<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES ACT OF 1934
Date of Report (Date of earliest event reported) September 23,1997
-------------------------------
Sizzler International, Inc.
- -------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware
- -------------------------------------------------------------------------------
(State or Other Jurisdiction of Incorporation)
1-10711 95-4307254
- ------------------------ ------------------------------------
(Commission File Number) (IRS Employer Identification Number)
12655 West Jefferson Boulevard, Los Angeles, California 90066
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (310) 827-2300
----------------------------
Not Applicable
- -------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
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Item 2. Acquisition or Disposition of Assets
On August 14, 1997, pursuant to order of the United States Bankruptcy Court
for the Central District of California (the "Bankruptcy Court"), the
Registrant's Sixth Amended Plan of Reorganization (the "Plan") was confirmed.
On August 18, 1997, the Registrant obtained a commitment from Westpac
Banking Corporation to lend up to AUD 63.5 million (approximately $45 million
US) to certain of Registrant's subsidiaries (the "Westpac Loan"). Westpac
Banking Corporation, based in Sydney, is one of Australia's largest banks. The
Registrant obtained the Westpac Loan commitment in order to refinance the claims
of unsecured creditors under the Plan.
On September 11, 1997, the Bankruptcy Court entered an order approving a
modification of the Registrant's Plan of Reorganization (the "Plan"). The
modification allowed the Registrant, in lieu of the issuance of five-year notes
to unsecured creditors at an interest rate of prime plus 3 1/4%, to pay or
reserve for the claims of unsecured creditors. The order permitted the
Registrant, subject to the availability of cash, to take the following actions
on the Plan's effective date: (i) pay in full in cash all allowed claims of
unsecured creditors and (ii) set aside in a segregated reserve account
sufficient funds to pay the disputed claims of unsecured creditors.
On September 23, 1997, the effective date of the Plan, the Westpac Loan was
funded and the Registrant utilized the net loan proceeds, together with other
cash reserves, to pay or reserve for the claims of unsecured creditors in cash
as permitted by the modified Plan.
The Westpac Loan provides for a five year term at an interest rate equal to
the Australian interbank borrowing rate (BBSY), 4.73% at the time of the
funding, plus a margin. The margin for the Westpac Loan will be based on a
formula tied to the Registrant's international operations ratio of debt to
earnings before interest and taxes, and will vary between 1.25% and 2.25%. The
Westpac Loan involved the collateralization of a significant amount of the
Registrant's consolidated assets, including the principal operating assets and
"Sizzler" trademarks of the Registrant's international division. The
international division consists of 98 KFC restaurants, 33 Sizzler restaurants,
and one The Italian Oven restaurant in Australia.
Item 7. Exhibits
2.1 Registrant's Sixth Amended Plan of Reorganization dated August 26,
1997.
3.1 Letter of Offer dated August 18, 1997 among certain subsidiaries of
the Registrant and Westpac Banking Corporation.
3.2 A$63,500,000 Bill Acceptance and Discount Facility dated as of
September 19, 1997 among certain subsidiaries of the Registrant and Westpac
Banking Corporation.
3.3 Unlimited Cross Guarantee and Indemnity and Negative Pledge with
Financial Ratio Covenants dated as of September 19, 1997 among certain
subsidiaries of the
<PAGE>
Registrant and Westpac Banking Corporation.
3.4 Subordination Deed dated as of September 24, 1997 among the Registrant
and certain of its subsidiaries and Westpac Banking Corporation.
3.5 Stock Pledge dated as of September 24, 1997 between the Registrant and
Westpac Banking Corporation.
3.6 Form of Fixed and Floating Charge dated as of September 19, 1997
between various subsidiaries of the Registrant and Westpac Banking
Corporation.
SIGNATURES
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 hereunto duly authorized.
Sizzler International, Inc.
By: /s/ Christopher R. Thomas
---------------------------
Christopher R. Thomas
Its: Executive Vice President
October 8, 1997
<PAGE>
EXHIBIT 2.1
RICHARD M. PACHULSKI, ESQ., (State Bar #90073)
JAMES I. STANG, ESQ., (State Bar #94435)
BRAD R. GODSHALL, ESQ., (State Bar #105438)
DEBRA GRASSGREEN, ESQ., (State Bar #169978)
RACHELLE S. VISCONTE, ESQ., (State Bar #182158)
PACHULSKI, STANG, ZIEHL & YOUNG P.C.
10100 Santa Monica Boulevard, Suite 1100
Los Angeles, California 90067
Telephone: (310) 277-6910
Attorneys for Debtor and Debtor in Possession
SCOTT McNUTT, ESQ. (State Bar #104696)
REBECCA LITTENEKER, ESQ. (State Bar #111744)
SEVERSON & WERSON
1 Embarcadero Center, 25th Floor
San Francisco, CA 94111
Telephone: (415) 398-3344
Special Counsel for Debtor and Debtor in Possession
UNITED STATES BANKRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
In re:
SIZZLER RESTAURANTS INTERNATIONAL, INC.,
SIZZLER INTERNATIONAL, INC., COLLINS
PROPERTIES, INC., TENLY ENTERPRISES, INC.,
and BUFFALO RANCH STEAKHOUSES, INC.,
Debtors.
- -------------------------------
__ Affects all Debtors
__ Affects SRI Only
X Affects SII Only
--
__ Affects Collins Only
__ Affects Tenly Only
__ Affects Buffalo Ranch Only
- -------------------------------
Case No. SV 96-16075-AG
(Jointly administered with:
Case Nos: SV 96 -16076-AG
SV 96 -16077-AG
SV 96 -16078-AG
SV 96 -16079-AG)
Chapter 11 cases
SIZZLER INTERNATIONAL, INC.'S SIXTH AMENDED PLAN OF REORGANIZATION AS MODIFIED
Disclosure Statement Hearing:
- ----------------------------
Date: April 29, 1997
Time: 9:00 a.m.
Place: Courtroom "302"
21041 Burbank Blvd.
Woodland Hills, CA 91367
Confirmation Hearing:
- --------------------
Date: June 2, 1997
Time: 9:00 a.m.
Place: Courtroom "302"
