Lyon's.................................................. 22,752 25,173
Corporate and other..................................... -- --
-------- --------
Total consolidated sales................................ $ 60,673 $ 59,720
======== ========
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
2000 1999
-------- --------
<S> <C> <C>
DEPRECIATION AND AMORTIZATION
Sybra................................................... $ 1,197 $ 1,052
Lyon's.................................................. 342 253
Corporate and other..................................... 82 32
-------- --------
Total consolidated depreciation and amortization........ $ 1,621 $ 1,337
======== ========
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------
2000 1999
-------- ----------
<S> <C> <C>
EBITDA AS DEFINED
Sybra................................................. $ 4,278 $ 3,442
Lyon's................................................ 303 1,232
Corporate and other................................... (12) (148)
-------- --------
Total EBITDA as defined for reportable segments....... $ 4,569 $ 4,526
======== ========
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------
2000 1999
-------- ----------
<S> <C> <C>
CAPITAL EXPENDITURES
Sybra................................................. 4,208 2,408
Lyon's................................................ 745 430
Corporate and other................................... -- --
-------- --------
Total capital expenditures for reportable segments.... $ 4,953 $ 2,838
======== ========
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
--------- ------------
<S> <C> <C>
ASSETS
Sybra................................................. $ 98,594 $ 97,627
Lyon's................................................ 28,073 30,540
Corporate and other................................... 3,797 4,489
-------- --------
Total consolidated assets............................. $130,464 $132,656
======== ========
</TABLE>
7
<PAGE>
NOTE 3. EQUITY AND EARNINGS PER COMMON SHARE
Basic earnings per share is computed by dividing net income available to
common shareholders by the weighted-average number of common shares outstanding
during each period. Diluted computations include dilutive common share
equivalents.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------
2000 1999
---------- ----------
<S> <C> <C>
Income for computation of basic earnings per share
and diluted earnings per share..................... $ 317 $ 707
---------- ----------
Weighted-average shares for computation of basic
earnings per share................................. 2,883,000 2,667,000
Incremental shares on assumed issuance and repurchase
of stock options................................... 436,000 613,000
---------- ----------
Weighted-average shares for computation of diluted
earnings per share................................. 3,319,000 3,280,000
---------- ----------
Basic earnings per share............................. $.11 $.27
========== ==========
Diluted earnings per share........................... $.10 $.22
========== ==========
</TABLE>
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Certain information discussed below may constitute forward-looking
statements within the meaning of the federal securities laws. Although the
Company believes that the expectations reflected in such forward-looking
statements are based upon reasonable assumptions, it can give no assurance that
its expectations will be achieved. Forward-looking information is subject to
certain risks, trends and uncertainties that could cause actual results to
differ materially from projected results. Among those risks, trends and
uncertainties are the general economic climate, costs of food and labor,
consumer demand, interest rate levels, the availability of financing and other
risks associated with the acquisition, development and operation of new and
existing restaurants. Unless otherwise indicated all amounts are in thousands,
except share amounts.
GENERAL
The Company conducts its restaurant operations principally through two
wholly-owned subsidiaries, Sybra, Inc. and Lyon's of California, Inc.
Restaurant costs and expenses include all direct costs, including direct
labor, occupancy costs, advertising expenses, royalty payments, expenditures for
repairs and maintenance, and workers' compensation, casualty and general
liability insurance costs. Advertising fees paid by the Company's Sybra
subsidiary to the AFA Service Corporation, a non-profit association of Arby's
restaurant operators, to develop and prepare advertising materials and to
undertake marketing research, are equal to 0.7% of restaurant sales. In
addition, the Company operates its restaurants pursuant to licenses which
require the Company to pay Arby's, Inc. a royalty based upon percentages of its
restaurant sales (presently an aggregate of approximately 3.1% of the Company's
restaurant sales). The royalty rate for new restaurants (currently 4.0%) will
result in an increase in the Company's aggregate royalty rate as new Arby's
restaurants are opened.
General and administrative expenses consist of corporate and regional office
expenses, including executive and administrative compensation, office expenses,
travel and professional fees.
RESULTS OF OPERATIONS
The following table sets forth, with respect to the Company and for the
periods indicated, the percentage of total revenues represented by certain
expense and income items.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
2000 1999
-------- --------
<S> <C> <C>
Revenues................................................ 100.0% 100.0%
Expenses
Restaurant costs & expenses........................... 86.2% 86.3%
General & administrative.............................. 6.3% 6.2%
Depreciation & amortization........................... 2.6% 2.2%
----- -----
Operating income........................................ 4.9% 5.3%
Interest expense........................................ 4.0% 3.3%
----- -----
Income before taxes..................................... 0.9% 2.0%
Income tax expense...................................... 0.4% 0.8%
===== =====
Net income.............................................. 0.5% 1.2%
===== =====
</TABLE>
9
<PAGE>
COMPARISON OF THE QUARTER ENDED MARCH 31, 2000 AND THE QUARTER ENDED MARCH 31,
1999.
Revenues--Consolidated revenues were $60.8 million for the quarter ended
March 31, 2000 as compared to $59.8 million for the quarter ended March 31,
1999, an increase of $1.0 million or 1.7%. This sales increase is due primarily
to additional sales from Sybra new store openings and acquisitions offset by one
closed Lyon's restaurant in the fourth quarter of 1999 and a Lyon's same store
sales decrease of 8.6%.
Restaurant Costs & Expenses--Consolidated restaurant costs and expenses were
$52.4 million or 86.2% of sales for the quarter ended March 31, 2000, as
compared to $51.6 million or 86.3% of sales for the quarter ended March 31,
1999, an increase of $815,000. The increase in total restaurant costs and
expenses is due to costs associated with the new Sybra restaurants discussed
above, offset by decreased costs at Lyon's associated with its decrease in comp
store sales.
General and Administrative--General and administrative costs and expenses
were $3.8 million or 6.3% of sales for the quarter ended March 31, 2000, as
compared to $3.7 million or 6.2% of sales, for the quarter ended March 31, 1999.
Depreciation and Amortization--Consolidated depreciation and amortization
expense was $1.6 million or 2.6% of sales for the quarter ended March 31, 2000,
as compared to $1.3 million or 2.2% of sales for the quarter ended March 31,
1999, an increase of $284,000. This increase is due to depreciation expense
associated with the new Sybra restaurants discussed above in addition to
increased depreciation related to normal capital expenditures at both Sybra and
Lyon's.
Interest Expense--Consolidated interest expense was $2.4 million, or 4.0% of
sales for the quarter ended March 31, 2000, as compared to $2.0 million or 3.3%
of sales for the quarter ended March 31, 1999. This increase is due to interest
expense related to Sybra's new store openings and acquisitions.
OPERATING SEGMENTS
The Company operates entirely in the food service industry with
substantially all revenues resulting from the sale of menu products at the
restaurants operated by its wholly-owned subsidiaries. At March 31, 2000, Sybra
owned and operated 191 Arby's restaurants and Lyon's owned and operated 72
Lyon's restaurants. The Company considers each subsidiary a reportable segment.
The Company evaluates performance based on several factors, of which the primary
financial measure is business segment operating income.
SYBRA, INC.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
SYBRA 2000 1999
- ----- -------- --------
<S> <C> <C>
Sales................................................... 100.0% 100.0%
Expenses
Restaurant costs & expenses........................... 81.5% 82.7%
General & Administrative.............................. 7.5% 7.5%
Depreciation & amortization........................... 3.4% 3.1%
----- -----
Operating income (loss)................................. 7.6% 6.7%
===== =====
</TABLE>
COMPARISON OF THE QUARTER ENDED MARCH 31, 2000 AND QUARTER ENDED MARCH 31,
1999--SYBRA, INC.
Sales--Sybra's sales for the quarter ended March 31, 2000 were
$37.9 million, as compared to $34.5 million for the quarter ended March 31, 1999
an increase of $3.4 million or 9.8% over the prior year
10
<PAGE>
comparable period. This increase is due to additional sales from new store
openings and store acquisitions. Same store sales at Sybra were flat for the
quarter.
Restaurant Costs & Expenses--Sybra's restaurant costs and expenses were
$30.9 million or 81.5% of sales for the quarter ended March 31, 2000 as compared
to $28.6 million or 82.7% of sales for the quarter ended March 31, 1999, an
increase of $2.3 million due to the sales increase explained above. As a
percentage of sales, costs decreased primarily as a result of increased
efficiencies and a decrease in the cost of certain food and related products.
Depreciation and Amortization--Sybra's depreciation and amortization expense
was $1.2 million or 3.4% of sales for the quarter ended March 31, 2000, as
compared to $1.1 million, or 3.1% of sales for the quarter ended March 31, 1999.
This increase is due to additional depreciation from new store openings and
store acquisitions.
CAPITAL EXPENDITURES--SYBRA, INC.
Sybra's capital expenditures were $4.2 million and $2.4 million for the
quarters ended March 31, 2000 and March 31, 1999, respectively. These include
new store development, as well as store maintenance, store remodel and store
renovation capital expenditures.
LYON'S
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
LYON'S 2000 1999
- ------ -------- --------
<S> <C> <C>
Sales................................................... 100.0% 100.0%
Expenses
Restaurant costs & expenses........................... 94.5% 91.5%
General & Administrative.............................. 4.2% 3.6%
Depreciation & amortization........................... 1.5% 1.0%
----- -----
Operating income (loss)................................. (0.2)% 3.9%
===== =====
</TABLE>
COMPARISON OF THE QUARTER ENDED MARCH 31, 2000 AND QUARTER ENDED MARCH 31,
1999--LYON'S
Sales--Lyon's sales for the quarter ended March 31, 2000 were $22.8 million
as compared to $25.2 million for the quarter ended March 31, 1999, a decrease of
$2.4 million or 9.6% below the prior year comparable period. This decrease is
due to the closing of one Lyon's restaurant at the end of the fourth quarter of
1999 and a same store sales decrease of 8.6%.
Restaurant Costs & Expenses--Lyon's restaurant costs and expenses were
$21.5 million or 94.5% of sales for the quarter ended March 31, 2000, as
compared to $23.0 million or 91.5% of sales for the quarter ended March 31,
1999, a decrease of $1.5 million due to the sales decline explained above. As a
percentage of sales, costs increased primarily as a result of reduced restaurant
level efficiencies related to the decrease in comp store sales.
Depreciation and Amortization--Lyon's depreciation and amortization expense
was $342,000 or 4.2% of sales for the quarter ended March 31, 2000, as compared
to $253,000or 3.6% of sales for the quarter ended March 31, 1999.
CAPITAL EXPENDITURES--LYON'S
Lyon's capital expenditures were 745,000 and 430,000 for the quarters ended
March 31, 2000 and March 31, 1999, respectively. These costs are primarily store
maintenance.
11
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary liquidity needs arise from debt service on
indebtedness incurred in connection with the Sybra acquisition, the Lyon's
acquisition, operating lease requirements and the funding of capital
expenditures primarily for new store openings. As of March 31, 2000, the Company
had total long-term debt of $84.7 million, which included $29.8 million under a
term facility with Atherton Capital Incorporated (the "Atherton Loan"),
$15.8 million under a term facility with USRP (Finance) LLC (the "USRP Loan")
and certain other indebtedness totaling $39.1 million. The Atherton Loan has a
weighted-average maturity of 12.5 years (of which approximately 9.5 years
remain), bears interest at 10.63%, requires monthly payments of principal and
interest, is collateralized by substantially all of the assets owned by Sybra at
the time it was acquired by the Company and imposes certain financial
restrictions and covenants. The USRP Loan has a weighted average maturity of
12 years (of which approximately 11 years remain) a weighted average interest
rate of 12.75%, requires monthly payments of principal and interest, is
collateralized by substantially all of the assets owned by Lyon's and imposes
certain financial restrictions and covenants.
The Company's primary source of liquidity during the quarter was the
operation of the restaurants owned by its principal operating subsidiaries,
Sybra and Lyon's, and debt and lease financing.
In the future, the Company's liquidity and capital resources will primarily
depend on the operations of Sybra and Lyon's which, under the provisions of the
Company's loan agreements, would permit, under certain conditions, distributions
and dividends to the Company. Sybra and Lyon's, like most restaurant businesses,
are able to operate with nominal or deficit working capital because all sales
are for cash and inventory turnover is rapid. Renovation and/or remodeling of
existing restaurants is either funded directly from available cash or, in some
instances, is financed through outside lenders. Construction or acquisition of
new restaurants is generally, although not always, financed by outside lenders.
The Company believes that it will continue to be able to secure adequate
financing on acceptable terms for new restaurant construction and acquisitions
and that cash generated from operations will be adequate to meet its needs for
the foreseeable future, although no assurances can be given.
ITEM 5. OTHER INFORMATION
The Company's Sybra subsidiary entered into an Amended and Restated Loan
Agreement with FINOVA Capital Corporation dated as of May 2, 2000. Under the
terms of that agreement, FINOVA has agreed to provide Sybra with a
$10.0 million credit facility, consisting of a $3.0 million term loan which will
be used to refinance existing Sybra indebtedness, and a $7.0 million revolving
credit facility which may be used for the development and acquisition of Arby's
restaurants and for the refinancing of other existing Sybra indebtedness.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed herewith:
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT TITLE
- --------------------- -------------
<C> <S>
10.28 Amended and Restated Loan Agreement between FINOVA Capital
Corporation and Sybra, Inc., dated as of May 2, 2000.
27.1 Financial Data Schedule
</TABLE>
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, I.C.H.
Corporation has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: May 12, 2000
<TABLE>
<S> <C> <C>
I.C.H. CORPORATION
By: /s/ JAMES R. ARABIA
-----------------------------------------
James R. Arabia
CHAIRMAN OF THE BOARD, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
By: /s/ GLEN V. FRETER
-----------------------------------------
Glen V. Freter
CHIEF FINANCIAL OFFICER
</TABLE>
13
<PAGE>
EXHIBIT 10.28
AMENDED AND RESTATED LOAN AGREEMENT
among
FINOVA CAPITAL CORPORATION,
as Lender
and
SYBRA, INC.,
as Borrower
Dated as of May 2, 2000
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I - DEFINITIONS AND DETERMINATIONS...................................1
1.1 Definitions......................................................1
1.2 Time Periods....................................................18
1.3 Accounting Terms and Determinations.............................18
1.4 References......................................................19
1.5 FINOVA's Discretion.............................................19
1.6 Borrower's Knowledge............................................19
ARTICLE II - LOANS AND TERMS OF PAYMENT.....................................19
2.1 Tranche A Loan..................................................19
2.1.1 Amount and Disbursement...................................19
2.1.2 Use of Proceeds...........................................19
2.1.3 Tranche A Note............................................19
2.1.4 Reborrowing...............................................19
2.1.5 Interest..................................................19
2.1.6 Payments..................................................19
2.1.7 Voluntary Prepayments.....................................20
2.1.8 Mandatory Prepayments.....................................20
2.2 Tranche B Loan..................................................21
2.2.1 Amount and Disbursement...................................21
2.2.2 Use of Proceeds...........................................21
2.2.3 Tranche B Note............................................21
2.2.4 Reborrowing...............................................21
2.2.5 Interest..................................................21
2.2.6 ..........................................................21
2.2.7 Voluntary Prepayments.....................................21
2.2.8 Mandatory Prepayments.....................................21
2.3 Tranche C Loan..................................................22
2.3.1 Amount and Disbursement...................................22
2.3.2 Use of Proceeds...........................................23
2.3.3 Tranche C Note............................................23
2.3.4 Reborrowing...............................................23
2.3.5 Interest..................................................23
2.3.6 Payments..................................................23
2.3.7 Voluntary Prepayments.....................................24
2.3.8 Mandatory Prepayments.....................................24
2.4 Tranche D Loan..................................................24
2.4.1 Amount and Disbursement...................................25
2.4.2 Use of Proceeds...........................................25
2.4.3 Tranche D Note............................................25
2.4.4 Reborrowing...............................................25
2.4.5 Interest..................................................25
2.4.6 Payments..................................................25
i
<PAGE>
2.4.7 Voluntary Prepayments.....................................25
2.4.8 Mandatory Prepayments.....................................26
2.5 Tranche E Loan..................................................26
2.5.1 Amount and Disbursement...................................26
2.5.2 Use of Proceeds...........................................27
2.5.3 Tranche E Note............................................27
2.5.4 Reborrowing...............................................27
2.5.5 Interest..................................................27
2.5.6 Payments..................................................27
2.5.7 Voluntary Prepayments.....................................27
2.5.8 Mandatory Prepayments.....................................27
2.6 Loan Fees.......................................................28
2.6.1 Closing...................................................28
2.6.2 Maintenance Fee...........................................28
2.6.3 Tranche D Loan Fee........................................28
2.6.3 Tranche E Loan Fees.......................................28
2.6.4 Non-Utilization Fee.......................................28
2.7 Late Charges....................................................29
2.8 No Prepayment Premium...........................................29
2.9 Involuntary Prepayment..........................................29
2.10 Payments after Event of Default.................................29
2.11 Interest Computation; Maximum Interest..........................29
2.11.1 Interest Computation...................................29
2.11.2 Maximum Interest.......................................29
2.12 Reliance on Notices.............................................30
ARTICLE III - GUARANTY AND SECURITY.........................................30
3.1 Guaranty........................................................30
3.2 Collateral......................................................30
3.3 Release of Security Interests...................................30
3.3.1 Release of Tranche A Collateral...........................31
3.3.2 Release of Tranche B Collateral...........................31
3.3.3 Release of Tranche C Collateral...........................31
3.3.4 Release of Tranche D Collateral...........................31
3.3.5 Release of Tranche E Collateral...........................31
3.4 Substitution of Collateral Stores...............................31
ARTICLE IV - CONDITIONS OF CLOSING..........................................31
4.1 Conditions of all Loans.........................................31
4.1.1 Representations and Warranties............................31
4.1.2 Performance; No Default...................................32
4.1.3 Opinions of Counsel.......................................32
4.1.4 Security Interests........................................32
4.1.5 Approval of Instruments and Security Interests............32
4.1.6 Licenses..................................................32
4.1.7 Use of Assets.............................................32
4.1.8 No Material Adverse Effect................................32
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4.1.9 Business and Flood Insurance.............................32
4.1.10 Environmental............................................32
4.1.11 Payment of Fees and Expenses.............................33
4.2 Conditions of Disbursement of Tranche B Loan and Advances of the
Tranche C Loan..................................................33
4.2.1 Appraisals................................................33
4.2.2 Minimum Store Level Fixed Charge Coverage.................33
4.2.3 Delivery of Documents.....................................33
4.2.4 Title Insurance; Survey...................................34
4.2.5 Opinions of Counsel; Direction for Delivery...............35
4.2.6 Financial Statements; Inspection..........................35
4.3 Conditions of Disbursement of the Tranche D Loan................35
4.3.1 Preliminary Deliveries....................................35
4.3.2 Consummation of Tranche D Acquisition.....................35
4.3.3 Appraisals................................................35
4.3.4 Store Fixed Charge Coverage...............................35
4.3.5 Tranche D Notice of Borrowing.............................36
4.3.6 Tranche D Payment Schedule................................36
4.3.7 Delivery of Documents.....................................36
4.3.8 Title Insurance; Survey...................................37
4.4 Conditions of Disbursement of Advances of the Tranche E Loan....37
4.4.1 Designation of Tranche E Store............................37
4.4.2 Appraisals and Evidence of Financeable Costs..............37
4.4.3 Amount of Advance.........................................37
4.4.4 Store Fixed Charge Coverage...............................38
4.4.5 Tranche E Notice of Borrowing.............................38
4.4.6 Tranche E Payment Schedule................................38
4.4.7 Delivery of Documents.....................................38
4.4.8 Title Insurance; Survey...................................39
ARTICLE V - REPRESENTATIONS AND WARRANTIES..................................39
5.1 Existence and Power.............................................39
5.2 Authority.......................................................39
5.3 Borrower Capital Stock and Related Matters......................39
5.3.1 Borrower Capital Stock....................................39
5.3.2 Restrictions..............................................40
5.4 Binding Agreements..............................................40
5.5 Business and Property; Collateral Stores........................40
5.5.1 Business and Property.....................................40
5.5.2 Collateral Stores; Other Locations........................40
5.5.3 Collateral Store Leases...................................40
5.5.4 Licenses and Franchise Agreements.........................40
5.5.5 Operating Agreements......................................41
5.5.6 Real Estate...............................................41
5.5.7 Operation and Maintenance of Equipment....................41
5.5.8 Title to Property; Liens..................................41
5.6 Indebtedness for Borrowed Money.................................41
5.7 Financial Statements............................................41
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5.8 Litigation......................................................42
5.9 Defaults in Other Agreements; Consents; Conflicting Agreements..42
5.10 Taxes...........................................................42
5.11 Compliance with Applicable Laws ................................42
5.12 Patents, Trademarks, Franchises, Agreements.....................42
5.13 Regulatory Matters..............................................43
5.14 Environmental Matters...........................................43
5.15 Application of Certain Laws and Regulations.....................43
5.15.1 Investment Company Act...................................43
5.15.2 Holding Company Act......................................43
5.15.3 Foreign or Enemy Status..................................43
5.15.4 Regulations as to Borrowing..............................43
5.16 Margin Regulations..............................................43
5.17 No Misrepresentation............................................44
5.18 Employee Benefit Plans..........................................44
5.18.1 ERISA and Code Compliance and Liability..................44
5.18.2 Funding..................................................44
5.18.3 Prohibited Transactions and Payments.....................44
5.18.4 No Termination Event.....................................44
5.18.5 ERISA Litigation.........................................44
5.19 Employee Matters................................................45
5.19.1 Collective Bargaining Agreements; Grievances.............45
5.19.2 Claims Relating to Employment............................45
5.20 Burdensome Obligations..........................................45
5.21 Broker Fees.....................................................45
ARTICLE VI - AFFIRMATIVE COVENANTS..........................................45
6.1 Legal Existence; Good Standing..................................45
6.2 Inspection......................................................45
6.3 Financial Statements and Other Information......................46
6.3.1 Quarterly Statements......................................46
6.3.2 Annual Statements.........................................46
6.3.3 Compliance Certificate....................................46
6.3.4 Audit Reports.............................................46
6.3.5 Notice of Defaults; Loss..................................47
6.3.6 Notice of Suits; Adverse Events...........................47
6.3.7 Reports to Shareholders, Creditors and Governmental
Bodies....................................................47
6.3.8 ERISA Notices and Requests................................47
6.3.9 Other Information.........................................48
6.4 Reports to Governmental Bodies and Other Persons................48
6.5 Maintenance of Licenses and Franchise Agreements................49
6.6 Insurance.......................................................49
6.6.1 Maintenance of Insurance..................................49
6.6.2 Claims and Proceeds.......................................49
6.7 Environmental Matters...........................................50
6.8 Compliance with Laws............................................50
6.9 Taxes and Claims................................................50
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6.10 Maintenance of Properties.......................................50
6.11 Approvals.......................................................50
6.12 Payment of Indebtedness.........................................51
ARTICLE VII - NEGATIVE COVENANTS............................................51
7.1 Borrowing.......................................................51
7.2 Liens...........................................................51
7.3 Merger and Acquisition..........................................51
7.4 Contingent Liabilities..........................................51
7.5 Dividends and Distributions.....................................51
7.6 Equipment Leases................................................51
7.7 Fundamental Business Changes....................................52
7.8 Facility Sites..................................................52
7.9 Sale or Transfer of Assets......................................52
7.10 Amendment of Certain Agreements.................................52
7.11 Fundamental Business Changes....................................52
7.12 Transactions with Affiliates....................................52
7.13 Compliance with ERISA...........................................52
7.14 Borrower Fixed Charge Coverage Ratio............................53
ARTICLE VIII - DEFAULT AND REMEDIES.........................................53
8.1 Events of Default...............................................53
8.1.1 Default in Payment........................................53
8.1.2 Breach of Covenants.......................................53
8.1.3 Breach of Warranty........................................53
8.1.4 Default Under Other Indebtedness for Borrowed Money.......54
8.1.5 Bankruptcy................................................54
8.1.6 Judgments.................................................54
8.1.7 Impairment of Licenses; Other Agreements..................54
8.1.8 Collateral................................................55
8.1.9 Plans.....................................................55
8.1.10 Change in Control........................................55
8.1.11 Guaranty.................................................55
8.2 Acceleration of Borrower's Obligations..........................55
8.3 Remedies on Default.............................................55
8.3.1 Enforcement of Security Interests.........................56
8.3.2 Other Remedies............................................56
8.4 Application of Funds............................................56
8.4.1 Expenses..................................................56
8.4.2 Borrower's Obligations....................................56
8.4.3 Surplus...................................................56
8.5 Performance of Borrower's Obligations...........................56
ARTICLE IX - CLOSING........................................................56
ARTICLE X - EXPENSES AND INDEMNITY..........................................57
10.1 Attorneys'Fees and Other Fees and Expenses......................57
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10.1.1 Fees and Expenses for Preparation of Loan Instruments....57
10.1.2 Fees and Expenses in Enforcement of Rights or
Defense of Loan Instruments..............................57
10.2 Indemnity.......................................................57
10.2.1 Brokerage Fees...........................................57
10.2.2 General..................................................57
10.2.3 Operation of Collateral; Joint Venturers.................58
10.2.4 Environmental Indemnity..................................58
ARTICLE XI - MISCELLANEOUS..................................................58
11.1 Notices.........................................................58
11.2 Survival of Loan Agreement; Indemnities.........................59
11.3 Further Assurance...............................................60
11.4 Taxes and Fees..................................................60
11.5 Severability....................................................60
11.6 Waiver..........................................................60
11.7 Modification of Loan Instruments................................60
11.8 Captions........................................................60
11.9 Successors and Assigns..........................................60
11.10 Remedies Cumulative.............................................60
11.11 Entire Agreement; Conflict......................................61
11.12 Applicable Law..................................................61
11.13 Jurisdiction and Venue..........................................61
11.14 Waiver of Right to Jury Trial...................................61
11.15 Estoppel Certificate............................................61
11.16 Consequential Damages...........................................62
11.17 Counterparts....................................................62
11.18 No Fiduciary Relationship.......................................62
11.19 Sale of Notes; Participations...................................62
11.20 Publicity.......................................................62
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LIST OF EXHIBITS
Exhibit 1.1(A) - Form of Compliance Certificate
Exhibit 1.1(B) - Indebtedness to be Refinanced
Exhibit 1.1(C) - Form of Landlord's Waiver (Leasehold Mortgage
Stores)
Exhibit 1.1(D) - Form of Landlord's Waiver (Non-Leasehold Mortgage
Stores)
Exhibit 1.1(E) - Form of Tranche C Conversion Request
Exhibit 1.1(F) - Form of Tranche C Decision Notice
Exhibit 1.1(G) - Form of Tranche C Notice of Borrowing
Exhibit 1.1(H) - Form of Tranche C Payment Schedule
Exhibit 1.1(I) - Form of Tranche D Notice of Borrowing
Exhibit 1.1(J) - Form of Tranche D Payment Schedule
Exhibit 1.1(K) - Form of Tranche E Notice of Borrowing
Exhibit 1.1(L) - Form of Tranche E Payment Schedule
Exhibit 5.3.1 - Borrower Capital Stock
Exhibit 5.5.2 - Locations and Allocated Loan Amounts
Exhibit 5.5.3 - Collateral Store Leases
Exhibit 5.5.5 - Operating Agreements
Exhibit 5.6 - Indebtedness for Borrowed Money
Exhibit 5.7 - Financial Statements
Exhibit 5.19.1 - Collective Bargaining Agreements; Grievances
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AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT, dated as of May 2, 2000, is
between SYBRA, INC., a Michigan corporation ("Borrower"), and FINOVA CAPITAL
CORPORATION, a Delaware corporation (together with its successors and assigns,
"FINOVA").
