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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): FEBRUARY 28, 1995
---------------
KETTLE RESTAURANTS, INC.
(Exact name of registrant as specified in its charter)
TEXAS 0-13234 76-0276342
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation or organization) Number) Identification No.)
3131 ARGONNE
HOUSTON, TEXAS 77098
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (713) 524-3464
No Change
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
Between February 28, 1995 and March 31, 1995, Kettle Restaurants, Inc.,
a Texas corporation (the "Company"), entered into several agreements with
Foothill Capital Corporation ("Foothill"), the current holder of the Company's
outstanding 13.30% Senior Secured Notes due 1999 (the "Notes"), pursuant to
which six properties mortgaged by the Company pursuant to the Indentures
securing the Notes were released from the lien of the Indentures and, in
substitution therefor, eight other properties owned by the Company were
mortgaged and made subject to the lien of the Indentures securing the Notes. Two
of the released properties were sold by the Company and then leased back by the
Company for a lease term of twenty years. In addition, a third property subject
to the lien of the Indentures securing the Notes was also sold by the Company.
The net proceeds of these sales, together with other funds of the Company, were
used to purchase from Foothill $3,049,000 principal amount of the Company's
15 7/8% subordinated debentures due 1996 (the "Bonds") at par plus accrued
interest. The Company intends to sell the three other properties which were
released from the lien of the Indentures securing the Notes as soon as
practicable (two of which it is intended will be leased back) and has agreed
with Foothill that when such sales are consummated, the net proceeds realized by
the Company will be used to purchase additional Bonds from Foothill at par plus
accrued interest until an aggregate of $3,967,000 principal amount of the bonds
has been purchased by the Company from Foothill. The net proceeds realized by
the Company from such sales in excess of the amount of funds needed to purchase
an aggregate of $3,967,000 principal amount of the Bonds will be paid to
Foothill to be applied by Foothill to the $1,800,000 principal payment due June
30, 1996 with respect to the Notes. Foothill agreed to waive any prepayment
penalty provided for with respect to such prepayment. Foothill also agreed that
the $1,800,000 principal payment due June 30, 1995 with respect to the Notes
would be deferred until the maturity date of the Notes -- June 30, 1999.
In addition, the Company and Foothill agreed that the security interest
in the collateral granted by the Company to Foothill as security for the payment
of the Company's obligations under the Loan Agreement, dated as of February 11,
1994, under which Foothill made a $1,000,000 term loan to Kettle, shall remain
collateral security for the payment of the Notes until perfection of the
substitution of properties is completed. The Company and Foothill also agreed
that in the event that there were additional sales of units and/or other
property by the Company subsequent to March 31, 1995, other than sales of (i)
units 012, 068, 090, 096, 138 and 488, (ii) other property currently encumbered
by debt held by Textron, (iii) units encumbered by the Indentures and remaining
as collateral for the Notes, and (iv) units or other property where the net
proceeds from sale exceed the related debt payoff by less than $125,000, then
the net proceeds therefrom will be divided equally, one-half being used to
purchase Bonds and the remainder of the proceeds being used to refurbish
Company-operated units then encumbered by the Indentures and held as collateral
for the Notes. The agreement set forth in the preceding sentence shall
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continue until the proceeds from sales of properties not excluded by the terms
of such agreement exceeds $2,500,000. The net proceeds resulting from the sale
of units or other property described in subparagraphs (ii) and (iv) above will
be retained by the Company to be used for such purposes as the Company may
determine in its discretion. Any proceeds required by the terms of such
agreement to be used to purchase Bonds that are not immediately used for such
purpose will be placed in a separate, segregated account (the "Proceeds
Account") maintained for that purpose. The Company will not withdraw any funds
from the Proceeds Account except for the purposes stated and will not pledge the
Proceeds Account as security for any indebtedness or otherwise permit any other
person or entity to have any interest in the Proceeds Account. In the event that
the Company is unable to purchase Bonds in the marketplace or through private
sale, the Company will call the Bonds, to the extent of the amount of the funds
in the Proceeds Account, prior to June 1, 1996 in order to comply with its
obligations under such agreement.
The formal releasing of the six properties released and substitution of
the eight properties mortgaged was accomplished pursuant to the Supplemental
Indenture, Deed of Trust, Security Agreement, Assignment of Leases and Financing
Statement (Fixture Filing) from Kettle Restaurants, Inc., as Grantor, to
NationsBank of Texas, National Association, as Trustee, dated as of May 2, 1995.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of business acquired.
None.
(b) Pro forma financial information.
None.
(c) Exhibits.
4.21 Supplemental Indenture, Deed of Trust, Security
Agreement, Assignment of Leases and Financing
Statement (Fixture Filing) from Kettle Restaurants,
Inc., as Grantor, to NationsBank of Texas, National
Association, as Trustee, dated as of May 2, 1995.
10.29. Letter agreement, dated February 28, 1995, between
Kettle Restaurants, Inc. and Foothill Capital
Corporation.
10.30. Letter agreement, dated March 27, 1995, between Kettle
Restaurants, Inc. and Foothill Capital Corporation.
10.31. Letter agreement, dated March 28, 1995, between Kettle
Restaurants, Inc. and Foothill Capital Corporation.
10.32. Letter agreement, dated March 29, 1995, between Kettle
Restaurants, Inc. and Foothill Capital Corporation.
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10.33. Letter agreement, dated March 31, 1995, between Kettle
Restaurants, Inc. and Foothill Capital Corporation.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
KETTLE RESTAURANTS, INC.
Date: May 22, 1995 By: /s/CARLETTE WOODS
---------------------------------
Carlette Woods
Vice President-Finance
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EXHIBIT 4.21
AFTER RECORDING RETURN TO:
Mayor, Day, Caldwell & Keeton, L.L.P.
700 Louisiana, Suite 1900
Houston, Texas 77002
Attention: Mr. David W. Martin
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SUPPLEMENTAL INDENTURE, DEED OF TRUST,
SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND
FINANCING STATEMENT (FIXTURE FILING)
FROM
KETTLE RESTAURANTS, INC.,
AS GRANTOR
TO
NATIONSBANK OF TEXAS, NATIONAL ASSOCIATION,
AS TRUSTEE
COLLATERAL IS OR INCLUDES FIXTURES
DATED AS OF MAY 2, 1995
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
GRANTING CLAUSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 1 INCORPORATION OF TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 2 DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 General Provisions for Sale of Mortgaged Property; Application of Proceeds . . . . 10
2.4 Purchase by the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.5 Receivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.6 Suits by the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.7 Waiver of Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.8 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.9 Waiver of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.10 Retention of Possession . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.11 Direction of Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.12 Suit by Registered Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 3 THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.1 Rights and Obligations of Trustee . . . . . . . . . . . . . . . . . . . . . . . . 14
3.2 Resignation of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.3 Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.4 Co-Trustees and Separate Trustees . . . . . . . . . . . . . . . . . . . . . . . . 18
3.5 Appointment of Certain Separate Trustees . . . . . . . . . . . . . . . . . . . . . 20
3.6 Liability of Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.7 Segregation of Moneys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.8 Illegal Acts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE 4 GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.1 Legal Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.2 No Impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.3 Security Agreement; Fixture Filing . . . . . . . . . . . . . . . . . . . . . . . . 22
4.4 Overdue Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.6 Successors; Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.7 Care by the Beneficiaries or the Trustee . . . . . . . . . . . . . . . . . . . . . 25
4.8 No Obligation on the Beneficiaries or the Trustee . . . . . . . . . . . . . . . . 25
4.9 No-Waiver; Writing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
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<TABLE>
<S> <C>
4.12 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.13 No Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.14 Beneficiaries or Trustee Not Joint Venturers or Partners . . . . . . . . . . . . . 26
4.15 No Third Party Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.16 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.17 Table of Contents; Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.18 Maximum Interest Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
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SUPPLEMENTAL INDENTURE, DEED OF TRUST,
SECURITY AGREEMENT, ASSIGNMENT OF LEASES
AND FINANCING STATEMENT (FIXTURE FILING)
THIS SUPPLEMENTAL INDENTURE, DEED OF TRUST, SECURITY AGREEMENT,
ASSIGNMENT OF LEASES AND FINANCING STATEMENT (FIXTURE FILING) is dated as of May
2, 1995, from KETTLE RESTAURANTS, INC., a Texas corporation, having an address
at 3131 Argonne Street, Houston, Texas, 77098, as grantor and trustor, to
NATIONSBANK OF TEXAS, NATIONAL ASSOCIATION, a national banking association,
having an address at 700 Louisiana Street, Corporate Trust Department, 31st
Floor, Houston, Texas 77002, as trustee, secured party and assignee, for the
benefit of FOOTHILL CAPITAL CORPORATION, a California corporation, having an
address at 11111 Santa Monica Blvd., Suite 1500, Los Angeles, California 90025,
and any subsequent holders of the Notes from time to time outstanding.
RECITALS
A. Pursuant to that certain Note Purchase Agreement dated as of June 1,
1989, between Kettle Restaurants, Inc., a Texas corporation (formerly known as
KRA, Inc.), Kettle Restaurants, Inc., a Texas corporation (which was merged into
KRA, Inc. on June 23, 1989), Principal Mutual Life Insurance Company ("Principal
Mutual") and Wisconsin Life Insurance Company ("Wisconsin"), Kettle Restaurants,
Inc. authorized and issued (i) to Principal Mutual that certain 13.30% Senior
Secured Note Due 1999 dated as of June 23, 1989, in the aggregate principal
amount of $14,000,000.00 and (ii) to Wisconsin that certain 13.30% Senior
Secured Note Due 1999 dated as of June 23, 1989, in the aggregate principal
amount of $2,000,000.00 (individually, the "$14,000,000 Note" and the
"$2,000,000 Note", respectively and collectively, the "Notes"). Foothill Capital
Corporation is now the holder of the Notes, which have been reissued to be
payable to the order of Foothill Capital Corporation.
B. The Notes are secured by (i) that certain Indenture, Deed of Trust,
Security Agreement, Assignment of Leases and Financing Statement (Fixture
Filing) dated June 1, 1989, executed by KRA, Inc. to NCNB Texas National Bank
("NCNB"), as trustee, for the ratable benefit of the holders of the Notes and
recorded in various counties within the states of Colorado, Florida, Louisiana,
Missouri, New Mexico, North Carolina, Oklahoma, Texas and Virginia, which was
modified and affected by, among others, that certain First Supplemental
Indenture, Deed of Trust, Security Agreement, Assignment of Leases and Financing
Statement (Fixture Filing) dated as of June 23, 1989, executed by Kettle
Restaurants, Inc. to NCNB, as trustee, for the ratable benefit of the holders of
the Notes (collectively, as subsequently modified and affected, the "First
Indenture") and (ii) that certain Indenture, Deed of Trust, Security Agreement,
Assignment of Leases and Financing Statement (Fixture Filing) dated as of May
28, 1993, executed by Kettle Restaurants, Inc. to NationsBank of Texas, National
Association, as trustee for the ratable benefit of the holders of the Notes
encumbering as of the date hereof six (6) properties within various counties
within the states of Oklahoma, Tennessee and Texas (as
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subsequently modified and affected, the "Second Indenture") (the First Indenture
and the Second Indenture are collectively referred to as the "Indenture").
NationsBank of Texas, National Association is the current trustee under the
Indenture. All capitalized terms not defined herein shall have the meanings
assigned to such terms in the First Indenture and the Second Indenture,
respectively.
C. Kettle Restaurants, Inc. desires to substitute under the Indenture
those Sites (and the corresponding Units), each to be known as a Site and a Unit
as applicable hereunder and under the Indenture, those properties listed on
Schedule A-1 through A-8 hereto; subject, however, to the Permitted Exceptions
described on Part II of Schedules A-1 through A-8 hereto; provided that the
exceptions described in Part II of any Schedule shall apply only to the Site and
corresponding Unit described in Part I of that Schedule.
GRANTING CLAUSES
NOW, THEREFORE, in consideration of the premises, and to secure the
payment and performance of the Obligations, including without limitation the
payment of the principal of, and interest and premium (if any) on, the Notes
from time to time outstanding, and for other good and valuable consideration the
sufficiency of which is hereby acknowledged, Grantor has executed and delivered
this Supplemental Indenture.
Grantor has irrevocably Granted, and by these presents does hereby
irrevocably Grant, unto Trustee and its successors and assigns forever, all of
the following described property, together with the proceeds thereof, whether
now owned or hereafter acquired:
Granting Clause First
The Sites, together with (a) the Appurtenances with respect to each of
the Sites, and the Improvements with respect to each of the Sites, (b) all
furniture and equipment owned by Grantor located on the Sites, (c) all claims or
demands of Grantor, in law or in equity, in and to one or more of the Units or
part of one or more of the Units, (d) any insurance or condemnation proceeds or
awards to which Grantor is or may become entitled with respect to one or more of
the Units or part of one or more of the Units, and (e) all rents, income,
revenues, issues, profits (including without limitation those derived from
operations), deposits, royalties, moneys, security, earnings and other benefits
from or in respect of the property described in this Granting Clause First;
Granting Clause Second
The entire right, title and interest of Grantor in and to (a) the Unit
Leases, (b) all rights, powers, privileges, options and other benefits of
Grantor as lessor under the Unit Leases or any of them, including without
limitation the immediate and continuing right (i) to make claim for, receive,
collect and apply in accordance with Article 5 of the Indenture all rents,
income, revenues, issues, profits (including, without limitation, those derived
from operations), insurance
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or condemnation proceeds or awards, deposits, royalties, moneys, security,
earnings and other benefits payable to or receivable by Grantor under the Unit
Leases, or any of them, or pursuant to any of the provisions of the Unit Leases,
or any of them, whether as rents or otherwise, (ii) to make all waivers and
agreements with respect to the Unit Leases, or any of them, (iii) to give all
Instructions with respect to the Unit Leases, or any of them, (iv) to take such
action upon the happening of a default under the Unit Leases, or any of them,
including the commencement, conduct and consummation of proceedings at law or in
equity, as shall be permitted under any provision of the Unit Leases, or any of
them, or by law or in equity, and (v) to do any and all other things whatsoever
that Grantor is or may be entitled to do under the Unit Leases, or any of them,
(c) any and all guarantees of the performance of the lessees, or any of them,
under the Unit Leases, or any of them, and (d) all rents, income, revenues,
issues, profits (including without limitation those derived from operations),
insurance or condemnation proceeds or awards, deposits, royalties, moneys,
security, earnings and other benefits paid or payable pursuant to the Unit
Leases, or any of them, or pursuant to any of the provisions of the Unit Leases
or any of them, it being the intention of Grantor to establish an absolute
transfer and assignment of the Unit Leases and other properties described in the
foregoing provisions of this Granting Clause Second, which shall be deemed
vested in the Trustee as of the date hereof;
Granting Clause Third
Any and all moneys, any and all accounts containing such moneys, and
any and all other property that may from time to time become subject to the lien
hereof or that may come into the possession or be subject to the control of the
Trustee pursuant to this Supplemental Indenture or any other instrument related
to one or more of the Units or to part of one or more of the Units or to the
Unit Leases, or any of them, including without limitation insurance proceeds and
all awards that may at any time be made to Grantor for the taking by eminent
domain of one or more of the Units or any part of one or more of the Units, and
any other property delivered to the Trustee by or on behalf of Grantor, it being
the intention of Grantor and it being hereby agreed that all property hereafter
acquired by Grantor that is required to be subjected to the lien of this
Supplemental Indenture or intended so to be shall forthwith upon the acquisition
thereof by Grantor be subject to the lien of this Supplemental Indenture as if
such property were now owned by Grantor and were specifically described in this
Supplemental Indenture and Granted hereby or pursuant hereto;
PROVIDED, HOWEVER, the Excluded Property is SAVED AND EXCEPTED from the
property subject to the lien of this Supplemental Indenture and is specifically
excluded from the property described in any of the foregoing Granting Clauses;
and FURTHER PROVIDED, HOWEVER, that with respect to certain portions of the
Mortgaged Property, the foregoing Grant shall be construed as a Grant to a
separate trustee named with respect to such property, as set forth in Section
3.5 below.
TO HAVE AND TO HOLD all and singular the property described in the
foregoing Granting Clauses, whether now owned or held or hereafter acquired,
unto the Trustee and its successors and assigns forever, and Grantor does hereby
bind itself, its successors and assigns
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to warrant and forever defend all and singular the property described in the
foregoing Granting Clauses unto the Trustee and its successors and assigns,
against every Person whomsoever lawfully claiming or to claim the same, or any
part thereof, subject only to the Permitted Exceptions;
IN TRUST, NEVERTHELESS, WITH POWER OF SALE AND RIGHT OF ENTRY, upon the
terms and conditions herein set forth, (a) for the ratable benefit and security
of the holders of the Notes from time to time outstanding, without preference,
priority or distinction of any Note over any other Note by reason of difference
in time of issuance, sale or otherwise, (b) for the enforcement of the payment
of the principal of, and premium (if any) and interest on, the Notes from time
to time outstanding in accordance with their respective terms, and (c) for the
enforcement of the payment and performance of all other Obligations, including
without limitation the other sums payable under any Operative Document;
PROVIDED ALWAYS, that if Grantor, or its successors, shall pay and
perform in full, or shall cause to be paid and performed in full, all of the
Obligations, including without limitation the payment of the principal of, and
interest and premium (if any) on, the Notes according to their respective terms
and the payment of all other sums becoming due and payable hereunder, and
Grantor shall abide by and comply with each and every covenant and condition set
forth herein or in the Notes, then this Supplemental Indenture and the lien
hereof shall cease, terminate, and become void, or at the option of Grantor be
assigned to Grantor, and the Trustee, if requested by Grantor or required by
law, shall execute and deliver, at the sole expense of Grantor, to the party
entitled thereto an instrument in form for recording, discharging, releasing,
conveying or so assigning this Supplemental Indenture.
IT IS HEREBY COVENANTED, DECLARED AND AGREED that the Mortgaged
Property is to be held and disposed of by the Trustee, pursuant and subject to
the provisions of this Supplemental Indenture.
ARTICLE 1
INCORPORATION OF TERMS
By this reference all the terms, conditions, covenants, agreements and
other matters contained in the Indenture are hereby incorporated herein as if
fully set out herein and the Sites and Units described herein are hereby made
subject to all such terms, conditions, covenants, agreements and other matters.
ARTICLE 2
DEFAULT AND REMEDIES
2.1 Events of Default. Each "Event of Default" under the Indenture
shall constitute an Event of Default hereunder.
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2.2 Remedies.
(a) General Remedies. Upon the occurrence and during the
continuation of any Event of Default:
(i) The Trustee, by notice to Grantor, may at any time, and upon the
request of the Majority Holders shall, declare the aggregate unpaid principal
amount of the then outstanding Notes, together with all accrued and unpaid
interest thereon, immediately due and payable, whereupon such principal amount
and such interest shall become immediately due and payable, without any
presentment, demand, protest, notice of intent to accelerate or other notice of
any kind, all of which are hereby waived by Grantor. In the event of such a
declaration by the Trustee, (A) a premium in an amount equal to the Default
Premium Amount at the date of declaration shall likewise become immediately due
and payable and (B) Grantor shall immediately deposit with the Trustee (in
immediately available funds) the moneys required to pay such principal amount,
such interest and such premium.
(ii) The Trustee personally, or by its separate trustees, co-trustees,
agents or attorneys, may enter into and upon one or more of the Units, or any
part of one or more of the Units, and may exclude Grantor and its agents and
servants therefrom; and, at the expense of Grantor, may use, operate, manage and
control the same and conduct the business thereof, may maintain and restore one
or more of the Units, or any part of one or more of the Units, may insure and
reinsure the same and may make all necessary or proper repairs, renewals and
replacements and any useful alterations, additions, betterments and improvements
thereto and thereon, all as the Trustee may deem advisable; and in every case,
the Trustee shall have the right to manage and operate one or more of the Units,
or any part of one or more of the Units, and to carry on the business thereof
and exercise all rights and powers of Grantor with respect thereto either in the
name of Grantor or otherwise as the Trustee shall deem best. The Trustee shall
be entitled to collect and receive all rents, income, revenues, issues, profits
(including without limitation those derived from operations), deposits,
royalties, moneys, security, earnings and other benefits from or in respect of
and income of the Mortgaged Property, and said rents, income, revenues, issues,
profits, deposits, royalties, moneys, security, earnings and other benefits of
the Mortgaged Property are hereby assigned to the Trustee and its successors and
assigns. After deducting the expenses of conducting the business thereof and of
all maintenance, repairs, renewals, replacements, alterations, additions,
betterments and improvements and all taxes, assessments, insurance and other
proper charges upon or with respect to the Mortgaged Property, as well as
reasonable compensation for the services of all separate trustees, co-trustees,
attorneys, servants and agents by the Trustee engaged and employed (including
compensation and expenses in connection with any appeal), the moneys arising as
aforesaid shall be applied as follows:
(A) in case the unpaid principal amounts of the then
outstanding Notes have not been declared due and payable pursuant to
subparagraph (i) of this paragraph (a) of this Section 2.2, first to the payment
of any amounts due and payable with respect to the Notes,
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when and as the same shall become due and payable, and second to the payment of
any other sums required to be paid by Grantor under this Supplemental Indenture;
or
(B) in case the Notes shall have been declared due and payable
as described in subparagraph (i) of this paragraph (a) of this Section 2.2, in
the order of priorities set forth in clauses second through sixth of paragraph
(e) of Section 2.3.