21041 Burbank Blvd.
Woodland Hills, CA 91367
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ARTICLE I DEFINITIONS............................................................... 1
A. Definitions............................................................... 1
B. Rules of Interpretation, Computation of Time and Governing Law............ 21
1. Rules of Interpretation.............................................. 21
2. Computation of Time.................................................. 22
3. Governing Law........................................................ 22
ARTICLE II ADMINISTRATIVE AND TAX CLAIMS............................................ 23
A. Treatment of Administrative Claims........................................ 23
1. Bar Date for Administrative Tax Claims............................... 23
2. Bar Date for All Other Administrative Claims......................... 23
3. Payment of Administrative Claims, Administrative Tax
Claims and Priority Tax Claims...................................... 24
4. Statutory Fees....................................................... 25
ARTICLE III CLASSIFICATION OF CLAIMS AND INTERESTS AND
DESIGNATION OF IMPAIRMENT................................................. 26
A. Nature of Class Designations.............................................. 26
B. Class Overview............................................................ 26
1. Priority Non-Tax Claims.............................................. 27
2. Secured Claims....................................................... 27
3. Bank Claims.......................................................... 27
4. Large Unsecured Claims............................................... 27
5. Damage Claims........................................................ 27
6. Affiliate Claims..................................................... 27
7. SERP Claims.......................................................... 27
8. Small Unsecured Claims............................................... 28
9. Workers' Compensation Claims......................................... 28
10. Non-Vested Retirement Claims......................................... 28
11. Interests............................................................ 28
ARTICLE IV DESIGNATION AND TREATMENT OF CLASSES..................................... 28
A. Treatment of Allowed Secured Claims: Class 2(a) and 2(b).................. 28
1. Class 2 Subclasses................................................... 28
2. Treatment............................................................ 28
B. Treatment of Unsecured Claims............................................. 29
1. Class 1 - Priority Non-Tax Claims.................................... 29
2. Class 3 - Bank Claims................................................ 30
3. Class 4 - Large Unsecured Claims..................................... 31
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4. Class 5 - Damage Claims.............................................. 33
5. Class 6 - Affiliate Claims........................................... 34
6. Class 7 - SERP Claims................................................ 34
7. Class 8 - Small Unsecured Claims..................................... 34
8. Class 9 - Workers' Compensation Claims............................... 35
9. Class 10 - Non-Vested Retirement Claims.............................. 35
C. Treatment of Equity - Class 11............................................ 35
ARTICLE V VARIOUS MECHANICS FOR PAYMENT OF CLASS 3 AND 4 GENERAL UNSECURED CLAIMS... 36
A. The Indenture............................................................. 36
B. The Notes................................................................. 36
C. Term of Notes............................................................. 37
D. Interest Accrual Under the Notes.......................................... 37
E. Amortization Payments..................................................... 37
F. Affiliate Guarantees/Collateral........................................... 41
G. Covenants Under the Indenture............................................. 42
H. Dividend Purchase......................................................... 45
I. The Reserve Agent......................................................... 47
J. Approved Reserve Agent Expenses........................................... 48
K. Reserve Agent Indemnification/Expenses Upon Default....................... 48
L. The Attorneys Fee Fund.................................................... 48
M. Controlling Nature of the Indenture....................................... 50
N. Cash Election or Termination of the Indenture............................. 50
ARTICLE VI CONDITIONS TO EFFECTIVENESS.............................................. 51
ARTICLE VII TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES................... 53
A. Assumption................................................................ 53
B. Assignment................................................................ 54
C. Rejection................................................................. 54
D. Claims Arising From Rejection of Contracts................................ 55
ARTICLE VIII MEANS FOR IMPLEMENTATION OF PLAN/RESERVES.............................. 55
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A. Effective Date Transactions............................................... 55
1. Incorporation of Sizzler USA Holdings and Sizzler USA and
Sizzler International Marks......................................... 56
2. Assignment of International Licensing Assets to Sizzler
International Marks................................................. 56
3. International Licensing Assets Payment............................... 56
B. Global Interestate Settlement............................................. 56
C. Distributions and Plan Funding............................................ 57
1. Source of Plan Funding............................................... 57
2. The ADR.............................................................. 57
3. Rounding of Amounts.................................................. 57
4. Name and Address of Holder........................................... 57
5. Corporate Governance................................................. 58
6. Execution of Plan Agreements......................................... 58
7. Disputed Claims Reserves............................................. 58
8. Unclaimed Property................................................... 61
9. De Minimis Distributions/Return of Undistributed Funds............... 62
D. Services by and Fees for Professionals.................................... 62
1. Services by Professionals and Certain Parties after the
Effective Date...................................................... 62
2. Fees for Professionals and Certain Parties........................... 62
E. Dissolution of Committees................................................. 63
F. Litigation................................................................ 63
ARTICLE IX MODIFICATION............................................................. 64
ARTICLE X EFFECT OF CONFIRMATION.................................................... 64
A. Binding Effect of Confirmation............................................ 64
B. Vesting of Assets Free and Clear of Liens, Claims and Interests........... 64
C. Good Faith................................................................ 65
D. No Limitations on Effect of Confirmation.................................. 66
E. Continuation of ADR - Permanent Injunction for Damage Claims.............. 66
F. Discharge of Claims and Termination of Interests.......................... 66
G. Judicial Determination of Discharge....................................... 67
H. Injunction................................................................ 67
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ARTICLE XI SUCCESSORS AND ASSIGNS................................................... 68
ARTICLE XII RETENTION OF JURISDICTION............................................... 68
ARTICLE XIII MISCELLANEOUS......................................................... 69
A. Severability.............................................................. 69
B. Release of Avoidance Actions.............................................. 69
C. Amendment, Withdrawal or Revocation of the Plan........................... 69
D. Headings.................................................................. 70
E. Successors and Assigns.................................................... 70
F. Statutory Fees............................................................ 70
G. Amendment to Charter...................................................... 70
ARTICLE XIV CONFIRMATION REQUEST.................................................... 71
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5
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Exhibits:
A. Form of Affiliate Guarantee
B. Assumed and Assigned Executory Contracts
C. Form of Indenture
D. Assumed Executory Contracts
E. List of Encumbered Properties
F. Form of LUC Note
G. Sandwich Lease Properties
H. SERP Guarantee
I. Form of Bank Note
J. Form of SII Stock Pledge Agreement
K. Form of SII Security Agreement
L. [Intentionally Omitted]
M. Form of Letter of Credit Note
N. List of International Licensing Assets
O. List of CPI Properties
6
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Sizzler International, Inc., a Delaware corporation, debtor and debtor in
possession herein, hereby proposes the following Plan of Reorganization ("Plan")
pursuant to Bankruptcy Code (S) 1121:
ARTICLE I
DEFINITIONS
-----------
A. DEFINITIONS
-----------
The following definitions will apply with respect to this Plan and the
Disclosure Statement, as those terms are defined below.
1. "ADMINISTRATIVE AND PRIORITY CLAIMS RESERVE". The Administrative and
------------------------------------------
Priority Claim reserve of the Debtor for Disputed Administrative and Priority
Claims and projected and actual Administrative Claims which have not been
disallowed by the Bankruptcy Court.
2. "ADMINISTRATIVE CLAIM". A Claim for payment of an administrative
--------------------
expense of a kind specified in Bankruptcy Code (S) 503(b) and referred to in
Bankruptcy Code (S) 507(a)(1), including, without limitation, the actual,
necessary costs and expenses of preserving the Estate and operating the business
of the Debtor, including wages, salaries, and commissions for services rendered
after the commencement of the Case; obligations for goods and services procured
after the commencement of the Case; compensation for legal and other services
and reimbursement of expenses awarded under Bankruptcy Code (S)(S) 328, 330(a)
and 331; and all fees and charges assessed against the Estate under Chapter 123
of Title 28 of the United States Code.
3. "ADMINISTRATIVE TAX CLAIM". An unsecured Claim by a governmental unit
------------------------
for taxes (and for interest or penalties related
1
<PAGE>
to such taxes) for any tax year or period, all or a portion of which occurs or
falls within the period from and including the Petition Date through and
including the Effective Date.
4. "ADR". The alternative dispute resolution procedure which will be
---
implemented pursuant to an order of the Bankruptcy Court prior to the Effective
Date for the liquidation of Damage Claims. The ADR will provide an orderly
mechanism for the settlement, mediation or arbitration of Damage Claims and, in
some instances, the payment of Damage Claims without further order of the
Bankruptcy Court.