PRELIMINARY STATEMENT:
A. Borrower and FINOVA entered into a Loan Agreement dated as of December
29, 1999 (the "Existing Loan Agreement"). Pursuant to the Existing Loan
Agreement, FINOVA extended to Borrower an $8,500,000 term loan. The outstanding
principal balance of the term loan made pursuant to the Existing Loan Agreement
(the "Existing Principal Balance") is $8,380,591.24 as of the date hereof.
B. Borrower has requested $21,000,000 in additional financing from FINOVA
on the terms and for the uses and purposes herein set forth.
C. FINOVA is willing to grant the requests of Borrower, pursuant and
subject to the terms and conditions herein set forth.
NOW, THEREFORE, it is agreed that the Existing Loan Agreement is hereby
amended and restated in its entirety as follows:
ARTICLE I
DEFINITIONS AND DETERMINATIONS
1.1 DEFINITIONS. As used in this Loan Agreement and in the other Loan
Instruments, unless otherwise expressly indicated herein or therein, the
following terms shall have the following meanings (such meanings to be
applicable equally to both the singular and plural forms of the terms defined):
ACCOUNTANTS: PricewaterhouseCoopers LLP or any other independent
certified public accounting firm selected by Borrower and reasonably
satisfactory to FINOVA.
ACCOUNTING CHANGES: as defined in Section 1.3.
ACQUIRED STORE CASH FLOW: for any period, the sum of (i) the
combined Store Cash Flow of each Store acquired by Borrower during such
period from the beginning of such period to the date Borrower acquired
such Store PLUS (ii) such increases to the Store Cash Flow of each such
Store to take into account expense savings to be implemented by Borrower,
in each case as determined by Borrower and reasonably acceptable to FINOVA
based upon financial information provided by Borrower to FINOVA with
respect to each such Store.
ACQUIRED STORE FIXED CHARGES: for any period in which Borrower has
acquired one or more Stores, the sum of the following from the beginning
of such period to the date Borrower acquired
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such Store(s): (i) all payments of principal, interest, premium, loan fees
and other charges with respect to Indebtedness for Borrowed Money incurred
by Borrower in connection with the acquisition of such Store(s) which
would have been required to be made by Borrower had Borrower incurred such
Indebtedness for Borrowed Money at the beginning of such period PLUS (ii)
rent expense which would have been paid or accrued by Borrower under all
Operating Leases (including Leases and equipment leases which are not
Capitalized Leases) pertaining to such Store(s) had Borrower acquired such
Store(s) at the beginning of such period, in each case as determined by
Borrower and reasonably acceptable to FINOVA based upon financial
information provided by Borrower to FINOVA with respect to each such
Store.
ADA: the Americans with Disabilities Act of 1990, as amended, any
successor statute thereto, and the rules and regulations issued
thereunder, as in effect from time to time.
ADDITIONAL SUMS: as defined in subsection 2.11.2.
ADJUSTED BORROWER FIXED CHARGE COVERAGE RATIO: for any period, the
ratio of (i) the sum of (A) Borrower Cash Flow for such period PLUS (B)
Development Debt Service for such period PLUS (C) Acquired Store Cash Flow
for such period to (ii) the sum of (A) Borrower Fixed Charges for such
period PLUS (B) Acquired Store Fixed Charges for such period.
ADVANCE: an advance of the Tranche C Loan or the Tranche E Loan.
AFFILIATE: any Person that directly or indirectly, through one or
more intermediaries, controls or is controlled by or is under common
control with another Person. The term "control" means possession, direct
or indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of
voting securities or equity interests, by contract or otherwise. For the
purposes hereof any Person which owns or controls, directly or indirectly,
10% or more of the securities or equity interests, as applicable, whether
voting or non-voting, of any other Person shall be deemed to "control"
such Person.
ALLOCATED LOAN AMOUNT: for each Collateral Store (i) listed on
EXHIBIT 5.5.2, the portion of the Principal Balance allocated to such
Collateral Store as set forth on EXHIBIT 5.5.2 and (ii) not listed on
EXHIBIT 5.5.2, the portion of the Principal Balance allocated to such
Collateral Store by FINOVA and reasonably satisfactory to Borrower. The
Allocated Loan Amount for each Collateral Store shall be reduced
concurrently with each payment of the Principal Balance of the applicable
Loan by an amount equal to the amount of such payment multiplied by the
percentage that such Allocated Loan Amount bears to the entire Principal
Balance of such Loan; provided that no such reduction shall be made with
respect to any payment of the Tranche C Loan for any payment of the
Tranche C Loan made prior to the Tranche C Conversion Date.
BANKRUPTCY CODE: the United States Bankruptcy Code, any successor
statute thereto, and the rules, regulations and legally binding policies
promulgated thereunder, as amended and in effect from time to time.
BASIC FINANCIAL STATEMENTS: as defined in subsection 6.3.2.
BORROWER: as defined in the Preamble to this Loan Agreement.
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BORROWER CAPITAL STOCK: all of the issued and outstanding capital
stock and all warrants, options and other rights to acquire capital stock
of Borrower.
BORROWER CASH FLOW: for any period, the net income of Borrower for
such period:
(i) PLUS the sum of the following (without duplication), to
the extent deducted in determining such net income for such period:
(A) losses from sales, exchanges and other dispositions
of Property, and other extraordinary and non-recurring losses,
in each case not in the ordinary course of business;
(B) interest, fees and other charges paid or accrued on
Indebtedness, including, without limitation, interest on
Capitalized Leases that is imputed in accordance with GAAP;
(C) income taxes paid or accrued;
(D) depreciation, amortization and all other non-cash
items deducted in determining such net income; and
(E) rent expense paid or accrued under all Operating
Leases of Borrower during such period, including all Leases
and all equipment leases of Borrower which are not Capitalized
Leases; and
(ii) MINUS the sum of the following (without duplication), to
the extent included in determining such net income for such period:
(A) gains from sales, exchanges and other dispositions
of Property, and other extraordinary and non-recurring gains,
in each case not in the ordinary course of business;
(B) proceeds of any insurance other than business
interruption insurance; and
(C) any other non-cash item included in determining such
net income.
BORROWER FIXED CHARGE COVERAGE RATIO: for any period, the ratio of
(i) Borrower Cash Flow for such period to (ii) Borrower Fixed Charges for
such period.
BORROWER FIXED CHARGES: during any period as applicable, the sum of
(i) all payments of principal, interest, premium, loan fees and other
charges with respect to Indebtedness for Borrowed Money made or required
to be made by Borrower during such period plus (ii) rent expense paid or
accrued under all Operating Leases of Borrower during such period,
including all Leases and all equipment leases of Borrower which are not
Capitalized Leases.
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BORROWER'S OBLIGATIONS: (i) any and all Indebtedness due or to
become due, now existing or hereafter arising, of Borrower to FINOVA
pursuant to the terms of this Loan Agreement or any other Loan Instrument,
including, without limitation, the Loan Fees, and (ii) the performance of
the covenants of Borrower contained in the Loan Instruments.
BUSINESS DAY: any day other than a Saturday, Sunday or other day on
which banks in Phoenix, Arizona or New York, New York are required to
close.
CAPITALIZED LEASE: any lease of Property, the obligations for the
rental of which are required to be capitalized in accordance with GAAP.
CLOSING: the disbursement of the Tranche B Loan.
CLOSING DATE: the date the Closing occurs.
CODE: the Internal Revenue Code of 1986, any successor statute
thereto, and the rules, regulations and legally binding policies
promulgated thereunder, as amended and in effect from time to time.
COLLATERAL: collectively, the Tranche A Collateral, the Tranche B
Collateral, the Tranche C Collateral, the Tranche D Collateral and the
Tranche E Collateral.
COLLATERAL STORE LEASE: a Lease of a Collateral Store.
COLLATERAL STORES: collectively, the Tranche A Stores, the Tranche B
Stores, the Tranche C Stores, the Tranche D Stores and the Tranche E
Stores.
COMPLIANCE CERTIFICATE: a compliance certificate executed by
Borrower in the form of EXHIBIT 1.1(A).
DEFAULT RATE: with respect to any portion of the Principal Balance,
the per annum interest rate payable thereon under the applicable
provisions of Section 2 other than during a Default Rate Period plus 2.0%
per annum.
DEFAULT RATE PERIOD: a period of time commencing on the date an
Event of Default has occurred and ending on the date that such Event of
Default is cured or waived.
DEVELOPMENT AGREEMENT: that certain Development Agreement dated as
of May 12, 1998 between Franchisor and Borrower.
DEVELOPMENT DEBT SERVICE: for any period, all payments of principal,
interest, premium, loan fees and other charges with respect to
Indebtedness for Borrowed Money required to be made by Borrower during
such period allocable to each Store under development by Borrower for the
portion of such period that such Store is and not yet open for business.
EMPLOYEE BENEFIT PLAN: any employee benefit plan within the meaning
of Section 3(3) of ERISA which (i) is maintained for employees of Borrower
or any of its ERISA Affiliates or (ii) has
4
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at any time within the preceding six years been maintained for the
employees of Borrower or any of its current or former ERISA Affiliates.
ENVIRONMENTAL LAWS: any and all federal, state and local laws that
relate to or impose liability or standards of conduct concerning public or
occupational health and safety or protection of the environment, as now or
hereafter in effect and as have been or hereafter may be amended or
reauthorized, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. ss.9601
ET Seq.), the Hazardous Materials Transportation Act (42 U.S.C. ss.1802 ET
Seq.), the Resource Conservation and Recovery Act (42 U.S.C. ss.6901 ET
Seq.), the Federal Water Pollution Control Act (33 U.S.C. ss.1251 ET
Seq.), the Toxic Substances Control Act (15 U.S.C. ss.2601 ET Seq.), the
Clean Air Act (42 U.S.C. ss.7901 ET seq.), the National Environmental
Policy Act (42 U.S.C. ss.4231, ET Seq.), the Refuse Act (33 U.S.C. ss.407,
ET Seq.), the Safe Drinking Water Act (42 U.S.C. ss.300(f) ET Seq.), the
Occupational Safety and Health Act (29 U.S.C. ss.651 ET Seq.), and all
rules, regulations, codes, ordinances and guidance documents promulgated
or published thereunder, and the provisions of any licenses, permits,
orders and decrees issued pursuant to any of the foregoing.
ERISA: the Employee Retirement Income Security Act of 1974, and any
successor statute thereto, and the rules, regulations and legally binding
policies promulgated thereunder, as amended and in effect from time to
time.
ERISA AFFILIATE: any Person who is a member of a group which is
under common control with Borrower, who together with Borrower is treated
as a single employer within the meaning of Section 414(b), (c) and (m) of
the Code.
EVENT OF DEFAULT: any of the Events of Default set forth in Section
8.1.
EXCESS INTEREST: as defined in subsection 2.11.2.
EXISTING LOAN AGREEMENT: as defined in the Preamble to this Loan
Agreement.
EXISTING PRINCIPAL BALANCE: as defined in the Preamble to this Loan
Agreement.
EXPANSION STORES: new Stores to be acquired, constructed, renovated
or otherwise developed by Borrower after the Closing Date.
FIFTEEN YEAR TRANCHE D MATURITY DATE: the fifteenth anniversary of
the first Business Day of the month following the month in which the
Tranche D Closing Date occurs.
FINANCEABLE COSTS: the invoice costs of furniture, fixtures and
equipment.
FINOVA: as defined in the Preamble to this Loan Agreement.
FINOVA DEBT SERVICE: for any period, all payments of principal and
interest with respect to the Principal Balance or an Allocated Loan
Amount, as applicable, made or required to be made by Borrower during such
period.
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FRANCHISE AGREEMENT: a franchise agreement between Borrower and
Franchisor with respect to the operation of a Collateral Store, in form
and substance reasonably satisfactory to FINOVA.
FRANCHISOR: Arby's, Inc., a Delaware corporation.
FUNDING DATE: the date of a disbursement of a Loan or Advance.
GAAP: generally accepted accounting principles as in effect from
time to time, which shall include but shall not be limited to the official
interpretations thereof by the Financial Accounting Standards Board or any
successor thereto.
GOOD FUNDS: United States Dollars available in Federal funds to
FINOVA at or before 2:00 p.m., Phoenix time, on a Business Day.
GOVERNMENTAL BODY: any foreign, federal, state, municipal or other
government, or any department, commission, board, bureau, agency, public
authority or instrumentality thereof or any court or arbitrator.
GUARANTY: a guaranty of Borrower's Obligations executed by the
Guarantor in favor of FINOVA.
GUARANTOR: I.C.H. Corporation, a Delaware corporation.
HAZARDOUS MATERIALS: any hazardous, toxic, dangerous or other waste,
substance or material defined as such in, regulated by or for purposes of
any Environmental Law.
INCIPIENT DEFAULT: any event or condition which, with the giving of
notice or the lapse of time, or both, would become an Event of Default.
INDEBTEDNESS: all liabilities, obligations and reserves, contingent
or otherwise, which, in accordance with GAAP, would be reflected as a
liability on a balance sheet or would be required to be disclosed in a
financial statement or the footnotes thereto, including, without
duplication: (i) Indebtedness for Borrowed Money, (ii) obligations secured
by any Lien upon Property, (iii) guaranties, letters of credit and other
contingent obligations and (iv) liabilities in respect of unfunded vested
benefits under any Pension Plan or in respect of withdrawal liabilities
incurred under ERISA by Borrower or any of its ERISA Affiliates to any
Multiemployer Plan.
INDEBTEDNESS FOR BORROWED MONEY: without duplication, all
Indebtedness (i) in respect of money borrowed, (ii) evidenced by a note,
debenture or other like written obligation to pay money (including,
without limitation, all of Borrower's Obligations and Permitted Senior
Indebtedness), (iii) in respect of rent or hire of Property under
Capitalized Leases or for the deferred purchase price of Property, (iv) in
respect of obligations under conditional sales or other title retention
agreements and (v) all guaranties of any or all of the foregoing.
INDEBTEDNESS TO BE REFINANCED: all Indebtedness of Borrowed Money of
Borrower to be paid concurrently with the Closing, as more particularly
described on EXHIBIT 1.1(B).
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LANDLORD: a lessor under a Lease.
LANDLORD'S WAIVER: shall mean, with respect to any Collateral Store
Lease, a landlord's waiver in substantially the form of (i) EXHIBIT
1.1(C), if a Leasehold Mortgage is delivered to FINOVA in connection with
such Collateral Store Lease, or (ii) EXHIBIT 1.1(D), if a Leasehold
Mortgage is not delivered to FINOVA in connection with such Collateral
Store Lease.
LEASE: any lease of real estate under which Borrower is the lessee
or sublessee.
LEASEHOLD MORTGAGE: a leasehold mortgage or leasehold deed of trust
executed by Borrower in favor of FINOVA encumbering Borrower's right,
title and interest in, to and under a Lease.
LEASEHOLD PROPERTY: any real estate which is the subject of a Lease.
LICENSES: all licenses (including liquor licenses, if any), permits,
consents, approvals and authority issued by any Governmental Body in
connection with the operation of the Collateral Stores.
LIEN: any mortgage, pledge, assignment, lien, charge, encumbrance or
security interest of any kind, or the interest of a vendor or lessor under
any conditional sale agreement, Capitalized Lease or other title retention
agreement.
LOAN: any of the Loans.
LOANS: collectively, the Tranche A Loan, the Tranche B Loan, the
Tranche C Loan, the Tranche D Loan and the Tranche E Loan.
LOAN AGREEMENT: this Amended and Restated Loan Agreement and any
amendments or supplements hereto.
LOAN FEES: the fees payable to FINOVA pursuant to Section 2.6.
LOAN INSTRUMENTS:
(i) Loan Agreement;
(ii) Notes;
(iii) Guaranty;
(iv) Security Agreement;
(v) all Leasehold Mortgages executed by Borrower;
(vi) Solvency Certificate;
(vii) such Uniform Commercial Code financing statements as
FINOVA may require in order to perfect the Security
Interests; and
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(viii) such other instruments and documents as FINOVA
reasonably may require in connection with the
transactions contemplated by this Loan Agreement.
MATERIAL ADVERSE EFFECT: (i) a material adverse effect upon the
business, operations, Property, profits or condition (financial or
otherwise) of Borrower, (ii) a material adverse effect upon the validity,
enforceability or priority of the Security Interests or (iii) a material
impairment of the ability of Borrower to perform its obligations under any
Loan Instrument to which it is a party or of FINOVA to enforce or collect
any of Borrower's Obligations.
MAXIMUM RATE: as defined in subsection 2.11.2.
MULTIEMPLOYER PLAN: any multiemployer plan as defined pursuant to
Section 3(37) of ERISA to which Borrower or any of its ERISA Affiliates
makes, or accrues an obligation to make contributions, or has made, or
been obligated to make, contributions within the preceding six years.
NOTE: any of the Notes.
NOTES: collectively, the Tranche A Note, the Tranche B Note, the
Tranche C Note, the Tranche D Note and the Tranche E Note.
OBLIGOR: any of the Obligors.
OBLIGORS: collectively, Borrower and Guarantor.
OPERATING AGREEMENTS: all right-of-entry agreements, supply
agreements, access agreements, advertising contracts, equipment leases,
service contracts and similar agreements relating to the operation of the
Collateral Stores, excluding the Development Agreement and the Collateral
Store Leases, the Franchise Agreements and Licenses.
OPERATING LEASE: any lease which, under GAAP, is not required to be
capitalized.
PBGC: the Pension Benefit Guaranty Corporation or any Governmental
Body succeeding to the functions thereof.
PENSION PLAN: any Employee Benefit Plan, other than a Multiemployer
Plan, which is subject to the provisions of Part 3 of Title I of ERISA,
Title IV of ERISA, or Section 412 of the Code and which (i) is maintained
for employees of Borrower or any of its ERISA Affiliates, or (ii) has at
any time within the preceding six years been maintained for the employees
of Borrower or any of its current or former ERISA Affiliates.
PERMITTED LIENS: any of the following Liens:
(i) the Security Interests;
(ii) Liens for taxes or assessments and similar charges,
which either are (A) not delinquent or (B) being
contested diligently and in good faith by
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appropriate proceedings, and as to which Borrower has
set aside reserves on its books which are satisfactory
to FINOVA;
(iii) statutory Liens, such as mechanic's, materialman's,
warehouseman's, carrier's or other like Liens, incurred
in good faith in the ordinary course of business,
provided that the underlying obligations relating to
such Liens are paid in the ordinary course of business,
or are being contested diligently and in good faith by
appropriate proceedings and as to which Borrower has
set aside reserves on its books satisfactory to FINOVA,
or the payment of which obligations are otherwise
secured in a manner satisfactory to FINOVA;
(iv) zoning ordinances, easements, licenses, reservations,
provisions, covenants, conditions, waivers or
restrictions on the use of Property and other title
exceptions, in each case, that are acceptable to
FINOVA, or that do not interfere with the intended use
of the Property as a Collateral Store;
(v) Liens in respect of judgments or awards with respect to
which no Event of Default would exist pursuant to
subsection 8.1.6;
(vi) Liens to secure payment of insurance premiums (A) to be
paid in accordance with applicable laws in the ordinary
course of business relating to payment of worker's
compensation, or (B) that are required for the
participation in any fund in connection with worker's
compensation, unemployment insurance, old-age pensions
or other social security programs;
(vii) the Permitted Senior Indebtedness Liens; and
(viii) statutory liens in favor of Landlords under Collateral
Store Leases or contractual liens granted to Landlords
under Collateral Store Leases, in each case to secure
the obligations of Borrower under Collateral Store
Leases.
PERMITTED PRIOR LIENS: any of the following Liens:
(i) the Permitted Liens described in clauses (ii) and (iii)
of the definition of Permitted Liens that are accorded
priority to the Security Interests by law;
(ii) the Permitted Liens described in clauses (iv) and (vi)
of the definition of Permitted Liens, subject to the
limitations set forth therein; and
(iii) the Permitted Senior Indebtedness Liens.
PERMITTED SENIOR INDEBTEDNESS: Indebtedness, other than Borrower's
Obligations, incurred to purchase tangible personal property or
Indebtedness incurred to lease tangible personal property pursuant to
Capitalized Leases, provided that (i) the amount of such Indebtedness
attributable to any
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Collateral Store at any one time outstanding during any Loan Year shall
not exceed $60,000, and (ii) no Event of Default exists at the time or
will be caused as a result of the incurrence of any Indebtedness described
in clause (i).
PERMITTED SENIOR INDEBTEDNESS LIENS: Liens that secure Permitted
Senior Indebtedness, provided that each such Lien attaches only to the
Property purchased or leased with the proceeds of the Permitted Senior
Indebtedness incurred with respect to such Property.
PERSON: any individual, firm, corporation, business enterprise,
trust, association, joint venture, partnership, Governmental Body or other
entity, whether acting in an individual, fiduciary or other capacity.
PRIME RATE: the per annum rate of interest announced or published
publicly from time to time by Chase Manhattan Bank, N.A. in New York as
its corporate base (or equivalent) rate of interest, which rate shall
change automatically without notice and simultaneously with each change in
such corporate base rate. The Prime Rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to any
customer by Chase Manhattan Bank, N.A. in New York, New York.
PRINCIPAL BALANCE: the aggregate unpaid principal balance of the
Loans or any specified portion thereof outstanding from time to time.
PROPERTY: all types of real, personal or mixed property and all
types of tangible or intangible property.
QUALIFIED DEPOSITORY: a member bank of the Federal Reserve System
having a combined capital and surplus of at least $100,000,000.
REAL ESTATE: any fee simple real estate now owned or hereafter
acquired, beneficially or otherwise, by Borrower.
RESTAURANT BUSINESS: the ownership and operation of restaurants,
taverns, banquet centers, related commissary/catering services and
ancillary activities.
SECURITIES ACT: the Securities Act of 1933, the Securities Exchange
Act of 1934, any successor statute thereto, and the rules, regulations and
legally binding policies of the Securities Exchange Commission promulgated
thereunder, as amended and in effect from time to time.