(iii) The Trustee, with or without entry, personally or by its separate
trustees, co-trustees, agents or attorneys, may exercise the power of sale
hereby conveyed and Granted by Grantor and sell the Mortgaged Property and all
estate, right, title, interest, claim and demand therein and right of redemption
thereof at one or more private or public sales, as an entirety or in parcels and
at such times and places and upon such terms as may be specified in the notice
or notices of sale to be given to Grantor or as may be required by law. Any
number of sales may be conducted from time to time. The power of sale shall not
be exhausted by any one or more such sale as to any part of the Mortgaged
Property remaining unsold, but shall continue unimpaired until all of the
Mortgaged Property shall have been sold or the Notes and all other Obligations
secured hereby shall have been paid. In addition, either the Trustee, or in the
event the Trustee may not so act, its separate trustees, co-trustees, agents or
attorneys, will have and may exercise the statutory power of sale provided by
the laws of the State wherein the Unit or Units sought to be sold are located.
(iv) The Trustee may take all steps to protect and enforce its rights
and remedies provided hereby or by applicable law, whether by action, suit or
proceeding in equity or at law (for the complete or partial foreclosure hereof,
for the specific performance of any covenant, condition or agreement contained
in the Notes or herein or in aid of the execution of any power herein granted or
for the enforcement of any other appropriate legal or equitable remedy) or
otherwise as the Trustee shall deem most effectual to protect and enforce the
same.
(b) Specific Remedies with Respect to Certain of the Mortgaged
Property. Without limiting the powers of sale or any other general remedies,
rights and powers conferred upon or granted to the Trustee under any other
provisions of this Supplemental Indenture to the full extent the same may be
valid under the laws of any State in which a portion of the Mortgaged Property
is located, Grantor covenants and agrees that upon the occurrence and during the
continuation of any Event of Default, the following specific rights and remedies
shall also be available with respect to hereinafter identified portions of the
Mortgaged Property:
(i) The Trustee is authorized and empowered by Grantor, at the request
of the Majority Holders (which request shall be presumed), to enforce the trust
under this Supplemental Indenture and to sell the Texas Mortgaged Property, as
an entirety or in parcels, by one sale or by several sales, held at one time or
at different times, all as the Trustee may elect, each sale to be held at the
location within the county courthouse designated for the holding of nonjudicial
foreclosure sales by the Commissioners Court of any county in which a part of
the real property constituting the Texas Mortgaged Property to be sold is
situated (or if no area has been so designated, then in an area within said
courthouse described in the notice hereinafter referred
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to in this subparagraph (i) of paragraph (b) of Section 2.2) and to be made on
the first Tuesday of some month between the hours of 10 o'clock A.M. and 4
o'clock P.M. to the highest bidder for cash at public vendue, after the Trustee
(or a Person or Persons selected by the Trustee), acting in its capacity as
Trustee and on behalf of the Beneficiaries, shall have given notices of the
proposed sale in the manner hereinafter set forth, and to make due conveyance to
the purchaser or purchasers, with general warranty of title to such purchaser or
purchasers binding upon Grantor and its successors. Such sale must begin at the
time stated in the notice referred to hereinafter in this subparagraph (i) of
paragraph (b) of Section 2.2 or not later than three hours after that time.
The Trustee (or a Person or Persons selected by the Trustee)
shall give notice of each such proposed sale by posting written notice of the
time, place, and terms of sale at the courthouse door, and by filing a copy of
such written notice in the office of the county clerk of the county in which the
sale is to be made for at least twenty-one (21) consecutive days preceding the
date of the sale. Where the real property comprising the Texas Mortgaged
Property to be sold is situated in more than one county, one notice shall be
posted at the courthouse door, and a copy of such notice shall be filed with the
county clerk of each county in which a part of such real property to be sold is
situated, and such notices shall designate the county where such Texas Mortgaged
Property will be sold, which may be any county in which a part of such real
property is situated. In addition to the foregoing notice or notices to be
posted and filed by the Trustee (or a Person or Persons selected by the
Trustee), the Trustee acting on behalf of the Beneficiaries shall, at least
twenty-one (21) days preceding the date of sale, serve or cause to be served
written notice of the proposed sale by certified mail on each debtor obligated
to pay the Obligations according to the records of Beneficiaries. The service of
such notice shall be completed upon deposit of the notice, enclosed in a
postpaid wrapper, properly addressed to each such debtor at the most recent
address (which shall be within the United States of America) as shown by the
records of the Beneficiaries, in a post office or official depository under the
care and custody of the United States Postal Service. The affidavit of any
Person having knowledge of the facts to the effect that such service was
completed shall be prima facie evidence of the fact of service. In this respect
and to the full extent Grantor may legally do so, Grantor also expressly agrees
that: (i) the address of Grantor shall be the address set out in this
Supplemental Indenture and shall be deemed conclusively to be and remain at all
times the most recent addresses of all debtors obligated to pay the Obligations
as shown by the records of the Beneficiaries, provided such address may be
changed to some other address within the United States of America from time to
time only by express written notice of change thereof signed by all debtors
obligated to pay the Obligations and actually delivered to and received by the
Beneficiaries and setting forth a new address for all such debtors which shall
be within the United States of America and which shall be deemed conclusively to
be and remain at all times thereafter the most recent address of all debtors
obligated to pay the Obligations as shown by the records of the Beneficiaries
until changed in the manner herein provided, (ii) the records of the
Beneficiaries shall not be deemed to reflect any change in the names or
identities of the respective debtors obligated to pay the Obligations (to whom
notice of proposed sale shall be required to be mailed as provided for above)
unless and until express written notice of such change signed by all debtors
obligated to pay the Obligations shall have been actually delivered
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to and received by the Beneficiaries, and (iii) no notice of such sale or sales
other than the notices hereinabove provided shall be required to be given to
Grantor or any other persons and any other notice is expressly waived.
The above provisions with respect to posting, serving, filing,
and giving notices of sale are intended to comply with the provisions of Section
51.002, et seq. of the Property Code of the State of Texas (in this subparagraph
(i) of paragraph (b) of Section 2.2, such Section 51.002, et seq. shall be
called the "Subject Statute"). In the event the requirement for any notice, or
the posting, serving, filing, or giving thereof, under the Subject Statute shall
be eliminated or the prescribed manner of posting, serving, filing, or giving
same is modified by future amendment to the Subject Statute, the requirement for
such particular notice shall be stricken from, or the manner of posting,
serving, filing, or giving any notice hereunder modified in, this Supplemental
Indenture in conformity with such amendment. The manner herein prescribed for
posting, serving, filing, or giving any notice, other than that to be posted and
filed or caused to be posted and filed by the Trustee, shall not be deemed
exclusive but such notice or notices may be posted, served, filed, or given in
any other manner which may be permitted by applicable law. Further, in relation
to this Supplemental Indenture and the exercise of any power of sale by the
Trustee hereunder, if the Subject Statute shall be amended or modified to
require any other notice or the posting, filing, serving, or giving thereof or
any statute hereafter enacted shall require any other notice or the posting,
filing, serving, or giving thereof, the Trustee or any Person or Persons
selected by the Trustee is hereby authorized and empowered by Grantor to give
such notice or make such posting, filing, serving, or giving thereof, provided,
however, that Grantor waives such other notice or the posting, filing, serving,
or giving thereof to the full extent Grantor may legally do so.
The power of sale hereinabove granted to the Trustee shall
extend to and may be exercised by any co-trustee or separate trustee appointed
pursuant to this Supplemental Indenture as a substitute for the Trustee. Grantor
further agrees that the recitals in the conveyance made to the purchaser
pursuant to exercise of the foregoing power of sale, shall be full proof and
evidence of the matters therein stated, and no other proof shall be requisite of
the request by any Beneficiary or the Trustee to enforce this trust, or of the
due, timely, and proper posting, filing, serving and giving of all notices and
making of the sale, or any particulars thereof, or of the inability, refusal, or
failure of the Trustee to act, or of the removal of any trustee, or of the
appointment of a successor trustee, separate trustee or co-trustee, as provided
in this Supplemental Indenture, either as to the legality of any such trustee's
appointment or otherwise, or of the contingencies which brought about the
failure or inability of the Trustee or any separate trustee or co-trustee to
act, or of their removal, as the case may be, all prerequisites of said sale
shall be presumed to have been performed, and any sale made under the powers
herein granted shall be a perpetual bar against Grantor, its successors and
assigns.
(ii) Insofar as this Supplemental Indenture covers and describes the
North Carolina Mortgaged Property, the Grant of this Supplemental Indenture
shall be deemed and constituted as a power of sale; and in furtherance thereof,
the Grantor does hereby Grant to the North Carolina Trustee, as trustee, having
an address at 700 Louisiana Street, Suite 1900, Houston,
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<PAGE> 12
Texas 77002, and to its successors and assigns, for the benefit of the
Beneficiaries, in fee simple, forever, all the North Carolina Mortgaged
Property. TO HAVE AND TO HOLD the North Carolina Mortgaged Property unto the
North Carolina Trustee, its successors and assigns, in fee simple forever, upon
the trusts and for the uses and purposes hereinafter set forth. Upon the
occurrence of an Event of Default, the Trustee may notify the North Carolina
Trustee to exercise the power of sale granted hereunder and upon such
notification it shall be lawful for and the duty of the North Carolina Trustee,
and the North Carolina Trustee is hereby authorized and empowered to expose to
sale and to sell the North Carolina Mortgaged Property or any part thereof at
public sale to the highest bidder for cash, after having first complied with all
applicable requirements of North Carolina law with respect to the exercise of
powers of sale contained in deeds of trust and upon such sale, the North
Carolina Trustee shall convey title to the portion of the North Carolina
Mortgaged Property so sold to the purchaser in fee simple. The North Carolina
Trustee shall apply the proceeds of any such sale as set forth in paragraph (e)
of Section 2.3. The Grantor agrees that in the event of a sale hereunder the
Beneficiaries, the Trustee, or any of them (but not the North Carolina Trustee)
shall have the right to bid at such sale. The North Carolina Trustee may require
the successful bidder at any sale to deposit immediately with the North Carolina
Trustee cash or certified check in an amount up to 10% of the bid, provided
notice of such requirement is contained in the advertisement of the sale. The
bid may be rejected if the deposit is not immediately made and thereupon the
next highest bidder may be declared to be the purchaser. Such deposit shall be
refunded in case a resale is had; otherwise it shall be applied to the purchase
price. If personal property is sold hereunder, it need not be at the place of
sale. The published notice, however, shall state the time and place where such
personal property may be inspected prior to sale. The North Carolina Mortgaged
Property may be sold in such parcels or lots as the North Carolina Trustee may
determine and the North Carolina Mortgaged Property may be sold at one sale or
in multiple sales as determined by the North Carolina Trustee. The exercise of
the power of sale hereunder by the North Carolina Trustee on one or more
occasions shall not be deemed to extinguish the power of sale which power of
sale shall continue in full force and effect until all of the North Carolina
Mortgaged Property shall have been finally sold and properly conveyed to the
purchasers at the sales. The North Carolina Trustee's commission shall be five
percent (5%) of the gross proceeds of the sale for a completed foreclosure. In
the event foreclosure is commenced, but not completed, the Grantor shall pay all
expenses incurred by the North Carolina Trustee, including reasonable attorneys'
fees, and a partial commission computed on five percent (5%) of the outstanding
indebtedness in accordance with the following schedule: one-fourth (1/4th)
thereof before the North Carolina Trustee issues a notice of hearing on the
right to foreclose; one-half (1/2) thereof after issuance of said notice;
three-fourths (3/4ths) thereof after such hearing; and the full commission after
the initial sale.
The Trustee shall at any time have the irrevocable right to
remove the North Carolina Trustee herein named without notice or cause and to
appoint its successor by an instrument in writing, duly acknowledged, in such
form as to entitle such written instrument to record in North Carolina, and in
the event of the resignation of the North Carolina Trustee herein named, the
Trustee shall have the right to appoint its successor by such written
instrument, and any successor to the North Carolina Trustee so appointed shall
be vested with
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the title to the North Carolina Mortgaged Property, and shall possess all the
powers, duties and obligations herein conferred on the North Carolina Trustee in
the same manner and to the same extent as though such successor were named
herein as the North Carolina Trustee.
2.3 General Provisions for Sale of Mortgaged Property; Application of
Proceeds.
(a) The Trustee may postpone any sale of all or any part of the
Mortgaged Property under or by virtue of this Article 2 by public announcement
at the time and place of such sale, and from time to time thereafter may further
postpone such sale by public announcement made at the time of sale fixed by the
preceding postponement.
(b) Upon the completion of any sale or sales made by the Trustee under
or by virtue of this Article 2, the Trustee shall execute and deliver to the
purchaser good and sufficient deeds and other instruments conveying, assigning
and transferring all its estate, right, title and interest in and to the
property and rights sold. The Trustee is hereby irrevocably appointed the true
and lawful attorney of Grantor and any subsequent owner of the Mortgaged
Property or any part thereof to make, in its own name and stead or in the name
of Grantor or any such subsequent owner, all necessary conveyances, assignments,
transfers and deliveries of the property and rights so sold, and for that
purpose the Trustee may execute all necessary deeds and instruments of
assignment and transfer and may substitute persons with like power, Grantor and
every such subsequent owner hereby ratifying and confirming all that their said
attorneys or such substitutes shall lawfully do by virtue hereof. Without
limiting the generality of the foregoing, Grantor and any such subsequent owner,
if so requested by the Trustee, shall ratify and confirm any such sale by
executing and delivering to the Trustee, without recourse, or to such purchaser
any instrument which, in the judgment of the Trustee, is suitable or appropriate
therefor. Any such sale made under or by virtue of this Article 2, whether made
under the power of sale herein granted or under or by virtue of judicial
proceedings or of a judgment or decree of foreclosure and sale, shall operate to
divest all the estate, right, title, interest, claim and demand whatsoever,
whether at law or in equity, of Grantor and any Person claiming from, through or
under Grantor in and to the property and rights so sold, and shall be a
perpetual bar at law and in equity against Grantor and its successors, assigns
and any and all Persons who claim or may claim the same from, through or under
it.
(c) The receipt of the Trustee of the purchase money paid as a result
of any such sale shall be a sufficient discharge therefor to any purchaser of
the Mortgaged Property sold as aforesaid; and no such purchaser or its
representatives, grantees or assigns, after paying such purchase money and
receiving such receipt, shall be bound to see to the application of such
purchase money upon or for any purpose hereof, shall be answerable in any manner
whatsoever for any loss, misapplication or nonapplication of any of such
purchase money or shall be bound to inquire as to the authorization, necessity,
expediency or regularity of any such application.
(d) In the event of any sale made under or by virtue of this Article 2
(whether made under any power of sale herein granted or under or by virtue of
judicial proceedings or of a judgment or decree of foreclosure and sale), the
entire principal of the Notes, together with all
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<PAGE> 14
accrued, unpaid interest thereon, and all other sums required to be paid by
Grantor pursuant hereto, if not previously due and payable, shall thereupon be
deemed to have been declared due and payable pursuant to subparagraph (i) of
paragraph (a) of Section 2.2 and shall immediately become due and payable,
anything in the Notes or in this Supplemental Indenture to the contrary
notwithstanding.
(e) The purchase money, proceeds or avails of any sale made under or by
virtue of this Article 2, together with any other sums which then may be held by
the Trustee as part of the Mortgaged Property or the proceeds thereof, whether
under the provisions of this Article 2 or otherwise, shall be applied to the
extent not prohibited by applicable law: first, to the payment of the costs and
expenses of such sale, including reasonable commissions or compensation to the
Trustee, its agents and counsel, and of any judicial proceedings wherein the
same may be made; second, to the payment of the whole amount then owing on the
Notes for accrued, unpaid interest; third, to the payment of the whole amount
then owing on the Notes for the Default Premium Amount; fourth, to the payment
of the whole amount then owed on the Notes for principal; fifth, to the payment
of any other Obligations; and sixth, to the payment of the surplus, if any, to
whomsoever shall be lawfully entitled thereto.
(f) In case of any proceedings against or involving Grantor in
insolvency or bankruptcy (including any proceedings under any federal or state
bankruptcy or insolvency statute or similar law) or any proceedings for its
reorganization or involving the liquidation of its assets, the Trustee shall be
entitled to prove the whole amount of principal, interest, and premium, if any,
due upon the Notes to the full amount thereof and all other payments, charges
and costs due under this Supplemental Indenture.
2.4 Purchase by the Trustee. Upon any sale made under or by virtue of
this Article 2 (whether made under any power of sale herein granted or under or
by virtue of judicial proceedings or of a judgment or decree of foreclosure and
sale), to the extent permitted by applicable law, the Trustee, on behalf of the
Registered Owners, may bid for and acquire the Mortgaged Property or any part
thereof and in lieu of paying cash therefor may make settlement for the purchase
price by crediting upon the indebtedness of the Grantor secured by this
Supplemental Indenture the net proceeds of sale after deduction of all costs,
expenses, compensations and other charges to be paid therefrom as herein
provided and any other sums which the Trustee is authorized to deduct under this
Supplemental Indenture. The Person making such sale shall accept such settlement
without requiring the production of the Notes evidencing such indebtedness, and
without such production there shall be deemed credited thereon the net proceeds
of sale ascertained and established as aforesaid. The Trustee upon so acquiring
the Mortgaged Property or any part thereof, shall be entitled to hold, deal with
and sell the same in any manner permitted by applicable laws.
2.5 Receivers. After the happening of any Event of Default hereunder,
immediately upon the commencement of any legal proceeding by the Trustee for or
in aid of the enforcement of the Notes then outstanding or of this Supplemental
Indenture, and without regard to the adequacy of the security of the Mortgaged
Property, the Trustee shall be entitled to the
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appointment of a receiver or receivers of the Mortgaged Property and of all the
earnings, revenues, rents, issues, profits and income thereof, and Grantor
hereby irrevocably consents to any such appointment.
2.6 Suits by the Trustee. All rights of action under this Supplemental
Indenture or under any of the Notes may be enforced by the Trustee without the
possession of any of the Notes and without the production thereof at any trial
or other proceeding relative thereto. A copy of any Note, if properly certified
by the Trustee to be true and correct, shall constitute conclusive evidence of
all matters that could be proven by production of the original of that Note in
any trial or proceeding relative thereto. Any such suit or proceeding instituted
by the Trustee shall be brought in its name as the Trustee, and any recovery of
judgment shall be, subject to the rights of the Trustee, for the ratable benefit
of the Registered Owners.
2.7 Waiver of Remedies. The Trustee, upon the request of the Majority
Holders, shall waive any Default, or Event of Default and its consequences,
except a Default, or Event of Default (i) in the payment or prepayment of the
principal of, interest, and premium, if any, on any Notes when and as the same
shall become due and payable or (ii) depriving the Trustee or a Registered Owner
of any Note of a lien upon the Mortgaged Property, waiver of which Defaults or
Events of Default specified in clause (i) or (ii) above shall require the
consent of the Registered Owner of each Note at the time outstanding. In case of
any such waiver or in case any proceeding taken on account of any such Default
or Event of Default shall have been discontinued or abandoned or determined
adversely to the Trustee, then and in every such case, Grantor, the Trustee and
the Registered Owners shall be restored to their former positions and rights
hereunder respectively. No such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
2.8 Remedies Cumulative. No remedy herein conferred upon or reserved to
the Trustee or the Registered Owners is intended to be exclusive of any other
remedy or remedies, and each such remedy shall be cumulative and in addition to
every other remedy given hereunder or now or hereafter existing at law or in
equity. No delay or omission of the Trustee to exercise any right or power
accruing upon any Event of Default shall impair any such right or power or shall
be construed to be a waiver of any such Event of Default or be deemed an
acquiescence therein; and every power and remedy of the Trustee hereunder may be
exercised from time to time and as often as may be deemed expedient by the
Trustee or the Registered Owners.
2.9 Waiver of Rights. Grantor agrees that Grantor will not at any time
or in any manner whatever claim or take any benefit of any stay, extension or
moratorium law which may affect the terms of this Supplemental Indenture; nor
claim or take any benefit of any law providing for the valuation or appraisal of
the Mortgaged Property or any part thereof prior to any sale thereof; nor, prior
to or after any such sale, claim or exercise any right to redeem the property so
sold or to be sold or any part thereof; and Grantor hereby expressly waives all
benefit or advantage of any such law and covenants not to hinder, delay or
impede the execution of any power or remedy herein granted or available at law
or in equity, but to suffer and permit
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<PAGE> 16
the execution of every power and remedy as though no such law existed. Grantor
waives all right to have the Mortgaged Property marshaled upon any foreclosure
hereof.