5. "AFFILIATE". Any direct or indirect wholly or partially owned
---------
subsidiary of SII other than a subsidiary in which SII and all direct or
indirect wholly or partially owned subsidiaries of SII combined hold less than a
fifty-one percent (51%) interest.
6. "AFFILIATE CLAIM". Any Claim held by an Affiliate against the Debtor.
---------------
7. "AFFILIATE GUARANTEES". The guarantees executed by all Affiliates of
--------------------
Debtor, other than SRI Affiliates and CFI Insurers Ltd., of Debtor's obligations
under this Plan and the Notes. The Affiliate Guarantees shall be in
substantially the form of Exhibit "A" hereto.
8. "AFFILIATE TRUST DEEDS". The deeds of trust or mortgages to be given
---------------------
by CFI Pty., CPI and SA Pty on the Encumbered Properties.
9. "AFFILIATED DEBTORS". The Debtor, together with Buffalo Ranch, SRI,
------------------
Collins and Tenly, all of which are debtors in related chapter 11 cases.
2
<PAGE>
10. "ALLOWED". When used in respect of a Claim or Interest or group of
-------
Claims or Interests, means --
(a) if no proof of Claim or Interest has been timely filed, such
amount of the Claim or Interest, or group of Claims or Interests, which has been
scheduled by the Debtor as liquidated in amount and not disputed or contingent
and as to which no party in interest has filed an objection within the time
required under this Plan, or otherwise fixed by the Bankruptcy Court, and which
Claim or Interest is not disallowed under Bankruptcy Code (S)(S) 502(d) or (e);
or
(b) if a proof of Claim or Interest has been filed by the Claims Bar
Date, or is deemed timely filed by the Bankruptcy Court, such amount of the
Claim or Interest, or group of Claims or Interests, as to which any party in
interest has not filed an objection within the time required under this Plan, or
otherwise fixed by the Bankruptcy Court, and which Claim or Interest is not
disallowed under Bankruptcy Code (S)(S) 502(d) or (e); or
(c) such amount of the Claim or Interest, or group of Claims or
Interests, which is allowed by a Final Order of the Bankruptcy Court; or
(d) such amount of the Claim or Interest or group of Claims or
Interests, which is allowed under this Plan.
11. "ALLOWED AMOUNT". The amount in which a Claim is Allowed.
--------------
12. "ALLOWED CLAIM". A Claim which is Allowed.
-------------
13. "ALLOWED CLASS ... CLAIM". An Allowed Claim in the particular Class
-----------------------
described.
3
<PAGE>
14. "ALLOWED INTEREST". An Interest which is Allowed.
----------------
15. "ASSETS". All "property of the estate" as described in Bankruptcy
------
Code (S) 541.
16. "ASSUMED AND ASSIGNED EXECUTORY CONTRACTS". Those executory contracts
----------------------------------------
to be assumed and assigned to SRI on the Effective Date as identified on Exhibit
"B" hereto.
17. "ASSUMED EXECUTORY CONTRACTS". Those executory contracts to be assumed
---------------------------
on the Effective Date as identified on Exhibit "D" hereto.
18. "ATTORNEYS FEE FUND". That certain fund to be established with Cash in
------------------
the amount of $245,000 held in a separate account by the Debtor together with
any interest thereon for application on any and all Allowed Claims for
professional fees or expenses which are not disputed by the Debtor or which are
Allowed in respect of any Large Unsecured Claim, as provided in Section V.L. of
this Plan.
19. "AVAILABLE CASH". All Cash available for Plan payments calculated
--------------
using the methodology described in connection with the cash flow projections
annexed as Exhibit "7" to the Disclosure Statement.
20. "AVOIDANCE ACTIONS". All avoiding powers, and all rights and remedies
-----------------
under, relating to, or similar to Bankruptcy Code (S)(S) 544, 545, 547, 548,
549, 551, or any fraudulent conveyance, fraudulent transfer or preference laws
as addressed in Section XIII.B. of this Plan.
21. "BANK EFFECTIVE DATE PAYMENT". Cash payable to the Holders of Allowed
---------------------------
Bank Claims on the Effective Date in the sum of
4
<PAGE>
all accrued interest and pre-Petition Date and post-Petition Date fees and
expenses (other than pre- and post-Petition Date professional fees and expenses)
which are a portion of the total Bank Claims payable under this Plan.
22. "BANK CLAIMS". Any Claim against the Debtor arising under or related
-----------
to that certain Revolving Credit Agreement dated as of March 22, 1995 between
and among SII, CFI Insurers, Ltd., the banks named therein and Bank of New York,
as agent, as such agreement may have subsequently been amended or restated
whether held by such banks or their assignees.
23. "BANK NOTES". The registered Notes, substantially in the form of
----------
Exhibit "I" to this Plan, to be issued by the Debtor pursuant to the Indenture
to the Holders of the Bank Claims.
24. "BANK PROFESSIONAL FEE PAYMENT". Cash in the amount of $750,000 to be
-----------------------------
paid on the Effective Date to the Holders of Allowed Bank Claims in full
satisfaction of pre- and post-Petition Date professional fees and expenses that
are a portion of the Bank Claims.
25. "BANKRUPTCY CODE". The Bankruptcy Code, as codified in Title 11 of
---------------
the United States Code, 11 U.S.C. (S) 101 et seq., including all amendments
thereto, to the extent such amendments are applicable to the Case.
26. "BANKRUPTCY COURT". The United States Bankruptcy Court for the Central
----------------
District of California.
27. "BANKRUPTCY RULES". The Federal Rules of Bankruptcy Procedure, as now
----------------
in effect or hereafter amended and applicable to the Case.
5
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28. "BUFFALO RANCH". Buffalo Ranch Steakhouses, Inc., a California
-------------
corporation, an Affiliate which is a debtor in a related chapter 11 case filed
on June 2, 1996.
29. "BUSINESS DAY". Any day other than a Saturday, Sunday or a legal
------------
holiday (as defined in Bankruptcy Rule 9006(a)).
30. "CAPITAL LEASE OBLIGATIONS". Obligations arising under leases which
-------------------------
are required to be capitalized under GAAP.
31. "CASE". The case under Chapter 11 of the Bankruptcy Code commenced by
----
the Debtor on June 2, 1996, pending in the Bankruptcy Court and bearing Case No.
SV 96-16076-AG.
32. "CASH". Cash or cash equivalents including, but not limited to, bank
----
deposits, checks or other similar items.
33. "CFI ACCOUNTING AFFILIATES". CFI Pty and all other Affiliates as of
-------------------------
or after the Effective Date which are consolidated into CFI Pty for accounting
purposes pursuant to GAAP, including, without limitation, the following
corporations: Sizzler International Marks, Inc., Collins International, Inc.,
Restaurant Concepts International, Inc., Sizzler Franchise Development, Collins
Food Australia Pty Ltd, CFI Insurers, Ltd., Collins Finance & Management Pty,
Ltd, Collins Property Development Pty Ltd, Gulliver's Australia Pty Ltd, Sizzler
Australia Pty Ltd, Buffalo Ranch Australia Pty Ltd, Italian Oven Australia Pty
Ltd, Restaurant Concepts Australia Pty Ltd, Sizzler New Zealand Limited, Sizzler
Restaurant Services, Inc., Sizzler South Pacific Pty Ltd, Sizzler South East
Asia Inc., Furnace Concepts International, Inc., and Furnace Concepts Australia
Corp.