SECURITY AGREEMENT: a security agreement executed by Borrower in
favor of FINOVA.
SECURITY INTERESTS: the Liens in the Collateral granted to FINOVA
pursuant to the Security Agreement, the Leasehold Mortgages and any other
document now or hereafter executed by any Obligor which purports to grant
a Lien on the Property of such Obligor in favor of FINOVA to secure
Borrower's Obligations.
SOLVENCY CERTIFICATE: a solvency certificate executed by Borrower in
favor of FINOVA.
STATED RATE: as defined in subsection 2.11.2.
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STORE: an ARBY'S restaurant owned and operated by Borrower.
STORE CASH FLOW: for any period, with respect to any designated
Store, the net income derived from the operation of such Store for such
period:
(i) PLUS the sum of the following (without duplication), to
the extent deducted in determining such net income for such period
and to the extent attributable to such Store for such period:
(A) losses from sales, exchanges and other dispositions
of Property, and other extraordinary and non-recurring losses,
in each case not in the ordinary course of business;
(B) interest, fees and other charges paid or accrued on
Indebtedness, including, without limitation, interest on
Capitalized Leases that is imputed in accordance with GAAP;
(C) income taxes paid or accrued;
(D) depreciation, amortization and all other non-cash
items deducted in determining such net income; and
(E) rent expense paid or accrued under all Operating
Leases related to such Store, including the Collateral Store
Lease of such Store and all equipment leases which are not
Capitalized Leases pertaining to equipment located at such
Store; and
(ii) MINUS the sum of the following (without duplication), to
the extent included in determining such net income for such period
and to the extent attributable to such Store for such period:
(A) gains from sales, exchanges and other dispositions
of Property, and other extraordinary and non-recurring gains,
in each case not in the ordinary course of business;
(B) proceeds of any insurance other than business
interruption insurance; and
(C) any other non-cash item included in determining such
net income.
STORE FIXED CHARGES: during any period with respect to any
designated Store, as applicable, the sum of (i) all payments of principal,
interest, premium, loan fees and other charges with respect to
Indebtedness for Borrowed Money made or required to be made by Borrower
which are allocable to such Store plus (ii) rent expense paid or accrued
under all Operating Leases of Borrower related to such Store including the
applicable Collateral Store Lease and all equipment leases which are not
Capitalized Leases pertaining to equipment located at such Store.
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SUBSTITUTE STORE: any Store designated by Borrower:
(i) which is the subject of a Lease and a Franchise Agreement
each having an expiration date not earlier than one year later than
the corresponding expiration dates of the Store being replaced by
such Substitute Store;
(ii) with respect to which Borrower demonstrates to the
satisfaction of FINOVA that the ratio of (i) the Store Cash Flow for
the most recently ended twelve month period to (ii) the sum of (A)
Store Fixed Charges for such period plus (B) the projected FINOVA
Debt Service on the Allocated Loan Amount of the Store being
replaced for the succeeding twelve month period is not less than
1.25:1.00; and
(iii) with respect to which the representations and warranties
contained in Section 5.5 are true and correct in all material
respects.
SUBSTITUTION CONDITIONS: shall mean, in connection with the
replacement of a Collateral Store with a Substitute Store, that:
(i) Borrower shall have delivered to FINOVA the Substitution
Documents with respect to the Substitute Store, each duly authorized
and executed and in form and substance reasonably satisfactory to
FINOVA;
(ii) all filings of Uniform Commercial Code financing
statements and other actions necessary to perfect and maintain the
Security Interests as first, valid and perfected Liens in the
Collateral covered thereby, subject only to Permitted Liens and
subject in priority only to Permitted Prior Liens, shall have been
filed or taken and FINOVA shall have received such UCC, state and
federal tax Lien, pending suit and other searches as it deems
necessary to confirm the foregoing;
(iii) FINOVA shall have received evidence that all insurance
coverage required pursuant to Section 6.6 with respect to such
Substitute Store is in full force and effect and that all premiums
then due thereon have been paid in full; and
(iv) no Event of Default or Incipient Default shall exist and
be continuing or be created by the replacement of such Collateral
Store with such Substitute Store.
SUBSTITUTION DOCUMENTS: shall mean, in connection with the
replacement of a Collateral Store with a Substitute Store (i) a certified
copy of the Lease and Franchise Agreement of such Substitute Store, (ii)
such amendments to this Loan Agreement and the Security Agreement as are
necessary to reflect the substitution of such Substitute Store for such
Collateral Store, together with a UCC-1 financing statement naming
Borrower, as debtor, and FINOVA, as secured party, covering the Collateral
located at such Substitute Store, (iii) if such Substitute Store is being
substituted for a Store pursuant to which FINOVA received a Leasehold
Mortgage, a Leasehold Mortgage on such Substitute Store, together with a
survey and such title insurance and landlord's and mortgagee's consents as
FINOVA reasonably may require, and (iv) if such Substitute Store is being
substituted
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for a Store pursuant to which FINOVA received a Landlord's Waiver, a
Landlord's Waiver from the landlord under the Lease of the Substitute
Store.
TEN YEAR TRANCHE D MATURITY DATE: the tenth anniversary of the first
Business Day of the month following the month in which the Tranche D
Closing Date occurs.
TERMINATION EVENT: (i) a "Reportable Event" described in Section
4043 of ERISA and the regulations issued thereunder; or (ii) the
withdrawal of Borrower or any of its ERISA Affiliates from a Pension Plan
during a plan year in which it was a "substantial employer" as defined in
Section 4001(a)(2); or (iii) the termination of a Pension Plan, the filing
of a notice of intent to terminate a Pension Plan or the treatment of a
Pension Plan amendment as a termination under Section 4041 of ERISA; or
(iv) the institution of proceedings to terminate, or the appointment of a
trustee with respect to, any Pension Plan by the PBGC; or (v) any other
event or condition which would constitute grounds under Section 4042(a) of
ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan; or (vi) the partial or complete withdrawal
of Borrower or any of its ERISA Affiliates from a Multiemployer Plan; or
(vii) the imposition of a lien pursuant to Section 412 of the Code or
Section 302 of ERISA; or (viii) any event or condition which results in
the reorganization or insolvency of a Multiemployer Plan under Sections
4241 or 4245 of ERISA; or (ix) any event or condition which results in the
termination of a Multiemployer Plan under Section 4041A of ERISA or the
institution by the PBGC of proceedings to terminate a Multiemployer Plan
under Section 4042 of ERISA.
TRANCHE A COLLATERAL: collectively, (i) all existing and
after-acquired Property of Borrower related to the Tranche A Stores,
including, without limitation, all furniture, fixtures, equipment and
inventory located at the each Tranche A Store, but excluding (A) the
Development Agreement, (B) all intellectual property, Franchise
Agreements, Collateral Store Leases and Licenses of Borrower and (C) all
Property of Borrower subject to Permitted Senior Indebtedness Liens and
(ii) all proceeds of the foregoing.
TRANCHE A LOAN: the loan made by FINOVA to Borrower pursuant to the
Existing Loan Agreement in the original principal amount of $8,500,000 and
described in Section 2.1.
TRANCHE A LOAN YEAR: a period of time from December 29, 1999 or any
anniversary thereof to the immediately succeeding anniversary thereof.
TRANCHE A MATURITY DATE: the earlier to occur of (i) January 4, 2010
and (ii) the date Borrower's Obligations are accelerated pursuant to
Section 8.2.
TRANCHE A NOTE: a promissory note in the principal amount of
$8,500,000 executed and delivered by Borrower to FINOVA to evidence the
Tranche A Loan.
TRANCHE A STORES: the existing Stores designated as Tranche A Stores
in EXHIBIT 5.5.2 and each Substitute Store designated by Borrower and
accepted by FINOVA as a Tranche A Store in replacement thereof pursuant to
subsection 2.1.8.
TRANCHE B COLLATERAL: collectively, (i) all existing and
after-acquired Property of Borrower related to the Tranche B Stores,
including, without limitation, the Leases of the Tranche B Stores
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which are encumbered by a Leasehold Mortgage and all furniture, fixtures,
equipment and inventory located at each Tranche B Store, but excluding (A)
the Development Agreement, (B) all intellectual property, Franchise
Agreements and Licenses of Borrower and (C) all Property of Borrower
subject to Permitted Senior Indebtedness Liens and (ii) all proceeds of
the foregoing.
TRANCHE B LOAN: the loan to be made by FINOVA to Borrower in the
maximum amount of $3,000,000 pursuant to Section 2.2.
TRANCHE B LOAN YEAR: a period of time from the Closing Date or any
anniversary thereof to the immediately succeeding anniversary thereof.
TRANCHE B MATURITY DATE: the earlier to occur of (i) June 1, 2015
and (ii) the date Borrower's Obligations are accelerated pursuant to
Section 8.2.
TRANCHE B NOTE: a promissory note in the principal amount of
$3,000,000 executed and delivered by Borrower to FINOVA to evidence the
Tranche B Loan.
TRANCHE B STORES: the existing Stores designated as Tranche B Stores
in EXHIBIT 5.5.2 and each Substitute Store designated by Borrower and
accepted by FINOVA pursuant to subsection 2.2.8.
TRANCHE C COLLATERAL: (i) all existing and after-acquired Property
of Borrower related to the Tranche C Stores, including, without
limitation, the Leases of the Tranche C Stores which are encumbered by a
Leasehold Mortgage and all furniture, fixtures, equipment and inventory
located at each Tranche C Store, but excluding (A) the Development
Agreement, (B) all intellectual property, Franchise Agreements, the Leases
of the Tranche C Stores which are not encumbered by a Leasehold Mortgage
and the Licenses of Borrower and (C) all Property of Borrower subject to
Permitted Senior Indebtedness Liens and (ii) all proceeds of the
foregoing.
TRANCHE C CONVERSION CONDITIONS: shall mean, with respect to the
conversion of the Tranche C Loan from a revolving loan to a term loan,
that:
(i) not less than 5 nor more than 15 days prior to the Tranche
C Conversion Date, Borrower shall have delivered the Tranche C
Conversion Notice to FINOVA;
(ii) Borrower shall have executed and returned to FINOVA the
Tranche C Payment Schedule delivered by FINOVA to Borrower;
(iii) on the Tranche C Conversion Date, the representations
and warranties of each Obligor set forth in the Loan Instruments to
which such Obligor is a party shall be true and correct in all
material respects, except to the extent set forth in any written
disclosures provided by such Obligor to FINOVA subsequent to the
Closing Date which are not reasonably likely to have a Material
Adverse Effect as determined by FINOVA in its reasonable discretion;
(iv) each Obligor shall have performed and complied in all
material respects with all agreements and conditions contained in
the Loan Instruments to be performed by
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or complied with by such Obligor prior to or on the Tranche C Conversion
Date and no Event of Default or Incipient Default shall then exist or
result from such conversion; and
(v) no event or series of events shall have occurred since the
Closing Date, and no litigation or governmental proceeding or
investigation shall be pending, which has had or is reasonably
likely to have a Material Adverse Effect, and no judgment, order,
injunction or other restraint prohibiting or imposing adverse
conditions on any Obligor shall be in effect which has had or is
reasonably likely to have a Material Adverse Effect.
TRANCHE C CONVERSION DATE: (i) June 1, 2002 if FINOVA delivers to
Borrower a Tranche C Decision Notice at any time after February 15, 2002
and before May 15, 2002 and (ii) June 1, 2003 if FINOVA does not deliver
to Borrower a Tranche C Decision Notice at any time after February 15,
2002 and before May 15, 2002.
TRANCHE C CONVERSION NOTICE: a notice from Borrower to FINOVA that
Borrower has elected to convert the Tranche C Loan from a revolving loan
to a term loan, in the form of EXHIBIT 1.1(E).
TRANCHE C DECISION NOTICE: a notice from FINOVA to Borrower, in the
form of EXHIBIT 1.1(F), requiring Borrower to (i) repay the Principal
Balance of the Tranche C Loan and all accrued and unpaid interest thereon
on June 1, 2002 or (ii) convert the Principal Balance of the Tranche C
Loan to a term loan on June 1, 2002 on the terms and conditions herein set
forth.
TRANCHE C LOAN: the loan to be made by FINOVA to Borrower in the
maximum aggregate amount of $7,000,000 pursuant to Section 2.3.
TRANCHE C LOAN YEAR: a period of time from the Tranche C Conversion
Date or any anniversary thereof to the immediately succeeding anniversary
thereof.
TRANCHE C MATURITY DATE: the earlier to occur of (i) May 1, 2010 and
(ii) the date Borrower's Obligations are accelerated pursuant to Section
8.2.
TRANCHE C NOTE: a promissory note in the principal amount of
$7,000,000 executed and delivered by Borrower to FINOVA to evidence the
Tranche C Loan.
TRANCHE C NOTICE OF BORROWING: a Tranche C Notice of
Borrowing/Disbursement Request in the form of EXHIBIT 1.1(G).
TRANCHE C PAYMENT SCHEDULE: shall mean, in connection with the
conversion of the Tranche C Loan from a revolving loan to a term loan, a
schedule prepared by FINOVA and delivered to Borrower in the form of
EXHIBIT 1.1(H).
TRANCHE C REFERENCE RATE: the yield on the 10.00% May 2005/2010 U.S.
Treasury Note/Bond (or, if such index ceases to be available, a comparable
substitute acceptable to FINOVA) as published in THE WALL STREET JOURNAL
on the Friday before the Tranche C Conversion Date.
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TRANCHE C STORES: the existing Stores designated as Tranche C Stores
in EXHIBIT 5.5.2 and each Substitute Store designated by Borrower and
accepted by FINOVA pursuant to subsection 2.3.8.
TRANCHE D ACQUISITION: the acquisition by Borrower of the Stores to
be designated as Tranche D Stores located in Connecticut from C-Vac,
Enterprises or an affiliate thereof pursuant to the Tranche D Acquisition
Instruments.
TRANCHE D ACQUISITION INSTRUMENTS: the purchase agreement and all
other documents executed and/or delivered in connection with the Tranche D
Acquisition.
TRANCHE D ASSIGNMENT OF ACQUISITION INSTRUMENTS: an assignment of
the Tranche D Acquisition Instruments executed by Borrower in connection
with the Tranche D Acquisition, and consented to by the seller under the
Tranche D Acquisition Instruments.
TRANCHE D CLOSING: the disbursement of the Tranche D Loan.
TRANCHE D CLOSING DATE: the date the Tranche D Closing occurs.
TRANCHE D COLLATERAL: (i) all existing and after-acquired Property
of Borrower related to the Tranche D Stores, including, without
limitation, and all furniture, fixtures, equipment and inventory located
at each Tranche D Store, but excluding (A) the Development Agreement, (B)
all intellectual property, Franchise Agreements, Licenses and the Leases
of the Tranche D Stores and (C) all Property of Borrower subject to
Permitted Senior Indebtedness Liens and (ii) all proceeds of the
foregoing.
TRANCHE D LOAN: the loan to be made by FINOVA to Borrower in the
maximum aggregate amount of $4,000,000 pursuant to Section 2.4.
TRANCHE D LOAN YEAR: a period of time from the Funding Date of the
Tranche D Loan or any anniversary thereof to the immediately succeeding
anniversary thereof.
TRANCHE D MATURITY DATE: if on or prior to the Tranche D Closing
Date FINOVA (i) does not receive a Leasehold Mortgage encumbering the
Lease of each Tranche D Store or the conditions set forth in subsection
2.4.8 are not satisfied, the Tranche D Maturity Date shall be the Ten Year
Tranche D Maturity Date or (ii) receives a Leasehold Mortgage encumbering
the Lease of each Tranche D Store and the conditions set forth in
subsection 2.4.8 are satisfied, the Tranche D Maturity Date shall be the
Fifteen Year Tranche D Maturity Date.
TRANCHE D NOTE: a promissory note in the principal amount of
$4,000,000 executed and delivered by Borrower to FINOVA to evidence the
Tranche D Loan.
TRANCHE D NOTICE OF BORROWING: a Tranche D Notice of
Borrowing/Disbursement Request in the form of EXHIBIT 1.1(I).
TRANCHE D PAYMENT SCHEDULE: shall mean, with respect to the Tranche
D Loan, a schedule prepared by FINOVA and delivered to Borrower in the
form of EXHIBIT 1.1(J).
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TRANCHE D REFERENCE RATE: if the Tranche D Maturity Date is the (i)
Ten Year Tranche D Maturity Date, the Tranche D Reference Rate shall be
equal to the yield on the 10.00% May 2005/2010 U.S. Treasury Note/Bond
(or, if such index ceases to be available, a comparable substitute
acceptable to FINOVA) as published in THE WALL STREET Journal on the
Friday before the Tranche D Closing Date and (ii) Fifteen Year Tranche D
Maturity Date, the Tranche D Reference Rate shall be equal to the yield on
the 11.25% February 2015 U.S. Treasury Note/Bond (or, if such index ceases
to be available, a comparable substitute acceptable to FINOVA) as
published in THE WALL STREET Journal on the Friday before the Tranche D
Closing Date.
TRANCHE D STORES: the Stores purchased by Borrower pursuant to the
Tranche D Acquisition Instruments and identified in the Tranche D Payment
Schedule and each Substitute Store designated by Borrower and accepted by
FINOVA pursuant to subsection 2.4.8.
TRANCHE E COLLATERAL: (i) all existing and after-acquired Property
of Borrower related to the Tranche E Stores, including, without
limitation, the Leases of the Tranche E Stores, all of which shall be
encumbered by a Leasehold Mortgage, and all furniture, fixtures, equipment
and inventory located at each Tranche E Store, but excluding (A) the
Development Agreement, (B) all intellectual property, Franchise Agreements
and Licenses, (C) all Property of Borrower subject to Permitted Senior
Indebtedness Liens and (ii) all proceeds of the foregoing.
TRANCHE E LOAN: the loan to be made by FINOVA to Borrower in the
maximum aggregate amount of $7,000,000 pursuant to Section 2.5.
TRANCHE E LOAN YEAR: shall mean, with respect to each Advance of the
Tranche E Loan, a period of time from the Funding Date of such Advance or
any anniversary thereof to the immediately succeeding anniversary thereof.
TRANCHE E MATURITY DATE: the earlier to occur of (i) the first
Business Day of the month following the month in which the fifteenth
anniversary of the Funding Date of the first Tranche E Advance occurs and
(ii) the date Borrower's Obligations are accelerated pursuant to Section
8.2.
TRANCHE E NOTE: a promissory note in the principal amount of
$7,000,000 executed and delivered by Borrower to FINOVA to evidence the
Tranche E Loan.
TRANCHE E NOTICE OF BORROWING: a Tranche E Notice of
Borrowing/Disbursement Request in the form of EXHIBIT 1.1(K) attached
hereto.
TRANCHE E PAYMENT SCHEDULE: shall mean, with respect to each Advance
of the Tranche E Loan, a schedule prepared by FINOVA and delivered to
Borrower in the form of EXHIBIT 1.1(L).
TRANCHE E REFERENCE RATE: with respect to an Advance of the Tranche
E Loan, a per annum rate of interest equal to the highest yield on U.S.
Treasury Note/Bonds having a maturity date closest to the Tranche E
Maturity Date as published in THE WALL STREET JOURNAL on the Friday before
the Funding Date of such Advance.
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TRANCHE E STORES: the Stores developed by Borrower and designated by
Borrower and accepted by FINOVA as Tranche E Stores and each Substitute
Store designated by Borrower and accepted by FINOVA pursuant to subsection
2.5.8.
VOLUNTARY PREPAYMENT CONDITIONS: shall mean, with respect to any
permitted voluntary prepayment of the Loans, that:
(i) not less than 30 days prior to the date upon which
Borrower desires to make such prepayment, Borrower shall have
delivered to FINOVA notice of its intention to prepay, which notice
shall state the prepayment date and the amount of such Principal
Balance as of the prepayment date;
(ii) concurrently with any such prepayment, Borrower shall pay
to FINOVA any prepayment premium required in connection with such
prepayment under the applicable provisions of Section 2; and
(iii) concurrently with any such prepayment, Borrower shall
pay to FINOVA accrued and unpaid interest on the Principal Balance
which is being prepaid to the date on which FINOVA is in receipt of
Good Funds, and any other sums which are due and payable pursuant to
the terms of any of the Loan Instruments.
1.2 TIME PERIODS. In this Loan Agreement and the other Loan Instruments,
in the computation of periods of time from a specified date to a later specified
date, (i) the word "from" means "from and including," (ii) the words "to" and
"until" each mean "to, but excluding" and (iii) the words "through," "end of"
and "expiration" each mean "through and including." Unless otherwise specified,
all references in this Loan Agreement and the other Loan Instruments to (i) a
"month" shall be deemed to refer to a calendar month, (ii) a "quarter" shall be
deemed to refer to a calendar quarter and (iii) a "year" shall be deemed to
refer to a calendar year.
1.3 ACCOUNTING TERMS AND DETERMINATIONS. All accounting terms not
specifically defined herein shall be construed, all accounting determinations
hereunder shall be made and all financial statements required to be delivered
pursuant hereto shall be prepared in accordance with GAAP as in effect at the
time of such interpretation, determination or preparation, as applicable. In the
event that any Accounting Changes (as hereinafter defined) occur and such
changes result in a change in the method of calculation of financial covenants,
standards or terms contained in this Loan Agreement, then Borrower and FINOVA
agree to enter into negotiations to amend such provisions of this Loan Agreement
so as to reflect such Accounting Changes with the desired result that the
criteria for evaluating the financial condition of Borrower shall be the same
after such Accounting Changes as if such Accounting Changes had not been made.
For purposes hereof, "Accounting Changes" shall mean (i) changes in generally
accepted accounting principles required by the promulgation of any rule,
regulation, pronouncement or opinion by the Financial Accounting Standards Board
of the American Institute of Certified Public Accountants (or any successor
thereto) or other appropriate authoritative body and (ii) changes in accounting
principles as approved by the Accountants.
1.4 REFERENCES. All references in this Loan Agreement to "Article,"
"Section," "subsection," "subparagraph," "clause" or "Exhibit," unless otherwise
indicated, shall be deemed to refer to an Article, Section, subsection,
subparagraph, clause or Exhibit, as applicable, of this Loan Agreement.
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1.5 FINOVA'S DISCRETION. Whenever the terms "satisfactory to FINOVA,"
"determined by FINOVA," "acceptable to FINOVA," "FINOVA shall elect," "FINOVA
shall request," "at the option or election of FINOVA," or similar terms are used
in the Loan Instruments, except as otherwise specifically provided therein, such
terms shall mean satisfactory to, at the election or option of, determined by,
acceptable to or requested by FINOVA, in its sole and unlimited discretion.
1.6 BORROWER'S KNOWLEDGE. Any statements, representations or warranties
in the Loan Instruments that are based upon the best knowledge of Borrower or an
officer thereof shall be deemed to have been made after due inquiry by Borrower
or an officer, as applicable, with respect to the matter in question.
ARTICLE II
LOANS AND TERMS OF PAYMENT
2.1 TRANCHE A LOAN.
2.1.1 AMOUNT AND DISBURSEMENT. The Tranche A Loan consists of a term
loan made by FINOVA to Borrower pursuant to the Existing Loan Agreement in
the original principal amount of $8,500,000. On the Closing Date, the
Existing Principal Balance shall be deemed to have been converted to the
Principal Balance of the Tranche A Loan.
2.1.2 USE OF PROCEEDS. The proceeds of the Tranche A Loan were used
for the purposes specified in the Existing Loan Agreement.
2.1.3 TRANCHE A NOTE. The Tranche A Loan shall be evidenced by the
Tranche A Note.
2.1.4 REBORROWING. Borrower shall not be entitled to reborrow any
portion of the Tranche A Loan which is repaid or prepaid.
2.1.5 INTEREST. The Principal Balance of the Tranche A Loan shall
bear interest at a fixed rate per annum equal to 10.88%, except that
during a Default Rate Period, the Principal Balance of the Tranche A Loan
shall bear interest at the applicable Default Rate.
2.1.6 PAYMENTS. Commencing on the first Business Day of May, 2000
and on the first Business Day of each month thereafter through the first
Business Day of December, 2009, the Principal Balance of the Tranche A
Loan and all accrued and unpaid interest thereon shall be payable in 117
equal monthly installments of $116,510.88. The remaining Principal Balance
of the Tranche A Loan, together with all accrued and unpaid interest
thereon, shall be due and payable in full on the Tranche A Maturity Date.