2.10 Retention of Possession. Notwithstanding the appointment of any
receiver, liquidator or trustee of Grantor, or of any of its property, or of the
Mortgaged Property or any part thereof, the Trustee shall be entitled to retain
possession and control of all property now or hereafter held by the Trustee
under this Supplemental Indenture.
2.11 Direction of Remedies. The Majority Holders shall have the right
by an instrument in writing delivered to the Trustee to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
with respect to this Supplemental Indenture or of exercising any power or trust
conferred upon the Trustee, and the Trustee shall have the right to decline to
follow any such direction if the Trustee in good faith shall, by the Chairman of
the Board of Directors, the President or a Vice President of the Trustee,
determine that the proceeding so directed would involve it in personal liability
or would be unjustly prejudicial to the Registered Owners not joining in such
direction. The Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with any written
instruction furnished to the Trustee by the Majority Holders in response to a
written application by the Trustee therefor. If no such instrument or
instruction has been received from the Majority Holders, the Trustee may take
such action, if any, as the Trustee shall determine.
2.12 Suit by Registered Owners. If an event of Default described in
paragraph (a), paragraph (b) or paragraph (c) of Section 2.1 shall have occurred
and be continuing and the Registered Owner or Registered Owners shall have
requested the Trustee to act with respect thereto against the Mortgaged Property
as specified in Section 2.2 and the Trustee shall have failed so to act within
15 days of such request, then and only then, subject to the next sentence of
this Section 2.12, shall any Registered Owner have the right to institute
proceedings against the Mortgaged Property for the collection of all moneys due
and payable, whether for principal, interest, or premium, if any, or any other
indebtedness relating to the Notes. Notwithstanding anything herein to the
contrary, no Registered Owner shall be entitled to take any judicial action or
institute any suit to initiate foreclosure proceedings with respect to the
Mortgaged Property or any part thereof or to enforce, by any judicial
proceeding, the payment of its Note or Notes, whether for principal, interest,
or premium, if any, or any other indebtedness thereunder, to the extent that the
taking of such action or the institution or prosecution of any such suit or the
entry of judgment therein would under applicable law result in a surrender,
impairment, waiver or loss of the lien of this Supplemental Indenture upon such
Mortgaged Property, or any part thereof, as security for Notes held by any other
Registered Owner.
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<PAGE> 17
ARTICLE 3
THE TRUSTEE
3.1 Rights and Obligations of Trustee. The Trustee accepts the trusts
hereby created and agrees to perform its duties herein for the benefit of the
Beneficiaries upon the following terms and conditions:
(a) The Trustee shall have the full power and authority to do all
things not inconsistent with the provisions of this Supplemental Indenture or
applicable law in order to enforce this Supplemental Indenture or to take any
action with respect to an Event of Default, or to institute, appear in or defend
any suit or other proceeding with respect thereto, or to protect the interests
of the Beneficiaries. The Trustee shall not be answerable or accountable except
for its own willful misconduct or gross negligence. Grantor agrees to indemnify
and save harmless the Trustee from any liability and damages which it may incur
or sustain in the exercise and performance of its powers and duties hereunder,
including expressly and without limitation any such liability and damages
arising from negligence of the Trustee. The Trustee shall not be accountable for
the use of any proceeds from the sale of the Notes. The Trustee shall be
obligated to timely make all required refilings of any financing statements
referred to in Section 3.2 of the Indenture (unless such refilings relate to
original filings of which the Trustee has no knowledge), and upon request of any
of the Beneficiaries, any other security documents necessary or appropriate to
preserve the liens created hereby, but shall have no obligation to take any
action to protect, preserve or enforce any rights or interests in the Mortgaged
Property or towards the execution or enforcement of the trusts hereby created
which, in its opinion, shall be likely to involve expense or liability, unless
the Beneficiaries shall furnish reasonable indemnity against such liability and
expense to the Trustee. In accepting the trusts hereunder and the Mortgaged
Property, the Trustee is acting solely as trustee hereunder and not in its
individual capacity (except with respect to the penultimate sentence of Section
2.2 of the Indenture) and all Persons, other than the Beneficiaries, having any
claim against the Trustee arising by reason hereof (other than claims in respect
of the gross negligence or willful misconduct of the Trustee and other than
claims in respect of the penultimate sentence of Section 2.2 of the Indenture),
shall look only to the Mortgaged Property for payment or satisfaction thereof.
Unless and until an Event of Default shall have occurred and be continuing, the
Trustee shall not be obligated to take any action under this Supplemental
Indenture or any document included in the Mortgaged Property except for the
performance of such duties as are specifically set forth herein or therein and
except as may be requested from time to time in writing by the Majority Holders.
If and so long as an Event of Default (of which the Trustee shall be deemed to
have knowledge, as hereinafter provided) shall have occurred and be continuing,
the Trustee shall exercise such rights, powers and remedies (whether vested in
it by this Supplemental Indenture or by law or in equity or by statute or
otherwise) for the protection and enforcement of its rights under this
Supplemental Indenture and in respect of the Mortgaged Property as the Trustee
(in the absence of written instructions from the Beneficiaries pursuant to
Section 2.11 of this Supplemental Indenture) may determine, and shall use the
same degree of care and skill
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<PAGE> 18
in such exercise as a prudent man would use under the circumstances in the
conduct of his own affairs.
(b) The Trustee shall be entitled to receive compensation from Grantor
for all services rendered by it hereunder prior to an Event of Default, and to
be reimbursed for all proper disbursements incurred by it hereunder prior to an
Event of Default, provided that no commissions shall be paid for the collection
of moneys pursuant to the terms hereof. The Trustee shall be entitled to
reasonable compensation for its services and reimbursement for all proper
disbursements incurred by it upon or after an Event of Default, or instituting,
appearing in or defending any suit or proceeding with respect thereto. All sums
payable pursuant to this paragraph (b) of this Section 3.1 shall be secured by
the lien of this Supplemental Indenture.
(c) The Trustee shall incur no liability in acting upon any signature,
notice, request, consent, instrument, certificate, opinion, or other instrument
reasonably believed by it in good faith to be genuine. In administering the
trusts, the Trustee may execute any of the trusts or powers hereof directly or
through its agents or attorneys and may consult with counsel, accountants and
other skilled persons to be selected and employed by it, and the reasonable
expenses thereof shall be paid by Grantor, and the Trustee shall not be liable
for anything done, suffered or omitted in good faith by it in accordance with
the advice of any such Person.
(d) The recitals and statements (other than express covenants of the
Trustee) in the Operative Documents (except for the Trustee's certificate of
authentication endorsed on the Notes) shall not be considered as made by, or as
imposing any obligation or liability upon, the Trustee. The Trustee makes no
covenant or representation as to the rights of the holders of the Notes, the
title or interest of Grantor in or to, or the condition of, the Mortgaged
Property or the sufficiency of the security for the Notes or of this
Supplemental Indenture, except that the Trustee represents and warrants that
this Supplemental Indenture is valid, binding and enforceable in and with
respect to the Trustee in accordance with its terms.
(e) The Trustee shall have no duty to see to any recording, filing or
registration of this Supplemental Indenture, any instrument of further
assurance, any instrument constituting part of the Mortgaged Property, or any
amendments or supplements to any of said instruments, other than those refilings
referred to in paragraph (a) of this Section 3.1, or to see to the payment of
any fees, charges or taxes in connection therewith (and the Trustee may act with
respect to the Notes and pay out deposited moneys without regard thereto), or to
give any notice thereof, or to see to the payment of or be under any duty in
respect of any tax, assessment or other governmental charge which may be levied
or assessed on the Mortgaged Property or any part thereof or against Grantor.
(f) Whenever in administering the trust, the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, such matter (unless other evidence
in respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate or other instrument
purporting to be signed by either the president or a vice president of Grantor
and
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delivered to the Trustee, and such certificate or other instrument shall be full
warrant to the Trustee for any action taken, suffered or omitted by it on the
faith thereof, but in its discretion the Trustee may in lieu thereof accept
other evidence of such fact or matter or may require such further or additional
evidence as may seem reasonable to it.
(g) The Trustee shall have no obligation to see to the payment or
discharge of any Liens (other than the lien of this Supplemental Indenture and
then only to the extent herein provided, and liens, if any, arising by reasons
of acts or omissions of the Trustee unrelated to the discharge of its duties as
Trustee hereunder) upon the property included in the Mortgaged Property, or to
see to the payment of the principal of, premium or interest on any of the
Obligations secured thereby or to the delivery or transfer to any Person of any
property released from any such Lien, or to give notice to or make demand upon
any mortgagor, mortgagee or other Person for the delivery or transfer of any
such property.
(h) The Trustee shall have no duty to confirm or verify any schedules
setting forth the interest and principal payments and other payments to be made
on or in respect of the Notes or any financial or other statements or reports or
certificates furnished pursuant to any provision hereof, and, except as
otherwise provided hereby the Trustee shall be under no other duty in respect of
the same, except to retain the same in its files, and permit the inspection
thereof at reasonable times by any of the Beneficiaries.
(i) The Trustee shall not be concerned with or accountable to any
Person for the use or application of any deposited moneys which shall be
released or withdrawn in accordance with the provisions hereof or of any
property or securities or the proceeds thereof which shall be released from the
lien of this Supplemental Indenture in accordance with the provisions hereof.
(j) The Trustee shall not be required to ascertain or inquire as to the
performance or observance of any of the covenants or agreements herein
contained, or contained in any other instruments pledged or assigned to the
Trustee hereunder, to be performed or observed by Grantor or any party to any
such other instruments. The Trustee shall not be required to take notice or be
deemed to have notice or knowledge of any Default or Event of Default (except
default in the payment of moneys to the Trustee which are required to be paid to
the Trustee on or before a specified date or within a specified time after
receipt by the Trustee of a notice or certificate which was in fact received and
except default in the delivery of any certificate, opinion or other document
expressly required to be delivered to the Trustee by any provision hereof),
unless (i) the Trustee shall receive from Grantor or any of the Beneficiaries
written notice stating that a Default or Event of Default has occurred and
specifying the same, or (ii) a responsible officer in the corporate trust
department of the Trustee shall otherwise obtain actual knowledge thereof, and
in the absence of such notice or such actual knowledge, the Trustee may
conclusively assume that there is no such Default or Event of Default, except as
aforesaid. As soon as practicable after receiving knowledge thereof, the Trustee
shall notify all Beneficiaries and Grantor of any Event of Default, and if such
Event of Default is subsequently wholly cured or waived, the Trustee shall give
notice to such effect to the Beneficiaries and Grantor.
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(k) The Trustee shall forward to each of the Beneficiaries a copy of
any financial report, certificate or communication submitted to the Trustee
pursuant to this Supplemental Indenture.
(l) Notwithstanding any other provision of this Supplemental Indenture,
if (i) any payment of principal of, or premium (if any) or interest on, any
outstanding Note is not paid or made when due and (ii) the Trustee shall have
notice of that fact, the Trustee shall on the next succeeding Business Day give
immediate telephonic or written notice by telex or its equivalent to Grantor and
to each Registered Owner.
3.2 Resignation of Trustee. The Trustee may resign and be discharged of
the trusts by giving notice thereof to each of the Beneficiaries and Grantor (or
any subsequent owner of Grantor's interest in any property included in the
Mortgaged Property), specifying the date (not less than 60 days after such
notice) when such resignation shall take effect. Notwithstanding the foregoing,
no such resignation shall take effect until the appointment and acceptance of a
successor trustee pursuant to Section 3.3 of this Supplemental Indenture.
3.3 Successor Trustee.
(a) The Trustee may be removed at any time by notice from the
Registered Owners of not less than a majority in aggregate unpaid principal
amount of the Notes then outstanding. If the Trustee shall have given notice of
its intention to resign, shall resign, be removed or otherwise be incapable of
acting, or if the Trustee shall be taken under the control of any public officer
or a receiver appointed by a court, or be adjudged a bankrupt or insolvent, then
a successor may be appointed by the Registered Owners of not less than a
majority in aggregate unpaid principal amount of the Notes then outstanding;
provided that Grantor may appoint a successor trustee to act until such
successor shall be so appointed. Grantor shall notify each of the Beneficiaries
of any such appointment by Grantor, but any successor trustee so appointed by
Grantor shall immediately and without further act be superseded by a successor
trustee appointed by the Beneficiaries as above provided.
(b) Any successor to the Trustee shall execute, acknowledge and deliver
to its predecessor and Grantor (or any subsequent owner of Grantor's interest in
the property included in the Mortgaged Property), an instrument accepting such
appointment, and thereupon such successor, without any further act, deed or
conveyance, unless otherwise required by applicable state law, shall become
vested with all the estate, properties, rights, powers, duties and trusts of its
predecessor in the trusts hereunder with like effect as if originally named as
the Trustee herein; provided that on the written request of Grantor, any of the
Beneficiaries or the successor trustee, such predecessor shall execute and
deliver an instrument transferring to such successor, upon the trusts expressed
in this Supplemental Indenture, such estate, properties, rights, powers, duties
and trusts and shall duly assign, transfer, deliver and pay over to such
successor, any property and moneys subject to the lien of this Supplemental
Indenture and held by such predecessor. The successor Trustee shall deliver to
each of the Beneficiaries and to Grantor (or
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any subsequent owner of Grantor's interest in the property included in the
Mortgaged Property) a copy of any such instrument accepting appointment promptly
after its execution thereof.
(c) Any successor to the Trustee shall always be a bank or trust
company organized under the laws of the United States of America or a State
thereof licensed, chartered or regulated by the Office of the Comptroller of the
Currency, the Federal Deposit Insurance Corporation, the Federal Savings and
Loan Insurance Corporation, the Federal Home Loan Bank Board or the Bureau of
Federal Credit Unions or any successor thereof, having a combined capital,
surplus and undivided profits (as shown by its most recent financial statement
published to its shareholders) aggregating at least $100,000,000 and a principal
office in one of the forty-eight contiguous United States, in which it is duly
authorized to act as a trustee.
(d) Subject to the provisions of paragraph (c) of this Section 3.3, any
corporation into which the Trustee may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation or
conversion to which it shall be a party, shall be the successor to the Trustee
without the execution or filing of any paper or any further act on the part of
any of the parties hereto.
3.4 Co-Trustees and Separate Trustees.
(a) Whenever (i) the Trustee shall deem it necessary or prudent in
order to conform to any law of any jurisdiction in which all or any part of the
Mortgaged Property shall be situated or to make any claim or bring any suit with
respect to all or any part of the Mortgaged Property, (ii) the Trustee shall be
advised by counsel satisfactory to it that it is necessary or prudent in the
interests of the Beneficiaries, or (iii) the Trustee shall have been requested
to do so in writing by the Registered Owners of at least 25% in principal amount
of the Notes then outstanding, then the Trustee shall execute and deliver all
instruments and agreements necessary or proper to appoint one or more Persons
approved by the Trustee, either to act as co-trustee or co-trustees with respect
to all or any part of the Mortgaged Property, jointly with the Trustee, or to
act as separate trustee or separate trustees with respect to all or any part of
the Mortgaged Property, in either such case with such powers a may be provided
in the instrument of appointment, and to vest in such Person or Persons any
property, title, right or power of the Trustee, subject to the other provisions
of this Section 3.4. If the Trustee deems it necessary or prudent, Grantor, upon
request of the Trustee, will join in any such instrument of appointment. The
Trustee may execute, deliver and perform any deed, conveyance, assignment or
other instrument as may be required by any co-trustee or separate trustee for
more fully and certainly vesting in and confirming to it or him any property,
title, right or power that by the terms of such instrument of appointment are
expressed to be conveyed or conferred to or upon such co-trustee or separate
trustee, and Grantor, upon request of the Trustee, will join therein and
execute, acknowledge and deliver the same. In like manner, if the Trustee, upon
15 days written request of the Registered Owners of at least 25% in principal
amount of the Notes then outstanding, has failed or is unable to so act, should
the Majority Holders deem it necessary or prudent to so act, such Majority
Holders by instrument in writing delivered to the Trustee may appoint any
co-trustee or separate trustee acceptable to the Trustee; and Grantor, upon
request
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of the Trustee, will join in any such instrument of appointment. In the event
Grantor shall not have joined in any such appointment, deed, conveyance,
assignment or other instrument within 15 days after the receipt by Grantor of a
written request from the Trustee or the Majority Holders so to do, or in the
event a Default or an Event of Default shall occur and be continuing, the
Trustee or Majority Holders, as the case may be, shall have the power to make
such appointment pursuant to the provisions of this Section 3.4 without the
concurrence of Grantor; and without limiting such power, Grantor further hereby
appoints the Trustee its agent and attorney-in-fact to act in the name of and
for Grantor under the foregoing provisions of this Section 3.4 in any of such
contingencies should the Trustee desire so to act.
(b) Every co-trustee and separate trustee shall, to the extent
permitted by law but to such extent only, be appointed and act and the Trustee
shall act subject to the following terms and conditions:
(i) the Notes shall be authenticated and delivered, and all rights,
powers, duties and obligations of the Trustee hereunder in respect of the
custody of money held by, or required to be deposited with, the Trustee
hereunder, shall be exercised solely by the Trustee;
(ii) all other rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such co-trustee or separate trustee, jointly,
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed, the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights, powers,
duties, and obligations (including but not limited to the holding of title to or
power of sale to the Mortgaged Property situated in any such jurisdiction) shall
be exercised and performed by such co-trustee or separate trustee;
(iii) No power hereby given to, or with respect to which it is hereby
provided may be exercised by, any such co-trustee or separate trustee shall be
exercised hereunder by such co-trustee or separate trustee except (A) jointly
with the Trustee, (B) with the consent of the Trustee, or (C) at the request of
the Majority Holders.
(iv) The Trustee may at any time by written instrument accept the
resignation of or, acting on behalf and under the direction of the Registered
Owners of 25% in principal amount of the Notes then outstanding, remove any such
co-trustee or separate trustee, and upon the request of the Trustee, Grantor
shall join with the Trustee in the execution, delivery and performance of all
instruments and agreements necessary or proper to make effective such
resignation, but the Trustee shall have the power to accept such resignation or
to make such removal without the joinder of Grantor as is above provided with
respect to the appointment of such co-trustees and separate trustees. A
successor to a co-trustee or separate trustee so resigning or removed may be
appointed in the manner provided in this Section 3.4 for the appointment of a
separate trustee or co-trustee.
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(v) Any request, approval or consent in writing by the Trustee or the
Majority Holders to any co-trustee or separate trustee shall be sufficient
warrant to such co-trustee or separate trustee, as the case may be, to take such
action as may be so requested, approved, or consented to.
(vi) Subject to the limitations set forth in this Section 3.4, each
co-trustee and separate trustee appointed pursuant to this Section 3.4 shall be
subject to, and shall have the benefit of, the provisions of this Supplemental
Indenture insofar as they apply to the Trustee.
(c) Such co-trustee or separate trustee, upon appointment pursuant to
this Section 3.4, shall be vested with the estates or property specified in the
instrument under which it was appointed, either jointly with the Trustee, or
separately, as may be provided therein, subject to all the trusts, conditions
and provisions of this Supplemental Indenture; and every such instrument shall
be filed with the Trustee. Any co-trustee or separate trustee may, at any time,
by written instrument constitute the Trustee his agent or attorney-in-fact with
full power and authority, to the extent permitted by law, to do all acts and
things and exercise all discretion authorized or permitted by such co-trustee or
separate trustee for and in behalf of such trustee and in the name of such
trustee. If any co-trustee or separate trustee shall be dissolved, become
incapable of acting, resign, be removed or die, all the estates, property,
rights, powers, trusts, duties and obligations of such co-trustee or separate
trustee, so far as permitted by law, shall vest in and be exercised by the
Trustee, without the appointment of a successor to said co-trustee or separate
trustee, until the appointment of a successor to said co-trustee or separate
trustee is deemed necessary or prudent as provided in paragraph (a) of this
Section 3.4.
(d) Any notice, request or other writing, by or on behalf of the
Registered Owners or any of them delivered to the Trustee shall be deemed to
have been delivered to the Trustee, and all co-trustees and separate trustees.
3.5 Appointment of Certain Separate Trustees. With respect to the North
Carolina Mortgaged Property, David W. Martin, Trustee (herein called the "North
Carolina Trustee"), is hereby appointed to act as a separate trustee pursuant to
the provisions of Section 3.4 of this Supplemental Indenture for the sole
purpose of accepting the benefits of the power of sale and related rights set
forth in subparagraph (ii) of paragraph (b) of Section 2.2 of this Supplemental
Indenture. In furtherance thereof, the North Carolina Trustee is hereby vested
with full power to effect and enforce the power of sale granted by this
Supplemental Indenture as to the North Carolina Mortgaged Property for the
benefit of the Beneficiaries to the full extent that the Trustee is incompetent
or unqualified to accept such power of sale and related rights or to perform
such act or acts as may hereafter be required with respect thereto. Upon the
occurrence of an Event of Default, the North Carolina Trustee shall enforce all
powers, duties, obligations and rights hereby conferred upon the North Carolina
Trustee in respect of the North Carolina Mortgaged Property, at the request of
the Majority Holders, in accordance with this Supplemental Indenture and the
laws of the State of North Carolina.