6
<PAGE>
34. "CFI PTY". Collins Food International, Pty Ltd., a Nevada corporation,
--------
Debtor's wholly owned subsidiary.
35. "CFI STOCK". The shares representing Debtor's one hundred percent (100%)
----------
equity interest in CFI Pty.
36. "CLAIM". (a) Any right to payment from the Debtor, whether or not such
-----
right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or
unsecured, or (b) any right to an equitable remedy for breach of performance if
such breach gives rise to a right of payment from the Debtor, whether or not
such right to an equitable remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured or unsecured.
37. "CLAIMS BAR DATE". The date by which proof of a Claim or Interest was or
---------------
is required to be filed. This date was previously determined by the Bankruptcy
Court for most Claims or Interests to be October 15, 1996 and October 22, 1996
for Claims dated prior to October 15, 1996 other than with respect to executory
contracts or unexpired leases for which an order rejecting such contract or
lease is entered after September 15, 1996, and certain tax claims.
38. "CLASS". A class of Claims or Interests described in Article III of this
-----
Plan.
39. "COLLATERAL AGREEMENTS". The Affiliate Trust Deeds and all other
---------------------
security agreements, pledges, and mortgages to be granted to the Indenture
Trustee by the Affiliates.
7
<PAGE>
40. "CPI REAL ESTATE". That real property owned or leased by CPI and to be
---------------
transferred to Sizzler USA on the Effective Date as identified on Exhibit "O" to
the Plan.
41. "COMMITTEE". The Official Committee of Creditors Holding Unsecured
---------
Claims appointed in the Case by the U.S. Trustee pursuant to Bankruptcy Code (S)
1102.
42. "CONFIRMATION". The entry of the Confirmation Order.
------------
43. "CONFIRMATION DATE". The date upon which the Bankruptcy Court enters the
-----------------
Confirmation Order.
44. "CONFIRMATION ORDER". The order of the Bankruptcy Court confirming
------------------
this Plan pursuant to Bankruptcy Code (S) 1129.
45. "CONSOLIDATED NET INCOME". For any fiscal year beginning with fiscal
-----------------------
year 1998, shall mean the consolidated net income (or loss) of the CFI
Accounting Affiliates determined in accordance with GAAP and adjusted so as to
eliminate the impact of: (i) discontinued operations; (ii) extraordinary items;
and (iii) changes in accounting principles.
46. "COPELCO SECURED CLAIM". The Secured Claim of Copelco Capital, Inc.
---------------------
47. "COVERAGE". Any insurance coverage provided by an unrelated third-party
--------
that is available for the payment of Damage Claims.
48. "CPI". CPI Properties, Inc., a Delaware corporation, an Affiliate of the
---
Debtor and a debtor in a related chapter 11 case filed on June 2, 1996.
49. "CPI ENCUMBERED PROPERTIES". Those Encumbered Properties owned by CPI.
-------------------------
8
<PAGE>
50. "CREDITOR". The Holder of a Claim against the Debtor.
--------
51. "DAMAGE CLAIM". A Claim for personal injury or property damage allegedly
------------
caused by the tortious acts of the Debtor or its agents or employees, other than
uninsured Claims for property damage asserted by landlords or former landlords
of the Debtor.
52. "DEBTOR OR SII". Sizzler International, Inc., a Delaware corporation,
-------------
whether as debtor or as debtor in possession, prior to the commencement of the
Case, during the pendency of the Case, or following the Effective Date, as the
case may be.
53. "DISCLOSURE STATEMENT". The "Disclosure Statement in Support of Debtor's
--------------------
Amended Plan of Reorganization" filed by the Debtor in support of this Plan
which has been approved by the Bankruptcy Court, and any and all amendments and
exhibits to the Disclosure Statement. A copy of the Disclosure Statement shall
be distributed concurrently with this Plan to all Holders of Claims and
Interests entitled to vote on this Plan.
54. "DISPUTED CLAIM OR DISPUTED ... CLAIM". A Claim in a particular Class as
-------------------------------------
to which a proof of Claim has been filed or is deemed to have been filed under
applicable law, or an Administrative Claim, as to which a timely objection has
been or is filed by the Committee, the Debtor, or any other party in interest in
accordance with this Plan, the Bankruptcy Code, the Bankruptcy Rules, or the
Local Rules, which objection has not been withdrawn or determined by a Final
Order. When a Disputed Claim is disallowed by a Final Order, such Claim shall
no longer be considered a Claim for any purpose under this Plan. Once an
objection has been or is filed, for the purposes of this Plan, a
9
<PAGE>
Claim or Interest shall be considered a Disputed Claim to the extent that: (i)
the amount of a Claim or Interest specified in a proof of claim exceeds the
amount of any corresponding Claim scheduled by the Debtor in its Schedules; (ii)
any corresponding Claim scheduled by the Debtor in its Schedules has been
scheduled as disputed, contingent or unliquidated, irrespective of the amount
scheduled; or (iii) no corresponding Claim has been scheduled by the Debtor in
its Schedules.
55. "DISPUTED CLAIMS RESERVES". Accounts in which (a) the Reserve Agent is
------------------------
to hold payments set aside for Disputed Large Unsecured Claims in accordance
with and to the extent set forth in this Plan, and (b) the Debtor is to hold
payments set aside for all other Disputed Claims, in accordance with and to the
extent set forth in this Plan.
56. "DISTRIBUTION". Any transfer under this Plan or any Plan Agreement of
------------
Cash or other property or instruments to either a Holder of an Administrative
Claim or a Holder of an Allowed Claim.
57. "DIVIDEND PURCHASE PERIOD". The period from and including the Effective
------------------------
Date to and including the date of the first scheduled quarterly Distribution of
principal on account of the Notes, pursuant to Article V.E.3. of this Plan.
58. "EBITDA". Consolidated Net Income plus the following expenses incurred
------
by CFI Accounting Affiliates: (i) income taxes; (ii) net interest; and (iii)
depreciation and amortization; minus, any provision for income tax benefit
recognized by the CFI Accounting Affiliates.
10
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59. "EFFECTIVE DATE". The later of (a) eleven days following the
--------------
Confirmation Date or (b) the first date, up to ninety days after the
Confirmation Date upon which the conditions to effectiveness are satisfied;
provided, however, that as long as all applicable conditions have been satisfied
the Debtor may elect, in its sole and exclusive discretion, to shorten the
period between Confirmation and the Effective Date, in which event the Effective
Date will be the date specified in a written Notice of Effective Date, filed by
the Debtor with the Bankruptcy Court and served upon all Creditors and parties
in interest.
60. "ENCUMBERED PROPERTIES". Those parcels of real estate owned by SA Pty,
---------------------
CFI Pty or CPI listed on Exhibit "E" hereto to be encumbered by the Affiliate
Trust Deeds.
61. "EQUITY SECURITY OR INTEREST". A share in the ownership of the
---------------------------
Debtor, whether or not transferable or denominated "stock," and any warrant or
right to purchase, sell, or subscribe to such share.