2.1.7 VOLUNTARY PREPAYMENTS. Borrower may not prepay the Principal
Balance of the Tranche A Loan at any time during the first two Tranche A
Loan Years. Borrower voluntarily may prepay the Principal Balance of the
Tranche A Loan in whole, but not in part, at any time after the second
Tranche A Loan Year subject to the satisfaction of the Voluntary
Prepayment Conditions. Concurrently with any such voluntary prepayment of
the Principal Balance of the Tranche A Loan,
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Borrower shall pay to FINOVA a prepayment premium equal to a percentage of
the amount of the Principal Balance prepaid, determined in accordance with
the following schedule:
Percentage of Principal
Period of Prepayment Balance Prepaid
-------------------- ------------------------
Third Tranche A Loan Year 5.0%
Fourth Tranche A Loan Year 3.0%
Fifth Tranche A Loan Year and Thereafter 1.0%
2.1.8 MANDATORY PREPAYMENTS. In the event any Collateral Store Lease
or Franchise Agreement with respect to any Tranche A Store terminates
prior to the Tranche A Maturity Date, and such Collateral Store Lease or
Franchise Agreement is not renewed or otherwise extended, Borrower shall
prepay the Principal Balance of the Tranche A Loan in an amount equal to
the Allocated Loan Amount with respect such Tranche A Store, unless at
least 30 days prior to such termination Borrower designates a Substitute
Store for such Tranche A Store and satisfies the Substitution Conditions.
Concurrently with any mandatory prepayment pursuant to this subsection
2.1.8, Borrower shall pay to FINOVA accrued and unpaid interest on the
Principal Balance which is being prepaid to the date on which FINOVA is in
receipt of Good Funds, any other sums which are due and payable pursuant
to the terms of any of the Loan Instruments and a prepayment premium equal
to a percentage of the Principal Balance prepaid, determined in accordance
with the following schedule:
Percentage of Principal
Period of Prepayment Balance Prepaid
-------------------- ------------------------
First Tranche A Loan Year 10.0%
Second Tranche A Loan Year 10.0%
Third Tranche A Loan Year 5.0%
Fourth Tranche A Loan Year 3.0%
Fifth Tranche A Loan Year and Thereafter 1.0%
Prepayments received by FINOVA pursuant to this subsection 2.1.8 shall be
applied in the following order of priority to the payment of: (i) any and
all sums which are due and payable pursuant to the terms of the Loan
Instruments, except the Principal Balance and accrued and unpaid interest
thereon, (ii) to the monthly installment payments required under
subsection 2.1.6 in the inverse order of maturity and (iii) any remainder,
to Borrower's Obligations in such order as FINOVA shall determine.
2.2 TRANCHE B LOAN.
2.2.1 AMOUNT AND DISBURSEMENT. The Tranche B Loan shall consist of a
term loan to be made by FINOVA to Borrower in the original principal
amount of $3,000,000. FINOVA shall disburse the Tranche B Loan to or as
directed by Borrower when all of the terms and conditions set forth in
Sections 4.1 and 4.2 have been satisfied.
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2.2.2 USE OF PROCEEDS. The proceeds of the Tranche B Loan shall be
used (i) to repay the Indebtedness to be Refinanced and (ii) for working
capital.
2.2.3 TRANCHE B NOTE. The Tranche B Loan shall be evidenced by the
Tranche B Note.
2.2.4 REBORROWING. Borrower shall not be entitled to reborrow any
portion of the Tranche B Loan which is repaid or prepaid.
2.2.5 INTEREST. The Principal Balance of the Tranche B Loan shall
bear interest at a fixed rate per annum equal to 10.27%, except that
during a Default Rate Period, the Principal Balance of the Tranche B Loan
shall bear interest at the applicable Default Rate.
2.2.6 Interest which will accrue on the Principal Balance of the
Tranche B Loan from the Closing Date through the last day of May, 2000
shall be payable in advance on the Closing Date. Commencing on the first
Business Day of July, 2000 and on the first Business Day of each month
thereafter through the first Business Day of June, 2015, the Principal
Balance of the Tranche B Loan and all accrued and unpaid interest thereon
shall be payable in 180 equal monthly installments of $32,735.49. The
remaining Principal Balance of the Tranche B Loan, together with all
accrued and unpaid interest thereon, shall be due and payable in full on
the Tranche B Maturity Date.
2.2.7 VOLUNTARY PREPAYMENTS. Borrower may not prepay the Principal
Balance of the Tranche B Loan at any time during the first two Tranche B
Loan Years. Borrower voluntarily may prepay the Principal Balance of the
Tranche B Loan in whole, but not in part, at any time after the second
Tranche B Loan Year subject to the satisfaction of the Voluntary
Prepayment Conditions. Concurrently with any such voluntary prepayment of
the Principal Balance of the Tranche B Loan, Borrower shall pay to FINOVA
a prepayment premium equal to a percentage of the amount of the Principal
Balance prepaid, determined in accordance with the following schedule:
Percentage of Principal
Period of Prepayment Balance Prepaid
-------------------- ------------------------
Third Tranche B Loan Year 5.0%
Fourth Tranche B Loan Year 3.0%
Fifth Tranche B Loan Year and Thereafter 1.0%
2.2.8 MANDATORY PREPAYMENTS. In the event any Collateral Store Lease
or Franchise Agreement with respect to any Tranche B Store terminates
prior to the Tranche B Maturity Date, and such Collateral Store Lease or
Franchise Agreement is not renewed or otherwise extended, Borrower shall
prepay the Principal Balance of the Tranche B Loan in an amount equal to
the Allocated Loan Amount with respect such Tranche B Store, unless at
least 30 days prior to such termination Borrower designates a Substitute
Store for such Tranche B Store and satisfies the Substitution Conditions.
Concurrently with any mandatory prepayment pursuant to this subsection
2.2.8, Borrower shall pay to FINOVA accrued and unpaid interest on the
Principal Balance which is being prepaid to the date on which FINOVA is in
receipt of Good Funds, any other sums which are due and payable pursuant
to the terms of any of the Loan Instruments and a prepayment premium equal
to a percentage of the Principal Balance prepaid, determined in accordance
with the following schedule:
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Percentage of Principal
Period of Prepayment Balance Prepaid
-------------------- ------------------------
First Tranche B Loan Year 10.0%
Second Tranche B Loan Year 10.0%
Third Tranche B Loan Year 5.0%
Fourth Tranche B Loan Year 3.0%
Fifth Tranche B Loan Year and Thereafter 1.0%
Prepayments received by FINOVA pursuant to this subsection 2.2.8 shall be
applied in the following order of priority to the payment of: (i) any and
all sums which are due and payable pursuant to the terms of the Loan
Instruments, except the Principal Balance and accrued and unpaid interest
thereon, (ii) to the monthly installment payments required under
subsection 2.2.6 in the inverse order of maturity and (iii) any remainder,
to Borrower's Obligations in such order as FINOVA shall determine.
2.3 TRANCHE C LOAN.
2.3.1 AMOUNT AND DISBURSEMENT. The Tranche C Loan shall consist of a
revolving loan from FINOVA to Borrower convertible into a term loan on the
terms and conditions herein set forth. Prior to the Tranche C Conversion
Date, the Tranche C Loan shall consist of a revolving loan from FINOVA to
Borrower in the maximum aggregate amount of $7,000,000. FINOVA agrees to
make Advances of the Tranche C Loan to or as directed by Borrower at any
time on or after the Closing Date to the Tranche C Conversion Date
provided that:
(i) all of the terms and conditions set forth in Sections
4.1 and 4.2 have been satisfied;
(ii) FINOVA shall have received a Tranche C Notice of
Borrowing for such Advance from Borrower not later than 10:00 a.m.
Paramus, New Jersey time at least three days prior to the proposed
Funding Date of such Advance;
(iii) such Advance shall be in a minimum amount of $100,000
and integral multiples of $100,000 in excess of that amount;
(iv) after giving effect to such Advance, the Principal
Balance of the Tranche C Loan would not exceed $7,000,000; and
(v) no more than two such Advances shall be made in any 30 day
period.
2.3.2 USE OF PROCEEDS. The proceeds of the Tranche C Loan shall be
used (i) to pay the Loan Fees payable on the Closing Date and transaction
costs in connection with the Closing, (ii) for the acquisition and
development of Expansion Stores, (iii) for the remodeling of Collateral
Stores, (iv) for the purchase of replacement fixtures, furniture and
equipment for the Collateral Stores and (v) to repay Indebtedness of
Borrowed Money of Borrower.
2.3.3 TRANCHE C NOTE. The Tranche C Loan shall be evidenced by the
Tranche C Note.
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2.3.4 REBORROWING. Subject to the terms and conditions of subsection
2.3.1, prior to the Tranche C Conversion Date Borrower may reborrow all or
any portion of the Tranche C Loan which is repaid or prepaid. From and
after the Tranche C Conversion Date, Borrower shall not be entitled to
reborrow all or any portion of the Tranche C Loan which is repaid or
prepaid.
2.3.5 INTEREST. The Principal Balance of the Tranche C Loan shall
bear interest:
(i) prior to the Tranche C Conversion Date at a per annum rate
of interest equal to the Prime Rate in effect from time to time plus
2.00% per annum; and
(ii) from and after the Tranche C Conversion Date at a per
annum rate of interest equal to the Tranche C Reference Rate plus
3.85% per annum;
except that during a Default Rate Period, the Principal Balance of the
Tranche C Loan shall bear interest at the applicable Default Rate.
2.3.6 PAYMENTS. Interest which accrues on the Tranche C Loan through
the Tranche C Conversion Date shall be payable monthly in arrears on the
first Business Day of each month and on the Tranche C Conversion Date. The
Principal Balance of the Tranche C Loan, together with all accrued and
unpaid interest thereon, shall be due and payable in full on the Tranche C
Conversion Date unless the Tranche C Conversion Conditions are satisfied
as of the Tranche C Conversion Date, in which event the Tranche C Loan
shall be converted from a revolving loan to a term loan. In such event (i)
commencing on the first Business Day of the second month following the
month in which the Tranche C Conversion Date occurs and on the first
Business Day of each month thereafter through the first Business Day of
June, 2010, the Principal Balance of the Tranche C Loan as of the Tranche
C Conversion Date and all accrued and unpaid interest thereon shall be
payable:
(A) if the Tranche C Conversion Date is June 1, 2002, in 96
equal monthly installments, each in the amount necessary to amortize
the Tranche C Loan fully by June 1, 2010; and
(B) if the Tranche C Conversion Date is June 1, 2003, in 84
equal monthly installments, each in the amount necessary to amortize
the Tranche C Loan fully by June 1, 2010; and
(ii) the remaining Principal Balance of the Tranche C Loan, together with
all accrued and unpaid interest thereon, shall be due and payable in full
on the Tranche C Maturity Date. Promptly following its receipt of the
Tranche C Conversion Notice, FINOVA shall deliver to Borrower the Tranche
C Payment Schedule.
2.3.7 VOLUNTARY PREPAYMENTS. Borrower may not prepay the Principal
Balance of the Tranche C Loan at any time during the first two Tranche C
Loan Years. Borrower voluntarily may prepay the Principal Balance of the
Tranche C Loan in whole, but not in part, at any time after the second
Tranche C Loan Year subject to the satisfaction of the Voluntary
Prepayment Conditions. Concurrently with any such voluntary prepayment of
the Principal Balance of the Tranche C Loan, Borrower shall pay to FINOVA
a prepayment premium equal to a percentage of the amount of the Principal
Balance prepaid, determined in accordance with the following schedule:
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Percentage of Principal
Period of Prepayment Balance Prepaid
-------------------- -----------------------
Third Tranche C Loan Year 5.0%
Fourth Tranche C Loan Year 3.0%
Fifth Tranche C Loan Year and Thereafter 1.0%
2.3.8 MANDATORY PREPAYMENTS. In the event any Collateral Store Lease
or Franchise Agreement with respect to any Tranche C Store terminates
prior to the Tranche C Maturity Date, and such Collateral Store Lease or
Franchise Agreement is not renewed or otherwise extended, Borrower shall
prepay the Principal Balance of the Tranche C Loan in an amount equal to
the Allocated Loan Amount with respect such Tranche C Store, unless at
least 30 days prior to such termination Borrower designates a Substitute
Store for such Tranche C Store and satisfies the Substitution Conditions.
Concurrently with any mandatory prepayment pursuant to this subsection
2.3.8, Borrower shall pay to FINOVA accrued and unpaid interest on the
Principal Balance which is being prepaid to the date on which FINOVA is in
receipt of Good Funds, any other sums which are due and payable pursuant
to the terms of any of the Loan Instruments and a prepayment premium equal
to a percentage of the Principal Balance prepaid, determined in accordance
with the following schedule:
Percentage of Principal
Period of Prepayment Balance Prepaid
-------------------- ------------------------
First Tranche C Loan Year 10.0%
Second Tranche C Loan Year 10.0%
Third Tranche C Loan Year 5.0%
Fourth Tranche C Loan Year 3.0%
Fifth Tranche C Loan Year and Thereafter 1.0%
Prepayments received by FINOVA pursuant to this subsection 2.3.8 shall be
applied in the following order of priority to the payment of: (i) any and
all sums which are due and payable pursuant to the terms of the Loan
Instruments, except the Principal Balance and accrued and unpaid interest
thereon, (ii) to the monthly installment payments required under
subsection 2.3.6 in the inverse order of maturity and (iii) any remainder,
to Borrower's Obligations in such order as FINOVA shall determine.
2.4 TRANCHE D LOAN.
2.4.1 AMOUNT AND DISBURSEMENT. The Tranche D Loan shall consist of a
term loan to be made by FINOVA to Borrower in the original principal
amount of $4,000,000. FINOVA shall disburse the Tranche D Loan to or as
directed by Borrower at any time prior to July 31, 2000 provided all of
the terms and conditions set forth in Section 4.1 and 4.3 have been
satisfied. Promptly following FINOVA's receipt of the Tranche D Notice of
Borrowing, FINOVA shall deliver to Borrower the Tranche D Payment
Schedule.
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2.4.2 USE OF PROCEEDS. The proceeds of the Tranche D Loan shall be
used (i) to pay the Loan Fee payable upon the Tranche D Closing and (ii)
to consummate the Tranche D Acquisition.
2.4.3 TRANCHE D NOTE. The Tranche D Loan shall be evidenced by the
Tranche D Note.
2.4.4 REBORROWING. Borrower shall not be entitled to reborrow any
portion of the Tranche D Loan which is repaid or prepaid.
2.4.5 INTEREST. The Principal Balance of the Tranche D Loan shall
bear interest at a fixed rate per annum equal to the Tranche D Reference
Rate plus 3.85% per annum, except that during a Default Rate Period, the
Principal Balance of the Tranche D Loan shall bear interest at the
applicable Default Rate.
2.4.6 PAYMENTS. Interest which will accrue on the Principal Balance
of the Tranche D Loan from the Tranche D Closing Date through the last day
of the month in which the Tranche D Closing occurs shall be payable in
advance on the Tranche D Closing Date. Commencing on the first Business
Day of second month following the month in which the Tranche D Closing
occurs and on the first Business Day of each month thereafter, the
Principal Balance of the Tranche D Loan and all accrued and unpaid
interest thereon shall be payable in:
(A) if the Tranche D Maturity Date is the Ten Year Tranche D
Maturity Date, 120 equal monthly installments, each in the amount
necessary to amortize the Tranche D Loan fully over ten years; and
(B) if the Tranche D Maturity Date is the Fifteen Year Tranche
D Maturity Date, 180 equal monthly installments, each in the amount
necessary to amortize the Tranche D Loan fully over fifteen years.
The remaining Principal Balance of the Tranche D Loan, together with all
accrued and unpaid interest thereon, shall be due and payable in full on
the earlier to occur of (i) the Tranche D Maturity Date and (ii) the date
Borrower's Obligations are accelerated pursuant to Section 8.2.
2.4.7 VOLUNTARY PREPAYMENTS. Borrower may not prepay the Principal
Balance of the Tranche D Loan at any time during the first two Tranche D
Loan Years. Borrower voluntarily may prepay the Principal Balance of the
Tranche D Loan in whole, but not in part, at any time after the second
Tranche D Loan Year subject to the satisfaction of the Voluntary
Prepayment Conditions. Concurrently with any such voluntary prepayment of
the Principal Balance of the Tranche D Loan, Borrower shall pay to FINOVA
a prepayment premium equal to a percentage of the amount of the Principal
Balance prepaid, determined in accordance with the following schedule:
Percentage of Principal
Period of Prepayment Balance Prepaid
-------------------- ------------------------
Third Tranche D Loan Year 5.0%
Fourth Tranche D Loan Year 3.0%
Fifth Tranche D Loan Year and Thereafter 1.0%
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2.4.8 MANDATORY PREPAYMENTS. In the event any Collateral Store Lease
or Franchise Agreement with respect to any Tranche D Store terminates
prior to the Tranche D Maturity Date, and such Collateral Store Lease or
Franchise Agreement is not renewed or otherwise extended, Borrower shall
prepay the Principal Balance of the Tranche D Loan in an amount equal to
the Allocated Loan Amount with respect such Tranche D Store, unless at
least 30 days prior to such termination Borrower designates a Substitute
Store for such Tranche D Store and satisfies the Substitution Conditions.
Concurrently with any mandatory prepayment pursuant to this subsection
2.4.8, Borrower shall pay to FINOVA accrued and unpaid interest on the
Principal Balance which is being prepaid to the date on which FINOVA is in
receipt of Good Funds, any other sums which are due and payable pursuant
to the terms of any of the Loan Instruments and a prepayment premium equal
to a percentage of the Principal Balance prepaid, determined in accordance
with the following schedule:
Percentage of Principal
Period of Prepayment Balance Prepaid
-------------------- ------------------------
First Tranche D Loan Year 10.0%
Second Tranche D Loan Year 10.0%
Third Tranche D Loan Year 5.0%
Fourth Tranche D Loan Year 3.0%
Fifth Tranche D Loan Year and Thereafter 1.0%
Prepayments received by FINOVA pursuant to this subsection 2.4.8 shall be
applied in the following order of priority to the payment of: (i) any and
all sums which are due and payable pursuant to the terms of the Loan
Instruments, except the Principal Balance and accrued and unpaid interest
thereon, (ii) to the monthly installment payments required under
subsection 2.4.6 in the inverse order of maturity and (iii) any remainder,
to Borrower's Obligations in such order as FINOVA shall determine.
2.5 TRANCHE E LOAN.
2.5.1 AMOUNT AND DISBURSEMENT. The Tranche E Loan shall consist of a
term loan to be made by FINOVA to Borrower in the maximum principal amount
of $7,000,000. FINOVA shall disburse Advances of the Tranche E Loan to or
as directed by Borrower from time to time prior to June 1, 2003 provided
all of the terms and conditions set forth in Sections 4.1 and 4.4 have
been satisfied. Promptly following FINOVA's receipt of a Tranche E Notice
of Borrowing, FINOVA shall deliver to Borrower a Tranche E Payment
Schedule with respect to the requested Advance of the Tranche E Loan.
2.5.2 USE OF PROCEEDS. The proceeds of each Advance of the Tranche E
Loan shall be used (i) to pay the Loan Fee payable upon the disbursement
of such Advance and (ii) for the acquisition and development of one or
more Expansion Stores.
2.5.3 TRANCHE E NOTE. The Tranche E Loan shall be evidenced by the
Tranche E Note.
2.5.4 REBORROWING. Borrower shall not be entitled to reborrow any
portion of the Tranche E Loan which is repaid or prepaid.
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2.5.5 INTEREST. The Principal Balance of each Advance of the Tranche
E Loan shall bear interest at a fixed rate per annum equal to the Tranche
E Reference Rate with respect to such Advance plus 3.85% per annum, except
that during a Default Rate Period, the Principal Balance of each Advance
of the Tranche E Loan shall bear interest at the applicable Default Rate.
2.5.6 PAYMENTS. Interest which will accrue on the Principal Balance
of each Advance of the Tranche E Loan from the Funding Date of such
Advance through the last day of the month in which such Funding Date
occurs shall be payable in advance on such Funding Date. Commencing on the
first Business Day of second month following the month in which such
Funding Date occurs and on the first Business Day of each month thereafter
through the month in which the Tranche E Maturity Date occurs, the
Principal Balance of such Advance and all accrued and unpaid interest
thereon shall be payable in equal monthly installments, each in an amount
sufficient to amortize such Advance fully over fifteen years. The
remaining Principal Balance of the entire Tranche E Loan, together with
all accrued and unpaid interest thereon, shall be due and payable in full
on the Tranche E Maturity Date.
2.5.7 VOLUNTARY PREPAYMENTS. Borrower may not prepay the Principal
Balance of any Advance of the Tranche E Loan at any time during the first
two Tranche E Loan Years applicable to such Advance. Borrower voluntarily
may prepay the entire Principal Balance of an Advance of the Tranche E
Loan in whole, but not in part, at any time after the second Tranche E
Loan Year applicable to such advance subject to the satisfaction of the
Voluntary Prepayment Conditions. Concurrently with any such voluntary
prepayment of the Principal Balance of an Advance of the Tranche E Loan,
Borrower shall pay to FINOVA a prepayment premium equal to a percentage of
the amount of such Advance of the Principal Balance prepaid, determined in
accordance with the following schedule:
Period of Prepayment Percentage of Principal
For each AdvancE Balance Prepaid
---------------- -----------------------
Third Tranche E Loan Year 5.0%
Fourth Tranche E Loan Year 3.0%
Fifth Tranche E Loan Year and Thereafter 1.0%
2.5.8 MANDATORY PREPAYMENTS. In the event any Collateral Store Lease
or Franchise Agreement with respect to any Tranche E Store terminates
prior to the Tranche E Maturity Date, and such Collateral Store Lease or
Franchise Agreement is not renewed or otherwise extended, Borrower shall
prepay the Principal Balance of the Tranche E Loan in an amount equal to
the Allocated Loan Amount with respect such Tranche E Store, unless at
least 30 days prior to such termination Borrower designates a Substitute
Store for such Tranche E Store and satisfies the Substitution Conditions.
Concurrently with any mandatory prepayment pursuant to this subsection
2.5.8, Borrower shall pay to FINOVA accrued and unpaid interest on the
Principal Balance which is being prepaid to the date on which FINOVA is in
receipt of Good Funds, any other sums which are due and payable pursuant
to the terms of any of the Loan Instruments and a prepayment premium equal
to a percentage of the Principal Balance prepaid, determined in accordance
with the following schedule:
Percentage of Principal
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<PAGE>
Period of Prepayment Balance Prepaid
-------------------- -------------------------
First Tranche E Loan Year 10.0%
Second Tranche E Loan Year 10.0%
Third Tranche E Loan Year 5.0%
Fourth Tranche E Loan Year 3.0%
Fifth Tranche E Loan Year and Thereafter 1.0%
Prepayments received by FINOVA pursuant to this subsection 2.5.8 shall be
applied in the following order of priority to the payment of: (i) any and
all sums which are due and payable pursuant to the terms of the Loan
Instruments, except the Principal Balance and accrued and unpaid interest
thereon, (ii) to the monthly installment payments required under
subsection 2.5.6 in the inverse order of maturity and (iii) any remainder,
to Borrower's Obligations in such order as FINOVA shall determine.
2.6 LOAN FEES.
2.6.1 CLOSING. Borrower shall pay to FINOVA a closing fee of
$100,000, which shall be deemed to be fully earned and payable upon the
Closing.
2.6.2 MAINTENANCE FEE. Borrower shall pay to FINOVA a maintenance
fee of $70,000, which shall be deemed to be fully earned upon the Closing
and payable (i) in annual installments of $35,000 each on the first and
second anniversaries of the Closing Date or (ii) if Borrower's Obligations
are accelerated pursuant to Section 8.2 prior to the second anniversary of
the Closing Date, on the date Borrower's Obligations are accelerated.
2.6.3 TRANCHE D LOAN FEE. Borrower shall pay to FINOVA a loan fee in
the amount of $40,000 on the Tranche D Closing Date, which loan fee shall
be deemed to be fully earned and payable upon the Tranche D Closing.
2.6.3 TRANCHE E LOAN FEES. Borrower shall pay to FINOVA a loan fee
in an amount equal to 1.0% of the amount of each Advance of the Tranche E
Loan on the Funding Date of such Advance, which loan fee shall be deemed
to be fully earned and payable upon the disbursement of such Advance.
2.6.4 NON-UTILIZATION FEE. Borrower shall pay to FINOVA:
(i) on the first anniversary of the Closing Date, a non-utilization
fee in an amount equal to 1.0% of the remainder, if any, of (A) $1,500,000
MINUS (B) the aggregate amount of all Advances of the Tranche D Loan and
the Tranche E Loan made during the first Tranche B Loan Year;
(ii) on the second anniversary of the Closing Date, a
non-utilization fee in an amount equal to 1.0% of the remainder, if any,
of (A) $3,000,000 MINUS (B) the aggregate amount of all Advances of the
Tranche D Loan and the Tranche E Loan made during the first two Tranche B
Loan Years; and
(iii) on the third anniversary of the Closing Date, a
non-utilization fee in an amount equal to 1.0% of the remainder, if any,
of (A) $4,500,000 MINUS (B) the aggregate amount of all
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Advances of the Tranche D Loan and the Tranche E Loan made during the
first three Tranche B Loan Years.