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3.6 Liability of Trustees. No trustee hereunder shall be personally
liable by reason of any act or omission of any other trustee hereunder.
3.7 Segregation of Moneys. All moneys received by the Trustee pursuant
to this Supplemental Indenture shall be held in trust for the purposes for which
they were paid, but, except as otherwise provided herein and to the extent
required by law, need not be segregated from any other moneys, and may be
deposited by the Trustee under such general conditions as may be prescribed by
law in the general banking department of the Trustee, and the Trustee shall not
be liable for any interest thereon, except as otherwise provided herein.
3.8 Illegal Acts. No provision of this Supplemental Indenture or any
amendment or supplement hereto or thereto shall be deemed to impose any duty or
obligation on the Trustee to perform any act in the execution of the trust or to
exercise any right, power, duty or obligation conferred or imposed on it, which
under any present or future law shall be unlawful (including without limitation
the performance of any act that would violate the Trust Indenture Act of 1939,
as amended), or which shall be beyond the corporate powers, authorization or
qualification of the Trustee, but any such act and any such exercise shall be
performed and exercised by any co-trustee or separate trustee appointed as
provided in Section 3.4 of this Supplemental Indenture, provided, that the same
shall not be unlawful or beyond his or its powers, authorization or
qualification.
ARTICLE 4
GENERAL
4.1 Legal Expenses. Grantor agrees to indemnify the Trustee and the
Beneficiaries from all loss, damage and expense, including (without limitation)
attorneys' fees, incurred in connection with any action of whatever kind taken
in connection with this Supplemental Indenture or any supplement or amendment
hereto or waiver hereunder or any suit or proceeding in or to which the Trustee
and the Beneficiaries may be made or become a party for the purpose of
protecting the lien of this Supplemental Indenture or its priority.
4.2 No Impairment. Grantor agrees that no other security, now existing
or hereafter taken, for the payment or performance of any of the Obligations
shall be impaired or affected in any manner by the execution of this
Supplemental Indenture; no security subsequently taken to secure the payment or
performance of any of the Obligations shall impair or affect in any manner the
security given by this Supplemental Indenture; all security for the payment or
performance of any of the Obligations shall be taken, considered, and held as
cumulative; and the taking of additional security shall at no time release or
impair any security by endorsement or otherwise previously given. Grantor
further agrees that any part of the security herein described may be released
without in anywise altering, varying, or diminishing the force, effect, or lien
of this Supplemental Indenture, or of any renewal or extension of said lien, and
that this Supplemental Indenture shall continue as a first lien, assignment, and
security interest on all the Mortgaged Property not expressly released until all
Obligations are fully paid and performed.
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4.3 Security Agreement; Fixture Filing. This Supplemental Indenture, to
the extent that it conveys or otherwise deals with personal property or with
items of personal property which are or may become fixtures, shall also be
construed as a security agreement under Article 9 (in this Section 4.3 called
"Article 9") of the Uniform Commercial Code, as adopted and in effect in the
State of North Carolina, and this Supplemental Indenture constitutes a financing
statement filed as a fixture filing in the real property records of the
respective Cities or Counties in which this Supplemental Indenture is recorded
with respect to any and all fixtures now or at any time included within the
Mortgaged Property. If any item of Mortgaged Property also constitutes
collateral granted to the Trustee or the Beneficiaries under any other mortgage,
agreement, document, or instrument, in the event of any conflict between the
provisions of this Supplemental Indenture and the provisions of such other
mortgage, agreement, document, or instrument relating to such collateral, the
provision or provisions this Supplemental Indenture or such other mortgage,
agreement, document or instrument selected by the Trustee at its sole discretion
shall control with respect to such collateral.
Without limiting the generality of the preceding paragraph, Grantor
grants unto the Trustee a security interest in all the Mortgaged Property
(including both that now owned and that hereafter acquired) to the full extent
that attachment of a security interest in such Mortgaged Property may be
obtained under Article 9 (all such Mortgaged Property in which such attachment
may now or hereafter be obtained is in this Section 4.3 collectively called, the
"UCC Collateral").
Grantor covenants and agrees with the Trustee with respect to the UCC
Collateral that:
(a) In addition to any other remedies granted in this Supplemental
Indenture to the Trustee, the Trustee may, during the continuation of any Event
of Default, proceed under Article 9 as to all or any part of the UCC Collateral,
and shall have and may exercise with respect to the UCC Collateral all the
rights, remedies, and powers of a secured party under Article 9, including,
without limitation, the right and power to sell, at one or more public or
private sales, or otherwise dispose of, lease, or utilize the UCC Collateral and
any part or parts thereof in any manner authorized or permitted under Article 9
after default by a debtor, and to apply the proceeds thereof to the Obligations
in such manner as the Trustee may elect.
(b) The rights of the Trustee upon such occurrence and continuation of
an Event of Default shall include, but without limitation, the right, by any
lawful means, to take possession of the UCC Collateral or any part thereof and
to enter, in any lawful manner, upon any premises where UCC Collateral may be
situated for such purpose without being deemed guilty of trespass and without
liability for damages thereby occasioned, and to take any lawful action deemed
necessary or appropriate or desirable by the Trustee, at its option and in its
discretion, to repair, refurbish, or otherwise prepare the UCC Collateral for
sale, lease, or other or disposition pursuant to Article 9.
(c) To the extent permitted by Article 9, Grantor expressly waives any
notice of sale or other disposition of the UCC Collateral and any other
formalities prescribed by law relative
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to sale or disposition of the UCC Collateral or the exercise of any other right
or remedy of the Trustee existing during the continuation of an Event of
Default. To the extent any such notice is required and cannot be waived, Grantor
agrees that, if such notice is mailed, postage prepaid, to Grantor at the
address of Grantor set forth hereinbelow at least five days before the time of
such sale or disposition, such notice shall be deemed reasonable and shall fully
satisfy any requirement under Article 9 for giving of said notice.
(d) During the continuation of any Event of Default, the Trustee is
Granted the express right, at its option, to transfer to itself or to its
nominee the UCC Collateral, or any part thereof, to notify any obligor or
account debtor with respect to any UCC Collateral to make payment directly to
the Trustee or its designated nominee, and to receive the moneys, income,
proceeds or benefits attributable or accruing thereto and to apply the same to
the Obligations in such order and manner as the Trustee may elect. With respect
to the UCC Collateral, Grantor, for itself, its successors, heirs and assigns,
hereby expressly and specifically waives all rights to a marshaling of the
assets of Grantor, including the UCC Collateral, or to a sale in inverse order
of alienation.
(e) All recitals in any instrument of assignment or any other
instrument executed by the Trustee incident to a sale, transfer, assignment,
lease, or other disposition or utilization of the UCC Collateral or any part
thereof hereunder shall be full proof of the matters stated therein, no other
proof shall be requisite to establish full legal propriety of the sale or other
action or of any fact, condition or thing incident thereto, and all
prerequisites of such sale or other action and of any fact, condition or thing
incident thereto shall be presumed conclusively to have been performed or to
have occurred.
(f) The Trustee may require Grantor to assemble the UCC Collateral
(except any portion thereof which is a fixture and is affixed to a Site or to
Improvements situated thereon) and make it available to the Trustee at a place
to be designated by the Trustee that is reasonably convenient to Grantor and
Trustee. Grantor shall be fully liable for all expenses of retaking, holding,
preparing for sale, lease or other use or disposition, selling, leasing or
otherwise disposing or preparing to dispose of the UCC Collateral which are
incurred or paid by the Trustee, including all attorneys' fees, legal expenses
and other costs, and all of such fees, expenses and costs shall constitute a
part of the Obligations.
(g) Certain of the UCC Collateral is or will become fixtures and this
Supplemental Indenture upon being filed for record in the real property records
of the respective counties where the Sites are located shall operate also as a
financing statement upon such of the UCC Collateral which is or may become
fixtures. Grantor is the record owner of or has a record interest in each of the
Sites on which fixtures constituting a portion of the UCC Collateral are
located.
(h) Any copy of this Supplemental Indenture which is signed by Grantor
or any photographic or other reproduction of this Supplemental Indenture may
also be filed as a financing statement.
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(i) So long as any of the Obligations remain unpaid, unless the prior
written specific consent and approval of the Trustee shall have first been
obtained, Grantor will not execute and there will not be filed in any public
office any financing statement or statements covering the UCC Collateral other
than financing statements in favor of the Trustee hereunder.
4.4 Overdue Obligations. In the event any payment Obligation of the
Grantor hereunder, under the Notes or under any other Operative Document (other
than any of the principal of, or interest or premium (if any) on the Notes,
which Obligation, if not paid when due, shall bear interest as provided in
Section 2.11 of the Indenture) is not paid when due, such Obligation shall bear
interest, payable on demand, at the Overdue Rate from the date such Obligation
became due until such Obligation is paid.
4.5 Notices. All communications, notices and consents provided for
herein shall be in writing and be given in person or by overnight delivery
service or by means of telex, telecopy or other wire transmission made before
5:00 P.M., recipient's time, on a Business Day and promptly confirmed by mail
(with request for assurance of receipt in a manner typical with respect to
communications of that type) or by mail, and shall become effective (w) on
delivery if given in person, (x) on the date of transmission if sent by telex,
telecopy or other wire transmission, (y) the next Business Day if delivered by
overnight delivery service, or (z) three Business Days after being deposited in
the United States mail, registered or certified mail, return receipt requested,
with proper postage prepaid. Notices shall be addressed as follows:
If to Grantor:
Kettle Restaurants, Inc.
3131 Argonne
Houston, Texas 77098
Attention: Vice President-Finance
Telecopier: (713) 524-7956
If to the Trustee:
NationsBank of Texas, National Association
700 Louisiana Street
Houston, Texas 77002
Attention: Corporate Trust Administration
Telecopier: (713) 247-7851
or at such other address as any party hereto may from time to time designate by
notice duly given in accordance with the provisions of this Section 4.5 to the
other parties hereto.
4.6 Successors; Gender. All provisions hereof shall bind Grantor,
the Trustee, the Beneficiaries and their respective successors, vendees and
assigns and shall inure to the benefit of the Trustee, the Beneficiaries and
their respective successors and assigns, and Grantor and
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its permitted successors and assigns. The word "Grantor" shall include all
Persons claiming under or through any Grantor and all Persons liable for the
payment or performance by Grantor of any of the Obligations whether or not such
Persons shall have executed the Notes or this Supplemental Indenture. Wherever
used, unless specifically defined herein to the contrary, the singular number
shall include the plural, and the plural the singular. The use of any gender
shall be applicable to all genders.
4.7 Care by the Beneficiaries or the Trustee. The Beneficiaries or the
Trustee shall be deemed to have exercised reasonable care in the custody and
preservation of any of the Mortgaged Property in their possession if any of them
take such action for that purpose as Grantor requests in writing, but failure of
the Beneficiaries or the Trustee to comply with any such request shall not be
deemed to be (or to be evidence of) a failure to exercise reasonable care, and
no failure of the Beneficiaries or the Trustee to preserve or protect any rights
with respect to such Mortgaged Property against prior parties, or to do any act
with respect to the preservation of such Mortgaged Property not so requested by
Grantor, shall be deemed a failure to exercise reasonable care in the custody or
preservation of such Mortgaged Property.
4.8 No Obligation on the Beneficiaries or the Trustee. This
Supplemental Indenture is intended only as security for the Obligations.
Anything herein to the contrary notwithstanding, (i) Grantor shall be and remain
liable hereunder and with respect to the Mortgaged Property to perform all of
the obligations assumed by Grantor under this Supplemental Indenture or with
respect to each thereof, (ii) neither the Beneficiaries nor the Trustee shall
have any obligation or liability hereunder or with respect to the Mortgaged
Property by reason or arising out of this Supplemental Indenture other than the
obligation of the Trustee to act with respect to the Mortgaged Property as
herein provided, and (iii) neither the Beneficiaries nor the Trustee shall be
required or obligated in any manner to perform or fulfill any of the obligations
of Grantor, under, pursuant to or with respect to any of the Mortgaged Property.
4.9 No-Waiver; Writing. No delay on the part of the Trustee or the
Beneficiaries in the exercise of any right or remedy shall operate as a waiver
thereof, and no single or partial exercise by the Trustee or the Beneficiaries
of any right or remedy shall preclude other or further exercise thereof or the
exercise of any other right or remedy. The granting or withholding of consent by
the Trustee or the Beneficiaries to any transaction as required by the terms
hereof shall not be deemed a waiver of the right to require consent to future or
successive transactions.
4.10 GOVERNING LAW. THIS SUPPLEMENTAL INDENTURE AND THE NOTES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAW OF THE STATE OF
TEXAS; PROVIDED, HOWEVER, THAT THE PROVISIONS FOR THE CREATION, PERFECTION
AND/OR ENFORCEMENT OF THE LIEN AND SECURITY INTEREST CREATED BY THIS
SUPPLEMENTAL INDENTURE IN RESPECT OF ANY SITE AND UNIT AND THE FORECLOSURE OR
POWER OF SALE PROCEDURES SET FORTH IN THIS SUPPLEMENTAL INDENTURE IN RESPECT OF
SUCH SITE AND UNIT SHALL BE GOVERNED BY
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AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE WHERE THAT SITE
AND UNIT IS LOCATED.
4.11 Severability. Whenever possible, each provision of this
Supplemental Indenture shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Supplemental
Indenture shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Supplemental Indenture.
4.12 Waiver. Grantor, on behalf of Grantor and all Persons now or
hereafter interested in any of the Units or the Mortgaged Property, to the
fullest extent permitted by applicable law, hereby waives all rights under all
appraisement, homestead, moratorium, valuation, exemption, stay, extension, and
redemption statutes, laws or equities now or hereafter existing, and hereby
further waives the pleading of any statute of limitations as a defense to any
and all Obligations secured by this Supplemental Indenture, and Grantor agrees
that no defense, claim or right based on any thereof will be asserted, or may be
enforced, in any action enforcing or relating to this Supplemental Indenture or
any of the Mortgaged Property. Without limiting the generality of the preceding
sentence, Grantor, on Grantor's own behalf and on behalf of each and every
Person acquiring any interest in or title to any Unit subsequent to the date of
this Supplemental Indenture, hereby irrevocably waives any and all rights of
redemption from sale under any order or decree of foreclosure of this
Supplemental Indenture or under any power contained herein or therein or under
any sale pursuant to any statute, order, decree or judgment of any court.
Grantor, for Grantor, and for all Persons hereafter claiming through or under it
or who may at any time hereafter become holders of liens junior to the lien of
this Supplemental Indenture, hereby expressly waives and releases: (i) all right
to direct the order in which any of the Mortgaged Property shall be sold in the
event of any sale or sales pursuant hereto; and (ii) all right to have any of
the Mortgaged Property and any other property now or hereafter constituting
security for any of Obligations marshalled upon any foreclosure of the Mortgaged
Property or of such other property.
4.13 No Merger. It being the desire and intention of the parties hereto
that this Supplemental Indenture and the liens hereof and thereof do not merge
in fee simple title to the Units, it is hereby understood and agreed that should
the Trustee or any of the Beneficiaries acquire an additional or other interests
in or to the Units or the ownership thereof, then, unless a contrary intent is
manifested by the Trustee as evidenced by an express statement to that effect in
an appropriate document duly recorded, this Supplemental Indenture and the liens
hereof shall not merge in the fee simple title, toward the end that this
Supplemental Indenture may be foreclosed as if owned by a stranger to the fee
simple title.
4.14 Beneficiaries or Trustee Not Joint Venturers or Partners. Grantor
and the Trustee acknowledge and agree that in no event shall the Trustee or any
of the Beneficiaries be deemed to be a partner or joint venturer with Grantor.
Without limitation of the foregoing, neither the Trustee nor any of the
Beneficiaries shall be deemed to be such a partner or joint venturer on
26
<PAGE> 30
account of its becoming a mortgagee in possession or exercising any rights
pursuant to this Supplemental Indenture or pursuant to any other instrument or
document evidencing or securing any of the Obligations secured hereby, or
otherwise.
4.15 No Third Party Benefits. This Supplemental Indenture, the Notes
and the other Operative Documents are made for the sole benefit of the parties
thereto, the Registered Owners and, subject to the provisions of Section 4.6 of
this Supplemental Indenture, their successors and assigns, and no other party
shall have any legal interest of any kind under or by reason of any of the
foregoing. Whether or not the Trustee elects to employ any or all the rights,
powers or remedies available to it under any of the foregoing, the Trustee shall
have no obligation or liability of any kind to any third party by reason of any
of the foregoing or any of the Trustee's actions or omissions pursuant thereto
or otherwise in connection with this transaction.
4.16 Counterparts. This Supplemental Indenture is being executed in
several counterparts, one of which counterparts, complete with Schedules A-1
through A-7, is on file at the Corporate Trust Office and is to be delivered to
each of the Registered Owners and to Grantor. Each of such executed counterparts
shall for all purposes be deemed to be an original, and all such counterparts
shall together constitute one and the same instrument.
4.17 Table of Contents; Headings. The table of contents contained
herein and the headings of the various Articles, Sections, paragraphs,
subparagraphs and Schedules herein have been inserted for reference only and
shall not to any extent have the effect of modifying or amending the express
terms and provisions hereof.
4.18 Maximum Interest Payable.
(a) Grantor, the Trustee and the Beneficiaries hereby limit the
aggregate amount of Compensation to the maximum lawful nonusurious amount of
interest permitted by the laws of the State of Texas from time to time in effect
to be contracted for or by, charged to, and collected and received from Grantor
(the "Maximum Amount"). Grantor, the Trustee and the Beneficiaries further agree
that solely for the purpose of determining such limitation, the aggregate amount
of Compensation shall, to the fullest extent permitted by such laws, be
amortized, prorated, allocated and spread throughout the period from the Closing
Date to the date on which the aggregate principal amount of all outstanding
Notes is paid.
(b) If the Operative Documents would, in the absence of this Section
4.18, be construed to require the payment of an aggregate amount of Compensation
that exceeds the Maximum Amount, Grantor shall not be obligated to pay such
excess, the right to demand payment of such excess is hereby waived, and this
Section 4.18 shall control over any other provision of any of the Operative
Documents.
27
<PAGE> 31
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Supplemental Indenture as of the day and year first above written.
GRANTOR:
KETTLE RESTAURANTS, INC., a Texas
corporation
(Tax I.D. No. 76-0276342)
By: /s/ Charlette Woods
-----------------------------------------
Carlette Woods,
Vice President-Finance
ATTEST:
By: /s/ Margaret A. Hall
----------------------------------
Name: Margaret A. Hall
Title: Asst. Corp. Secretary
[Affix Corporate Seal]
TRUSTEE:
NATIONSBANK OF TEXAS, National
Association, a national banking association
(Tax I.D. No. 75-2238693)
By: /s/ J. Kovatz
-----------------------------------------
Julianne Kovatz, Assistant Vice President
ATTEST:
By: /s/ M. H. Magee
----------------------------------
Name: Maryem H. Magee
Title: Vice President
28
<PAGE> 32
STATE OF TEXAS )
)
COUNTY OF HARRIS )
This instrument was acknowledged before me on the 2nd day of May, 1995,
by Carlette Woods, Vice President - Finance of Kettle Restaurants, Inc., a Texas
corporation, on behalf of the corporation.
/s/ Annette Casley
------------------------------------
[NOTARY SEAL] Notary Public in and for
The State of Texas
STATE OF TEXAS )
)
COUNTY OF HARRIS )
This instrument was acknowledged before me on the 2nd day of May, 1995,
by Margaret A. Hall, Ass't Corporate Secretary of Kettle Restaurants, Inc., a
Texas corporation, on behalf of the corporation.
/s/ Annette Casley
------------------------------------
[NOTARY SEAL] Notary Public in and for
The State of Texas
29
<PAGE> 33
STATE OF TEXAS )
)
COUNTY OF HARRIS )
This instrument was acknowledged before me on the 2nd day of May, 1995,
by Julianne Kovatz, Assistant Vice President of NationsBank of Texas, National
Association, a national banking association, on behalf of the association.
/s/ Annette Casley
-------------------------------------
[NOTARY SEAL] Notary Public in and for
The State of Texas
STATE OF TEXAS )
)
COUNTY OF HARRIS )
This instrument was acknowledged before me on the 2nd day of May, 1995,
by Maryem A. Magee, Vice President of NationsBank of Texas, National
Association, a national banking association, on behalf of the association.