62. "EQUITY COMMITTEE". The Official Committee of Equity Security Holders
----------------
appointed by the Office of the United States Trustee pursuant to Bankruptcy Code
(S) 1102.
63. "ESTATE". The estate in the Case created pursuant to Bankruptcy Code (S)
------
541(a).
64. "EXCESS CASH FLOW." With respect to the CFI Accounting Affiliates, shall
----------------
mean for fiscal years beginning with the fiscal year ended April 1998, seventy
percent (70%) of the following: EBITDA less (i) income taxes paid (including
----
amounts paid by SII) during the fiscal year in respect of the tax liability
incurred
11
<PAGE>
during the fiscal year for which the calculation is being performed; less (ii)
----
income taxes paid (including amounts paid by SII) during the fiscal year in
respect of the tax liability related to prior fiscal years (to the extent such
amounts were not previously deducted for purposes of making the Excess Cash Flow
calculation); less (iii) income taxes paid (including amounts paid by SII)
----
during the ninety (90) day period following the fiscal year end in respect of
the tax liability incurred during the fiscal year for which the calculation is
being performed; less (iv) all interest, principal and lease payments made in
respect of the Funded Debt (including any payment made by SII in respect of the
Notes); less (v) capital expenditures paid; less (vi) Cash paid for items
---- ----
chargeable to reserves already established on the books of the CFI Accounting
Affiliates (or SII) on the Effective Date (e.g. payments for temporary personnel
handling bankruptcy related matters for which a reserve has been established) or
for items not reflected in the Consolidated Net Income for fiscal years ending
after the Effective Date (such as distributions to the SERP Creditors and any
future participants under SII's retirement program (which shall be deemed to
have been paid by CFI Pty)); less (vii) any gain resulting from the disposition
of assets; less (viii) International Licensing Assets Payment; and less (ix) to
---- ----
the extent not already included in the amounts referenced above, any
Distributions; less (x) any costs associated with repatriating funds necessary
----
to make the Excess Cash Flow payment for the fiscal year for which it is being
calculated; plus (xi) write-downs required by FASB pronouncements that do not
----
result in the
12
<PAGE>
expenditure of Cash (e.g. FAS 121); provided, however, that for the purpose of
-------- -------
calculating Excess Cash Flow (i) SII corporate general and administrative cash
expenditures allocable by SII to the CFI Accounting Affiliates shall not be
higher than the lesser of $2,500,000 or two percent (2%) of the CFI Accounting
Affiliates annual revenue for the fiscal year for which the calculation is being
performed; (ii) incremental operating losses generated by SA Pty shall be
disregarded to the extent they cause SA Pty's contribution to EBITDA to be less
favorable than <$1,000,000> for fiscal year 1998, <$500,000> for fiscal year
1999, and $0 for fiscal year 2000 and thereafter; and (iii) any tax benefits
derived as a result of any incremental losses excluded from the calculation of
EBITDA as outlined in proviso (ii) shall be adjusted for so as to eliminate the
impact of such tax benefits in determining income taxes paid. To the extent any
amounts used for the purpose of calculating Excess Cash Flow are not denominated
in US ($) Dollars, such amounts shall be converted to US ($) Dollars by using
the exchange rate in effect as of five business days prior to the date of
payment.
65. "FINAL ORDER". An order, decree or judgment of the Bankruptcy Court, the
-----------
operation or effect of which has not been reversed, stayed, modified or amended,
and as to which order, decree or judgment (or any revision, modification or
amendment thereof), the time to appeal or seek review or rehearing has expired
and as to which no appeal or petition for review or rehearing has been taken or
is pending.
13
<PAGE>
66. "FINOVA SECURED CLAIM". The Secured Claim of Finova Capital Corporation,
--------------------
in the amount Allowed by the Bankruptcy Court.
67. "FUNDED DEBT". Indebtedness for money borrowed or for financing the
-----------
acquisition of fixed assets, including Purchase Money Obligations, Capital Lease
Obligations and the Notes.
68. "GAAP". Generally accepted accounting principles, consistently applied,
----
(i) in accordance with the opinions, pronouncements, statements, bulletins,
guides and interpretations, as appropriate, of the Financial Accounting
Standards Board ("FASB") the Accounting Principles Board ("APB") and the
American Institute of Certified Public Accountants ("AICPA"), or (ii) pursuant
to such other guidance by such entities as may be accepted and applied by a
significant segment of the accounting profession, and (iii) in each as
applicable to the circumstances and as of the date of determination.
69. "GENERAL UNSECURED CLAIM". Any Claim against the Debtor, however
-----------------------
arising, which is not an Administrative Claim, Priority Tax Claim, Priority Non-
Tax Claim, SERP Claim, Damage Claim, Affiliate Claim, Workers' Compensation
Claim or Secured Claim.
70. "HOLDER". The holder of a Claim against or Interest in the Debtor.
------
71. "IMMATERIAL AFFILIATES". Those Affiliates (excluding CFI Pty, SA Pty,
---------------------
CPI Finance and Management Pty, Ltd. and Sizzler South East Asia, Inc.) with
(a)(i) individual tangible asset value including Cash of less than $500,000, and
(ii) annual licensing fees received by such subsidiary less than $100,000 and
(b)(i) an aggregate tangible
14
<PAGE>
asset value including Cash for all such subsidiaries less than $2,000,000, and
(ii) aggregate annual licensing fees received by all such subsidiaries less than
$750,000.
72. "INDENTURE". The indenture agreement executed by the Debtor in favor of
---------
the Indenture Trustee, in substantially the form of Exhibit "C" hereto, pursuant
to which the Debtor shall issue the Notes.
73. "INDENTURE TRUSTEE". The trustee under the Indenture.
-----------------
74. "INTERNATIONAL LICENSING ASSETS". Those Assets relating to the
------------------------------
International licensing of the "Sizzler" trademark, including the International
Licensing Executory Contracts, which are identified on Exhibit "N" of this Plan.
75. "INTERNATIONAL LICENSING ASSETS PAYMENT". The payment of $1,000,000 to
--------------------------------------
the "Creditor Trust" created pursuant to the SRI Plan by Sizzler International
Marks and the transfer to Sizzler USA of the CPI Real Estate on the Effective
Date in return for the International Licensing Assets.
76. "INTERNATIONAL LICENSING EXECUTORY CONTRACTS". Those executory contracts
--------------------------------------------
relating to the international licensing of the "Sizzler" trademark identified on
Exhibit "O" to this Plan.
77. "KFC ASSETS". All assets of CFI Pty or SA Pty used in respect of or
----------
related to CFI Pty's operation of "KFC" restaurants in Australia including,
without limitation, the real property upon which such restaurants are operated,
the personal property used in the operation of such restaurants and any
development agreement, license agreement or master license agreement pursuant to
which such restaurants are operated.
15
<PAGE>
78. "LARGE UNSECURED CLAIM". Any General Unsecured Claim which is Allowed in
---------------------
an amount greater than $17,000 which (a) is not a Bank Claim, and (b) is not
voluntarily reduced in Allowed Amount to $17,000 and treated as a Small
Unsecured Claim under the Plan.
79. "LETTER OF CREDIT NOTE". The unregistered note, substantially in the
---------------------
form of Exhibit "M" to this Plan, to be executed by Debtor and CFI Insurers Ltd.
to reflect the conditional obligation to pay that portion of the Bank Claims
which constitutes an Undrawn LC Claim.