2.7 LATE CHARGES. If a payment of principal or interest to be made
pursuant to this Loan Agreement becomes past due for a period in excess of ten
days, Borrower shall pay on demand to FINOVA a late charge of 10% of the amount
of such overdue payment.
2.8 NO PREPAYMENT PREMIUM. Notwithstanding anything to the contrary
contained herein, no prepayment premium shall be payable with respect to any
prepayment of the Loans made from insurance proceeds.
2.9 INVOLUNTARY PREPAYMENT. If an Event of Default occurs and Borrower's
Obligations are accelerated, Borrower shall pay to FINOVA the Involuntary
Prepayment Premium determined as of the date Borrower's Obligations are
accelerated. For purposes of this Section 2.9, the term "INVOLUNTARY PREPAYMENT
PREMIUM" shall mean an amount equal to the sum of the prepayment premiums that
would be payable to FINOVA under subsections 2.1.8, 2.2.8, 2.3.8, 2.4.8 and
2.5.8 if Borrower prepaid the Allocated Loan Amounts of all Collateral Stores on
the date Borrower's Obligations are accelerated. Borrower acknowledges and
agrees that the Involuntary Prepayment Premium described in this Section 2.9 is
a reasonable estimate of loss and not a penalty. The Involuntary Prepayment
Premium is payable as liquidated damages for loss of bargain but shall not
reduce, affect or impair any other obligation of Borrower under the Loan
Instruments.
2.10 PAYMENTS AFTER EVENT OF DEFAULT. All payments received by FINOVA
during the existence of an Event of Default shall be applied in accordance with
Section 8.4.
2.11 INTEREST COMPUTATION; MAXIMUM INTEREST.
2.11.1 INTEREST COMPUTATION. Interest on the Loans shall be computed
on the basis of a year consisting of 360 days and charged for the actual
number of days during the period for which interest is being charged. In
computing interest, the date of funding of a Loan or Advance shall be
included and the date of payment shall be excluded.
2.11.2 MAXIMUM INTEREST. Notwithstanding any provision to the
contrary contained herein or in any other Loan Instrument, FINOVA shall
not collect a rate of interest on any obligation or liability due and
owing by Borrower to FINOVA in excess of the maximum contract rate of
interest permitted by applicable law ("Excess Interest"). All fees,
charges, goods, things in action or any other sums or things of value
(other than items (a), (b) and (c) below) paid or payable by Borrower
(collectively, the "Additional Sums"), whether pursuant to the Notes, this
Loan Agreement, the other Loan Instruments or any other document or
instrument in any way pertaining to the Loans, that, under the laws of the
State of Arizona, may be deemed to be interest with respect to the Loans,
for the purpose of any laws of the State of Arizona that may limit the
maximum amount of interest to be charged with respect to the Loans shall
be payable by Borrower and shall be deemed to be additional interest, and
for such purposes only, the agreed upon and "contracted for rate of
interest" with respect to the Loans shall be deemed to be increased by the
rate of interest resulting from the Additional Sums. FINOVA and Borrower
agree that the interest laws of the State of Arizona shall govern the
relationship among them and understand and believe that the transactions
contemplated by the Loan Instruments comply with the usury laws of the
State of Arizona, but in the event of a final adjudication to the
contrary, Borrower shall be obligated to pay, NUNC PRO TUNC, to FINOVA
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only such interest as then shall be permitted by the laws of the state
found to govern the contract relationship between FINOVA and Borrower. For
the purpose of any laws of the State of Arizona that may limit the maximum
amount of interest to be charged with respect to a loan, the "contracted
for rate of interest" for the Loans shall consist of the following: (a)
interest calculated in accordance with the provisions of this Section 2;
(b) the late charges calculated in accordance with the provisions of
Section 2.7; (c) the Loan Fees; and (d) all Additional Sums, if any.
Borrower agrees to pay an effective "contracted for rate of interest"
which is the sum of items (a), (b), (c) and (d) above. If any Excess
Interest is provided for or determined by a court of competent
jurisdiction to have been provided for in this Loan Agreement or any other
Loan Instrument, then in such event (i) no Obligor shall be obligated to
pay such Excess Interest, (ii) any Excess Interest collected by FINOVA
shall be, at FINOVA's option, (A) applied to the Principal Balance of any
Loans in such manner as FINOVA may elect or to accrued and unpaid interest
not in excess of the maximum rate permitted by applicable law or (B)
refunded to the payor thereof, (iii) the interest rates provided for
herein (collectively, including, without limitation, the Loan Fees, the
"Stated Rate") shall be automatically reduced to the maximum rate allowed
from time to time under applicable law (the "Maximum Rate") and this Loan
Agreement and the other Loan Instruments, as applicable, shall be deemed
to have been, and shall be, modified to reflect such reduction, and (iv)
neither Borrower nor any other Obligor shall have any action against
FINOVA for any damages arising out of the payment or collection of such
Excess Interest.
2.12 RELIANCE ON NOTICES. Borrower acknowledges that any Tranche C
Conversion Notice, Tranche D Notice of Borrowing or Tranche E Notice of
Borrowing executed by Borrower shall be irrevocable and that FINOVA shall have
the right without further confirmation to assume that any such document received
by FINOVA has been given by a Person duly authorized to act on behalf of
Borrower. If Borrower delivers to FINOVA a notice of prepayment and fails to
make such prepayment, Borrower shall reimburse FINOVA on demand in the amount of
any loss, cost and/or expense incurred by FINOVA as a result of FINOVA's
reliance on such notice, including without limitation, any loss, cost or expense
resulting from any contractual obligations of FINOVA in connection with the
reinvestment of the amount indicated in such notice of prepayment.
ARTICLE III
GUARANTY AND SECURITY
3.1 GUARANTY. Borrower's Obligations shall be guaranteed by Guarantor
pursuant to the Guaranty.
3.2 COLLATERAL. Borrower's Obligations shall be secured by a Lien upon all
of the Collateral, which at all times shall be superior and prior to all other
Liens, except Permitted Prior Liens.
3.3 RELEASE OF SECURITY INTERESTS.
3.3.1 RELEASE OF TRANCHE A COLLATERAL. Upon the payment or
prepayment in full of the Tranche A Loan in accordance with Section 2.1
and provided no Event of Default or Incipient Default then exists and is
continuing, FINOVA shall release its Security Interests in the Tranche A
Collateral.
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3.3.2 RELEASE OF TRANCHE B COLLATERAL. Upon the payment or
prepayment in full of the Tranche B Loan in accordance with Section 2.2
and provided no Event of Default or Incipient Default then exists and is
continuing, FINOVA shall release its Security Interests in the Tranche B
Collateral.
3.3.3 RELEASE OF TRANCHE C COLLATERAL. Upon the payment or
prepayment in full of the Tranche C Loan in accordance with Section 2.3
and provided no Event of Default or Incipient Default then exists and is
continuing, FINOVA shall release its Security Interests in the Tranche C
Collateral.
3.3.4 RELEASE OF TRANCHE D COLLATERAL. Upon the payment or
prepayment in full of the Tranche D Loan in accordance with Section 2.4
and provided no Event of Default or Incipient Default then exists and is
continuing, FINOVA shall release its Security Interests in the Tranche D
Collateral.
3.3.5 RELEASE OF TRANCHE E COLLATERAL. Upon the payment or
prepayment in full of the Tranche E Loan in accordance with Section 2.5
and provided no Event of Default or Incipient Default then exists and is
continuing, FINOVA shall release its Security Interests in the Tranche E
Collateral.
3.4 SUBSTITUTION OF COLLATERAL STORES. Borrower shall have the option to
substitute any Collateral Store with a Substitute Store provided that (i) at
least thirty (30) days prior to the date Borrower desires to substitute such
Collateral Store with such Substitute Store, Borrower designates the Collateral
Store to be replaced, (ii) Borrower shall demonstrate to the reasonable
satisfaction of FINOVA that the ratio of (A) the Store Cash Flow of the
Substitute Store for the twelve month period ending closest to the date of
substitution PLUS the sum of the Store Cash Flow of the Stores constituting such
portion of the Collateral (other than the Store being replaced) for such twelve
month period to (B) the Store Fixed Charges of such Substitute Store for such
twelve month period PLUS the sum of the Store Fixed Charges of the Stores
constituting such portion of the Collateral (other than the Store being
replaced) for such twelve month period is not less than 1.25:1.00 and (iii)
Borrower satisfies the Substitution Conditions.
ARTICLE IV
CONDITIONS OF CLOSING
4.1 CONDITIONS OF ALL LOANS. The obligation of FINOVA to disburse any Loan
or Advance shall be subject to the satisfaction or waiver of all of the
following conditions on or before the applicable Funding Date in a manner, form
and substance reasonably satisfactory to FINOVA:
4.1.1 REPRESENTATIONS AND WARRANTIES. On the applicable Funding Date
the representations and warranties of each Obligor set forth in the Loan
Instruments to which such Obligor is a party shall be true and correct in
all material respects, except to the extent set forth in any written
disclosures provided by such Obligor to FINOVA subsequent to such Funding
Date which are not reasonably likely to have a Material Adverse Effect as
determined by FINOVA in its reasonable discretion.
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4.1.2 PERFORMANCE; NO DEFAULT. Each Obligor shall have performed and
complied with all agreements and conditions contained in the Loan
Instruments to be performed by or complied with by such Obligor prior to
or at such disbursement and no Event of Default or Incipient Default shall
then exist or result from the disbursement of such Loan or Advance.
4.1.3 OPINIONS OF COUNSEL. FINOVA shall have received such opinions
of local counsel to Borrower as FINOVA reasonably may require, addressed
to FINOVA and in such form and covering such matters as FINOVA reasonably
may require.
4.1.4 SECURITY INTERESTS. All filings of Uniform Commercial Code
financing statements, Leasehold Mortgages and all other filings and
actions necessary to perfect and maintain the Security Interests as first,
valid and perfected Liens in the Collateral covered thereby, subject only
to Permitted Prior Liens, shall have been filed or taken and FINOVA shall
have received such UCC, state and federal tax Lien, pending suit, judgment
and other Lien searches as it deems necessary to confirm the foregoing and
to confirm that no Liens other than Permitted Liens exist on any of the
Collateral.
4.1.5 APPROVAL OF INSTRUMENTS AND SECURITY INTERESTS. FINOVA shall
have received evidence that the approval or consent shall have been
obtained from all Governmental Bodies and all other Persons whose approval
or consent is required to enable Obligors to (i) enter into and perform
their respective obligations under the Loan Instruments to which each such
Obligor is a party and (ii) grant the Security Interests to FINOVA.
4.1.6 LICENSES. FINOVA shall have received evidence that (i)
Borrower is the licensee of all Licenses and Franchise Agreements
necessary for the operation of the Collateral Stores and (ii) such
Licenses and Franchise Agreements are in full force and effect as of the
applicable Funding Date and no event has occurred which could result in
the termination, revocation or non-renewal of any such License or
Franchise Agreement.
4.1.7 USE OF ASSETS. FINOVA shall be satisfied that Borrower at all
times shall be entitled to the use and quiet enjoyment of all Property
necessary for the continued ownership and operation of the Collateral
Stores, including, without limitation, the use of equipment, fixtures,
Licenses, offices and means of ingress and egress thereto, necessary for
the operation of the Collateral Stores.
4.1.8 NO MATERIAL ADVERSE EFFECT. No event or series of events shall
have occurred since October 2, 1999, and no litigation or governmental
proceeding or investigation shall be pending, which has had or is
reasonably likely to have a Material Adverse Effect. No judgment, order,
injunction or other restraint prohibiting or imposing adverse conditions
on the transactions to be consummated on the applicable Funding Date shall
be in effect which has had or is reasonably likely to have a Material
Adverse Effect.
4.1.9 BUSINESS AND FLOOD INSURANCE. At least two Business Days prior
to the applicable Funding Date Borrower shall have delivered to FINOVA
evidence satisfactory to FINOVA that all insurance coverage required
pursuant to Section 6.6 is in full force and effect and all premiums then
due thereon have been paid in full.
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4.1.10 ENVIRONMENTAL. FINOVA shall have received such reports
concerning the environmental condition of the Stores which are the subject
of such Loan or Advance as FINOVA may require, including a Phase I
environmental assessment in accordance with the requirements of ASTM E
1527-97. Such reports shall be prepared by an environmental engineer
acceptable to FINOVA, shall be dated within six months of the Funding Date
of such Loan or Advance, shall confirm to the satisfaction of FINOVA that
such Store complies with all Environmental Laws and shall reflect, in
FINOVA's judgment, no adverse findings. For fee simple sites, in lieu of
the Phase I report FINOVA will accept a "lender" environmental insurance
policy evidencing coverage in an amount of $500,000.00 (or such greater
amount as FINOVA may require) per site issued by an insurer, reasonably
acceptable to FINOVA. For leasehold mortgage sites, FINOVA will accept
clean, in its sole opinion, environmental database searches. FINOVA
reserves the right to require the previously stated environmental
insurance on a leasehold mortgage site, and further due diligence in
compliance with the above requirements for a Phase I on fee simple sites.
The cost of the environmental reports/insurance shall be borne by the
Borrower.
4.1.11 PAYMENT OF FEES AND EXPENSES. Borrower shall have paid all of
the Loan Fees which are then due and payable and all fees and expenses
described in Section 10.1 then due and payable.
4.2 CONDITIONS OF DISBURSEMENT OF TRANCHE B LOAN AND ADVANCES OF THE
TRANCHE C LOAN. The obligation of FINOVA to disburse the Tranche B Loan and the
initial Advance of the Tranche C Loan shall be subject to the satisfaction or
waiver of all of the following conditions on or before the Closing Date in a
manner, form and substance reasonably satisfactory to FINOVA:
4.2.1 APPRAISALS. FINOVA shall have received from the Accountants
appraisals of (i) the Tranche B Stores, in each case in form and substance
reasonably satisfactory to FINOVA, showing an aggregate business value of
the Tranche B Stores of not less than $4,000,000 and (ii) the Tranche C
Stores, in each case in form and substance reasonably satisfactory to
FINOVA, showing an aggregate business value of the Tranche C Stores of not
less than $9,333,334.
4.2.2 MINIMUM STORE LEVEL FIXED CHARGE COVERAGE. Borrower shall
demonstrate to the satisfaction of FINOVA that the ratio of (i) the Store
Cash Flow of each Tranche B Store and each Tranche C Store for the twelve
month period ending closest to December 31, 1999 to (ii) the sum of (A)
Store Fixed Charges of such Store for such twelve month period plus (B)
the projected FINOVA Debt Service on the Allocated Loan Amount for each
such Store for the twelve month period following the Closing Date
(assuming the Tranche B Loan and the Tranche C Loan were fully disbursed
on the Closing Date) is not less than 1.25:1.00.
4.2.3 DELIVERY OF DOCUMENTS. The following shall have been delivered
to FINOVA, each duly authorized and executed, where applicable, and in
form and substance reasonably satisfactory to FINOVA:
(a) the Loan Instruments, including Leasehold Mortgages
encumbering the Leases of each Tranche B Store and the Leases of at
least three Tranche C Stores designated by FINOVA;
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(b) good standing certificates for each Obligor from the State
in which each such Obligor is organized and for Borrower from each
State in which any Tranche A Store, Tranche B Store or Tranche C
Store is located, each dated a recent date prior to the Closing
Date;
(c) copies of:
(1) the articles of incorporation of each Obligor,
certified by the Secretary of State of the State in which such
Obligor is organized, together with all current and proposed
amendments thereto, certified by the corporate secretary of
such Obligor;
(2) the by-laws of each Obligor, together with all
current and proposed amendments thereto, certified by the
corporate secretary of such Obligor;
(3) resolutions adopted by the board of directors of
each Obligor, authorizing the execution and delivery by such
Obligor of the Loan Instruments to which such Obligor is a
party and the consummation of the transactions contemplated
thereby, certified as of the Closing Date by the corporate
secretary of such Obligor;
(4) signature and incumbency certificates of the
officers of each Obligor;
(5) certified copies or executed originals of each of
the following:
(A) the Development Agreement as in effect on
the Closing Date;
(B) the Franchise Agreements for each of the
Tranche A Stores, Tranche B Stores and Tranche C Stores
as in effect on the Closing Date;
(C) the Collateral Store Leases for each of the
Tranche A Stores, Tranche B Stores and Tranche C Stores
as in effect on the Closing Date;
(D) the certificate of occupancy for each of the
Tranche A Stores, Tranche B Stores and Tranche C Stores,
to the extent available, or other evidence that each
such Store is operating in compliance with applicable
law;
(6) a Landlord's Waiver from the Landlord under the
Leases of the Tranche A Stores, the Tranche B Stores and the
Tranche C Stores; and
(7) such other instruments, documents,
certificates, consents, waivers and opinions as FINOVA
reasonably may request.
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4.2.4 TITLE INSURANCE; SURVEY. FINOVA shall have received a
mortgagee's policy of title insurance in favor of FINOVA with respect to
each parcel of Leasehold Property demised under any Lease of the Tranche B
Stores or the Tranche C Stores required to be encumbered by a Leasehold
Mortgage, issued by a title company and in an amount satisfactory to
FINOVA, showing that Borrower has valid leasehold estate under the Lease
of such parcel of Leasehold Property and insuring that the Leasehold
Mortgage encumbering such Lease constitutes a valid Lien on Borrower's
right, title and interest in, to and under such Lease, subject only to
Permitted Liens and subject in priority only to Permitted Prior Liens.
Each such policy shall insure over all survey and other general exceptions
contained therein and shall include such affirmative endorsements as
reasonably may be required by FINOVA and as are available in the
applicable jurisdiction, including, without limitation, comprehensive
endorsement no. 1, contiguity (if applicable), usury (if available), doing
business, variable rate, tie-in, restrictions (where applicable),
encroachment (where applicable), 3.1 zoning (including parking) at the
reasonable request of FINOVA (if available), last dollar, tax parcel,
survey, location, access and future advances. FINOVA shall have received
(i) copies of and found reasonably satisfactory the provisions of each
document referred to in each such policy, (ii) received evidence that all
premiums with respect to such title insurance have been paid by Borrower
and (iii) a recent "as-built" survey of each such parcel of Leasehold
Property, certified to FINOVA, the title insurer and Borrower, containing
a flood plain certification, and showing no matters or exceptions which
are not Permitted Liens and otherwise in sufficient detail as to permit
the elimination of any survey exceptions to the title policies described
above and the issuance of the affirmative endorsements required above.
4.2.5 OPINIONS OF COUNSEL; DIRECTION FOR DELIVERY. FINOVA shall have
received an opinion dated the Closing Date from Pryor Cashman Sherman &
Flynn LLP, counsel to the Obligors, and any other law firm representing
Obligors, addressed to FINOVA, in such form and covering such matters as
FINOVA may require.
4.2.6 FINANCIAL STATEMENTS; INSPECTION. FINOVA shall have received
the financial statements described in EXHIBIT 5.7. Borrower shall have
provided FINOVA with an opportunity for representatives of FINOVA to visit
and inspect its offices and properties.
4.3 CONDITIONS OF DISBURSEMENT OF THE TRANCHE D LOAN. The obligation of
FINOVA to disburse the Tranche D Loan shall be subject to the satisfaction or
waiver of all of the following conditions on or before the Tranche D Closing
Date in a manner, form and substance reasonably satisfactory to FINOVA:
4.3.1 PRELIMINARY DELIVERIES. FINOVA shall have received not less
than 20 days prior to the proposed Tranche D Closing Date an information
package with respect to the Tranche D Acquisition, including a description
of the operations history and relevant market information with respect to
the Stores to be acquired with the proceeds of such the Tranche D Loan and
a discussion of competition and information regarding key personnel with
respect to such Stores and a statement as to the amount of the Tranche D
Loan to be requested in connection with the Tranche D Acquisition.
4.3.2 CONSUMMATION OF TRANCHE D ACQUISITION. Prior to or
concurrently with the Tranche D Closing, FINOVA shall have received
evidence that (i) the Tranche D Acquisition has
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been consummated in accordance with the terms of the Tranche D Acquisition
Instruments and (ii) concurrently with the consummation of the Tranche D
Acquisition Borrower will acquire good and marketable title to all of the
Stores being purchased pursuant to the Tranche D Acquisition Instruments,
free and clear of all Liens and Indebtedness, except for Permitted Liens.
4.3.3 APPRAISALS. FINOVA shall have received from the Accountants
appraisals of the Tranche D Stores, in each case in form and substance
satisfactory to FINOVA, showing an aggregate business value of the Tranche
D Stores of not less than $5,333,334.
4.3.4 STORE FIXED CHARGE COVERAGE. Borrower shall demonstrate to the
satisfaction of FINOVA that the ratio of the Store Cash Flow of the
Tranche D Stores for the twelve month period ending closest to the Tranche
D Closing Date to the sum of Store Fixed Charges of such Stores for such
twelve month period plus the projected FINOVA Debt Service on the
Allocated Loan Amount for such Stores for the twelve month period
following the Tranche D Closing Date is not less than 1.25:1.00.
4.3.5 TRANCHE D NOTICE OF BORROWING. FINOVA shall have received the
Tranche D Notice of Borrowing from Borrower not later than 10:00 a.m.
Paramus, New Jersey at least five days prior to the proposed Tranche D
Closing Date.
4.3.6 TRANCHE D PAYMENT SCHEDULE. Borrower shall have executed and
returned to FINOVA the Tranche D Payment Schedule delivered by FINOVA to
Borrower.
4.3.7 DELIVERY OF DOCUMENTS. The following shall have been delivered
to FINOVA, each duly authorized and executed, where applicable, and in
form and substance reasonably satisfactory to FINOVA:
(a) the Tranche D Assignment of Acquisition Instruments;
(b) any amendments to the Loan Instruments and any security
agreements, security instruments, UCC Financing Statements and other
agreements reasonably required by FINOVA to grant to FINOVA a
perfected first Lien, subject in priority only to Permitted Prior
Liens, on each Tranche D Store and, at the option of Borrower,
Leasehold Mortgages encumbering the Leases of the Tranche D Stores;
(c) good standing certificates for Borrower from each State in
which the Tranche D Stores are located, each dated a recent date
prior to the Tranche D Closing Date;
(d) a certificate of the secretary of each Obligor, certifying
to FINOVA that the articles of incorporation and by-laws of such
Obligor have not been amended since the date such Obligor most
recently delivered a copy of such articles of incorporation and
by-laws to FINOVA.
(e) certified copies or executed originals of each of the
following:
(1) the Tranche D Acquisition Instruments;
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(1) the Franchise Agreements for each of the Tranche D
Stores as in effect on the Tranche D Closing Date;
(2) the Collateral Store Leases for each of the Tranche
D Stores as in effect on the Tranche D Closing Date; and
(3) the certificate of occupancy for each of the Tranche
D Stores, to the extent available, or other evidence that each
such Tranche D Store is operating in compliance with
applicable law; and
(f) a Landlord's Waiver from the Landlord under each Lease of
the Tranche D Stores; and
(g) such other instruments, documents, certificates, consents,
waivers and opinions as FINOVA reasonably may request.
4.3.8 TITLE INSURANCE; SURVEY. If Borrower has elected to deliver to
FINOVA Leasehold Mortgages encumbering the Leases of the Tranche D Stores
in favor of FINOVA, FINOVA shall have received a mortgagee's policy of
title insurance in favor of FINOVA with respect to each parcel of
Leasehold Property demised under such Leases, issued by a title company
and in an amount satisfactory to FINOVA, showing that Borrower has valid
leasehold estate under each such Lease of the applicable parcel of
Leasehold Property and insuring that the Leasehold Mortgage encumbering
such Lease constitutes a valid Lien on Borrower's right, title and
interest in, to and under such Lease, subject only to Permitted Liens and
subject in priority only to Permitted Prior Liens. Each such policy shall
insure over all survey and other general exceptions contained therein and
shall include such affirmative endorsements as reasonably may be required
by FINOVA and as are available in the applicable jurisdiction, including,
without limitation, comprehensive endorsement no. 1, contiguity (if
applicable), usury (if available), doing business, variable rate, tie-in,
restrictions (where applicable), encroachment (where applicable), 3.1
zoning (including parking) at the reasonable request of FINOVA (if
available), last dollar, tax parcel, survey, location, access and future
advances. FINOVA shall have received (i) copies of and found reasonably
satisfactory the provisions of each document referred to in each such
policy, (ii) received evidence that all premiums with respect to such
title insurance have been paid by Borrower and (iii) a recent "as-built"
survey of each such parcel of Leasehold Property, certified to FINOVA, the
title insurer and Borrower, containing a flood plain certification, and
showing no matters or exceptions which are not Permitted Liens and
otherwise in sufficient detail as to permit the elimination of any survey
exceptions to the title policies described above and the issuance of the
affirmative endorsements required above.