/s/ Annette Casley
------------------------------------
[NOTARY SEAL] Notary Public in and for
The State of Texas
30
<PAGE> 34
Unit #7
City:Brownsville, Cameron County
State:Texas
SCHEDULE A-1
PART I: LEGAL DESCRIPTION
An 0.82 acre tract of land in Block Number Thirty-eight (38) of LOS FRESNOS
PROPERTIES SUBDIVISION in the City of Brownsville, Cameron County, Texas
according to the map of said subdivision recorded in Volume 8, Page 12 Map
Records, Cameron County, Texas, which 0.82 acre tract is described by metes and
bounds as follows:
FROM the Northeast corner of Block 38, LOS EBANOS PROPERTIES SUBDIVISION, South
4 degs. 32 min. West, 30.0 feet to a point on the South right of way line of
Price Road for the Northeast corner and Place of Beginning of this tract;
THENCE, along the South right of way line of Price Road, 30.0 feet
perpendicularly
South of and parallel to the North line of Block 38, North 84 degs. 50 min.
West, 236.18' to a point for a corner;
THENCE, along the right of way line of U.S. 77 and 83 Expressway, South 28
degs. 01 min. 16 sec. West, 66.83 feet to a Texas Highway Dept. right of way
marker for the westernmost corner of this tract;
THENCE, along the Northeast right of way line of U.S. 77 and 83 Expressway,
South 39 degs. 07 min. 28 sec. East, 200.0 feet to a point for the southernmost
corner of this tract;
THENCE, North 50 degs. 52 min. 32 sec. East, 172.41 feet to a point on the East
line of Block 38 for a corner;
THENCE, along the East line of Block 38, North 4 degs. 32 min. East, 84.34 feet
to the Plat Beginning, containing 0.82 acre; more or less.
PART II: PERMITTED EXCEPTIONS
1. Restrictions recorded in Volume 813, Page 449 and in Volume 961, Page
748, Deed Records of Cameron County, Texas.
2. Rights, rules and regulations by law in favor of Cameron County Water
Control and Improvement District Number Seven (7).
<PAGE> 35
Unit #23
City: Jacksonville, Onslow County
State: North Carolina
SCHEDULE A-2
PART I: LEGAL DESCRIPTION
BEGINNING at a 2-inch pipe filled with concrete located at the point of
intersection of the Northernmost Right of Way of Marine with the
Easternmost Right of Way of Bordeaux Street; thence from said point of
beginning North 35 degrees 40 minutes West 183.0 feet with the
Easternmost Right of Way of Bordeaux Street to a nail and cap in the
Southernmost Right of Way of U.S. 17-N.C. 24; thence with the
Southernmost Right of Way of U.S. 17-N.C. 24 (a corrected course and
distance) North 02 degrees 58 minutes 30 seconds East 107.41 feet to a
nail and cap; thence continuing with said Right of Way North 87 degrees
20 minutes East 66.5 feet to a new iron stake; thence leaving said
Right of Way South 35 degrees 40 minutes East 95.3 feet to a 2-inch
pipe, filled with concrete, in the Northernmost Right of Way of Marine
Avenue; thence with the Northernmost Right of Way of Marine Avenue
South 54 degrees 20 minutes West 150.09 feet to the point and place of
beginning and containing 21,150 square feet or 0.49 acres according to
the survey of James E. Stewart, R.L.S., L-1632, dated May 5th, 1976.
PART II: PERMITTED EXCEPTIONS
1. Easement(s) to Carolina Power and Light Company recorded in Book 491,
Page 310, Onslow County Registry.
2. Unrecorded Lease dated May 15, 1990, from Kettle Restaurants, Inc. to
Mark Dickinson.
<PAGE> 36
Unit #44
City:Tyler, Smith County
State:
SCHEDULE A-3
PART I: LEGAL DESCRIPTION
All that certain lot, tract or parcel of land comprised of 0.448 acre,
more or less, being part of the Ultman Jergan Survey, A-621, a part of
NCB 1208, City of Tyler, more particularly described by metes and
bounds as follows:
ALL that certain lot, tract or parcel of land situated within the corporate
limits of the City of Tyler, Smith County, Texas, a part of the Ultman Jergan
Survey, Abstract No. 521, a part of N.C.B. 1208 of said City of Tyler, a part of
that certain called 27.906 acre tract described in a Deed of Trust from North
Tyler Ltd. to J.P. Koons, Trustee, on June 17, 1968, and recorded in Volume
G-12, Page 368 of the Deed of Trust Records of Smith County, Texas, and being
more completely described as follows, to-wit:
BEGINNING at a 1/2" iron rod for corner in the south line of a 1.670
acre tract conveyed to Robert A. Folsom May 13, 1965, and recorded in
Volume 1156, page 507 of the Deed Records of Smith County, Texas, and
being at the intersection of same with the new West right-of-way line
of U.S. Highway 69;
THENCE in a Southwesterly direction with the West line of said Highway
as follows: South 4 degrees 45 minutes West-92.05 feet, and south 6
degrees 25 minutes West, 30.47 feet to a point for corner;
THENCE West a distance of 141.84 feet to a point for corner;
THENCE North 45 degrees 00 minutes West a distance of 18 feet to a
point for corner;
THENCE North a distance of 109.28 feet to a point for corner in the
South line of the above-mentioned 1.670 acre tract;
THENCE East with said line a distance of 165.61 feet to the place of
beginning, and containing 0.448 acres of land.
<PAGE> 37
PART II: PERMITTED EXCEPTIONS
1. All oil, gas and other minerals reserved by Michael Matise and wife,
Mary Matise in instrument recorded in Volume 1156, Page 507 of the Deed
Records of Smith County, Texas (surface rights waived).
2. Easement granted to Levitt-United Commercial Corp., by instrument
recorded in Volume 1434, Page 645 of the Deed Records of Smith County,
Texas.
3. Right of Way granted to Texas Power & Light Co., by instrument recorded
in Volume 1452, Page 417 and Volume 1478, Page 258 of the Deed Records
of Smith County, Texas.
4. 24 foot concrete storm sewer crossing as shown on plat of survey dated
July 15, 1972, prepared by John Cowan, Registered Professional Land
Surveyor No. 243.
<PAGE> 38
Unit:#48
City:Wilmington, New Hanover County
State:North Carolina
SCHEDULE A-4
PART I: LEGAL DESCRIPTION
Being that certain 0.639 acres of land, located in New Hanover County,
North Carolina, and more particularly described as follows:
BEGINNING at a point in the southern right of way line of Market Street
(50 feet from center line thereof), said beginning point being located
S. 82 degs. 8 min. W. 243.43 feet from the interesction of the southern
right of way line of Market Street and the western right of way line of
29th Street South. Running thence from said beginning point, S. 4 degs.
6 min. W. 184.78 feet to a point; thence S. 49 degs. 1 min. W. 35.41
feet to a point; thence N. 86 degs. 3 min. W 119.46 feet to a point;
running thence N. 3 degs. 57 min. E. 179.45 feet to a point in the
southern right of way line of Market Street; running thence with said
right of way line N. 82 degs. 8 min. E. 145.16 feet to the point of
beginning. Same containing 0.639 acres.
PART II: PERMITTED EXCEPTIONS
1. Easement(s) to Carolina Power and Light Company recorded in Book 607,
Page 370, New Hanover County Registry.
2. Easement(s) to Levitt Commercial Corp., recorded in Book 971, Page 767
New Hanover County Registry.
<PAGE> 39
Unit:#58
City:Harlingen, Cameron County
State:Texas
SCHEDULE A-5
PART I: LEGAL DESCRIPTION
Lot Number Two (2), Block Number One (1), Storm Subdivision Unit No.
One (1), City of Harlingen, Cameron County, Texas, according to the map
or said subdivision recorded in Volume 19, Page 34, Map Records of
Cameron County, Texas.
PART II: PERMITTED EXCEPTIONS
1. Ten foot (10') utility easement across southerly part of Lot 2, as
shown on map of Storm Subdivision Unit No. One (1) recorded in Volume
19, Page 34, Map Records of Cameron County, Texas.
<PAGE> 40
Unit:#680 (Office Building)
City:Houston, Harris County
State:Texas
SCHEDULE A-6
PART I: LEGAL DESCRIPTION
Being a tract or parcel of land containing 29,991 square feet located
in the A. C. Reynolds Survey, Abstract No. 61, Harris County, Texas,
and being all of Lots 5, 6, 7 and 8, Block "B", Dozier Addition,
according to the map thereof recorded in Volume 302, Page 300 of the
Deed Records of Harris County, Texas and 8,456 square feet out of Block
35 of Dickey's West Park Addition, Houston, Harris County, Texas, said
29,991 square feet of land being more particularly described by metes
and bounds as follows:
BEGINNING at the intersection of the north right-of-way line of Branard
Street (50 feet wide) with the east right-of-way line of Argonne Street
(50 feet wide), said point being the southwest corner of said Block
"B", Dozier Addition;
THENCE North, along the east right-of-way line of Argonne Street, at
191.00 feet pass the northwest corner of said Block "B", Dozier
Addition and the southwest corner of said Block 35 of Dickey's West
Park Addition, and continuing North, 75.00 feet, in all a distance of
266.00 feet to the northwest corner of the herein described tract;
THENCE S 89 degs. 54 mins. 15 secs. E, 112.75 feet to a point for
corner;
THENCE South, at 75.00 feet pass the northeast corner of said Lot 5,
Block "B", Dozier Addition, and continuing South, 191.00 feet along the
east line of said Lots 5 and 8, Block "B", Dozier Addition to a point
on the north right-of-way line of Branard Street;
THENCE N 89 degs. 54 mins. 15 secs. W, 112.75 feet along the north
right-of-way line of Branard Street to the point of BEGINNING and
containing 29,991 square feet of land.
PART II: PERMITTED EXCEPTIONS
1. Subject to encroachment of concrete steps into street along the south
and west property lines as shown on survey dated June 27, 1989,
prepared by Robert Adams, Registered Professional Land Surveyor No.
1002.
<PAGE> 41
Unit:#63
City:Lufkin, Angelina County
State:Texas
SCHEDULE A-7
PART I: LEGAL DESCRIPTION
Being all that certain tract or parcel of land lying and situated in
the City of Lufkin, Angelina County, Texas out of the McKINNEY &
WILLIAMS SURVEY, ABSTRACT NO. 463 and being a part or portion of that
certain 4.305 acre tract of land described in a deed from R. L.
Cunningham to J.L.M. Development Co., dated November 30, 1973 and
recorded in Volume 406, Page 709 of the Deed Records of Angelina
County, Texas to which reference is hereby made for all purposes and
the said part or portion being described by metes and bounds as
follows, to wit:
BEGINNING at the most Western Southwest corner of the aforesaid
referred to 4.305 acre tract of land, concrete monument found for
corner in the East right of way line of U.S. Hwy. No. 59;
THENCE North 10 deg. 18 min. East, with said right-of-way line
and the West boundary line of said 4.305 acre tract, at 97.95 feet set
an iron stake in same, for corner;
THENCE South 87 deg. 40 min. East, at 141.43 feet set an iron
stake for corner;
THENCE South 02 deg. 20 min. West, at 97.00 feet intersect the
most Northern South boundary line of said 4.305 acre tract, set an iron
stake for corner;
THENCE North 87 deg. 40 min. West, with the most Northern South
boundary line of said 4.305 acre tract, at 155.00 feet the point and
place of beginning and containing 0.330 acres of land, more or less.
TOGETHER WITH THE FOLLOWING EASEMENTS, ALL OF WHICH WERE GRANTED IN
GRANT OF EASEMENTS FROM JLM DEVELOPMENT COMPANY TO HLH ENTERPRISES,
INC. DATED MAY 23, 1974, OF RECORD IN VOLUME 413, PAGE 385 OF THE DEED
RECORDS OF ANGELINA COUNTY, TEXAS:
EASEMENT TRACT 1 (PARKING AREA):
BEING all that certain tract or parcel of land lying and situated in
the City of Lufkin, Angelina County, Texas out of the McKINNEY &
WILLIAMS SURVEY, ABSTRACT NO. 463, and being a part or portion of that
certain 4.305 acre tract of land described in a deed from R. L.
Cunningham to JLM Development Co., dated November 30, 1973 and
recorded in Volume 406, Page 709 of the Deed Records of
Angelina County, Texas,
PAGE 1 OF 4 PAGES
<PAGE> 42
to which reference is hereby made for all purposes and the said part
or portion being described by metes and bounds as follows, to-wit:
BEGINNING South 10 deg. 18 min. West, 48.46 feet from the
Northwest corner of the aforesaid referred to 4.305 acre tract of land,
point for corner in the East right-of-way line of U. S. Hwy. No. 59;
THENCE South 87 deg. 40 min. East, at 87.00 feet, point for
corner;
THENCE South 02 deg. 20 min. West, at 86.20 feet, point for
corner;
THENCE North 87 deg. 40 min. West, at 99.06 feet, intersect the
said East right-of-way line of U. S. Highway No. 59, point for corner;
THENCE North 10 deg. 18 min. East, with said right-of-way line,
at 87.04 feet the point and place of beginning and containing 8,019
square feet of land, more or less.
EASEMENT TRACT 2 (PARKING AREA):
BEING all that certain tract or parcel of land lying and situated in
the City of Lufkin, Angelina County, Texas out of the McKINNEY &
WILLIAMS SURVEY, ABSTRACT NO. 463 and being a part or portion of that
certain 4.305 acre tract of land described in a deed from R. L.
Cunningham to JLM Development Co., dated November 30, 1973 and recorded
in Volume 406, Page 709 of the Deed Records of Angelina County, Texas,
to which reference is hereby made for all purposes and the said part or
portion being described by metes and bounds as follows, to-wit:
BEGINNING at the Northwest corner of the aforesaid referred to
4.305 acre tract of land, a 1/2" iron rod for corner in the East
right-of-way line of U. S. Hwy. No. 59;
THENCE South 87 deg. 40 min. East, with the North boundary line
of said 4.305 acre tract, at 47.00 feet, point for corner;
THENCE South 02 deg. 20 min. West, at 23.00 feet, point for
corner;
THENCE North 87 deg. 40 min. West, at 50.22 feet intersect the
said East right-of-way line of U. S. Hwy. No. 59, point for corner;
THENCE North 10 deg. 18 min. East, with said right-of-way line,
at 23.22 feet the point and place of beginning and containing 1,118
square feet of land, more or less.
PAGE 2 OF 4 PAGES
<PAGE> 43
EASEMENT TRACT 3 (ACCESS AREA):
BEING all that certain tract or parcel of land lying and situated in
the City of Lufkin, Angelina County, Texas out of the McKINNEY &
WILLIAMS SURVEY, ABSTRACT NO. 463 and being a part or portion of that
certain 4.305 acre tract of land described in a deed from R. L.
Cunningham to JLM Development Co., dated November 30, 1973 and recorded
in Volume 406, Page 709 of the Deed Records of Angelina County, Texas
to which reference is hereby made for all purposes and the said part or
portion being described by metes and bounds as follows, to-wit:
BEGINNING South 10 deg. 18 min. West, 23.22 feet from the
Northwest corner of the aforesaid referred to 4.305 acre tract of land,
point for corner in the East right-of-way line of U. S. Hwy. No. 59;
THENCE South 87 deg. 40 min. East, at 108.50 feet, point for
corner;
THENCE South 02 deg. 20 min. West, at 136.19 feet, point for
corner;
THENCE North 87 deg. 40 min. West, at 127.56 feet intersect the
East right-of-way line of U. S. Hwy. No. 59, iron pipe for corner;
THENCE North 10 deg. 18 min. East, with said right-of-way line,
at 25.24 feet, point for corner;
THENCE South 87 deg. 40 min. East, at 99.06 feet, point for
corner;
THENCE North 02 deg. 20 min. East, at 86.20 feet, point for
corner;
THENCE North 87 deg. 40 min. West, at 87.00 feet intersect the
East right-of-way line of U. S. Hwy. No. 59, point for corner;
THENCE North 10 deg. 18 min. East, with said right-of-way line,
at 25.24 feet the point and place of beginning and containing 8,056
square feet of land, more or less.
PART II: PERMITTED EXCEPTIONS
1. Restrictive Covenants of record in Volume 86, Page 317 of the Deed
Records and in Volume 404, Page 342 of the Deed Records of Angelina
County, Texas.
2. Right of way and easement held by Gulf Refining Company as retained in
Deed from Gulf Refining Company to R. L. Cunningham dated September 10,
1973 of record in Volume 404, Page 342 of the Deed Records of Angelina
County, Texas.
3. Easement executed by HLH Enterprises, Inc. to Texas Power and Light
Company dated September 14, 1974 or record in Volume 421, Page 131 of
the Deed Records of Angelina County, Texas.
PAGE 3 OF 4 PAGES
<PAGE> 44
4. Grant of easements described from JLM Development Company to HLH
Enterprises, Inc. dated May 23, 1974 of record in Volume 413, Page 385
of the Deed Records of Angelina County, Texas.
PAGE 4 OF 4 PAGES
<PAGE> 45
Unit:#72R
City:Houston, Harris County
State:Texas
SCHEDULE A-8
PART I: LEGAL DESCRIPTION
A tract or parcel of land containing 23,459 square feet, more or less,
out of Lot "B" of Bayou Woods, Section Three, as recorded in Volume 22,
Page 54, Harris County Map Records, Harris County, Texas, and being
more particularly described as follows:
BEGINNING at the Southeast corner of Lot B, Bayou Woods, Section Three,
as recorded in Volume 22, Page 54, Harris County Map Records, said
corner also being the Northwest corner of Lot 6; said corner marked
with a 5/8 inch iron rod.
THENCE West 125.17 along the South line of said Lot B to the Southwest
corner of the herein described tract, said corner marked with a 1/2
inch iron pipe;
THENCE North 00 degs. 20 mins. 05 secs. East 189.97 feet along the
West line of the herein described tract to its intersection with the
South line of Interstate 10 West said intersection marked with a 1/2
inch iron pipe;
THENCE South 88 degs. 29 mins. 43 secs. East 124.04 feet along the
South line of Interstate 10 to a 5/8 inch iron rod marking the
Northeast corner of Lot B, Bayou Woods, Section Three;
THENCE South 186.71 feet along the East line of said Lot B to a 5/8
inch iron rod marking the Southeast corner of said Lot B and the POINT
OF BEGINNING, and containing 23,459 square feet of land, and being the
same property conveyed by Deed dated August 27, 1975, from William
Carloss Morris, III, Trustee, reference to which instrument is here
made.
PART II: PERMITTED EXCEPTIONS
1. Restrictive Covenants of record in Volume 1397, Page 71 of the Deed
Records of Harris County, Texas.
2. Drainage easement fifteen (15') feet wide on each side of center line
of all natural drainage courses, as set out in instrument recorded in
Volume 1397, Page 71 of the Harris County Deed Records.
PAGE 1 OF 2 PAGES
<PAGE> 46
3. Unobstructed easement ten (10') feet wide, centered on the West
property line, together with an unobstructed aerial easement five (5')
feet wide from a plane twenty (20') feet above the ground upward,
located adjacent thereto, for the use of public utilities, granted to
Houston Lighting & Power Company, by instruments recorded under Harris
County Clerk's File Nos. E687009 and E687010, the exact location as
evidenced in Sketch attached thereto.
4. Option Agreement executed by H.L.H. Enterprises, Inc., a Texas
corporation, as Optionor, and William Carloss Morris, III, as Optionee,
as shown by instrument recorded under Harris County Clerk's File No.
E529377.
5. Terms, conditions and stipulations contained in that certain Easement
Deed dated August 7, 1990, from Kettle Restaurants, Inc., formerly
known as H.L.H. Enterprises, Inc., a Texas corporation, to the City of
Houston, a Municipal Corporation, and filed for record on August 8,
1990, under Harris County Clerk's File No. M764166.
6. Easement for water line purposes granted to the City of Houston by
Easement dated August 7, 1990, filed for record on August 8, 1990,
under Harris County Clerk's File No. M764166.
PAGE 2 OF 2 PAGES
<PAGE> 1
EXHIBIT 10.29
[KETTLE LOGO]
KETTLE RESTAURANTS, INC.
- --------------------------------------------------------------------------------
Via FAX No. (310) 479-0461 February 28, 1995
Mr. Dennis R. Ascher, Vice President
Foothill Capital Corporation
11111 Santa Monica Boulevard, Suite 1500
Los Angeles, California 90025-3333
Re: Sale of "Kettle" Unit #065, Houston, Harris County, Texas (the
"Property") for a gross sale price of $435,000 (the "Gross Sale
Price"), and lease by Kettle Restaurants, Inc. ("Kettle") of the
Property from the purchaser for a term of up to twenty (20) years at a
rental rate not to exceed $5,800.00 per month (the "Lease")
Dear Dennis:
The purpose of this letter is to confirm our understanding that Foothill
Capital Corporation ("Foothill") has consented to the sale by Kettle of the
Property, and to the release of the Property from the liens of the First
Indenture (as defined on Exhibit "A" attached hereto and incorporated herein by
this reference for all purposes), and to the referenced Lease, on the following
terms:
1. The Net Proceeds of such sale shall be utilized by Kettle to purchase,
for 100%, of their par value, a portion of the 15-7/8% Subordinated
Debentures due 1996 (the "Bonds") plus accrued interest through the
date of payment, held by Foothill Capital Corporation ("Foothill"),
such transaction to be consummated in accordance with any required or
appropriate procedures pursuant to the Indenture dated as of December
1, 1984 between Kettle and Texas Commerce Bank, National Association,
or otherwise under applicable laws.