80. "LITIGATION". Any and all claims, demands, rights, defenses, actions,
----------
causes of action, suits, contracts, agreements, obligations, accounts, defenses,
offsets, powers, privileges, licenses and franchises of any kind or character
whatsoever, known or unknown, suspected or unsuspected, whether arising prior
to, on or after the Petition Date, in contract or in tort, at law or in equity,
or under any other theory of law, of the Debtor or its Estate, including but not
limited to (i) rights of setoff, counterclaim, or recoupment, and claims on
contracts or for breaches of duties imposed by law, (ii) the right to object to
Claims or Interests, (iii) claims pursuant to Bankruptcy Code (S)(S) 362, (iv)
such claims and defenses as fraud, mistake, duress and usury and (v) all
Avoidance Actions.
81. "LOCAL RULES". The Local Bankruptcy Rules for the Bankruptcy Court, as
-----------
may be amended from time to time and which apply to the Case.
82. "LUC NOTES". The registered Notes, substantially in the form of Exhibit
---------
"F" to this Plan, to be issued by the Debtor
16
<PAGE>
pursuant to the Indenture to the Holders of Allowed Large Unsecured Claims.
83. "NET PROCEEDS". The proceeds received upon the sale or exchange of an
------------
asset, minus (a) the amount of any debt secured by the asset and satisfied by
payment from such amount, and (b) the costs of sale, including, without
limitation, any fees, expenses, commissions or taxes of any kind (including
income and transfer taxes) with respect thereto.
84. "NON-VESTED RETIREMENT CLAIM". A Claim by any Person under the SERP
---------------------------
Agreement which is not vested as of the Effective Date.
85. "NOTES". Collectively, the Bank Notes and LUC Notes (but excluding the
------
Letter of Credit Note).
86. "OPERATING CASH FLOW". The sum of EBITDA (as defined herein) and the
-------------------
general and administrative expenses allocated to CFI Accounting Affiliates by
SII less any losses recognized (for accounting purposes) as a result of assets
sold by the CFI Accounting Affiliates.
87. "PERMITTED RESERVE AMOUNT". "Permitted Reserve Amount" has the meaning
------------------------
given that term in Section VIII.C.7.c of this Plan.
88. "PERSON". An individual, partnership, corporation, an association,
------
a joint stock company, a joint venture, an estate, a trust, an unincorporated
organization, or any government or other political subdivision thereof or other
entity.
89. "PETITION DATE". June 2, 1996.
-------------
17
<PAGE>
90. "PLAN". This Plan of Reorganization, including any amendments and
----
modifications to this Plan, as approved by Final Order of the Bankruptcy Court.
91. "PLAN AGREEMENT". Any of the Exhibits hereto and any other agreement to
--------------
be executed by any Person under this Plan.
92. "POLICIES". The Debtor's insurance policies that provide Coverage for
--------
Damage Claims related to acts that occurred or are alleged to have occurred
prior to the Petition Date.
93. "PRIORITY NON-TAX CLAIM". A Claim against the Debtor that is not a
----------------------
Secured Claim and is specified as having priority in Bankruptcy Code (S)(S)
507(a)(3), 507(a)(4), 507(a)(5) or 507(a)(6), respectively.
94. "PRIORITY TAX CLAIM". A Claim entitled to priority under Bankruptcy Code
------------------
(S) 507(a)(8).
95. "PRO RATA". With respect to any Distribution: (a) to a particular Class
--------
of Allowed Claims or Interests, the ratio that the Allowed Amount of a
particular Allowed Claim or Allowed Interest in the Class bears to the total
Allowed Amount of Allowed Claims or Allowed Interests in the Class; (b) to be
made to more than one particular Class of Claims, the ratio that the total
Allowed Amount of Claims in a particular Class bears to the total Allowed Amount
of Allowed Claims and the Permitted Reserve Amount in respect of all relevant
Classes; or (c) to be made to the holders of Notes (and the Letter of Credit
Note if such instrument is payable at the time of and through such Distribution)
and the Reserve Agent in respect of Disputed Large Unsecured Claims, the ratio
that the face amount of any given Note or the Permitted Reserve Amount bears to
18
<PAGE>
the aggregate face amount of the Notes and the Permitted Reserve Amount.
96. "PURCHASE MONEY OBLIGATIONS". Indebtedness incurred in connection with
--------------------------
the acquisition of equipment, real property or any other fixed asset.
97. "REFERENCE RATE". The rate announced by Bank of America National Trust
--------------
and Savings Association from time to time as its "reference", "base" or "prime"
lending rate or, if the Bank of America fails to announce a "reference rate" or
"base rate", the "reference rate" or "prime rate" as articulated by three of the
money center banks as published in the United States edition of the Wall Street
Journal from time to time.
98. "RESERVE AGENT". The Holder of the Disputed Claims Reserve who shall
-------------
initially be Robert A. Berger.
99. [INTENTIONALLY OMITTED]
100. "SANDWICH LEASE PROPERTIES". The parcels of real properties listed on
-------------------------
Exhibit "G" hereto.
101. "SA PTY". Sizzler Australia Pty Ltd., an Australian corporation.
------
102. "SCHEDULES". The Debtor's Schedules of Assets and Liabilities, filed on
---------
July 9, 1996, as amended from time to time thereafter.
103. "SECURED CLAIM". Any Claim that is secured by a lien on property in
-------------
which the Estate has an interest or that is subject to setoff under Bankruptcy
Code (S) 553, to the extent of the value of the Claim Holder's interest in the
Estate's interest in such
19
<PAGE>
property or to the extent of the amount subject to setoff, as applicable, as
determined pursuant to Bankruptcy Code (S) 506(a).
104. "SECURED NON-TAX CLAIM". Any Secured Claim not owing on account of a
---------------------
tax.
105. "SECURED TAX CLAIM". Any Secured Claim owing on account of a tax.
-----------------
106. "SELLING HOLDERS". All Holders of Allowed Class 4 Large Unsecured Claims
---------------
as of July 16, 1997.
107. "SERP CLAIM". Any Claim held by a SERP Creditor under the SERP Plan.
----------
108. "SERP CREDITORS". Rushton O. Backer, Robert Barrett, Richard P.
--------------
Bermingham, Lee Clancy, Thomas L. Gregory, Michael Minchin, William R. Scarpino,
James A. Collins and Benjamin Stone.
109. "SERP GUARANTEE". The guarantee executed by CFI Pty, of Debtor's
--------------
obligations to the SERP Creditors under this Plan in substantially the form of
Exhibit "H" hereto.
110. "SERP PLAN". The Sizzler International Executive Supplemental Benefit
---------
Plan as of May 1, 1985, as subsequently amended.
111. "SII SECURITY AGREEMENT". The agreement of SII encumbering essentially
----------------------
all of its Assets in favor of the Indenture Trustee in substantially the form of
Exhibit "K" hereto.
112. "SII STOCK PLEDGE AGREEMENT". The agreement of Debtor pledging the CFI
--------------------------
Stock in favor of the Indenture Trustee in substantially the form of Exhibit "J"
hereto.
20
<PAGE>
113. "SIZZLER INTERNATIONAL MARKS". Sizzler International Marks, Inc., a
---------------------------
corporation to be formed pursuant to the Plan to hold the International
Licensing Assets.