4.4 CONDITIONS OF DISBURSEMENT OF ADVANCES OF THE TRANCHE E LOAN. The
obligation of FINOVA to disburse Advances of the Tranche E Loan shall be subject
to the satisfaction or waiver of all of the following conditions on or before
the applicable Funding Date in a manner, form and substance reasonably
satisfactory to FINOVA:
4.4.1 DESIGNATION OF TRANCHE E STORE. Borrower shall have designated
the Store(s) to be included in the Tranche E Collateral in connection with
such Advance.
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4.4.2 APPRAISALS AND EVIDENCE OF FINANCEABLE COSTS. FINOVA shall
have received, for each Tranche E Store designated to be included in the
Tranche E Collateral in connection with such Advance, (i) such evidence of
the Financeable Costs of each Store developed by Borrower as FINOVA
reasonably may request and (ii) appraisals from the Accountants of each
Tranche E Store acquired but not developed by Borrower.
4.4.3 AMOUNT OF ADVANCE. The requested Advance shall be (i) in a
minimum amount of $500,000 and integral multiples of $100,000 in excess
thereof and (ii) in a maximum amount not in excess of the (A) the
aggregate amount of the Financeable Costs for all Stores developed by
Borrower and designated to be included in the Tranche E Collateral in
connection with such Advance PLUS 75% of the appraised value of each Store
acquired by Borrower and designated to be included in the Tranche E
Collateral in connection with such Advance and (B) $1,000,000 per each
such Store.
4.4.4 STORE FIXED CHARGE COVERAGE. Borrower shall demonstrate to the
satisfaction of FINOVA that the ratio of the Store Cash Flow of the
designated Stores for the twelve month period ending closest to the
applicable Funding Date to the sum of Store Fixed Charges of such Stores
for such twelve month period plus the projected FINOVA Debt Service on the
Allocated Loan Amount for such Stores for the twelve month period
following the Funding Date of such Advance is not less than 1.25:1.00.
4.4.5 TRANCHE E NOTICE OF BORROWING. FINOVA shall have received a
Tranche E Notice of Borrowing from Borrower not later than 10:00 a.m.
Paramus, New Jersey at least five days prior to the proposed Funding Date
of such Advance.
4.4.6 TRANCHE E PAYMENT SCHEDULE. Borrower shall have executed and
returned to FINOVA the Tranche E Payment Schedule delivered by FINOVA to
Borrower in connection with such Advance.
4.4.7 DELIVERY OF DOCUMENTS. The following shall have been delivered
to FINOVA, each duly authorized and executed, where applicable, and in
form and substance reasonably satisfactory to FINOVA:
(a) a Leasehold Mortgage encumbering the Lease(s) of the
designated Store(s) and any amendments to the Loan Instruments and
any security agreements, security instruments, UCC Financing
Statements and other agreements reasonably required by FINOVA to
grant to FINOVA a perfected first Lien, subject in priority only to
Permitted Prior Liens, on each Tranche E Store;
(b) good standing certificates for Borrower from each State in
which the Tranche E Stores are located, each dated a recent date
prior to the applicable Funding Date;
(c) a certificate of the secretary of each Obligor, certifying
to FINOVA that the articles of incorporation and by-laws of such
Obligor have not been amended since the date such Obligor most
recently delivered a copy of such articles of incorporation and
by-laws to FINOVA.
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(d) certified copies or executed originals of each of the
following:
(1) the Franchise Agreements for each of the Tranche E
Stores not previously delivered to FINOVA as in effect on the
applicable Funding Date;
(2) the Collateral Store Leases for each of the Tranche
E Stores not previously delivered to FINOVA as in effect on
the applicable Funding Date;
(3) the certificate of occupancy for each of the Tranche
E Stores not previously delivered to FINOVA as in effect on
the applicable Funding Date, to the extent available, or other
evidence that each such Tranche E Store is operating in
compliance with applicable law; and
(e) a Landlord's Waiver from the Landlord under each Lease of
the Tranche E Stores; and
(f) such other instruments, documents, certificates, consents,
waivers and opinions as FINOVA reasonably may request.
4.4.8 TITLE INSURANCE; SURVEY. FINOVA shall have received a
mortgagee's policy of title insurance in favor of FINOVA with respect to
each parcel of Leasehold Property demised under the Lease of the
designated Store(s), issued by a title company and in an amount
satisfactory to FINOVA, showing that Borrower has valid leasehold estate
under the Lease of such parcel of Leasehold Property and insuring that the
Leasehold Mortgage encumbering such Lease constitutes a valid Lien on
Borrower's right, title and interest in, to and under such Lease, subject
only to Permitted Liens and subject in priority only to Permitted Prior
Liens. Each such policy shall insure over all survey and other general
exceptions contained therein and shall include such affirmative
endorsements as reasonably may be required by FINOVA and as are available
in the applicable jurisdiction, including, without limitation,
comprehensive endorsement no. 1, contiguity (if applicable), usury (if
available), doing business, variable rate, tie-in, restrictions (where
applicable), encroachment (where applicable), 3.1 zoning (including
parking) at the reasonable request of FINOVA (if available), last dollar,
tax parcel, survey, location, access and future advances. FINOVA shall
have received (i) copies of and found reasonably satisfactory the
provisions of each document referred to in each such policy, (ii) received
evidence that all premiums with respect to such title insurance have been
paid by Borrower and (iii) a recent "as-built" survey of each such parcel
of Leasehold Property, certified to FINOVA, the title insurer and
Borrower, containing a flood plain certification, and showing no matters
or exceptions which are not Permitted Liens and otherwise in sufficient
detail as to permit the elimination of any survey exceptions to the title
policies described above and the issuance of the affirmative endorsements
required above.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to FINOVA as follows:
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5.1 EXISTENCE AND POWER. Each Obligor is a corporation, duly formed,
validly existing and in good standing under the laws of the State of its
incorporation. Each Obligor is duly authorized to transact business in each
other State where such Obligor conducts business and has all requisite power and
authority to own its Property and to carry on its business as now conducted and
as proposed to be conducted.
5.2 AUTHORITY. Each Obligor has full power and authority to enter into,
execute, deliver and carry out the terms of the Loan Instruments to which it is
a party and to incur the obligations provided for therein, all of which have
been duly authorized by all proper and necessary action and are not prohibited
by its articles of incorporation, by-laws or other organizational instruments of
such Obligor.
5.3 BORROWER CAPITAL STOCK AND RELATED MATTERS.
5.3.1 BORROWER CAPITAL STOCK. As of the Closing Date, there is set
forth in EXHIBIT 5.3.1 a complete description of the Borrower Capital
Stock, all of which is validly issued, fully paid and non-assessable, and
has been issued and sold in compliance with all applicable federal and
state laws, rules and regulations, including, without limitation, all so-
called "Blue-Sky" laws. The Borrower Capital Stock is owned beneficially
and of record by Guarantor, free and clear of all Liens. Borrower has no
subsidiaries.
5.3.2 RESTRICTIONS. No Obligor (i) is a party to or has knowledge of
any agreements restricting the transfer of the Borrower Capital Stock,
except the Loan Instruments, (ii) has issued any rights which can be
convertible into or exchangeable or exercisable for any of the Borrower
Capital Stock, or any rights to subscribe for or to purchase, or any
options for the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to, any of the Borrower Capital Stock or any securities
convertible into or exchangeable or exercisable for any of the Borrower
Capital Stock and (iii) is not subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any of the
Borrower Capital Stock or any convertible rights or options.
5.4 BINDING AGREEMENTS. This Loan Agreement and the other Loan
Instruments, when executed and delivered, will constitute the valid and legally
binding obligations of each Obligor to the extent such Obligor is a party
thereto, enforceable against such Obligor in accordance with their respective
terms, except as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect affecting the enforcement of creditors' rights generally and
(ii) equitable principles (whether or not any action to enforce such document is
brought at law or in equity).
5.5 BUSINESS AND PROPERTY; COLLATERAL STORES.
5.5.1 BUSINESS AND PROPERTY. Borrower owns all Property and hold all
Collateral Store Leases, Licenses, Franchise Agreements and Operating
Agreements necessary to conduct its business as now conducted. Borrower
does not engage or propose to engage in any business or activity other
than the Restaurant Business.
5.5.2 COLLATERAL STORES; OTHER LOCATIONS. There is set forth in
EXHIBIT 5.5.2 (i) a complete and accurate address of each Collateral
Store, (ii) the chief executive office of each Obligor
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and (iii) all other locations where any books and records of Borrower
pertaining to the Collateral Stores are located.
5.5.3 COLLATERAL STORE LEASES. There is set forth in EXHIBIT 5.5.3 a
description of each Collateral Store Lease, including the name and address
of the landlord thereunder, the commencement and expiration dates thereof
and a description of all renewal or extension options with respect
thereto. Each such Collateral Store Lease is in full force and effect,
there has been no material default in the performance of any of its terms
or conditions by Borrower, or, to the best of Borrower's knowledge, any
other party thereto, and no claims of default have been asserted with
respect thereto. The present and contemplated use of the Leasehold
Property which is the subject of such Collateral Store Lease is in
compliance in all material respects with all applicable zoning ordinances
and regulations and other laws and regulations.
5.5.4 LICENSES AND FRANCHISE AGREEMENTS. All Licenses and Franchise
Agreements which have been issued or assigned to Borrower are in full
force and effect and have been duly issued in the name of, or validly
assigned to, Borrower, no default or breach exists thereunder and Borrower
has full power and authority thereunder to conduct its Restaurant Business
with respect to the Collateral Stores. Borrower is the licensee of all
Licenses and Franchise Agreements necessary for the operation of the
Collateral Stores.
5.5.5 OPERATING AGREEMENTS. There is set forth in EXHIBIT 5.5.5 a
description of all material Operating Agreements with respect to the
Collateral Stores. All of such Operating Agreements are in full force and
effect and no event has occurred which could result in the cancellation or
termination of any such Operating Agreement or the imposition thereunder
of any liability upon Borrower which is reasonably likely to have a
Material Adverse Effect.
5.5.6 REAL ESTATE. No Collateral Store is located upon any Real
Estate.
5.5.7 OPERATION AND MAINTENANCE OF EQUIPMENT. No equipment owned or
operated by Borrower which is necessary for the operation of any
Collateral Store has been used, operated or maintained in a manner which
now or hereafter could result in the cancellation or termination of the
right of Borrower to use or make use of the same or which could result in
any material liability of Borrower for damages in connection therewith.
All of the equipment and other tangible personal property owned by
Borrower used in the operation of the Collateral Stores is, in all
material respects, in good operating condition and repair (subject to
normal wear and tear) and has been used, operated and maintained in
substantial compliance with all material applicable laws, rules and
regulations.
5.5.8 TITLE TO PROPERTY; LIENS. Each Obligor has (i) good and
marketable title to all of its Property used or useful in connection with
the operation of the Collateral Stores, except (A) any License or
Franchise Agreement which cannot be transferred without the consent of the
applicable Governmental Body or Franchisor and (B) the portion thereof
consisting of a leasehold estate and (ii) a valid leasehold estate in each
portion of its Property which consists of a leasehold estate. All of such
Property is free and clear of all Liens, except Permitted Liens. Upon the
proper filing with the appropriate Governmental Bodies of appropriate
Uniform Commercial Code financing statements, the applicable Loan
Instruments will create valid and perfected Liens in the Property
described therein, subject only to Permitted Liens, and subject in
priority only to Permitted Prior Liens.
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5.6 INDEBTEDNESS FOR BORROWED MONEY. There is set forth in EXHIBIT 5.6 a
description of all Indebtedness for Borrowed Money of Borrower existing as of
the Closing Date (other than the Indebtedness to be Refinanced), including the
principal amount thereof and the interest rate, amortization schedule and
maturity date applicable thereto.
5.7 FINANCIAL STATEMENTS. Borrower has delivered to FINOVA the financial
statements described in EXHIBIT 5.7 pertaining to the operations of the
Obligors. Such financial statements present fairly in all material respects the
results of operations of the Obligors for the periods covered thereby and the
financial condition of the Obligors as of the dates indicated therein. All of
such financial statements have been prepared in conformity with GAAP. Since
October 2, 1999, there has been no change which has had a Material Adverse
Effect. Borrower also has delivered to FINOVA a pro-forma balance sheet as of
the Closing Date. Such pro-forma balance sheet, which assumes the consummation
of the transactions contemplated by the Loan Instruments, presents fairly in all
material respects the anticipated financial condition of Borrower as of the
Closing Date.
5.8 LITIGATION. There are no actions, suits, arbitration proceedings and
claims pending or, to the best knowledge of Borrower, threatened against any
Obligor or maintained by any Obligor at law or in equity or before any
Governmental Body, which could reasonably be expected to be adversely determined
could have a Material Adverse Effect if adversely determined.
5.9 DEFAULTS IN OTHER AGREEMENTS; CONSENTS; CONFLICTING AGREEMENTS. No
Obligor is in default under any agreement to which it is a party or by which it
or any of its Property is bound, the effect of which default could have a
Material Adverse Effect. No authorization, consent, approval or other action by,
and no notice to or filing with, any Governmental Body or any other Person which
has not already been obtained, taken or filed, as applicable, is required (i)
for the due execution, delivery or performance by any Obligor of any of the Loan
Instruments to which it is a party or (ii) as a condition to the validity or
enforceability of any of the Loan Instruments to which it is a party or any of
the transactions contemplated thereby or the priority of the Security Interests,
except for certain filings to establish and perfect the Security Interests. No
provision of any mortgage, indenture, contract, agreement, statute, rule,
regulation, judgment, decree or order binding on any Obligor or affecting its
Property conflicts with, or requires any consent which has not already been
obtained under, or would in any way prevent the execution, delivery or
performance of the terms of any of the Loan Instruments or affect the validity
or priority of the Security Interests. The execution, delivery and performance
of the terms of the Loan Instruments will not constitute a default under, or
result in the creation or imposition of, or obligation to create, any Lien upon
the Property of any Obligor pursuant to the terms of any such mortgage,
indenture, contract or agreement.
5.10 TAXES. Each Obligor has filed all tax returns required to be filed,
and has paid, or made adequate provision for the payment of, all taxes shown to
be due and payable on such returns or in any assessments made against it, and no
tax liens have been filed except for tax liens which are (i) not delinquent or
(ii) being contested diligently and in good faith by appropriate proceedings,
and as to which Borrower has set aside reserves on its books which are
satisfactory to FINOVA and, to the best knowledge of Borrower, no claims are
being asserted in respect of such taxes which are required by GAAP to be
reflected in the financial statements of such Obligor and are not so reflected
therein. The charges, accruals and reserves on the books of each Obligor with
respect to all federal, state, local and other taxes are considered by the
management of Borrower to be adequate, and Borrower does not know of any unpaid
assessment which is or might be due and payable by any Obligor or create a Lien
against such Obligor's Property, except such
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assessments as are being contested in good faith and by appropriate proceedings
diligently conducted, and for which adequate reserves have been set aside in
accordance with GAAP. Borrower has not received written notice that any of its
tax returns are under audit or that it is the subject or target of any
investigation by the Internal Revenue Service.
5.11 COMPLIANCE WITH APPLICABLE LAWS. No Obligor is in default in respect
of any judgment, order, writ, injunction, decree or decision of any Governmental
Body, which default could have a Material Adverse Effect. Each Obligor is in
compliance in all material respects with all applicable statutes and
regulations, including, without limitation, all Environmental Laws, ERISA, ADA
and all laws and regulations relating to unfair labor practices, equal
employment opportunity and employee safety, of all Governmental Bodies. No
condemnation, eminent domain or expropriation has been commenced or, to the best
knowledge of Borrower, threatened against the Property which any Obligor owns or
will own upon the Closing, which condemnation, eminent domain or expropriation
is reasonably likely to have a Material Adverse Effect.
5.12 PATENTS, TRADEMARKS, FRANCHISES, AGREEMENTS. Each Obligor owns,
possesses or has the right to use all patents, trademarks, service marks, trade
names, copyrights, franchises and rights with respect thereto which are
necessary for the conduct of its business, the failure to own, possess or have
the right to use could have a Material Adverse Effect, without any known
conflict with the rights of others.
5.13 REGULATORY MATTERS. Each Obligor (i) has duly and timely filed all
reports and other filings which are required to be filed by Borrower under any
applicable law, rule or regulation of any Governmental Body, the non-filing of
which could have a Material Adverse Effect, and (ii) is in compliance with all
such laws, rules and regulations, the noncompliance with which could have a
Material Adverse Effect.
5.14 ENVIRONMENTAL MATTERS. Each Obligor is in compliance in all respects
with all applicable Environmental Laws the failure to comply with which is
reasonably likely to have a Material Adverse Effect and, to the best knowledge
of Borrower, no portion of any Real Estate or Leasehold Property has been used
as a land fill. There currently are not any known Hazardous Materials generated,
manufactured, released, stored, buried or deposited over, beneath, in or on (or
used in the construction and/or renovation of) the Real Estate or Leasehold
Property in violation of applicable Environmental Laws.
5.15 APPLICATION OF CERTAIN LAWS AND REGULATIONS. Borrower is not and
no Affiliate of Borrower is:
5.15.1 INVESTMENT COMPANY ACT. An "investment company," or a company
"controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
5.15.2 HOLDING COMPANY ACT. A "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding company"
or of a "subsidiary company" of a "holding company," as such terms are
defined in the Public Utility Holding Company Act of 1935, as amended.
5.15.3 FOREIGN OR ENEMY STATUS. (i) An "enemy" or an "ally of an
enemy" within the meaning of Section 2 of the Trading with the Enemy Act,
(ii) a "national" of a foreign country designated in Executive Order No.
8389, as amended, or of any "designated enemy country" as defined in
Executive Order No. 9095, as amended, of the President of the United
States of America,
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in each case within the meaning of such Executive Orders, as amended, or
of any regulation issued thereunder, (iii) a "national of any designated
foreign country" within the meaning of the Foreign Assets Control
Regulations or the Cuban Assets Control Regulations of the United States
of America (Code of Federal Regulations, Title 31, Chapter V, Part 515,
Subpart B, as amended) or (iv) an alien or a representative of any alien
or foreign government within the meaning of Section 310 of Title 47 of the
United States Code.
5.15.4 REGULATIONS AS TO BORROWING. Subject to any statute or
regulation which regulates the incurrence of any Indebtedness for Borrowed
Money, including, without limitation, statutes or regulations relative to
common or interstate carriers or to the sale of electricity, gas, steam,
water, telephone, telegraph or other public utility services.
5.16 MARGIN REGULATIONS. None of the transactions contemplated by this
Loan Agreement or any of the other Loan Instruments, including the use of the
proceeds of the Loans, will violate or result in a violation of Section 7 of the
Securities Exchange Act of 1934, as amended, or any regulations issued pursuant
thereto, including, without limitation, Regulations T, U and X, and Borrower
will not purchase any "margin stock" within the meaning of Regulation U with the
proceeds of the Loans.
5.17 NO MISREPRESENTATION. Neither this Loan Agreement nor any other Loan
Instrument, certificate or financial statement furnished or to be furnished by
or on behalf of any Obligor to FINOVA in connection with any of the transactions
contemplated hereby or thereby, contains or will contain a misstatement of
material fact, or omits or will omit to state a material fact required to be
stated in order to make the statements contained herein or therein, taken as a
whole, not misleading in the light of the circumstances under which such
statements were made. There is no fact, other than information known to the
public generally, known to Borrower after diligent inquiry, that could have a
Material Adverse Effect that has not expressly been disclosed to FINOVA in
writing.
5.18 EMPLOYEE BENEFIT PLANS.
5.18.1 ERISA AND CODE COMPLIANCE AND LIABILITY. Borrower and each
ERISA Affiliate are in compliance with all applicable provisions of ERISA
and the regulations and published interpretations thereunder with respect
to all Employee Benefit Plans except where failure to comply would not
result in a material liability to Borrower and except for any required
amendments for which the remedial amendment period as defined in Section
401(b) of the Code has not yet expired. Each Employee Benefit Plan that is
intended to be qualified under Section 401(a) of the Code has been
determined by the Internal Revenue Service to be so qualified, and each
trust related to such plan has been determined to be exempt under Section
401(a) of the Code. No material liability has been incurred by Borrower or
any ERISA Affiliate which remains unsatisfied for any taxes or penalties
with respect to any Employee Benefit Plan or any Multiemployer Plan.
5.18.2 FUNDING. No Pension Plan has been terminated, nor has any
accumulated funding deficiency (as defined in Section 412 of the Code)
been insured (without regard to any waiver granted under Section 412 of
the Code), nor has any funding waiver from the Internal Revenue Service
been received or requested with respect to any Pension Plan, nor has
Borrower or any ERISA Affiliate failed to make any contributions or to pay
any amounts due and owing as required by Section 412 of the Code, Section
302 of ERISA or the terms of any Pension Plan prior to the due dates of
such contributions under Section 412 of the Code or Section 302 of ERISA,
nor has there
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been any event requiring any disclosure under Section 4041(c)(3)(C),
4063(a) or 4068 of ERISA with respect to any Pension Plan.
5.18.3 PROHIBITED TRANSACTIONS AND PAYMENTS. Neither Borrower nor
any ERISA Affiliate has: (i) engaged in a nonexempt "prohibited
transaction" as such term is defined in Section 406 of ERISA or Section
4975 of the Code; (ii) incurred any liability to the PBGC which remains
outstanding other than the payment of premiums and there are no premium
payments which are due and unpaid; (iii) failed to make a required
contribution or payment to a Multiemployer Plan; or (iv) failed to make a
required installment or other required payment under Section 412 of the
Code.
5.18.4 NO TERMINATION EVENT. No Termination Event has occurred or is
reasonably expected to occur.
5.18.5 ERISA LITIGATION. No material proceeding, claim, lawsuit
and/or investigation is existing or, to the best knowledge of Borrower,
threatened concerning or involving any (i) employee welfare benefit plan
(as defined in Section 3(1) of ERISA) currently maintained or contributed
to by Borrower or any ERISA Affiliate, (ii) Pension Plan or (iii)
Multiemployer Plan.
5.19 EMPLOYEE MATTERS.
5.19.1 COLLECTIVE BARGAINING AGREEMENTS; GRIEVANCES. As of the
Closing Date and except as set forth in EXHIBIT 5.19.1, (i) none of the
employees of Borrower is subject to any collective bargaining agreement
with Borrower, (ii) no petition for certification or union election is
pending with respect to the employees of Borrower and no union or
collective bargaining unit has sought such certification or recognition
with respect to the employees of Borrower and (iii) there are no strikes,
slowdowns, work stoppages, unfair labor practice complaints, grievances,
arbitration proceedings or controversies pending or, to the best knowledge
of Borrower, threatened against Borrower by any of Borrower's employees,
other than employee grievances or controversies arising in the ordinary
course of business that could not in the aggregate be expected to have a
Material Adverse Effect.
5.19.2 CLAIMS RELATING TO EMPLOYMENT. Neither Borrower nor, to
Borrower's best knowledge, any employee of Borrower, is subject to any
employment agreement or non-competition agreement with any former employer
or any other Person which agreement would have a Material Adverse Effect
due to (i) any information which Borrower would be prohibited from using
under the terms of such agreement or (ii) any legal considerations
relating to unfair competition, trade secrets or proprietary information.
5.20 BURDENSOME OBLIGATIONS. After giving effect to the transactions
contemplated by the Loan Instruments (i) no Obligor (A) will be a party to or be
bound by any franchise, agreement, deed, lease or other instrument, or be
subject to any restriction, which is so unusual or burdensome so as to cause, in
the foreseeable future, a Material Adverse Effect and (B) intends to incur, or
believes that it will incur, debts beyond its ability to pay such debts as they
become due, and (ii) each Obligor (A) owns and will own Property, the fair
saleable value of which is (I) greater than the total amount of its liabilities
(including contingent liabilities) and (II) greater than the amount that will be
required to pay the probable liabilities of its then existing debts as they
become absolute and matured, and (B) has and will have capital that is not
unreasonably small in relation to its business as presently conducted and as
proposed to be conducted.
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Borrower does not presently anticipate that future expenditures needed to meet
the provisions of federal or state statutes, orders, rules or regulations will
be so burdensome so as to have a Material Adverse Effect.
5.21 BROKER FEES. The services of a broker or other similar agent have not
been used in connection with the Loans.
ARTICLE VI
AFFIRMATIVE COVENANTS
Until all of Borrower's Obligations are paid and performed in full
Borrower agrees that it will:
6.1 LEGAL EXISTENCE; GOOD STANDING. Maintain its existence and its good
standing in the jurisdiction of its formation and its qualification in each
jurisdiction in which the failure so to qualify could have a Material Adverse
Effect, and in any event in each jurisdiction in which any Store is operated by
it.