For purposes of this agreement, "Net Proceeds" shall be an amount equal
to the Gross Sale Price less all sums paid or payable by Kettle (a) in
connection with the sale transaction for the Property, including, but
not limited to, all real estate commissions, attorney's fees, recording
fees, fees for surveys, title policy premiums, fees and charges of the
title company, messenger and overnight courier costs and any other
taxes, charges or fees payable by Kettle under its Purchase and Sale
Agreement for the sale of the property or required by law or permitted
by the Indenture, in connection with the sale of the referenced
property and/or lb) in connection with expenses incurred in the
purchase of the Bonds held by Foothill and the unconditional transfer
thereof to Kettle, and/or (c) in connection with the transactions
contemplated in paragraph 2 of this letter, rounded to the next lowest
integral multiple of $1,000. Such Net Proceeds shall be utilized by
Kettle to purchase such Bonds within three (3) business days after the
final determination of the amount of the Net Proceeds.
<PAGE> 2
Mr. Dennis R. Ascher February 28, 1995
Foothill Capital Corporation Page 2
2. On or before March 31, 1995, Kettle and Foothill shall have taken such
steps as are reasonably necessary to subject the Kettle office building
site located at 3131 Argonne, Houston, Harris County, Texas 77098, as
more particularly described on Exhibit "B" attached hereto and
incorporated herein by this reference for all purposes (the "Substitute
Site") to the liens of the Indenture, including the preparation,
execution and recording of documentation reasonably acceptable to
Foothill and the furnishing to Foothill of an Owner Policy of Title
Insurance in an amount, and containing only such exceptions to title,
as may be acceptable to Foothill. All costs of such transaction,
including without limitation, title policy premiums, recording fees and
attorneys fees, shall be paid by Kettle. Foothill agrees that,
notwithstanding anything in the Indenture to the contrary (including
but not limited to the provisions of Section 6.3 of the First
Indenture) which may be deemed to apply to this transaction, Foothill
shall not require an appraisal of the Substitute Site, nor compliance
with any other provisions of Section 6.3 of the First Indenture.
3. To the extent that Article 4 of the First Indenture may be or be deemed
to be applicable to the sale of the Property, Kettle and Foothill agree
as follows:
(a) Foothill consents to the sale of the Property and shall
instruct the Trustee under the Indenture to execute and
deliver a release of lien with respect thereto; and
(b) to the extent that the Property may be or be deemed to be
"Other Property" as defined in the Indenture, Foothill has
agreed to waive compliance by Kettle with the requirements of
Section 4.2 of the Indenture with respect to "Dispositions of
Other Property", and to waive any failure to comply with such
Section 4.2 which may be related to the sale of the Property.
4. Reference is hereby made to that certain Loan Agreement, as modified
and extended (the "Loan Agreement") dated as of February 11, 1994,
between Kettle and Foothill, under which Foothill made a $1,000,000
term loan to Kettle (the "Term Loan"), as modified and extended by
letter agreement dated as of February 10, 1995, and further extended by
letter agreement dated as of February 28, 1995, as secured, inter alia,
pursuant to a Security Agreement (the "Security Agreement") dated as of
February 11, 1994, by and between Kettle and Foothill. Kettle and
Foothill agree that the "Collateral", as defined in the Security
Agreement, shall remain collateral security for the prompt satisfaction
of the 13.30% Note Obligations (as defined in the Security Agreement),
and Foothill shall have no obligation to release such Collateral from
the lien or security interest created by the Security Agreement, until
the Obligations (as defined in the Security Agreement) have been paid
in full and the Substitute Site has been subjected to the liens of the
Indenture, as provided in paragraph 2 above.
<PAGE> 3
Mr. Dennis R. Ascher February 28, 1995
Foothill Capital Corporation Page 3
If the foregoing correctly represents your understanding of our
agreements, please so indicate by your signature below.
Sincerely,
KETTLE RESTAURANTS, INC.
/s/ Carlette Woods
-------------------------------------
Carlette Woods
Vice President-Finance
ACCEPTED AND AGREED TO this 28th day of February, 1995.
FOOTHILL CAPITAL CORPORATION
By: /s/ Dennis R. Ascher
--------------------
Dennis R. Ascher
Vice President
<PAGE> 4
EXHIBIT "A"
I. The Indenture. To Letter Agreement dated as of February 28, 1995 by and
between Kettle Restaurants, Inc. and Foothill Capital Corporation with
respect to sale of Kettle Unit #065, Houston, Harris County, Texas.
Pursuant to that certain Note Purchase Agreement dated as of June 1,
1989 between Kettle Restaurants, Inc., a Texas corporation (formerly known as
KRA, Inc.) ("Kettle"), Kettle Restaurants, Inc., a Texas corporation (which was
merged into KRA, Inc. on June 23, 1989), Principal Mutual Life Insurance Company
("Principal Mutual"), and Wisconsin Life Insurance Company ("Wisconsin"), Kettle
authorized and issued (i) to Principal Mutual that certain 13.30% Senior Secured
Note Due 1999 dated as of June 23, 1989 in the aggregate principal amount of
$14,000,000.00, and (ii) to Wisconsin that certain 13.30% Senior Secured Note
Due 1999 dated as of June 23, 1989, in the aggregate principal amount of
$2,000,000.00 (individually, the "$14,000,000 Note" and the "$2,000,000 Note",
respectively, and collectively, the "Notes"). Foothill Capital Corporation
("Foothill") is now the holder of the $14,000,000 Note, and Foothill is now the
holder of the $2,000,000 Note. The Notes are secured by (i) that certain
Indenture, Deed of Trust, Security Agreement, Assignment of Leases and Financing
Statement (Fixture Filing) dated June 1, 1989, executed by KRA, Inc. to NCNB
Texas National Bank, as trustee ("NCNB"), for the ratable benefit of the holders
of the Notes and recorded in various counties within the states of Colorado,
Florida, Louisiana, Missouri, New Mexico, North Carolina, Oklahoma, Texas and
Virginia, as modified and affected by (a) that certain First Supplemental
Indenture, Deed of Trust, Security Agreement, Assignment of Leases and Financing
Statement (Fixture Filing) dated as of June 23, 1989, executed by Kettle to
NCNB, as trustee, for the ratable benefit of the holders of the Notes, (b) that
certain Waiver and Amendment dated January 30, 1991, executed by Principal
Mutual and Kettle, (c) that certain letter dated January 20, 1992, executed by
Principal Mutual and Kettle, (d) that certain letter dated December 16, 1992,
executed by Principal Mutual and Kettle, (e) that certain letter dated March 15,
1993, executed by Principal Mutual and Kettle, (f) that certain letter dated May
14, 1993, executed by Principal Mutual, (g) that certain letter dated May 25,
1993, executed by Principal Mutual, (h) that certain Forbearance Agreement dated
as of May 28, 1993, executed by Principal Mutual, Central Life Assurance Company
("Central Life") and Kettle, (i) that certain letter dated June 1, 1993,
executed by Principal Mutual to Kettle, (j) that certain letter dated June 30,
1993, executed by Principal Mutual and Kettle, (k) that certain letter dated
August 2, 1993, executed by Principal Mutual and Kettle, (l) that certain
Forbearance Agreement dated as of October 1, 1993, executed by Principal Mutual,
Central Life and Kettle, (m) that certain Forbearance Agreement dated as of
November 1, 1993 executed by Principal Mutual, Central Life and Kettle, (n) that
certain Forbearance Agreement dated as of November 24, 1993 executed by Foothill
and Kettle, (o) that certain letter agreement waiving and amending Section 4.13
of the Indenture dated as of January 21, 1994, executed by Foothill and Kettle,
(p) that certain letter agreement dated as of May 27, 1994, executed by Foothill
and Kettle, (q) that certain letter agreement dated as of June 3, 1994. executed
by Foothill and Kettle, (r) that certain letter agreement dated as of July 26,
1994 executed by Foothill and Kettle, (s) that certain letter agreement dated as
of August 17, 1994, executed by Foothill and Kettle, (t) that certain letter
dated as of September 1, 1994 executed by NationsBank of Texas, National
Association, as Trustee to Kettle, (u) that certain letter agreement dated as of
September 8, 1994, executed by Foothill and Kettle, (v) that certain letter
agreement dated effective as of September 21, 1994 executed by Foothill and
Kettle, (w) that other certain letter agreement also dated as of September 21,
1994 executed by Foothill and Kettle, (x) that certain letter agreement dated as
of October 24, 1994 to be effective as of September 1, 1994 executed by Foothill
and Kettle, (y) that certain letter agreement dated as of October 25, 1994
executed by Foothill and Kettle, (z) that certain letter agreement dated as of
November 29, 1994 executed by Foothill and Kettle, (aa) that other certain
letter agreement also dated as of November 29, 1994 executed by Foothill and
Kettle, and (ab) that certain letter agreement dated as of December 28, 1994
executed by Foothill and Kettle (as modified and affected, the "First
Indenture"), and (ii) that certain Indenture, Deed of Trust, Security Agreement,
Assignment of Leases and Financing Statement (Fixture Filing) dated as of May
28, 1993, executed by Kettle to NationsBank of Texas, National Association, as
trustee, for the ratable benefit of the holders of the Notes encumbering as of
the date hereof six (6) properties within various counties within the states of
Oklahoma, Tennessee, and Texas (as modified and affected by the documents
described in clauses (h) - (ab) above, the "Second Indenture") (the First
Indenture and the Second Indenture being hereinafter collectively referred to as
the "Indenture"). NationsBank of Texas, National Association ("Trustee") is the
current trustee of the First Indenture and the Second Indenture.
<PAGE> 5
EXHIBIT "B"
SUBSTITUTE SITE
Being a tract or parcel of land containing 29,991 square feet located in the
A.C. Reynolds Survey, Abstract No. 61, Harris County, Texas, and being all of
Lots 5, 6, 7, and 8, Block "B", Dozier Addition, according to the map thereof
recorded in Volume 302, Page 30 of the Deed Records of Harris County, Texas and
8,456 square feet out of Block 35 of Dickey's West Park Addition, Houston,
Harris County, Texas, said 29,991 square feet of land being more particularly
described by metes and bounds as follows:
BEGINNING at the intersection of the North right-of-way line of Branard Street
(50 feet wide) with the East right-of-way line of Argonne Street (50 feet wide),
said point being the Southwest corner of said Block "B", Dozier Addition;
THENCE North, along the East right-of-way line of Argonne Street, at 191.00 feet
passing the Northwest corner of said Block "B", Dozier Addition and the
Southwest corner of said Block 35 of Dickey's West Park Addition, and continuing
North, 75.00 feet, in all a distance of 266.00 feet to the Northwest corner of
the herein described tract;
THENCE South 89 degs. 54 mins. 15 secs. East, a distance of 112.75 feet to a
point for the Northeast corner of the herein described tract;
THENCE South, at 75.00 feet passing the Northeast corner of said Lot 5, Block
"B", Dozier Addition, and continuing South, 191.00 feet along the East line of
said Lots 5 and 8, Block "B", Dozier Addition in all a distance of 266.00 feet
to a point on the North right-of-way line of Branard Street for the Southeast
corner of the herein described tract;
THENCE North 89 degs. 54 mins. 15 secs. West, a distance of 112.75 feet along
the North right-of-way line of Branard Street to the POINT OF BEGINNING and
containing 29,991 square feet (0.6885 acre) of land.
<PAGE> 1
EXHIBIT 10.30
[KETTLE LOGO]
KETTLE RESTAURANTS, INC.
- --------------------------------------------------------------------------------
Via FAX No. (310) 479-0461 March 27, 1995
Mr. Dennis R. Ascher, Vice President
Foothill Capital Corporation
11111 Santa Monica Boulevard, Suite 1500
Los Angeles, California 90025-3333
Re: Letter agreement dated as of February 28, 1995, by and between Kettle
Restaurants, Inc. and Foothill Capital Corporation in connection with
the sale of "Kettle" Unit #65, Houston, Harris County, Texas (the "Unit
#65 Letter Agreement")
Dear Dennis:
Reference is made to the Unit #65 Letter Agreement, a copy of which is
attached hereto and incorporated herein by this reference. The purpose of this
letter is to confirm our understanding that the date "March 31, 1995" in the
first line of paragraph number 2 of the Unit #65 Letter Agreement is extended to
April 30, 1995. Except as specifically amended and modified in the preceding
sentence, the Unit #65 Letter Agreement shall remain in full force and effect as
originally written.
If the foregoing correctly represents your understanding of our
agreements, please so indicate by your signature below.
Sincerely,
KETTLE RESTAURANTS, INC.
/s/ Carlette Woods
------------------------
Carlette Woods
Vice President-Finance
ACCEPTED AND AGREED TO this 29th day of March, 1995.
FOOTHILL CAPITAL CORPORATION
By: /s/ Dennis R. Ascher
--------------------
Dennis R. Ascher
Vice President
<PAGE> 2
[KETTLE LOGO]
KETTLE RESTAURANTS, INC.
- --------------------------------------------------------------------------------
Via FAX No. (310) 479-0461 February 28,1995
Mr. Dennis R. Ascher, Vice President
Foothill Capital Corporation
11111 Santa Monica Boulevard, Suite 1500
Los Angeles, California 90025-3333
Re: Sale of "Kettle" Unit #065, Houston, Harris County, Texas (the
"Property") for a gross sale price of $435,000 (the "Gross Sale
Price"), and lease by Kettle Restaurants, Inc. ("Kettle") of the
Property from the purchaser for a term of up to twenty (20) years at a
rental rate not to exceed $5,800.00 per month (the "Lease")
Dear Dennis:
The purpose of this letter is to confirm our understanding that
Foothill Capital Corporation ("Foothill") has consented to the sale by Kettle of
the Property, and to the release of the Property from the liens of the First
Indenture (as defined on Exhibit "A" attached hereto and incorporated herein by
this reference for all purposes), and to the referenced Lease, on the following
terms:
1. The Net Proceeds of such sale shall be utilized by Kettle to purchase,
for 100%, of their par value, a portion of the 15-7/8% Subordinated
Debentures due 1996 (the "Bonds") plus accrued interest through the
date of payment, held by Foothill Capital Corporation ("Foothill"),
such transaction to be consummated in accordance with any required or
appropriate procedures pursuant to the Indenture dated as of December
1, 1984 between Kettle and Texas Commerce Bank, National Association,
or otherwise under applicable laws.
For purposes of this agreement, "Net Proceeds" shall be an amount equal
to the Gross Sale Price less all sums paid or payable by Kettle (a) in
connection with the sale transaction for the Property, including, but
not limited to, all real estate commissions, attorney's fees, recording
fees, fees for surveys, title policy premiums, fees and charges of the
title company, messenger and overnight courier costs and any other
taxes, charges or fees payable by Kettle under its Purchase and Sale
Agreement for the sale of the property or required by law or permitted
by the Indenture, in connection with the sale of the referenced
property and/or (b) in connection with expenses incurred in the
purchase of the Bonds held by Foothill and the unconditional transfer
thereof to Kettle, and/or (c) in connection with the transactions
contemplated in paragraph 2 of this letter, rounded to the next lowest
integral multiple of $1,000. Such Net Proceeds shall be utilized by
Kettle to purchase such Bonds within three (3) business days after the
final determination of the amount of the Net Proceeds.
<PAGE> 3
Mr. Dennis R. Ascher February 28, 1995
Foothill Capital Corporation Page 2
2. On or before March 31, 1995, Kettle and Foothill shall have taken such
steps as are reasonably necessary to subject the Kettle office building
site located at 3131 Argonne, Houston, Harris County, Texas 77098, as
more particularly described on Exhibit "B" attached hereto and
incorporated herein by this reference for all purposes (the "Substitute
Site") to the liens of the Indenture, including the preparation,
execution and recording of documentation reasonably acceptable to
Foothill and the furnishing to Foothill of an Owner Policy of Title
Insurance in an amount, and containing only such exceptions to title,
as may be acceptable to Foothill. All costs of such transaction,
including without limitation, title policy premiums, recording fees and
attorneys fees, shall be paid by Kettle. Foothill agrees that,
notwithstanding anything in the Indenture to the contrary (including
but not limited to the provisions of Section 6.3 of the First
Indenture) which may be deemed to apply to this transaction, Foothill
shall not require an appraisal of the Substitute Site, nor compliance
with any other provisions of Section 6.3 of the First Indenture.
3. To the extent that Article 4 of the First Indenture may be or be deemed
to be applicable to the sale of the Property, Kettle and Foothill agree
as follows:
(a) Foothill consents to the sale of the Property and shall
instruct the Trustee under the Indenture to execute and
deliver a release of lien with respect thereto; and
(b) to the extent that the Property may be or be deemed to be
"Other Property" as defined in the Indenture, Foothill has
agreed to waive compliance by Kettle with the requirements of
Section 4.2 of the Indenture with respect to "Dispositions of
Other Property", and to waive any failure to comply with such
Section 4.2 which may be related to the sale of the Property.
4. Reference is hereby made to that certain Loan Agreement, as modified
and extended (the "Loan Agreement") dated as of February 11, 1994,
between Kettle and Foothill, under which Foothill made a $1,000,000
term loan to Kettle (the "Term Loan"), as modified and extended by
letter agreement dated as of February 10, 1995, and further extended by
letter agreement dated as of February 28, 1995, as secured, inter alia,
pursuant to a Security Agreement (the "Security Agreement") dated as of
February 11, 1994, by and between Kettle and Foothill. Kettle and
Foothill agree that the "Collateral", as defined in the Security
Agreement, shall remain collateral security for the prompt satisfaction
of the 13.30% Note Obligations (as defined in the Security Agreement),
and Foothill shall have no obligation to release such Collateral from
the lien or security interest created by the Security Agreement, until
the Obligations (as defined in the Security Agreement) have been paid
in full and the Substitute Site has been subjected to the liens of the
Indenture, as provided in paragraph 2 above.
<PAGE> 4
Mr. Dennis R. Ascher February 28, 1995
Foothill Capital Corporation Page 3
If the foregoing correctly represents your understanding of our
agreements, please so indicate by your signature below.
Sincerely,
KETTLE RESTAURANTS, INC.
/s/ Carlette Woods
------------------------
Carlette Woods
Vice President-Finance
ACCEPTED AND AGREED TO this 28th day of February, 1995.
FOOTHILL CAPITAL CORPORATION
By: /s/ Dennis R. Ascher
--------------------
Dennis R. Ascher
Vice President
<PAGE> 5
EXHIBIT "A"
I. The Indenture. To Letter Agreement dated as of February 28, 1995 by and
between Kettle Restaurants, Inc. and Foothill Capital Corporation with
respect to sale of Kettle Unit #065, Houston, Harris County, Texas.