114. "SIZZLER USA". Sizzler USA Real Property, Inc., a Delaware corporation
-----------
to be formed pursuant to this Plan, the stock of which will be held by Sizzler
USA Holdings.
115. "SIZZLER USA HOLDINGS". Sizzler USA, Inc., a Delaware corporation to be
--------------------
formed pursuant to this Plan, the stock of which will be held by Debtor.
116. "SMALL UNSECURED CLAIM". Any General Unsecured Claim which is not
---------------------
subject to dispute in whole or in part by Debtor and is Allowed in an Amount of,
or is voluntarily reduced to, $17,000 or less, which voluntary election becomes
effective pursuant to the Plan.
117. "SRI". Sizzler Restaurants International, Inc., a Delaware corporation,
---
the Debtor's indirect subsidiary and a debtor in a related chapter 11 case filed
on June 2, 1996.
118. "SRI AFFILIATES". Collectively, SRI, Sizzler USA, Sizzler USA Holdings,
--------------
Tenly and Buffalo Ranch and any other subsidiaries owned by SRI.
119. "SRI PLAN". The plan of reorganization filed by SRI in the SRI chapter
--------
11 case to be confirmed contemporaneously with the Confirmation of this Plan.
120. "TENLY". Tenly Enterprises, Inc., a Pennsylvania corporation, an
-----
Affiliate of the Debtor and a debtor in a related chapter 11 case filed on June
2, 1996.
21
<PAGE>
121. "UNCLAIMED PROPERTY". Any funds or property distributed to Creditors or
------------------
Holders of Interests (together with any interest earned thereon) which are
unclaimed as of 180 days after the Distribution. Unclaimed Property will
include, without limitation, Cash and any other property which is to be
distributed pursuant to this Plan which has been returned as undeliverable
without a proper forwarding address, or which was not mailed or delivered
because of the absence of a proper address to which to mail or deliver such
property.
122. "UNDRAWN LC CLAIM". That portion of an Allowed Bank Claim which relates
----------------
to any letter of credit issued by the Holder, to the extent such letter of
credit remains undrawn (in whole or in part) as of the Effective Date.
123. "U.S. TRUSTEE". The United States Trustee, or its representative.
------------
124. "WORKERS' COMPENSATION". Any Claim against the Debtor governed by the
---------------------
Workers' Compensation laws of California or any other applicable jurisdiction.
B. RULES OF INTERPRETATION, COMPUTATION OF TIME AND GOVERNING LAW
--------------------------------------------------------------
1. RULES OF INTERPRETATION. For purposes of this Plan: (a) whenever from
-----------------------
the context it is appropriate, each term, whether stated in the singular or the
plural, will include both the singular and the plural; (b) any reference in this
Plan to a contract, instrument, release or other agreement or document being in
a particular form or on particular terms and conditions means that such
agreement or document will be substantially in such form or substantially on
such terms and conditions; (c) any reference in this Plan to an existing
document or exhibit filed or to be filed
22
<PAGE>
means such document or exhibit, as it may have been or may be amended, modified
or supplemented; (d) unless otherwise specified, all references in this Plan to
sections, articles and exhibits are references to sections, articles and
exhibits of or to this Plan; (e) the words "herein" and "hereto" refer to this
Plan in its entirety rather than to a particular portion of this Plan; (f)
captions and headings to articles and sections are inserted for convenience of
reference only and are not intended to be a part of, or to affect, the
interpretation of this Plan; (g) "after notice and a hearing," or a similar
phrase has the meaning ascribed in Bankruptcy Code (S) 102; (h) "includes" and
"including" are not limiting; (i) "may not" is prohibitive, and not permissive;
(j) "or" is not exclusive; and (k) U.S. Trustee includes a designee of the U.S.
Trustee.
2. COMPUTATION OF TIME. In computing any period of time prescribed or
-------------------
allowed by this Plan, the provisions of Bankruptcy Rule 9006(a) will apply.
3. GOVERNING LAW. Except to the extent that the Bankruptcy Code, Bankruptcy
-------------
Rules or Local Rules are applicable, and subject to the provisions of any
contract, note, deed of trust, security agreement, instrument, release or other
agreement or document entered into in connection with this Plan, the rights and
obligations arising under this Plan will be governed by, and construed and
enforced in accordance with, the laws of the State of California without giving
effect to the principles of conflict of laws thereof to the same extent that a
valid and binding contract to be governed by, construed, and enforced in
accordance with the laws of the State of California without giving effect to the
23
<PAGE>
principles of conflict of laws thereof would be so governed, construed, and
enforced.
24
<PAGE>
ARTICLE II
ADMINISTRATIVE AND TAX CLAIMS
-----------------------------
A. TREATMENT OF ADMINISTRATIVE CLAIMS. Notwithstanding the following, the
----------------------------------
Holder of an Administrative Claim and the Debtor may agree to less favorable
treatment of the Administrative Claim. Holders of Large Unsecured Claims
seeking professional fees or expenses pursuant to Bankruptcy Code (S) 503(b)
shall be conclusively deemed by this Plan to have consented to have such Claims
treated solely by recourse to the Attorneys' Fee Fund governed by Section V.L.
of this Plan.
1. BAR DATE FOR ADMINISTRATIVE TAX CLAIMS. All requests for payment of
--------------------------------------
Administrative Tax Claims and for which no earlier bar date has been or is
established outside of this Plan, such as may be established by requesting an
expedited audit under Bankruptcy Code (S) 505, must be filed on or before the
later of (i) sixty days following the Effective Date; and (ii) sixty days
following the filing of any required tax return for such taxes for such year or
period with the applicable governmental unit. Any Holder of any Administrative
Tax Claim that is required to file a request for payment of such taxes and does
not file such a request by the applicable bar date will be forever barred from
asserting any such Administrative Tax Claim against the Debtor, whether any such
Administrative Tax Claim is deemed to arise prior to, on, or subsequent to the
Effective Date.
2. BAR DATE FOR ALL OTHER ADMINISTRATIVE CLAIMS. Requests for payment of
--------------------------------------------
Administrative Claims (other than Administrative Tax Claims and statutory fees
as described below) must be filed and served on the Debtor, the Committee, and
the U.S. Trustee no later
25
<PAGE>
than sixty days after the Effective Date. Professionals or other entities
requesting compensation or reimbursement of expenses pursuant to Bankruptcy Code
(S)(S) 327, 328, 330, 331, 503(b) and 1103 for services rendered prior to the
Effective Date will file and serve on all parties entitled to notice thereof, an
application for final allowance of compensation and reimbursement of expenses no
later than ninety days after the Effective Date in accordance with the various
orders of the Bankruptcy Court establishing procedures for submission and review
of such applications. All such requests for payment of Administrative Claims
and applications for final allowance of compensation and reimbursement of
expenses will be subject to the authorization and approval of the Bankruptcy
Court. Holders of Administrative Claims (including, without limitation,
professionals) requesting compensation or reimbursement of expenses that do not
file such requests by the applicable bar date will be forever barred from
asserting such claims against the Debtor, Estate, or its property. The Debtor
shall have 120 days from the date an Administrative Claim is served in
accordance herewith to bring an objection to such Claim.