6.2 INSPECTION. Permit representatives of FINOVA at any reasonable time
during normal business hours and upon reasonable notice, provided, however, that
if an Event of Default or Incipient Default exists, the following activities may
be conducted at any time and without notice, to (i) visit its offices, (ii)
examine its books and records and Accountants' reports relating thereto, (iii)
make copies or extracts therefrom, (iv) discuss its affairs with its employees,
(v) examine and inspect the Collateral and (vi) meet and discuss its affairs
with the Accountants, and such Accountants, as a condition to their retention by
Borrower, are hereby irrevocably authorized by Borrower to fully discuss and
disclose all such affairs with FINOVA. If no Event of Default or Incipient
Default exists, FINOVA shall not conduct any such inspections more than four
times per calendar year.
6.3 FINANCIAL STATEMENTS AND OTHER INFORMATION. Maintain a standard system
of accounting in accordance with GAAP and furnish to FINOVA:
6.3.1 QUARTERLY STATEMENTS. As soon as available and in any event
within 45 days after the close of each of the first three quarters of each
year:
(a) a copy of the balance sheet of Borrower as of the end
of such quarter, and
(b) statements of operations and Borrower Cash Flow of
Borrower for such quarter and for the period from the beginning of
the then current year to the end of such quarter, setting forth in
each case in comparative form the corresponding figures for the
corresponding period in the preceding year,
all in reasonable detail, containing such information as FINOVA reasonably
may require, and certified by the chief financial officer of Borrower as
complete and correct, subject to normal year-end adjustments.
6.3.2 ANNUAL STATEMENTS. As soon as available and in any event
within 120 days after the close of each year:
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(a) the balance sheet of Guarantor as of the end of such year
and the statements of operations, cash flows, shareholders' equity
of Guarantor for such year (collectively, the "Basic Financial
Statements"), the balance sheet of Borrower as of the end of such
year and the statements of operations and Borrower Cash Flow for
Borrower for such year, setting forth in each case in comparative
form the corresponding figures for the preceding year, and
(b) an opinion of the Accountants which shall accompany the
Basic Financial Statements which opinion shall be unqualified as to
going concern and scope of audit, stating that (i) the examination
by the Accountants in connection with such Basic Financial
Statements has been made in accordance with generally accepted
auditing standards, (ii) such Basic Financial Statements have been
prepared in conformity with GAAP and in a manner consistent with
prior periods, and (iii) such Basic Financial Statements fairly
present in all material respects the financial position and results
of operations of each Obligor.
6.3.3 COMPLIANCE CERTIFICATE. The financial statements described in
subsection 6.3.1 and in subsection 6.3.2 shall be accompanied by a
Compliance Certificate.
6.3.4 AUDIT REPORTS. Promptly upon receipt thereof, a copy of each
report, other than the reports referred to in subsection 6.3.2, including
any so-called "Management Letter" or similar report, submitted to any
Obligor by the Accountants in connection with any annual, interim or
special audit made by the Accountants of the books of such Obligor.
6.3.5 NOTICE OF DEFAULTS; LOSS. Prompt written notice if: (i) any
Indebtedness of any Obligor in the aggregate principal amount in excess of
$1,000,000 is declared or shall become due and payable prior to its
declared or stated maturity, or called and not paid when due, (ii) an
event has occurred that enables the holder of any note, or other evidence
of such Indebtedness, certificate or security evidencing any such
Indebtedness of any Obligor to declare such Indebtedness due and payable
prior to its stated maturity, (iii) there shall occur and be continuing an
Event of Default, accompanied by a statement of setting forth what action
Borrower proposes to take in respect thereof, or (iv) any event shall
occur which has a Material Adverse Effect, including the amount or the
estimated amount of any loss or adverse effect.
6.3.6 NOTICE OF SUITS; ADVERSE EVENTS. Prompt written notice of: (i)
any citation, summons, subpoena, order to show cause or other order naming
any Obligor a party to any proceeding before any Governmental Body which
is reasonably likely to have a Material Adverse Effect, including with
such notice a copy of such citation, summons, subpoena, order to show
cause or other order, (ii) any lapse or other termination of any license,
permit, franchise, agreement or other authorization issued to Borrower by
any Governmental Body or any other Person that is material to the
operation of the business of Borrower, (iii) any refusal by any
Governmental Body or any other Person to renew or extend any such license,
permit, franchise, agreement or other authorization and (iv) any dispute
between Borrower and any Governmental Body or any other Person, which
lapse, termination, refusal or dispute referred to in clauses (ii) and
(iii) above or in this clause (iv) could have a Material Adverse Effect.
6.3.7 REPORTS TO SHAREHOLDERS, CREDITORS AND GOVERNMENTAL BODIES.
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(a) Promptly upon becoming available, copies of all financial
statements, reports, notices and other statements sent or made
available generally by any Obligor to its shareholders, of all
regular and periodic reports and all registration statements and
prospectuses filed by any Obligor with any securities exchange or
with the Securities and Exchange Commission or any Governmental Body
succeeding to any of its functions, and of all statements generally
made available by any Obligor or others concerning material
developments in the business of such Obligor.
(b) Promptly upon becoming available, copies of any periodic
or special reports filed by any Obligor with any Governmental Body
or Person, if such reports indicate any material adverse change in
the business, operations, affairs or condition of such Obligor, or
if copies thereof are requested by FINOVA, and copies of any
material notices and other communications from any Governmental Body
or Person which specifically relate to any Obligor.
6.3.8 ERISA NOTICES AND REQUESTS.
(a) With reasonable promptness, and in any event within 30
days after occurrence of any of the following, notice and/or copies
of: (i) the establishment of any new Employee Benefit Plan, Pension
Plan or Multiemployer Plan; (ii) the commencement of contributions
to any Employee Benefit Plan, Pension Plan or Multiemployer Plan to
which Borrower or any of its ERISA Affiliates was not previously
contributing or any increase in the benefits of any existing
Employee Benefit Plan, Pension Plan or Multiemployer Plan; (iii)
each funding waiver request filed with respect to any Employee
Benefit Plan and all communications received or sent by Borrower or
any ERISA Affiliate with respect to such request; and (iv) the
failure of Borrower or any of its ERISA Affiliates to make a
required installment or payment under Section 302 of ERISA or
Section 412 of the Code by the due date.
(b) Promptly and in any event within 10 days of becoming aware
of the occurrence of or forthcoming occurrence of any (i)
Termination Event or (ii) "prohibited transaction," as such term is
defined in Section 406 of ERISA or Section 4975 of the Code, in
connection with any Pension Plan or any trust created thereunder, a
notice specifying the nature thereof, what action Borrower has
taken, is taking or proposes to take with respect thereto and, when
known, any action taken or threatened by the Internal Revenue
Service, the Department of Labor or the PBGC with respect thereto.
(c) With reasonable promptness but in any event within 10 days
after the occurrence of any of the following, copies of: (i) any
favorable or unfavorable determination letter from the Internal
Revenue Service regarding the qualification of an Employee Benefit
Plan under Section 401(a) of the Code; (ii) all notices received by
Borrower or any ERISA Affiliate of the PBGC's intent to terminate
any Pension Plan or to have a trustee appointed to administer any
Pension Plan; (iii) each Schedule B (Actuarial Information) to the
annual report (Form 5500 Series) filed by Borrower or any ERISA
Affiliate with the Internal Revenue Service with respect to each
Pension Plan; and (iv) all notices received by Borrower or any ERISA
Affiliate from a Multiemployer Plan sponsor concerning the
imposition or amount of withdrawal liability pursuant to Section
4202 of ERISA; and written
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notice within two Business Days of Borrower's or any ERISA
Affiliate's filing of or intention to file a notice of intent to
terminate any Pension Plan under a distress termination within the
meaning of Section 4041(c) of ERISA.
6.3.9 OTHER INFORMATION.
(a) Immediate notice of any change in the location of any
Property of Borrower located at any of the Collateral Stores, any
change in the name of Borrower, any sale or purchase of Property
located at the Collateral Stores or arising out of activities
conducted at the Collateral Stores outside the regular course of
business of Borrower or as otherwise permitted by Section 7.9, and
any change in the business or financial affairs of any Obligor,
which change could have a Material Adverse Effect.
(b) Promptly upon request therefor, such other information and
reports relating to the past, present or future financial condition,
operations, plans and projections of Borrower as FINOVA reasonably
may request from time to time.
6.4 REPORTS TO GOVERNMENTAL BODIES AND OTHER PERSONS. Timely file all
material reports, applications, documents, instruments and information required
to be filed pursuant to all rules, regulations or requests of any Governmental
Body or other Person having jurisdiction over the operation of the business of
Borrower, including, but not limited to, such of the Loan Instruments as are
required to be filed with any such Governmental Body or other Person pursuant to
applicable rules and regulations promulgated by such Governmental Body or other
Person, except where the failure to file such reports, applications, documents,
instruments and information is reasonably likely to have a Material Adverse
Effect.
6.5 MAINTENANCE OF LICENSES AND FRANCHISE AGREEMENTS. Maintain in full
force and effect at all times, and apply in a timely manner for renewal of, all
Licenses, Franchise Agreements, trademarks, tradenames and agreements necessary
for the operation of its Restaurant Business at the Collateral Stores, the loss
of any of which could have a Material Adverse Effect.
6.6 INSURANCE.
6.6.1 MAINTENANCE OF INSURANCE. (i) Maintain in full force and
effect at all times such property, casualty, business interruption and
other insurance with respect to the Collateral Stores required by FINOVA,
all of which shall be written by insurers, contain terms and be in amounts
and forms reasonably satisfactory to FINOVA (including, at a minimum (i)
comprehensive general liability insurance (including bodily injury and
property damage coverage) with a broad form endorsement and combined
single limit of at least $2,000,000 and (ii) casualty insurance against
fire and other "All Risk" perils (including, if required by FINOVA,
earthquake and flood, in the full replacement value of the Collateral
Stores), providing for deductibles of not more than $30,000 for any single
act or occurrence, with a standard mortgagee clause endorsed thereon in
favor of FINOVA which shall provide, among other things, that the policies
may not be canceled without 30 days' prior notice to FINOVA and (ii)
deliver to FINOVA, from time to time as FINOVA reasonably may request,
evidence of compliance with this subsection, provided that Borrower will
use its best efforts to provide such evidence at least 15 days prior to
the expiration date of any policy required hereunder, but in any event at
least 5 days prior to such expiration date, each bearing notations
evidencing prior payment of premiums.
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6.6.2 CLAIMS AND PROCEEDS. Borrower hereby directs all insurers
under all policies of casualty and property insurance pertaining to the
furniture, fixtures, equipment and other contents located at the
Collateral Stores required to be maintained by Borrower pursuant to
subsection 6.6.1 to pay all proceeds payable thereunder directly to FINOVA
and Borrower hereby authorizes FINOVA to collect such proceeds; provided
that so long as no Incipient Default or Event of Default exists and is
continuing any proceeds payable thereunder in an aggregate amount of
$100,000 or less may be paid directly to Borrower provided Borrower
promptly uses such proceeds to pay for the cost of repair or replacement
of the Collateral subject to the applicable loss, damage, destruction or
other casualty to at least equal value and substantially the same
character as prior to such loss, damage, destruction or other casualty.
Borrower hereby irrevocably appoints FINOVA (and all officers, employees
or agents designated by FINOVA) as Borrower's true and lawful attorney and
agent in fact for the purpose of and with power to make, settle and adjust
claims under such policies of insurance, endorse the name of Borrower on
any check, draft, instrument or other item of payment for the proceeds of
such policies of insurance, and to make all determinations and decisions
with respect to such policies of insurance. Borrower acknowledges that
such appointment of FINOVA as its attorney and agent in fact is a power
coupled with an interest and therefore is irrevocable. Borrower shall
promptly notify FINOVA of any loss, damage, destruction or other casualty
to the Collateral. Subject to the first sentence of this subsection 6.6.2,
the insurance proceeds received on account of any loss, damage,
destruction or other casualty (i) if any Incipient Default or Event of
Default exists, at the option of FINOVA shall be applied (A) as set forth
in the following clause (ii) or (B) in reduction of Borrower's Obligations
in the following order of priority: (1) first, to the payment of any and
all sums which are then due and payable pursuant to the terms of the Loan
Instruments, other than the Principal Balance and accrued and unpaid
interest thereon, (2) next, to accrued and unpaid interest on the
Principal Balance and (3) next, to the Principal Balance of the Loans in
such order as FINOVA may determine or (ii) if no Incipient Default or
Event of Default exists or if FINOVA so elects, shall be held by FINOVA
and applied to pay for the cost of repair or replacement of the Collateral
subject to such loss, damage, destruction or other casualty, in which
event such proceeds shall be made available in the manner and under such
conditions as FINOVA reasonably may require. In the event the proceeds are
to be applied to the repair or replacement of Collateral, the Collateral
shall be so repaired or replaced as to be of at least equal value and
substantially the same character as prior to such loss, damage,
destruction or other casualty.
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6.7 ENVIRONMENTAL MATTERS. At all times comply with, and be responsible
for, its obligations under all Environmental Laws applicable to the Real Estate
and Leasehold Property and any other Property owned by Borrower or used by
Borrower in the operation of the Collateral Stores. At its sole cost and
expense, Borrower shall (i) comply in all respects with (A) any notice of any
violation or administrative or judicial complaint or order having been filed
against Borrower, any portion of any Real Estate or Leasehold Property or any
other Property owned by Borrower or used by Borrower in the operation of its
business alleging violations of any law, ordinance and/or regulation requiring
Borrower to take any action in connection with the release, transportation
and/or clean-up of any Hazardous Materials, the violation of which could have a
Material Adverse Effect, and (B) any notice from any Governmental Body or any
other Person alleging that Borrower is or may be liable for costs associated
with a response or clean-up of any Hazardous Materials or any damages resulting
from such release or transportation, or (ii) diligently contest in good faith by
appropriate proceedings any demands set forth in such notices, provided (A)
reserves in an amount satisfactory to FINOVA to pay the costs associated with
complying with any such notice are established by Borrower and (B) no Lien would
or will attach to any Collateral which is the subject of any such notice as a
result of any compliance by Borrower which is delayed during any such contest.
Promptly upon receipt of any notice described in the foregoing clause (i),
Borrower shall deliver to FINOVA a copy thereof.
6.8 COMPLIANCE WITH LAWS. Comply with all federal, state and local laws,
ordinances, requirements and regulations and all judgments, orders, injunctions
and decrees applicable to Borrower and its operations, the failure to comply
with which could have a Material Adverse Effect.
6.9 TAXES AND CLAIMS. Pay and discharge all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any Collateral Store, prior to the date on which penalties attach thereto,
and all lawful claims which, if unpaid, might become a Lien (other than a
Permitted Lien) upon any Collateral Store, provided that Borrower shall not be
required by this Section 6.9 to pay any such amount if the same is being
contested diligently and in good faith by appropriate proceedings and as to
which Borrower has set aside reserves on its books satisfactory to FINOVA.
6.10 MAINTENANCE OF PROPERTIES. Maintain all of its Properties necessary
in the operation of the Collateral Stores in good working order and condition,
ordinary wear and tear excepted.
6.11 APPROVALS. Upon the exercise by FINOVA of any power, right or
privilege pursuant to the provisions of any of the Loan Instruments requiring
any consent, approval or authorization of any Governmental Body, Landlord,
Franchisor or other Person (including, without limitation, transfers of
Licenses, Collateral Store Leases and Franchise Agreements), promptly execute
and cause the execution of all applications, certificates, instruments and other
documents that FINOVA may be required to obtain for such consent, approval or
authorization.
6.12 PAYMENT OF INDEBTEDNESS. Except as to matters being contested in good
faith and by appropriate proceedings, promptly pay when due, or in conformance
with customary trade terms, all of its Indebtedness.
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ARTICLE VII
NEGATIVE COVENANTS
Until all of Borrower's Obligations are paid and performed in full,
Borrower shall not:
7.1 BORROWING. Create, incur, assume or suffer to exist any liability for
Indebtedness for Borrowed Money if the Adjusted Borrower Fixed Charge Coverage
Ratio for the twelve month period most recently ended would be less than 1.10
assuming such Indebtedness for Borrowed Money was incurred on the first day of
such period.
7.2 LIENS. Create, incur, assume or suffer to exist any Lien upon any of
the Collateral or the Collateral Store Leases, in each case whether now owned or
hereafter acquired, except Permitted Liens.
7.3 MERGER AND ACQUISITION. Consolidate with or merge with or into any
Person unless (i) Borrower is the surviving corporation and (ii) immediately
upon consummation of such consolidation or merger, Borrower would be permitted
to borrow at least $1.00 of additional Indebtedness for Borrowed Money under
Section 7.1.
7.4 CONTINGENT LIABILITIES. Assume, guarantee, endorse, contingently agree
to purchase, become liable in respect of any letter of credit, or otherwise
become liable upon the obligation of any Person, except for liabilities arising
from the endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business and except to the extent
permitted under Section 7.1.
7.5 DIVIDENDS AND DISTRIBUTIONS. Make any dividends or distributions with
respect to the Borrower Capital Stock or apply any of its Property to the
purchase, redemption or other retirement of, or set apart any sum for the
payment of, or make any other distribution by reduction of capital or otherwise
in respect of, any of the Borrower Capital Stock, if the ratio of (i) the
remainder of (A) Borrower Cash Flow for the period from the Closing Date through
the last day of the month most recently ended minus (B) the sum of (x) the
aggregate amount of all dividends, distributions and other payments referred to
above made during such period plus (y) the aggregate amount of all dividends,
distributions and other payments referred to above to be made to (ii) the
Borrower Fixed Charges for such period would be less than 1.00.
7.6 EQUIPMENT LEASES. Enter into any (i) Operating Leases after the
Closing Date pertaining to equipment or other Property located at any of the
Collateral Stores if the aggregate rent expense payable under all such Operating
Leases pertaining to any Collateral Store would exceed $5,000 in any year or
(ii) except to the extent permitted under Section 7.1, Capitalized Leases.
7.7 FUNDAMENTAL BUSINESS CHANGES. Materially change the nature of its
business or engage in any business other than the Restaurant Business and
activities incidental thereto.
7.8 FACILITY SITES. Change the locations of its chief executive office or
other Property used in the operation of the Collateral Stores unless (i) FINOVA
shall have received at least 30 days' prior written notice thereof and (ii)
Borrower shall have executed and delivered to FINOVA any documents FINOVA may
reasonably require in order to maintain the validity and priority of the
Security Interests.
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7.9 SALE OR TRANSFER OF ASSETS. Sell, lease, assign, transfer or otherwise
dispose of any of the Collateral or any of the Collateral Store Leases, except
for the sale or disposition of (i) inventory in the ordinary course of business
and (ii) obsolete, surplus or unusable items of equipment which promptly are
replaced with new items of equipment of like function and comparable value to
the unusable items of equipment when the same were new or not obsolete or
unusable, provided such replacement items of equipment shall become subject to
the Security Interests.
7.10 AMENDMENT OF CERTAIN AGREEMENTS. Amend, modify or waive any term or
provision of its articles of incorporation or by-laws or the Collateral Store
Leases or the Franchise Agreements, other than non-material amendments,
modifications or waivers that would not reasonable be expected to adversely
affect FINOVA.
7.11 FUNDAMENTAL BUSINESS CHANGES. Engage in any business other than
the Restaurant Business.
7.12 TRANSACTIONS WITH AFFILIATES. Sell, lease, assign, transfer or
otherwise dispose of any Property to any Obligor or any Affiliate of any
Obligor, lease Property, render or receive services or purchase assets from any
Obligor or any such Affiliate, or otherwise enter into any contractual
relationship with any Obligor or any Affiliate of any Obligor except to the
extent permitted by Section 7.5 or otherwise on terms and conditions no less
favorable to Borrower than could be obtained on an arm's length basis from a
third party who is not an Obligor or an Affiliate of an Obligor.
7.13 COMPLIANCE WITH ERISA.
(i) Permit the occurrence of any Termination Event which would
result in a liability to Borrower or any ERISA Affiliate in excess of
$50,000;
(ii) Permit the present value of all benefit liabilities under all
Pension Plans to exceed the current value of the assets of such Pension
Plans allocable to such benefit liabilities by more than $50,000;
(iii) Permit any accumulated funding deficiency in excess of $50,000
(as defined in Section 302 of ERISA and Section 412 of the Code) with
respect to any Pension Plan, whether or not waived;
(iv) Fail to make any contribution or payment to any Multiemployer
Plan which Borrower or any ERISA Affiliate may be required to make under
any agreement relating to such Multiemployer Plan, or any law pertaining
thereto which results in or is likely to result in a liability in excess
of $50,000;
(v) Engage, or permit Borrower or any ERISA Affiliate to engage, in
any "prohibited transaction" as such term is defined in Section 406 of
ERISA or Section 4975 of the Code for which a civil penalty pursuant to
Section 502(i) of ERISA or a tax pursuant to Section 4975 of the Code in
excess of $50,000 is imposed;
(vi) Permit the establishment of any Employee Benefit Plan providing
post-retirement welfare benefits or establish or amend any Employee
Benefit Plan which establishment or
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amendment could result in liability to Borrower or any ERISA Affiliate or
increase the obligation of Borrower or any ERISA Affiliate to a
Multiemployer Plan which liability or increase, individually or together
with all similar liabilities and increases, is material to Borrower or amu
ERISA Affiliate; or
(vii) Fail, or permit Borrower or any ERISA Affiliate to fail, to
establish, maintain and operate each Employee Benefit Plan in compliance
in all material respects with ERISA, the Code and all other applicable
laws and regulations and interpretations thereof.
7.14 BORROWER FIXED CHARGE COVERAGE RATIO. Permit the Borrower Fixed
Charge Coverage Ratio for the twelve month period ending on the last day of any
quarter commencing with the quarter ending March 30, 2000 to be less than 1.10.
ARTICLE VIII
DEFAULT AND REMEDIES
8.1 EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an Event of Default under the Loan Instruments:
8.1.1 DEFAULT IN PAYMENT. If Borrower shall fail to pay all or any
portion of Borrower's Obligations after the same become due and payable
and such failure shall continue for a period of 5 Business Days; or
8.1.2 BREACH OF COVENANTS.
(a) If Borrower shall fail to observe or perform any covenant
or agreement made by Borrower contained in Section 6.2, 6.5, 6.6,
6.8, 6.9 or in Article VII;
(b) If Borrower shall fail to observe or perform any covenant
or agreement made by Borrower contained in Section 6.1 or 6.3 and
such failure shall continue for a period of 5 Business Days; or
(c) If Borrower or Guarantor shall fail to observe or perform
any covenant or agreement (other than those referred to in
subparagraphs (a) or (b) above or specifically addressed elsewhere
in this Section 8.1) made by such Person in any of the Loan
Instruments to which such Person is a party, and such failure shall
continue for a period of 30 days.
8.1.3 BREACH OF WARRANTY. If any representation or warranty made by
or on behalf of any Obligor in or pursuant to any of the Loan Instruments
or in any instrument or document furnished in compliance with the Loan
Instruments shall prove to be false or misleading in any material respect.
8.1.4 DEFAULT UNDER OTHER INDEBTEDNESS FOR BORROWED MONEY. If any
default shall occur in respect of any issue of Indebtedness for Borrowed
Money of any Obligor (other than Borrower's Obligations) outstanding in a
principal amount of at least $1,000,000, or in respect of any agreement or
instrument relating to any such issue of Indebtedness for Borrowed Money,
and such default shall continue beyond the grace period, if any,
applicable thereto.
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8.1.5 BANKRUPTCY.
(a) If any Obligor shall (i) generally not be paying its debts
as they become due, (ii) file, or consent, by answer or otherwise,
to the filing against it of a petition for relief or reorganization
or arrangement or any other petition in bankruptcy or insolvency
under the laws of any jurisdiction, (iii) make an assignment for the
benefit of creditors, (iv) consent to the appointment of a
custodian, receiver, trustee or other officer with similar powers
for it or for any substantial part of its Property, or (v) be
adjudicated insolvent.
(b) If any Governmental Body of competent jurisdiction shall
enter an order appointing, without consent of such Obligor, a
custodian, receiver, trustee or other officer with similar powers
with respect to it or with respect to any substantial part of its
Property, or if an order for relief shall be entered in any case or
proceeding for liquidation or reorganization or otherwise to take
advantage of any bankruptcy or insolvency law of any jurisdiction,
or ordering the dissolution, winding-up or liquidation of any
Obligor or if any petition for any such relief shall be filed
against it and such petition shall not be dismissed or stayed within
90 days.
8.1.6 JUDGMENTS. If there shall be entered against Borrower one or
more judgments, awards or decrees, or orders of attachment, garnishment or
any other writ, which exceed $750,000 in the aggregate at any one time
outstanding (less the amount covered by insurance with respect to which
the insurer has assumed responsibility in writing), excluding judgments,
awards, decrees, orders or writs (i) for which there is full insurance
(subject to applicable deductibles) and with respect to which the insurer
has assumed responsibility in writing, (ii) for which there is full
indemnification (upon terms and by creditworthy indemnitors which are
satisfactory to FINOVA), (iii) which have been in force for less than the
applicable period for filing an appeal so long as execution has not been
levied thereunder (or in respect of which Borrower shall at the time in
good faith be prosecuting an appeal or proceeding for review and in
respect of which a stay of execution or appropriate appeal bond shall have
been obtained pending such appeal or review) or (iv) which have been paid
in full by Borrower, provided that (A) the aggregate of all such payments
made by Borrower prior to the payment in full of Borrower's Obligations
and the termination of this Loan Agreement shall not exceed $3,000,000
(provided that payments in the amount up to $2,000,000 may be made solely
from the proceeds of equity contributions from Guarantor and shall not be
included in the $3,000,000 described above) and (B) the payment of any
judgment, award, decree or order is reasonably likely to have a Material
Adverse Effect.