Pursuant to that certain Note Purchase Agreement dated as of June 1,
1989 between Kettle Restaurants, Inc., a Texas corporation (formerly known as
KRA, Inc.) ("Kettle"), Kettle Restaurants, Inc., a Texas corporation (which was
merged into KRA, Inc. on June 23, 1989), Principal Mutual Life Insurance Company
("Principal Mutual"), and Wisconsin Life Insurance Company ("Wisconsin"), Kettle
authorized and issued (i) to Principal Mutual that certain 13.30% Senior Secured
Note Due 1999 dated as of June 23, 1989 in the aggregate principal amount of
$14,000,000.00, and (ii) to Wisconsin that certain 13.30% Senior Secured Note
Due 1999 dated as of June 23, 1989, in the aggregate principal amount of
$2,000,000.00 (individually, the "$14,000,000 Note" and the "$2,000,000 Note",
respectively, and collectively, the "Notes"). Foothill Capital Corporation
("Foothill") is now the holder of the $14,000,000 Note, and Foothill is now the
holder of the $2,000,000 Note. The Notes are secured by (i) that certain
Indenture, Deed of Trust, Security Agreement, Assignment of Leases and Financing
Statement (Fixture Filing) dated June 1, 1989, executed by KRA, Inc. to NCNB
Texas National Bank, as trustee ("NCNB"), for the ratable benefit of the holders
of the Notes and recorded in various counties within the states of Colorado,
Florida, Louisiana, Missouri, New Mexico, North Carolina, Oklahoma, Texas and
Virginia, as modified and affected by (a) that certain First Supplemental
Indenture, Deed of Trust, Security Agreement, Assignment of Leases and Financing
Statement (Fixture Filing) dated as of June 23, 1989, executed by Kettle to
NCNB, as trustee, for the ratable benefit of the holders of the Notes, lb) that
certain Waiver and Amendment dated January 30, 1991, executed by Principal
Mutual and Kettle, (C) that certain letter dated January 20, 1992, executed by
Principal Mutual and Kettle, (d) that certain letter dated December 16, 1992,
executed by Principal Mutual and Kettle, (e) that certain letter dated March 15,
1993, executed by Principal Mutual and Kettle, (f) that certain letter dated May
14, 1993, executed by Principal Mutual, (g) that certain letter dated May 25,
1993, executed by Principal Mutual, (h) that certain Forbearance Agreement dated
as of May 28, 1993, executed by Principal Mutual, Central Life Assurance Company
("Central Life") and Kettle, (i) that certain letter dated June 1, 1993,
executed by Principal Mutual to Kettle, (j) that certain letter dated June 30,
1993, executed by Principal Mutual and Kettle, (k) that certain letter dated
August 2, 1993, executed by Principal Mutual and Kettle, (l) that certain
Forbearance Agreement dated as of October 1, 1993, executed by Principal Mutual,
Central Life and Kettle, (m) that certain Forbearance Agreement dated as of
November 1, 1993 executed by Principal Mutual, Central Life and Kettle, (n) that
certain Forbearance Agreement dated as of November 24, 1993 executed by Foothill
and Kettle, (o) that certain letter agreement waiving and amending Section 4.13
of the Indenture dated as of January 21, 1994, executed by Foothill and Kettle,
(p) that certain letter agreement dated as of May 27, 1994, executed by Foothill
and Kettle, (q) that certain letter agreement dated as of June 3, 1994. executed
by Foothill and Kettle, (r) that certain letter agreement dated as of July 26,
1994 executed by Foothill and Kettle, (s) that certain letter agreement dated as
of August 17,1994, executed by Foothill and Kettle, (t) that certain letter
dated as of September 1, 1994 executed by NationsBank of Texas, National
Association, as Trustee to Kettle, (u) that certain letter agreement dated as of
September 8, 1994, executed by Foothill and Kettle, (v) that certain letter
agreement dated effective as of September 21, 1994 executed by Foothill and
Kettle, (w) that other certain letter agreement also dated as of September 21,
1994 executed by Foothill and Kettle, (x) that certain letter agreement dated as
of October 24, 1994 to be effective as of September 1, 1994 executed by Foothill
and Kettle, (y) that certain letter agreement dated as of October 25, 1994
executed by Foothill and Kettle, (z) that certain letter agreement dated as of
November 29, 1994 executed by Foothill and Kettle, (aa) that other certain
letter agreement also dated as of November 29, 1994 executed by Foothill and
Kettle, and (ab) that certain letter agreement dated as of December 28, 1994
executed by Foothill and Kettle (as modified and affected, the "First
Indenture"), and (ii) that certain Indenture, Deed of Trust, Security Agreement,
Assignment of Leases and Financing Statement (Fixture Filing) dated as of May
28, 1993, executed by Kettle to NationsBank of Texas, National Association, as
trustee, for the ratable benefit of the holders of the Notes encumbering as of
the date hereof six (6) properties within various counties within the states of
Oklahoma, Tennessee, and Texas (as modified and affected by the documents
described in clauses (h) - (ab) above, the "Second Indenture") (the First
Indenture and the Second Indenture being hereinafter collectively referred to as
the "Indenture"). NationsBank of Texas, National Association ("Trustee") is the
current trustee of the First Indenture and the Second Indenture.
<PAGE> 6
EXHIBIT "B"
SUBSTITUTE SITE
Being a tract or parcel of land containing 29,991 square feet located in the
A.C. Reynolds Survey, Abstract No. 61, Harris County, Texas, and being all of
Lots 5, 6, 7, and 8, Block "B", Dozier Addition, according to the map thereof
recorded in Volume 302, Page 30 of the Deed Records of Harris County, Texas and
8,456 square feet out of Block 35 of Dickey's West Park Addition, Houston,
Harris County, Texas, said 29,991 square feet of land being more particularly
described by metes and bounds as follows:
BEGINNING at the intersection of the North right-of-way line of Branard Street
(50 feet wide) with the East right-of-way line of Argonne Street (50 feet wide),
said point being the Southwest corner of said Block "B", Dozier Addition;
THENCE North, along the East right-of-way line of Argonne Street, at 191.00 feet
passing the Northwest corner of said Block "B", Dozier Addition and the
Southwest corner of said Block 35 of Dickey's West Park Addition, and continuing
North, 75.00 feet, in all a distance of 266.00 feet to the Northwest corner of
the herein described tract;
THENCE South 89 degs. 54 mins. 15 secs. East, a distance of 112.75 feet to a
point for the Northeast corner of the herein described tract;
THENCE South, at 75.00 feet passing the' Northeast corner of said Lot 5, Block
"B", Dozier Addition, and continuing South, 191.00 feet along the East line of
said Lots 5 and 8, Block "B", Dozier Addition in all a distance of 266.00 feet
to a point on the North right-of-way line of Branard Street for the Southeast
corner of the herein described tract;
THENCE North 89 degs. 54 mins. 15 secs. West, a distance of 112.75 feet
along the North right-of-way line of Branard Street to the POINT OF BEGINNING
and containing 29,991 square feet (0.6885 acre) of land.
<PAGE> 1
EXHIBIT 10.31
[KETTLE LOGO]
KETTLE RESTAURANTS, INC.
- --------------------------------------------------------------------------------
Via FAX No. (310) 479-0461 March 28, 1995
Mr. Dennis R. Ascher, Vice President
Foothill Capital Corporation
11111 Santa Monica Boulevard, Suite 1500
Los Angeles, California 90025-3333
Re: Sale of Kettle Unit #68, Galveston, Galveston County, Texas (the
"Property") for a gross sale price of $494,000, and lease by Kettle
Restaurants, Inc. ("Kettle") of the Property from the purchaser for a
term of up to twenty (20) years at a rental rate not to exceed
$5,320.00 per month (the "Lease")
Dear Dennis:
The purpose of this letter is to confirm our understanding that
Foothill Capital Corporation ("Foothill") has consented to the sale by Kettle of
the Property, and to the release of the Property from the liens of the First
Indenture (as defined on Exhibit "A" attached hereto and incorporated herein by
this reference for all purposes), and to the referenced Lease, on the following
terms:
1. A portion of the net proceeds of such sale shall be utilized by Kettle
to purchase, for 100%, of their par value, $440,000 of the 15-7/8%
Subordinated Debentures due 1996 (the "Bonds") plus accrued interest
through the date of payment, held by Foothill Capital Corporation
("Foothill"), such transaction to be consummated in accordance with any
required or appropriate procedures pursuant to the Indenture dated as
of December 1, 1984 between Kettle and Texas Commerce Bank, National
Association, or otherwise under applicable laws.
2. On or before April 30, 1995, Kettle and Foothill shall have taken such
steps as are reasonably necessary to subject Kettle Unit #007 located
in Brownsville, Texas, as more particularly described on Exhibit "B"
attached hereto and incorporated herein by this reference for all
purposes (the "Substitute Site") to the liens of the Indenture,
including the preparation, execution and recording of documentation
reasonably acceptable to Foothill and the furnishing to Foothill of an
Owner Policy of Title Insurance in an amount, and containing only such
exceptions to title, as may be acceptable to Foothill. All costs of
such transaction, including without limitation, title policy premiums,
recording fees and attorneys fees, shall be paid by Kettle, Foothill
agrees that, notwithstanding anything in the Indenture to the contrary
(including but not limited to the provisions of Section 6.3 of the
First Indenture) which may be deemed to apply to this transaction,
Foothill shall not require an appraisal of the Substitute Site, nor
compliance with any other provisions of Section 6.3 of the First
Indenture.
3. To the extent that Article 4 of the First Indenture may be or be deemed
to be applicable to the sale of the Property, Kettle and Foothill agree
as follows:
<PAGE> 2
Mr. Dennis R. Ascher March 28, 1995
Foothill Capital Corporation Page 2
(a) Foothill consents to the sale of the Property and shall
instruct the Trustee under the Indenture to execute and
deliver a release of lien with respect thereto; and
(b) to the extent that the Property may be or be deemed to be
"Other Property" as defined in the Indenture, Foothill has
agreed to waive compliance by Kettle with the requirements of
Section 4.2 of the Indenture with respect to "Dispositions of
Other Property", and to waive any failure to comply with such
Section 4.2 which may be related to the sale of the Property.
4. Reference is hereby made to that certain Loan Agreement, as modified
and extended (the "Loan Agreement") dated as of February 11, 1994,
between Kettle and Foothill, under which Foothill made a $1,000,000
term loan to Kettle (the "Term Loan"), as modified and extended by
letter agreement dated as of February 10, 1995, and further extended by
letter agreement dated as of February 28, 1995, as secured, inter alia,
pursuant to a Security Agreement (the "Security Agreement") dated as of
February 11, 1994, by and between Kettle and Foothill. Kettle and
Foothill agree that the "Collateral", as defined in the Security
Agreement, shall remain collateral security for the prompt satisfaction
of the 13.30% Note Obligations (as defined in the Security Agreement),
and Foothill shall have no obligation to release such Collateral from
the lien or security interest created by the Security Agreement, until
the Obligations (as defined in the Security Agreement) have been paid
in full and the Substitute Site has been subjected to the liens of the
Indenture, as provided in paragraph 2 above.
If the foregoing correctly represents your understanding of our
agreements, please so indicate by your signature below.
Sincerely,
KETTLE RESTAURANTS, INC.
/s/ Carlette Woods
--------------------------
Carlette Woods
Vice President-Finance
ACCEPTED AND AGREED TO this 30th day of March, 1995.
FOOTHILL CAPITAL CORPORATION
By: /s/ Dennis R. Ascher
--------------------
Dennis R. Ascher
Vice President
<PAGE> 3
EXHIBIT "A"
To Letter Agreement dated as of March 28, 1995 by and between Kettle
Restaurants, Inc. and Foothill Capital Corporation with respect to sale of
Kettle Unit #068, Galveston, Galveston County, Texas,
Pursuant to that certain Note Purchase Agreement dated as of June 1, 1989
between Kettle Restaurants, Inc., a Texas corporation (formerly known as KRA,
Inc.) ("Kettle"), Kettle Restaurants, Inc., a Texas corporation (which was
merged into KRA, Inc. on June 23, 1989), Principal Mutual Life Insurance Company
("Principal Mutual"), and Wisconsin Life Insurance Company ("Wisconsin"), Kettle
authorized and issued (i) to Principal Mutual that certain 13.30% Senior Secured
Note Due 1999 dated as of June 23, 1989 in the aggregate principal amount of
$14,000,000.00, and (ii) to Wisconsin that certain 13.30% Senior Secured Note
Due 1999 dated as of June 23, 1989, in the aggregate principal amount of
$2,000,000.00 (individually, the "$14,000,000 Note" and the "$2,000,000 Note",
respectively, and collectively, the "Notes"). Foothill Capital Corporation
("Foothill") is now the holder of the $14,000,000 Note, and Foothill is now the
holder of the $2,000,000 Note. The Notes are secured by (i) that certain
Indenture, Deed of Trust, Security Agreement, Assignment of Leases and Financing
Statement (Fixture Filing) dated June 1, 1989, executed by KRA, Inc. to NCNB
Texas National Bank, as trustee ("NCNB"), for the ratable benefit of the holders
of the Notes and recorded in various counties within the states of Colorado,
Florida, Louisiana, Missouri, New Mexico, North Carolina, Oklahoma, Texas and
Virginia, as modified and affected by (a) that certain First Supplemental
Indenture, Deed of Trust, Security Agreement, Assignment of Leases and Financing
Statement (Fixture Filing) dated as of June 23, 1989, executed by Kettle to
NCNB, as trustee, for the ratable benefit of the holders of the Notes, lb) that
certain Waiver and Amendment dated January 30, 1991, executed by Principal
Mutual and Kettle, (c) that certain letter dated January 20, 1992, executed by
Principal Mutual and Kettle, (d) that certain letter dated December 16, 1992,
executed by Principal Mutual and Kettle, (e) that certain letter dated March 15,
1993, executed by Principal Mutual and Kettle, (f) that certain letter dated May
14, 1993, executed by Principal Mutual, (g) that certain letter dated May 25,
1993, executed by Principal Mutual, (h) that certain Forbearance Agreement dated
as of May 28, 1993, executed by Principal Mutual, Central Life Assurance Company
("Central Life") and Kettle, (i) that certain letter dated June 1, 1993,
executed by Principal Mutual to Kettle, (j) that certain letter dated June 30,
1993, executed by Principal Mutual and Kettle, (k) that certain letter dated
August 2, 1993, executed by Principal Mutual and Kettle, (l) that certain
Forbearance Agreement dated as of October 1, 1993, executed by Principal Mutual,
Central Life and Kettle, (m) that certain Forbearance Agreement dated as of
November 1, 1993 executed by Principal Mutual, Central Life and Kettle, (n) that
certain Forbearance Agreement dated as of November 24, 1993 executed by Foothill
and Kettle, (o) that certain letter agreement waiving and amending Section 4.13
of the Indenture dated as of January 21, 1994, executed by Foothill and Kettle,
(p) that certain letter agreement dated as of May 27, 1994, executed by Foothill
and Kettle, (q) that certain letter agreement dated as of June 3, 1994. executed
by Foothill and Kettle, (r) that certain letter agreement dated as of July 26,
1994 executed by Foothill and Kettle, (s) that certain letter agreement dated as
of August 17, 1994, executed by Foothill and Kettle, (t) that certain letter
dated as of September 1, 1994 executed by NationsBank of Texas, National
Association, as Trustee to Kettle, (u) that certain letter agreement dated as of
September 8, 1994, executed by Foothill and Kettle, (v) that certain letter
agreement dated effective as of September 21, 1994 executed by Foothill and
Kettle, (w) that other certain letter agreement also dated as of September 21,
1994 executed by Foothill and Kettle, (x) that certain letter agreement dated as
of October 24, 1994 to be effective as of September 1, 1994 executed by Foothill
and Kettle, (y) that certain letter agreement dated as of October 25, 1994
executed by Foothill and Kettle, (z) that certain letter agreement dated as of
November 29, 1994 executed by Foothill and Kettle, (aa) that other certain
letter agreement also dated as of November 29, 1994 executed by Foothill and
Kettle, (ab) that certain letter agreement dated as of December 28, 1994
executed by Foothill and Kettle, (ac) that certain Amendment to Indenture and
Notes dated as of January 25, 1995, executed by Foothill and Kettle, and (ad)
that certain letter agreement dated as of February 28, 1995, executed by
Foothill and Kettle, and as modified by letter agreement dated as of March 27,
1995, executed by Foothill and Kettle (as modified and affected, the 'First
Indenture'), and (ii) that certain [Indenture, Deed of Trust, Security
Agreement, Assignment of Leases and Financing Statement (Fixture Filing) dated
as of May 28, 1993, executed by Kettle to NationsBank of Texas, National
Association, as trustee, for the ratable benefit of the holders of the Notes
encumbering as of the date hereof six (6) properties within various counties
within the states of Oklahoma, Tennessee, and Texas (as modified and affected by
the documents described in clauses (h) - (ad) above, the "Second Indenture")
(the First Indenture and the Second Indenture being hereinafter collectively
referred to as the "Indenture"). NationsBank of Texas, National Association
("Trustee") is the current trustee of the First Indenture and the Second
Indenture. All capitalized terms not defined herein shall have the meanings
assigned to them in the First Indenture and the Second Indenture, respectively.
<PAGE> 4
EXHIBIT "B"
SUBSTITUTE SITE
A 0.82 acre tract of land in Block Thirty-eight (38) of Los Ebanos Properties
Subdivision in the City of Brownsville, Cameron County, Texas, according to
Volume 8, Page 12, Map Records, Cameron County, Texas, which 0.82 acre tract is
described by metes and bounds as follows:
FROM the Northeast corner of Block 38, Los Ebanos Properties Subdivision, South
4 deg. 32 mins. West, 30.0 feet to a point on the South right-of-way line of
Price Road for the Northeast corner and PLACE OF BEGINNING of this tract;
THENCE, along the South right-of-way line of Price Road, 30.0 feet
perpendicularly South of and parallel to the North line of Block 38, North 84
degs. 50 mins. West, 236.18 feet to a point for a corner;
THENCE, along the right-of-way line of U. S. 77 & 83 Expressway, South 28 deg.
01 mins. 16 secs. West 66.83 feet to a Texas Highway Department rightof-way
marker for the westernmost corner of this tract;
THENCE, along the Northeast right-of-way line of U. S. 77 & 83 Expressway, South
39 degs. 07 mins. 28 secs. East, 200.0 feet to a point for the Southernmost
corner of this tract;
THENCE, North 50 degs. 52 mins. 32 secs. East, 172.41 feet to a point, on the
East line of Block 38 for a corner;
THENCE, along the East line of Block 38, North 4 degs. 32 mins. East, 84.34 feet
to the PLACE OF BEGINNING, containing 0.82 acre more or less.
<PAGE> 1
EXHIBIT 10.32
[KETTLE LOGO]
KETTLE RESTAURANTS, INC.
- --------------------------------------------------------------------------------
Via FAX No. (310) 479-0461 March 29, 1995
Mr. Dennis R. Ascher, Vice President
Foothill Capital Corporation
11111 Santa Monica Boulevard, Suite 1500
Los Angeles, California 90025-3333
Re: Sale of Kettle Unit #488, Ft. Walton Beach, Broward County,
Florida (the "Property")
Dear Dennis:
The purpose of this letter is to confirm our understanding that
Foothill Capital Corporation ("Foothill") has consented to the sale by Kettle of
the Property, and to the release of the Property from the liens of the First
Indenture (as defined on Exhibit "A" attached hereto and incorporated herein by
this reference for all purposes), on the following terms:
1. A portion of the net proceeds of such sale shall be utilized by Kettle
to purchase, for 1 00% of their par value, $240,000 of the 15-7/8%
Subordinated Debentures due 1996 (the "Bonds") plus accrued interest
through the date of payment, held by Foothill Capital Corporation
("Foothill"), such transaction to be consummated in accordance with any
required or appropriate procedures pursuant to the Indenture dated as
of December 1, 1984 between Kettle and Texas Commerce Bank, National
Association, or otherwise under applicable laws.
2. On or before April 30,1995, Kettle and Foothill shall have taken such
steps as are reasonably necessary to subject Kettle Unit #072 located
in Houston, Texas, as more particularly described on Exhibit "B"
attached hereto and incorporated herein by this reference for all
purposes (the "Substitute Site") to the liens of the Indenture,
including the preparation, execution and recording of documentation
reasonably acceptable to Foothill and the furnishing to Foothill of an
Owner Policy of Title Insurance in an amount, and containing only such
exceptions to title, as may be acceptable to Foothill. All costs of
such transaction, including without limitation, title policy premiums,
recording fees and attorneys fees, shall be paid by Kettle. Foothill
agrees that, notwithstanding anything in the Indenture to the contrary
(including but not limited to the provisions of Section 6.3 of the
First Indenture) which may be deemed to apply to this transaction,
Foothill shall not require an appraisal of the Substitute Site, nor
compliance with any other provisions of Section 6.3 of the First
Indenture.
3. To the extent that Article 4 of the First Indenture may be or be deemed
to be applicable to the sale of the Property, Kettle and Foothill agree
as follows:
(a) Foothill consents to the sale of the Property and shall
instruct the Trustee under the Indenture to execute and deliver
a release of lien with respect thereto; and
(b) to the extent that the Property may be or be deemed to be
"Other Property" as defined in the Indenture, Foothill has
agreed to waive compliance by Kettle with the requirements of
Section 4.2 of the Indenture with respect to "Dispositions of
Other Property", and to waive any failure to comply with such
Section 4.2 which may be related to the sale of the Property.
<PAGE> 2
Mr. Dennis R. Ascher March 29, 1995
Foothill Capital Corporation Page 2
4. Reference is hereby made to that certain Loan Agreement, as modified
and extended (the "Loan Agreement") dated as of February 11, 1994,
between Kettle and Foothill, under which Foothill made a $1,000,000
term loan to Kettle (the "Term Loan"), as modified and extended by
letter agreement dated as of February 10, 1995, and further extended by
letter agreement dated as of February 28, 1995, as secured, inter alia,
pursuant to a Security Agreement (the "Security Agreement") dated as of
February 11, 1994, by and between Kettle and Foothill. Kettle and
Foothill agree that the "Collateral", as defined in the Security
Agreement, shall remain collateral security for the prompt satisfaction
of the 13.30% Note Obligations (as defined in the Security Agreement),
and Foothill shall have no obligation to release such Collateral from
the lien or security interest created by the Security Agreement, until
the Obligations (as defined in the Security Agreement) have been paid
in full and the Substitute Site has been subjected to the liens of the
Indenture, as provided in paragraph 2 above.
5. Reference is hereby made to that certain letter agreement dated "as of
September 1, 1994" by and between Kettle and Foothill dealing, inter
alia, with Foothill's consent to the closing of "Kettle" Units #081 and
the Property (the "Prior Letter"). The terms and provisions of this
letter supersede and replace the provisions of numbered paragraph 2 of
the Prior Letter as such provisions apply to the Property. Except as
specifically provided in the immediately preceding sentence hereof, the
Prior Letter shall remain in full force and effect as originally
executed.
If the foregoing correctly represents your understanding of our
agreements, please so indicate by your signature below.
Sincerely,
KETTLE RESTAURANTS, INC.
/s/ Carlette Woods
----------------------------
Carlette Woods
Vice President-Finance
ACCEPTED AND AGREED TO this 29th day of March, 1995.
FOOTHILL CAPITAL CORPORATION
By: /s/ Dennis R. Ascher
--------------------
Dennis R. Ascher
Vice President
<PAGE> 3
EXHIBIT "A"
To Letter Agreement dated as of March 29, 1995 by and between Kettle
Restaurants, Inc. and Foothill Capital Corporation with respect to sale of
Kettle Unit #488, Ft. Walton Beach, Broward County, Florida.
Pursuant to that certain Note Purchase Agreement dated as of June 1,
1989 between Kettle Restaurants, Inc., a Texas corporation (formerly known as
KRA, Inc.) ("Kettle"), Kettle Restaurants, Inc., a Texas corporation (which was
merged into KRA, Inc. on June 23, 1989), Principal Mutual Life Insurance Company
("Principal Mutual"), and Wisconsin Life Insurance Company ("Wisconsin"), Kettle
authorized and issued (i) to Principal Mutual that certain 13.30% Senior Secured
Note Due 1999 dated as of June 23, 1989 in the aggregate principal amount of
$14,000,000.00, and (ii) to Wisconsin that certain 13.30% Senior Secured Note
Due 1999 dated as of June 23, 1989, in the aggregate principal amount of
$2,000,000.00 (individually, the "$14,000,000 Note" and the "$2,000,000 Note",
respectively, and collectively, the "Notes"). Foothill Capital Corporation
("Foothill") is now the holder of the $14,000,000 Note, and Foothill is now the
holder of the $2,000,000 Note. The Notes are secured by (i) that certain
Indenture, Deed of Trust, Security Agreement, Assignment of Leases and Financing
Statement (Fixture Filing) dated June 1, 1989, executed by KRA, Inc. to NCNB
Texas National Bank, as trustee ("NCNB"), for the ratable benefit of the holders
of the Notes and recorded in various counties within the states of Colorado,
Florida, Louisiana, Missouri, New Mexico, North Carolina, Oklahoma, Texas and
Virginia, as modified and affected by (a) that certain First Supplemental
Indenture, Deed of Trust, Security Agreement, Assignment of Leases and Financing
Statement (Fixture Filing) dated as of June 23, 1989, executed by Kettle to
NCNB, as trustee, for the ratable benefit of the holders of the Notes, (b) that
certain Waiver and Amendment dated January 30, 1991, executed by Principal
Mutual and Kettle, (c) that certain letter dated January 20, 1992, executed by
Principal Mutual and Kettle, (d) that certain letter dated December 16, 1992,
executed by Principal Mutual and Kettle, (e) that certain letter dated March 15,
1993, executed by Principal Mutual and Kettle, (f)that certain letter dated May
14, 1993, executed by Principal Mutual, (g) that certain letter dated May 25,
1993, executed by Principal Mutual, (h) that certain Forbearance Agreement dated
as of May 28, 1993, executed by Principal Mutual, Central Life Assurance Company
("Central Life") and Kettle, (i) that certain letter dated June 1, 1993,
executed by Principal Mutual to Kettle, (j) that certain letter dated June 30,
1993, executed by Principal Mutual and Kettle, (k) that certain letter dated
August 2, 1993, executed by Principal Mutual and Kettle, (l) that certain
Forbearance Agreement dated as of October 1, 1993, executed by Principal Mutual,
Central Life and Kettle, (m) that certain Forbearance Agreement dated as of
November 1, 1993 executed by Principal Mutual, Central Life and Kettle, (n) that
certain Forbearance Agreement dated as of November 24, 1993 executed by Foothill
and Kettle, (o) that certain letter agreement waiving and amending Section 4.13
of the Indenture dated as of January 21, 1994, executed by Foothill and Kettle,
(p) that certain letter agreement dated as of May 27, 1994, executed by Foothill
and Kettle, (q) that certain letter agreement dated as of June 3, 1994. executed
by Foothill and Kettle, (r) that certain letter agreement dated as of July 26,
1994 executed by Foothill and Kettle, (s) that certain letter agreement dated as
of August 17, 1994, executed by Foothill and Kettle, (t) that certain letter
dated as of September 1, 1994 executed by NationsBank of Texas, National
Association, as Trustee to Kettle, (u) that certain letter agreement dated as of
September 8, 1994, executed by Foothill and Kettle, (v) that certain letter
agreement dated effective as of September 21, 1994 executed by Foothill and
Kettle, (w) that other certain letter agreement also dated as of September 21,
1994 executed by Foothill and Kettle, (x) that certain letter agreement dated as
of October 24, 1994 to be effective as of September 1, 1994 executed by Foothill
and Kettle, (y) that certain letter agreement dated as of October 25, 1994
executed by Foothill and Kettle, (z) that certain letter agreement dated as of
November 29, 1994 executed by Foothill and Kettle, (aa) that other certain
letter agreement also dated as of November 29, 1994 executed by Foothill and
Kettle, (ab) that certain letter agreement dated as of December 28, 1994
executed by Foothill and Kettle, (ac) that certain Amendment to Indenture and
Notes dated as of January 25, 1995, executed by Foothill and Kettle, (ad) that
certain letter agreement dated as of February 28, 1995, executed by Foothill and
Kettle, and as modified by letter agreement dated as of March 27, 1995, executed
by Foothill and Kettle, and (ae) that certain letter agreement dated as of March
28, 1995 by and between Foothill and Kettle (as modified and affected, the
"First Indenture"), and (ii) that certain Indenture, Deed of Trust, Security
Agreement, Assignment of Leases and Financing Statement (Fixture Filing) dated
as of May 28, 1993, executed by Kettle to NationsBank of Texas, National
Association, as trustee, for the ratable benefit of the holders of the Notes
encumbering as of the date hereof six (6) properties within various counties
within the states of Oklahoma, Tennessee, and Texas (as modified and affected by
the documents described in clauses (h) - (ae) above, the "Second Indenture")
(the First Indenture and the Second Indenture being hereinafter collectively
referred to as the "Indenture"). NationsBank of Texas, National Association
("Trustee") is the current trustee of the First Indenture and the Second
Indenture. All capitalized terms not defined herein shall have the meanings
assigned to them in the First Indenture and the Second Indenture, respectively.
<PAGE> 4
EXHIBIT "B"
SUBSTITUTE SITE
A tract or parcel of land containing 23,459 square feet out of Lot B of Bayou
Woods, Section Three, as recorded in Volume 22, Page 54, Harris County Map
Records, Harris County, Texas, and more particularly described as follows:
BEGINNING at the Southeast corner of Lot B, Bayou Woods, Section Three, as
recorded in Volume 22, Page 54, Harris County Map Records, said corner also
being the Northwest corner of Lot 6; said corner marked with a 5/8 inch iron
rod.
THENCE West 125.11 along the South line of said Lot B to the Southwest corner of
the herein described tract, said corner marked with a 1/2 inch iron pipe;
THENCE North 00 degs. 20 mins. 05 secs. East - 189.97 feet along the West line
of the herein described tract to its intersection with the South line of
Interstate 10 West said intersection marked with a 1/2 inch iron pipe;
THENCE South 88 degs. 29 mins. 43 secs. East - 124.04 feet along the South line
of Interstate 10 to a 5/8 inch iron rod marking the Northeast corner of Lot B,
Bayou Woods, Section Three;
THENCE South 186.71 feet along the East line of said Lot B to a 5/8 inch iron
rod marking the Southeast corner of said Lot B to the Point of beginning, and
containing 23,459 square feet of land
<PAGE> 1
EXHIBIT 10.32
KETTLE RESTAURANTS, INC.
3131 ARGONNE
HOUSTON, TEXAS 77098
March 31, 1995
Mr. Dennis R. Ascher, Vice President
Foothill Capital Corporation
11111 Santa Monica Boulevard
Los Angeles, California 90025-3333
Dear Dennis:
Reference is hereby made to the Indenture as defined in Exhibit "A"
attached hereto and incorporated herein by this reference for all purposes.
Capitalized terms used in this letter that are not otherwise defined herein
shall have the meanings given to them in the Indenture.
The purpose of this letter is to set forth in general terms our
agreements regarding the disposition of certain Units, the disposition of
certain Other property, the substitution of certain collateral for Units
released from the Indenture, the use of the proceeds from certain sales of Units
and Other Property, modification of certain principal payment requirements with
respect to the notes and the purchase by Kettle Restaurants, Inc. ("Kettle") of
the 15 7/8 percent subordinated debentures (the "Bonds") currently held by
Foothill Capital Corporation ("Foothill").
Kettle and Foothill, each intending to be legally bound, hereby agrees
as follows:
1. On or before March 31, 1995, Kettle will purchase from Foothill
$1,800,000 in face amount of the Bonds at par plus accrued interest.Settlement
will be April 4, 1995.
2. In consideration of the release of Units 096 (Houston, Texas), 138
(College Station, Texas) and 090 (Victoria, Texas) from the Indenture, Kettle
agrees to substitute as collateral Units 044 (Tyler, Texas), 058 (Harlingen,
Texas), 063 (Lufkin, Texas), 023 (Jacksonville, North Carolina) and 048
(Wilmington, North Carolina). The net proceeds from the sale of Units 096, 138
and 090, the sale of which Foothill consents to, will be used to purchase from
Foothill the remainder of the Bonds currently owned by Foothill at par plus
accrued interest; any excess proceeds ("Excess Proceeds") will be used by Kettle
to prepay the Notes and will be applied by Foothill to the $1,800,000 principal
payment due June 30, 1996, to such prepayment. Estimated proceeds from the sale
of the Units described in this paragraph are as follows:
<TABLE>
<S> <C>
Unit 096 (Houston, Texas) $485,000
Unit 138 (College Station, Texas) $550,000
Unit 090 (Victoria, Texas) $325,000
</TABLE>
<PAGE> 2
Mr. Dennis R. Ascher
March 31, 1995
Page 2
Foothill acknowledges that it owns $3,398,000 in face amount of the Bonds as of
the date hereof, prior to the purchase provided for in Paragraph 1 above and the
sale of Units 068 and 488.
3. The release of certain Units from the Indenture and the substitution
of certain other properties as collateral for the Notes as described in
Paragraph 2 above and in certain letter agreements relating to Units 068 and 488
shall occur on or before April 30, 1995.
4. Foothill will defer the $1,800,000 principal payment due June 30,
1995 until the maturity date of the Notes-June 30, 1999.
5. Following the purchase by Kettle of all the Bonds currently held by
Foothill as contemplated in Paragraphs 1 and 2, in the event that there are
additional sales of Units and/or Other Property by Kettle subsequent to March 1,
1995, other than sales of (i) Units 012, 068, 090, 096, 138 and 488,
(ii) Other Property currently encumbered by debt held by Textron, (iii) Units
encumbered by the Indenture and remaining as collateral for the Notes, and (iv)
units or Other Property where the net proceeds from sale exceed the related debt
payoff by less than $125,000, then the parties agree that the net proceeds
therefrom will be divided equally, one-half being used to purchase Bonds and the
remainder of the proceeds being used to refurbish Company-operated Units then
encumbered by the Indenture and held as collateral for the Notes. The agreement
set forth in this Paragraph 5 shall continue until the proceeds from sales of
the properties not excluded by the terms of this Paragraph 5 exceeds $2,500,000.
The net proceeds resulting from the sale of units or other property described in
subparagraphs (ii) and (iv) above resulting from the sale will be retained by
Kettle to be used for such purposes as Kettle may determine in its discretion.
Any proceeds required by the terms of this Paragraph 5 to be used to purchase
bonds that are not immediately used for such purpose will be placed in a
separate, segregated account (the "Proceeds Account") maintained for that
purpose. Kettle agrees that it will not withdraw any funds from the Proceeds
Account except for the purposes stated herein and that it will not pledge the
Proceed Account as security for any indebtedness or otherwise permit any other
person or entity to have any interest in the Proceeds Account. In the event that
Kettle is unable to purchase Bonds in the marketplace or through private sale,
Kettle agrees that it will call the Bonds, to the extent of the amount of the
funds in the Proceeds Account, prior to June 1, 1996 in order to comply with its
obligation under this Paragraph 5.
6. Foothill agrees that it will waive failure to comply with Section
4.2 of the Indenture with respect to sales described in subparagraphs (i), (ii)
and (iv) in Paragraph 5 above provided such sales are made at fair market value.
7. In consideration of the foregoing, Kettle will pay Foothill a
modification fee in the amount of $25,000 on or before April 3, 1995.
8. For the purposes of this letter agreement, the term "net proceeds"
will be an amount equal to gross sales prices for any units or other property
less all actual out-of-pocket costs incurred and paid by Kettle in order to
complete the sale.
<PAGE> 3
Mr. Dennis R. Ascher
March 31, 1995
Page 3
9. Kettle and Foothill agree to enter into more definitive agreements
in order to implement the provisions of this letter agreement, including one or
more amendments to the Indenture, as soon as possible hereafter, but in no event
later than April 30, 1995. The agreements will be in form and substance
reasonably satisfactory to Foothill and will contain an acknowledgment and
release by each party acknowledging that it has no claims against the other
arising under and with respect to the Indenture, the Notes and the $1,000,000
Term Loan dated as of February 11, 1994, and a waiver any and all claims with
respect thereto.
If the foregoing accurately states your understanding of our
agreements, please so indicate by your execution on the signature line below.
Very truly yours,
KETTLE RESTAURANTS, INC.
/s/ Carlette Woods
------------------------
Carlette Woods,
Vice President-Finance
AGREED and accepted this 3lst day
of March, 1995.
FOOTHILL CAPITAL CORPORATION
By: /s/ Dennis R. Ascher
--------------------
Dennis R. Ascher,
Vice President
<PAGE> 4
EXHIBIT "A"
To Letter Agreement dated as of March 31, 1995 by and between Kettle
Restaurants, Inc. and Foothill Capital Corporation
Pursuant to that certain Note Purchase Agreement dated as of June 1,
1989 between Kettle Restaurants, Inc., a Texas corporation (formerly known as
KRA, Inc.) ("Kettle"), Kettle Restaurants, Inc., a Texas corporation (which was
merged into KRA, Inc. on June 23, 1989), Principal Mutual Life Insurance Company
("Principal Mutual"), and Wisconsin Life Insurance Company ("Wisconsin"), Kettle
authorized and issued (i) to Principal Mutual that certain 13.30% Senior Secured
Note Due 1999 dated as of June 23, 1989 in the aggregate principal amount of
$14,000,000.00, and (ii) to Wisconsin that certain 13.30% Senior Secured Note
Due 1999 dated as of June 23, 1989, in the aggregate principal amount of
$2,000,000.00 (individually, the "$14,000,000 Note" and the "$2,000,000 Note",
respectively, and collectively, the "Notes"). Foothill Capital Corporation
("Foothill") is now the holder of the $14,000,000 Note, and Foothill is now the
holder of the $2,000,000 Note. The Notes are secured by (i) that certain
Indenture, Deed of Trust, Security Agreement, Assignment of Leases and Financing
Statement (Fixture Filing) dated June 1, 1989 executed by KRA, Inc. to NCNB
Texas National Bank, as trustee ("NCNB"), for the ratable benefit of the holders
of the Notes and recorded in various counties within the states of Colorado,
Florida, Louisiana, Missouri, New Mexico, North Carolina, Oklahoma, Texas and
Virginia, as modified and affected by (a) that certain First Supplemental
Indenture, Deed of Trust, Security Agreement, Assignment of Leases and Financing
Statement (Fixture Filing) dated as of June 23, 1989 executed by Kettle to NCNB,
as trustee, for the ratable benefit of the holders of the Notes, (b) that
certain Waiver and Amendment dated January 30, 1991 executed by Principal Mutual
and Kettle, (C) that certain letter dated January 20, 1992 executed by Principal
Mutual and Kettle, (d) that certain letter dated December 16, 1992 executed by
Principal Mutual and Kettle, (e) that certain letter dated March 15, 1993
executed by Principal Mutual and Kettle, (f) that certain letter dated May 14,
1993 executed by Principal Mutual, (g) that certain letter dated May 25, 1993
executed by Principal Mutual, (h) that certain Forbearance Agreement dated as of
May 28, 1993 executed by Principal Mutual, Central Life Assurance Company
("Central Life") and Kettle, (i) that certain letter dated June 1, 1993 executed
by Principal Mutual to Kettle, (j) that certain letter dated June 30, 1993
executed by Principal Mutual and Kettle, (k) that certain letter dated August 2,
1993 executed by Principal Mutual and Kettle, (l) that certain Forbearance
Agreement dated as of October 1, 1993 executed by Principal Mutual, Central Life
and Kettle, (m) that certain Forbearance Agreement dated as of November 1, 1993
executed by Principal Mutual, Central Life and Kettle, (n) that certain
Forbearance Agreement dated as of November 24, 1993 executed by Foothill and
Kettle, (o) that certain letter agreement waiving and amending Section 4.13 of
the Indenture dated as of January 21, 1994 executed by Foothill and Kettle, (p)
that certain letter agreement dated as of May 27, 1994 executed by Foothill and
Kettle, (q) that certain letter agreement dated as of June 3, 1994 executed by
Foothill and Kettle, (r) that certain letter agreement dated as of July 26, 1994
executed by Foothill and Kettle, (s) that certain letter agreement dated as of
August 17, 1994 executed by Foothill and Kettle, (t) that certain letter dated
as of September 1, 1994 executed by NationsBank of Texas, National Association,
as Trustee to Kettle, (u) that certain letter agreement dated as of September 8,
1994 executed by Foothill and Kettle, (v) that certain letter agreement dated
effective as of September 21, 1994 executed by Foothill and Kettle, (w) that
other certain letter agreement also dated as of September 21, 1994 executed by
Foothill and Kettle, (x) that certain letter agreement dated as of October 24,
1994 to be effective as of September 1, 1994 executed by Foothill and Kettle,
(y) that certain letter agreement dated as of October 25, 1994 executed by
Foothill and Kettle, (z) that certain letter agreement dated as of November 29,
1994 executed by Foothill and Kettle, (aa) that other certain letter agreement
also dated as of November 29, 1994 executed by Foothill and Kettle, (ab) that
certain letter agreement dated as of December 28, 1994 executed by Foothill and
Kettle, (ac) that certain Amendment to Indenture and Notes dated as of January
25, 1995 executed by Foothill and Kettle, (ad) that certain letter agreement
dated as of February 28, 1995 executed by Foothill and Kettle, and as modified
by letter agreement dated as of March 27, 1995 executed by Foothill and Kettle,
(ae) that certain letter agreement dated as of March 28, 1995 executed by
Foothill and Kettle, (af) that certain letter agreement dated as of March 29,
1995 executed by Foothill and Kettle, and (ag) that certain letter agreement
dated as of March 30, 1995 executed by Foothill and Kettle (as modified and
affected, the "First Indenture"), and (ii) that certain Indenture, Deed of
Trust, Security Agreement, Assignment of Leases and Financing Statement (Fixture
Filing) dated as of May 28, 1993 executed by Kettle to NationsBank of Texas,
National Association, as trustee, for the ratable benefit of the holders of the
Notes encumbering as of the date hereof six (6) properties within various
counties within the states of Oklahoma, Tennessee, and Texas (as modified and
affected by the documents described in clauses (h)-(ag) above, the "Second
Indenture"). (the First Indenture and the Second Indenture being hereinafter
collectively referred to as the "Indenture"). NationsBank of Texas, National
Association ("Trustee") is the current trustee of the First Indenture and the
Second Indenture. All capitalized terms not defined herein shall have the
meanings assigned to them in the First Indenture and the Second Indenture,
respectively.
<PAGE> 5
[FOOTHILL LETTERHEAD]
March 31, 1995
Ms. Carlette Woods
Kettle Restaurants, Inc.
3131 Argonne
P.O. Box 2964
Houston, TX 77252
Dear Carlette:
This letter confirms your purchase from us, under the Term Sheet dated March 31,
1995, of $1,800,000 face amount of Kettle's 15.875% subordinated debentures at a
purchase price of par, plus accrued interest. The following calculation details
the total amount due:
Trade date: March 31, 1995
Settlement date: April 4, 1995
<TABLE>
<S> <C>
$1,800,000 face amount @ 100% $1,800,000.00
accrued interest (123 days) 97,631.25
-------------
TOTAL AMOUNT DUE FOOTHILL $1,897,631.25
</TABLE>
We will be using the same delivery method for the bonds that we utilized
previously in connection with the sale of unit #65. Please give me a call if you
have any questions.
Sincerely,
/s/ Dennis R. Ascher
- ----------------------------
Dennis R. Ascher
Vice President
Agreed and accepted: /s/ Carlette Woods
------------------------------
Carlette Woods, VP-Finance