8.1.7 IMPAIRMENT OF LICENSES; OTHER AGREEMENTS. If (i) any
Governmental Body shall revoke, terminate, suspend or adversely modify any
License of Borrower, the adverse modification or non-continuation of which
could have a Material Adverse Effect, or (ii) there shall exist any
violation or default in the performance of, or a material failure to
comply with any agreement, or condition or term of any License or
Franchise Agreement, which violation, default or failure has a Material
Adverse Effect, or (iii) any Franchise Agreement or other agreement which
is necessary to the operation of the Restaurant Business of Borrower with
respect to any Collateral Store shall be revoked or terminated and not
replaced by a substitute acceptable to FINOVA within 30 days after the
date of such revocation or termination, and such revocation or termination
and non-replacement could have a Material Adverse Effect.
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8.1.8 COLLATERAL. If any material portion of the Collateral or any
Collateral Store Lease shall be seized or taken by a Governmental Body or
Person (unless in any such case either (i) the Store affected is replaced
with a Substitute Store within 60 days after such seizure or taking and
Borrower otherwise complies with the requirements of subsection 2.9.2(a)
with respect to such Substitute Store or (ii) Borrower prepays the
Principal Balance in an amount equal to the Allocated Loan Amount with
respect to such Store), or Borrower shall fail to maintain or cause to be
maintained the Security Interests and priority of the Loan Instruments as
against any Person, or the title and rights of Borrower to any material
portion of the Collateral or any Collateral Store Lease shall have become
the subject matter of litigation which could reasonably be expected to
result in impairment or loss of the security provided by the Loan
Instruments.
8.1.9 PLANS. If an event or condition specified in subsection 6.3.8
hereof shall occur or exist with respect to any Pension Plan or
Multiemployer Plan and, as a result of such event or condition, together
with all other such events or conditions, Borrower or any ERISA Affiliate
shall incur, or in the opinion of FINOVA be reasonably likely to incur, a
liability to a Pension Plan or Multiemployer Plan or the PBGC (or any of
them) which, in the reasonable judgment of FINOVA, would have a Material
Adverse Effect.
8.1.10 CHANGE IN CONTROL. If Guarantor at any time shall cease (i)
to own at least 51% of the Borrower Capital Stock or (ii) to maintain (A)
effective voting control over Borrower, including the right to elect a
majority of the board of directors of Borrower or (B) the ability to
direct the management and policies of Borrower.
8.1.11 GUARANTY. If prior to the termination of the Guaranty in
accordance with its terms, Guarantor shall (i) deny or disaffirm its
obligations thereunder or (ii) fail to make any payment required
thereunder when due.
8.2 ACCELERATION OF BORROWER'S OBLIGATIONS. Upon the occurrence of:
(a) any Event of Default described in clauses (ii), (iii), (iv) and
(v) of subsection 8.1.5(a) or in 8.1.5(b), all of Borrower's Obligations
at that time outstanding automatically shall mature and become due, and
(b) any other Event of Default, FINOVA, at any time, at its option,
without further notice or demand, may declare all of Borrower's
Obligations due and payable, whereupon Borrower's Obligations immediately
shall mature and become due and payable,
all without presentment, demand, protest or notice (other than notice of the
declaration referred to in clause (b) above), all of which hereby are waived.
8.3 REMEDIES ON DEFAULT. If Borrower's Obligations have been accelerated
pursuant to Section 8.2, FINOVA, at its option, may:
8.3.1 ENFORCEMENT OF SECURITY INTERESTS. Enforce its rights and
remedies under the Loan Instruments in accordance with their respective
terms.
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8.3.2 OTHER REMEDIES. Enforce any of the rights or remedies accorded
to FINOVA at equity or law, by virtue of statute or otherwise.
8.4 APPLICATION OF FUNDS. Any funds received by FINOVA pursuant to the
exercise of any rights accorded to FINOVA pursuant to, or by the operation of
any of the terms of, any of the Loan Instruments, including, without limitation,
insurance proceeds, condemnation proceeds or proceeds from the sale of
Collateral, shall be applied to Borrower's Obligations in the following order of
priority:
8.4.1 EXPENSES. First, to the payment of (i) all fees and expenses
actually incurred, including, without limitation, court costs, fees of
appraisers, title charges, costs of maintaining and preserving the
Collateral, costs of sale, and all other costs incurred by FINOVA in
exercising any rights accorded to such Persons pursuant to the Loan
Instruments or by applicable law, including, without limitation,
reasonable attorney's fees, and (ii) all Liens superior to the Liens of
FINOVA except such superior Liens subject to which any sale of the
Collateral may have been made.
8.4.2 BORROWER'S OBLIGATIONS. Next, to the payment of the remaining
portion of Borrower's Obligations in such order as FINOVA may determine.
8.4.3 SURPLUS. Any surplus, to the Person or Persons entitled
thereto.
8.5 PERFORMANCE OF BORROWER'S OBLIGATIONS. If Borrower fails to (i)
maintain in force and pay for any insurance policy or bond which Borrower is
required to provide pursuant to any of the Loan Instruments, (ii) keep the
Collateral free from all Liens except for Permitted Liens, (iii) pay when due
all taxes, levies and assessments on or in respect of the Collateral, except as
otherwise permitted pursuant to the terms hereof, (iv) make all payments and
perform all acts on the part of Borrower to be paid or performed in the manner
required by the terms hereof and by the terms of the other Loan Instruments with
respect to any of the Collateral, including, without limitation, all expenses of
protecting, storing, warehousing, insuring, handling and maintaining the
Collateral, (v) keep fully and perform promptly any other of the obligations of
Borrower hereunder or under any of the other Loan Instruments, and (vi) keep
fully and perform promptly the obligations of Borrower with respect to any issue
of Indebtedness for Borrowed Money secured by a Permitted Prior Lien, then
FINOVA may (but shall not be required to) procure and pay for such insurance
policy or bond, place such Collateral in good repair and operating condition,
pay, contest or settle such Liens or taxes or any judgments based thereon or
otherwise make good any other aforesaid failure of Borrower. Borrower shall
reimburse FINOVA immediately upon demand for all sums paid or advanced on behalf
of Borrower for any such purpose, together with costs and expenses (including
reasonable attorney's fees) paid or incurred by FINOVA in connection therewith
and interest on all sums advanced from the date of advancement until repaid to
FINOVA at the Default Rate. All such sums advanced by FINOVA, with interest
thereon, immediately upon advancement thereof, shall be deemed to be part of
Borrower's Obligations.
ARTICLE IX
CLOSING
The Closing Date shall be such date as the parties shall determine, and
the Closing shall take place on such date, provided all conditions for the
Closing as set forth in this Loan Agreement have been satisfied or otherwise
waived by FINOVA. The Closing shall take place at the offices of Altheimer &
Gray, 10 S.
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Wacker Drive, Chicago, Illinois 60606 or such other place as the parties hereto
shall agree. Unless the Closing occurs on or before May 31, 2000, this Loan
Agreement shall terminate and be of no further force or effect and, except for
any obligation of Borrower to FINOVA pursuant to Article X, none of the parties
hereto shall have any further obligation to any other party.
ARTICLE X
EXPENSES AND INDEMNITY
10.1 ATTORNEYS' FEES AND OTHER FEES AND EXPENSES. Whether or not any of
the transactions contemplated by this Loan Agreement shall be consummated,
subject to the limitations set forth in subsection 10.1.1, Borrower agrees to
pay to FINOVA on demand all reasonable expenses incurred by FINOVA in connection
with the transactions contemplated hereby and in connection with any amendments,
modifications or waivers (whether or not the same become effective) under or in
respect of any of the Loan Instruments, including, without limitation:
10.1.1 FEES AND EXPENSES FOR PREPARATION OF LOAN Instruments. All
reasonable expenses, disbursements (including, without limitation, charges
for required mortgagee's title insurance, lien searches, reproduction of
documents, long distance telephone calls and overnight express carriers)
and reasonable attorneys' fees, actually incurred by FINOVA in connection
with the (i) preparation and negotiation of the Loan Instruments or any
amendments, modifications or waivers thereto or any documents delivered
pursuant thereto and (ii) administration of the Loans.
10.1.2 FEES AND EXPENSES IN ENFORCEMENT OF RIGHTS OR DEFENSE OF LOAN
INSTRUMENTS. Any reasonable expenses or other costs, including reasonable
attorneys' fees and expert witness fees, actually incurred by FINOVA in
connection with the enforcement or collection against any Obligor of any
provision of any of the Loan Instruments, and in connection with or
arising out of any litigation, investigation or proceeding instituted by
any Governmental Body or any other Person with respect to any of the Loan
Instruments, whether or not suit is instituted, including, but not limited
to, such costs or expenses arising from the enforcement or collection
against any Obligor of any provision of any of the Loan Instruments in any
workout or restructuring or in any state or federal bankruptcy or
reorganization proceeding.
10.2 INDEMNITY. Borrower agrees to indemnify and save FINOVA harmless of
and from the following:
10.2.1 BROKERAGE FEES. The fees, if any, of brokers and
finders engaged by Borrower.
10.2.2 GENERAL. Any loss, cost, liability, damage or expense
(including reasonable attorneys' fees and expenses) incurred by FINOVA in
investigating, preparing for, defending against, providing evidence,
producing documents or taking other action in respect of any commenced or
threatened litigation, administrative proceeding, suit instituted by any
Person or investigation under any law, including any federal securities
law, the Bankruptcy Code, any relevant state corporate statute or any
other securities law, bankruptcy law or law affecting creditors generally
of any jurisdiction, or any regulation pertaining to any of the foregoing,
or at common law or otherwise, relating, directly or indirectly, to the
transactions contemplated by or referred to in, or any other
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matter related to, the Loan Instruments, except to the extent (i) of any
gross negligence or willful misconduct of FINOVA or (ii) Borrower is the
prevailing party in any adversarial proceeding between Borrower and
FINOVA.
10.2.3 OPERATION OF COLLATERAL; JOINT VENTURERS. Any loss, cost,
liability, damage or expense (including reasonable attorneys' fees and
expenses) incurred in connection with the ownership, operation or
maintenance of the Collateral, the construction of FINOVA and Borrower as
having the relationship of joint venturers or partners or the
determination that FINOVA has acted as agent for Borrower.
10.2.4 ENVIRONMENTAL INDEMNITY. Any and all claims, losses, damages,
response costs, clean-up costs and expenses suffered and/or incurred at
any time by FINOVA arising out of or in any way relating to the existence
at any time of any Hazardous Materials in, on, under, at, transported to
or from, or used in the construction and/or renovation of, any of the Real
Estate or Leasehold Property, or otherwise with respect to any
Environmental Law, and/or the failure of any Obligor to perform its
obligations and covenants hereunder witch respect to environmental
matters, including, but not limited to: (i) claims of any Persons for
damages, penalties, response costs, clean-up costs, injunctive or other
relief, (ii) costs of removal and restoration, including reasonable fees
of attorneys and experts, and costs of reporting the existence of
Hazardous Materials to any Governmental Body, and (iii) any expenses or
obligations, including reasonable attorneys' fees and expert witness fees,
incurred at, before and after any trial or other proceeding before any
Governmental Body or appeal therefrom whether or not taxable as costs,
including, without limitation, reasonable witness fees, deposition costs,
copying and telephone charges and other expenses, all of which shall be
paid by Borrower to FINOVA on demand, except where such costs were
directly caused by the gross negligence or willful misconduct of FINOVA or
by any agent or third party acting on behalf of and at the direction of
FINOVA.
ARTICLE XI
MISCELLANEOUS
11.1 NOTICES. All notices and communications under this Loan Agreement
shall be in writing and shall be (i) delivered in person, (ii) sent by telecopy,
or (iii) mailed, postage prepaid, either by registered or certified mail, return
receipt requested, or by overnight express carrier, addressed in each case as
follows:
To Borrower: I.C.H. Corporation
Sybra, Inc.
9255 Towne Centre Drive
Suite 600
San Diego, California 92121
Attention: Glen V. Freter
Senior Vice President
Chief Financial Officer
Telecopy No.: (858) 638-2078
Copy to: I.C.H. Corporation
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<PAGE>
780 Third Avenue, 43rd Floor
New York, New York 10017
Attention: Robert H. Drechsler, Esq.
Executive Vice President
Telecopy No.: (212) 317-0991
Copy to: Pryor Cashman Sherman & Flynn LLP
410 Park Avenue
New York, New York 10022
Attention: William M. Levine, Esq.
Telecopy No.: (212) 326-0806
To FINOVA: FINOVA Capital Corporation
115 West Century Road
Paramus, New Jersey 07693
Attention: Daniel O'Donnell
Vice President
Telecopy No.: (201) 634-3497
Copy to: FINOVA Capital Corporation
The FINOVA Corporate Center
4800 North Scottsdale Road
Attention: Vice President, Law
Telecopy No.: (480) 636-6444
Copy to: Altheimer & Gray
10 South Wacker Drive
Suite 4000
Chicago, Illinois 60606
Attention: Michael L. Owen, Esq.
Telecopy No.: (312) 715-4800
or to any other address or telecopy number, as to any of the parties hereto, as
such party shall designate in a written notice to the other parties hereto. All
notices sent pursuant to the terms of this Section 11.1 shall be deemed received
(i) if personally delivered, then on the Business Day of delivery, (ii) if sent
by telecopy before 2:00 p.m. Phoenix time, on the day sent if a Business Day or
if such day is not a Business Day or if sent after 2:00 p.m. Phoenix time, then
on the next Business Day, (iii) if sent by overnight, express carrier, on the
next Business Day immediately following the day sent, or (iv) if sent by
registered or certified mail, on the earlier of the fifth Business Day following
the day sent or when actually received. Any notice by telecopy shall be followed
by delivery on the next Business Day by overnight, express carrier or by hand.
11.2 SURVIVAL OF LOAN AGREEMENT; INDEMNITIES. All covenants, agreements,
representations and warranties made in this Loan Agreement and in the
certificates delivered pursuant hereto shall survive the making by FINOVA of the
Loans and the execution and delivery to FINOVA of the Notes and of all other
Loan Instruments, and shall continue in full force and effect so long as any of
Borrower's Obligations remain outstanding, unperformed or unpaid.
Notwithstanding the repayment of all amounts due under the Loan Instruments, the
cancellation of any Note and the release and/or cancellation of any and all of
the Loan
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Instruments or the foreclosure of any Liens on the Collateral, the obligations
of Borrower to indemnify FINOVA with respect to the expenses, damages, losses,
costs and liabilities described in Section 10.2 shall survive until all
applicable statute of limitations periods with respect to actions which may be
brought against FINOVA have run.
11.3 FURTHER ASSURANCE. From time to time, Borrower shall execute and
deliver to FINOVA such additional documents as FINOVA reasonably may require to
carry out the purposes of the Loan Instruments and to protect rights of FINOVA
thereunder, including, without limitation, using its reasonable best efforts in
the event any Collateral is to be sold to secure the approval by any
Governmental Body of any application required by such Governmental Body in
connection with such sale, and not take any action inconsistent with such sale
or the purposes of the Loan Instruments.
11.4 TAXES AND FEES. Should any tax (other than taxes based upon the net
income of FINOVA), recording or filing fees become payable in respect of any of
the Loan Instruments, or any amendment, modification or supplement thereof,
Borrower agrees to pay the same on demand, together with any interest or
penalties thereon attributable to any delay by Borrower in meeting FINOVA
demand, and agrees to hold FINOVA harmless with respect thereto.
11.5 SEVERABILITY. In the event that any provision of this Loan Agreement
is deemed to be invalid by reason of the operation of any law, or by reason of
the interpretation placed thereon by any court or any other Governmental Body,
as applicable, the validity, legality and enforceability of the remaining terms
and provisions of this Loan Agreement shall not in any way be affected or
impaired thereby, all of which shall remain in full force and effect, and the
affected term or provision shall be modified to the minimum extent permitted by
law so as to achieve most fully the intention of this Loan Agreement.
11.6 WAIVER. No delay on the part of FINOVA in exercising any right, power
or privilege hereunder shall operate as a waiver thereof, and no single or
partial exercise of any right, power or privilege hereunder shall preclude other
or further exercise thereof, or be deemed to establish a custom or course of
dealing or performance between the parties hereto, or preclude the exercise of
any other right, power or privilege.
11.7 MODIFICATION OF LOAN INSTRUMENTS. No modification or waiver of any
provision of any of the Loan Instruments shall be effective unless the same
shall be in writing and signed by Borrower and FINOVA, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given. No notice to or demand on Borrower in any case shall entitle
Borrower to any other or further notice or demand in the same, similar or other
circumstances.
11.8 CAPTIONS. The headings in this Loan Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof.
11.9 SUCCESSORS AND ASSIGNS. This Loan Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided that Borrower may not assign any of its
rights or delegate any of its duties hereunder to any other Person.
11.10 REMEDIES CUMULATIVE. All rights and remedies of the parties hereto,
any other Loan Instruments or otherwise, shall be cumulative and non-exclusive,
and may be exercised singularly or concurrently. FINOVA shall not be required to
prosecute collection, enforcement or other remedies against
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any Obligor before proceeding against any other Obligor or to enforce or resort
to any security, liens, collateral or other rights of FINOVA. One or more
successive actions may be brought against Borrower and/or any other Obligor,
either in the same action or in separate actions, as often as FINOVA deems
advisable, until all of Borrower's Obligations are paid and performed in full.
11.11 ENTIRE AGREEMENT; CONFLICT. This Loan Agreement and the other Loan
Instruments executed prior or pursuant hereto constitute the entire agreement
among the parties hereto with respect to the transactions contemplated hereby or
thereby and supersede any prior agreements, whether written or oral, relating to
the subject matter hereof. In the event of a conflict between the terms and
conditions set forth herein and the terms and conditions set forth in any other
Loan Instrument, the terms and conditions set forth herein shall govern.
11.12 APPLICABLE LAW. THE LOAN INSTRUMENTS SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS AND DECISIONS OF THE STATE OF ARIZONA.
FOR PURPOSES OF THIS SECTION 11.12, THE LOAN INSTRUMENTS SHALL BE DEEMED TO BE
PERFORMED AND MADE IN THE STATE OF ARIZONA.
11.13 JURISDICTION AND VENUE. BORROWER HEREBY AGREES THAT ALL ACTIONS OR
PROCEEDINGS INITIATED BY BORROWER AND ARISING DIRECTLY OR INDIRECTLY OUT OF THE
LOAN INSTRUMENTS SHALL BE LITIGATED IN THE SUPERIOR COURT OF MARICOPA COUNTY, OR
THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA OR, IF FINOVA
INITIATES SUCH ACTION, IN ADDITION TO THE FOREGOING COURTS, ANY COURT IN WHICH
FINOVA SHALL INITIATE OR TO WHICH FINOVA SHALL REMOVE SUCH ACTION, TO THE EXTENT
SUCH COURT HAS JURISDICTION. BORROWER HEREBY EXPRESSLY SUBMITS AND CONSENTS IN
ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED BY FINOVA IN
OR REMOVED BY FINOVA TO ANY OF SUCH COURTS, AND HEREBY AGREES THAT PERSONAL
SERVICE OF THE SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS ISSUED THEREIN
MAY BE SERVED IN THE MANNER PROVIDED FOR NOTICES HEREIN, AND AGREES THAT SERVICE
OF SUCH SUMMONS AND COMPLAINT OR OTHER PROCESS OR PAPERS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE ADDRESS TO WHICH
NOTICES ARE TO BE SENT PURSUANT TO SECTION 11.1. BORROWER WAIVES ANY CLAIM THAT
MARICOPA COUNTY, ARIZONA OR THE DISTRICT OF ARIZONA IS AN INCONVENIENT FORUM OR
AN IMPROPER FORUM BASED ON LACK OF VENUE. TO THE EXTENT PROVIDED BY LAW, SHOULD
BORROWER, AFTER BEING SO SERVED, FAIL TO APPEAR OR ANSWER TO ANY SUMMONS,
COMPLAINT, PROCESS OR PAPERS SO SERVED WITHIN THE NUMBER OF DAYS PRESCRIBED BY
LAW AFTER THE MAILING THEREOF, BORROWER SHALL BE DEEMED IN DEFAULT AND AN ORDER
AND/OR JUDGMENT MAY BE ENTERED BY THE COURT AGAINST BORROWER AS DEMANDED OR
PRAYED FOR IN SUCH SUMMONS, COMPLAINT, PROCESS OR PAPERS. THE EXCLUSIVE CHOICE
OF FORUM FOR BORROWER SET FORTH IN THIS SECTION 11.13 SHALL NOT BE DEEMED TO
PRECLUDE THE ENFORCEMENT BY FINOVA OF ANY JUDGMENT OBTAINED IN ANY OTHER FORUM
OR THE TAKING BY FINOVA OF ANY ACTION TO ENFORCE THE SAME IN ANY OTHER
APPROPRIATE JURISDICTION, AND BORROWER HEREBY WAIVES THE RIGHT TO COLLATERALLY
ATTACK ANY SUCH JUDGMENT OR ACTION.
11.14 WAIVER OF RIGHT TO JURY TRIAL. FINOVA AND BORROWER ACKNOWLEDGE AND
AGREE THAT ANY CONTROVERSY WHICH MAY ARISE UNDER ANY OF THE LOAN INSTRUMENTS OR
WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED THEREBY WOULD BE BASED UPON
DIFFICULT AND COMPLEX ISSUES AND, THEREFORE, THE PARTIES AGREE THAT ANY LAWSUIT
ARISING OUT OF ANY SUCH CONTROVERSY WILL BE TRIED IN A COURT OF COMPETENT
JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
11.15 ESTOPPEL CERTIFICATE. Within 15 days after FINOVA requests Borrower
to do so, Borrower will execute and deliver to FINOVA a statement certifying (i)
that this Loan Agreement is in full force and effect and has not been modified
except as described in such statement, (ii) the date to which interest and
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principal on the Notes has been paid, (iii) the Principal Balance, (iv) whether
or not to its knowledge an Incipient Default or Event of Default has occurred
and is continuing, and, if so, specifying in reasonable detail each such
Incipient Default or Event of Default of which it has knowledge, (v) whether to
its knowledge it has any defense, setoff or counterclaim to the payment of the
Notes in accordance with their terms, and, if so, specifying each defense,
setoff or counterclaim of which it has knowledge in reasonable detail (including
where applicable the amount thereof), and (vi) as to any other matter reasonably
requested by FINOVA.
11.16 CONSEQUENTIAL DAMAGES. Neither FINOVA nor any agent or attorney of
FINOVA shall be liable to Borrower for consequential damages arising from any
breach of contract, tort or other wrong relating to the establishment,
administration or collection of Borrower's Obligations.
11.17 COUNTERPARTS. This Loan Agreement may be executed by the parties
hereto in several counterparts and each such counterpart shall be deemed to be
an original, but all such counterparts shall together constitute one and the
same agreement.
11.18 NO FIDUCIARY RELATIONSHIP. No provision in this Loan Agreement or in
any other Loan Instrument, and no course of dealing among the parties hereto,
shall be deemed to create any fiduciary duty by FINOVA to Borrower.
11.19 SALE OF NOTES; PARTICIPATIONS. FINOVA may assign to one or more
banks or other Persons all or any part of, or may grant participations to one or
more banks or other Persons in, its right, title and interest in the Loans, this
Loan Agreement, the other Loan Instruments, or any of them, and to the extent of
any such assignment or participation (unless otherwise stated therein) the
assignee or participant of such assignment or participation shall have the same
rights, benefits and obligations hereunder and thereunder as FINOVA would have
hereunder.
11.20 PUBLICITY. Borrower authorizes FINOVA to issue appropriate press
releases and to cause a tombstone to be published announcing the consummation of
this transaction and the aggregate amount thereof.
[remainder of this page intentionally left blank]
63
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IN WITNESS WHEREOF, this Amended and Restated Loan Agreement has been
executed and delivered by each of the parties hereto by a duly authorized
officer of each such party on the date first set forth above.
SYBRA, INC., a Michigan corporation
By: s/s Glen V. Freter
-------------------------------------
Name: Glen V. Freter
Title: Chief Financial Officer
FINOVA CAPITAL CORPORATION, a Delaware
corporation
By: s/s Daniel W. O'Donnell
-------------------------------------
Name: Daniel W. O'Donnell
Title: Vice President
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