3. PAYMENT OF ADMINISTRATIVE CLAIMS, ADMINISTRATIVE TAX CLAIMS AND
---------------------------------------------------------------
PRIORITY TAX CLAIMS.
-------------------
(i) Subject to the bar dates and other provisions set forth above, each
Holder of an unpaid Administrative Claim or Administrative Tax Claim will
receive Cash equal to the Allowed amount of such Claim, on the latest of (w) the
Effective Date, (x) the date such Claim would be payable in the ordinary course
of business, (y) 120 days from the date the Claim is served in
26
<PAGE>
accordance herewith, and (z) if a timely objection is made, the date such Claim
becomes an Allowed Claim. Any Administrative Claim based on a guarantee issued
by Debtor during the Bankruptcy Case shall not be discharged on the Effective
Date and such guarantee will be honored by Debtor if and when an amount is
payable thereunder.
(ii) Each Allowed Priority Tax Claim shall be paid not later than six
years after such Claim was assessed. Principal payments shall be made semi-
annually in the amount of 1/12 of the Allowed Amount of such Claim, with the
full Amount of such Claim due and payable not later than the earlier of October
1, 2003 or the date that is six years from the date of assessment. Each such
Claim shall accrue interest thereon from the year such tax claim is assessed.
Payments shall be made on October 1 and April 1 of each year following the year
such Tax Claim is assessed. Interest shall accrue on the unpaid principal
amount of Allowed Priority Tax Claims at the legal rate after the Effective
Date. No Priority Tax Claim shall include interest unmatured and accrued
subsequent to the Petition Date and prior to the Effective Date in excess of the
Reference Rate unless ordered by the Court prior to the Confirmation. The
amount of each Priority Tax Claim may be prepaid, in whole or in part, at any
time without penalty of any kind. If any such Claim is disputed or subject to
Bankruptcy Court approval, the payment will be made on the first date on which
there is a Final Order awarding such Claim.
4. STATUTORY FEES. On or as soon as practicable after the Effective Date,
--------------
all Holders of Administrative Claims for fees payable pursuant to (S) 1930 of
Title 28 of the United States Code,
27
<PAGE>
28 U.S.C. (S) 1930, will receive Cash in the amount of such Administrative
Claim.
ARTICLE III
CLASSIFICATION OF CLAIMS AND INTERESTS AND
------------------------------------------
DESIGNATION OF IMPAIRMENT
-------------------------
A. NATURE OF CLASS DESIGNATIONS.
----------------------------
The following is a designation of the Classes of Claims and Interests under
this Plan. Administrative Claims, Administrative Tax Claims and Priority Tax
Claims have not been classified and are excluded from the following Classes in
accordance with Bankruptcy Code (S) 1123(a)(1). A Claim or Interest will be
deemed classified in a particular Class only to the extent that the Claim or
Interest qualifies within the description of that Class and, unless otherwise
provided in this Plan, will be deemed classified in a different Class to the
extent that any remainder of the Claim or Interest qualifies within the
description of such different Class. A Claim or Interest is classified in a
particular Class only to the extent that the Claim or Interest is an Allowed
Claim or Allowed Interest in that Class and has not been paid, released or
otherwise satisfied before the Effective Date. Notwithstanding the following
descriptions of the treatment of Claims, Interests, and Classes, the Holder of a
Claim or Interest which is not an Allowed Claim or Allowed Interest may not vote
upon or receive a Distribution under this Plan in respect to such Claims or
Interests unless otherwise ordered by the Bankruptcy Court after notice and a
hearing.
B. CLASS OVERVIEW.
--------------
28
<PAGE>
This Plan contains the following Classes of Claims or Interests:
29
<PAGE>
1. PRIORITY NON-TAX CLAIMS.
-----------------------
Class 1: Priority Non-Tax Claims. Class 1 Priority Non-Tax Claims are
unimpaired under the Plan.
2. SECURED CLAIMS.
--------------
Class 2: Secured Claims, if any, against the Debtor, with each Secured
Claim being deemed a separate subclass of Class 2. The Debtor believes that the
only Secured Claims against the Debtor are the Finova Secured Claim (which
Debtor has classified in Class 2(a)), and the Copelco Secured Claim (which
Debtor has classified in Class 2(b)). Class 2 Secured Claims are unimpaired
under the Plan.
3. BANK CLAIMS.
-----------
Class 3: Bank Claims. Class 3 Bank Claims are impaired under the Plan.
4. LARGE UNSECURED CLAIMS.
----------------------
Class 4: Large Unsecured Claims. Class 4 Large Unsecured Claims are
impaired under the Plan.
5. DAMAGE CLAIMS.
-------------
Class 5: Damage Claims, but only to the extent that such Claims are to
be paid from the Coverage. To the extent that a Damage Claim is not covered by
the Policies, then such uncovered portion of the Damage Claim will be treated as
a Large Unsecured Claim. Class 5 Damage Claims are impaired under the Plan.
6. AFFILIATE CLAIMS.
----------------
Class 6: Affiliate Claims. Class 6 Affiliate Claims are impaired under
the Plan.
7. SERP CLAIMS.
-----------
30
<PAGE>
Class 7: SERP Claims. Class 7 SERP Claims are unimpaired under the Plan.
8. SMALL UNSECURED CLAIMS.
----------------------
Class 8: Small Unsecured Claims. Class 8 Small Unsecured Claims are
impaired under the Plan.
9. WORKERS' COMPENSATION CLAIMS.
----------------------------
Class 9: Workers' Compensation Claims. Class 9 Workers' Compensation
Claims are unimpaired under the Plan.
10. NON-VESTED RETIREMENT CLAIMS.
----------------------------
Class 10: Non-Vested Retirement Claims. Class 10 Non-Vested Retirement
Claims are unimpaired under the Plan.
11. INTERESTS.
---------
Class 11: Interests in the Debtor. Class 11 Interests are unimpaired
under the Plan.
ARTICLE IV
DESIGNATION AND TREATMENT OF CLASSES
------------------------------------
A. TREATMENT OF ALLOWED SECURED CLAIMS: CLASS 2(a) AND 2(b).
--------------------------------------------------------
1. CLASS 2 SUBCLASSES. Each Allowed Class 2 Claim will be in its own
------------------
subclass and will be treated as being in a separate Class for voting and
confirmation purposes.
2. TREATMENT. Each Allowed Class 2 Claim will receive one of two forms of
---------
treatment described in subpart a and b below under this Plan in respect of its
Allowed Class 2 Claim, unless an Allowed Class 2 Claim Holder and the Debtor
agree to less favorable treatment. The Debtor prior to the Effective Date will
select which treatment each Holder is to receive, and shall file a notice
indicating its selection and serve it on the Holder of the Claim no later than
thirty days prior to the Effective Date (or, if the
31
<PAGE>
Claim is a Disputed Claim as of the Effective Date, within thirty days after the
Claim becomes an Allowed Claim). If no form of treatment is so selected, the
alternative described in subpart a below will be applicable.
a. PRESENT FULL PAYMENT. Each Holder of an Allowed Class 2 Claim will
--------------------
receive Cash in the amount of its Allowed Claim. For payment of the Class 2
Claim, (i) if the Claim is Allowed, the payment will be made by the Debtor on
the Effective Date and (ii) if the Claim is a Disputed Claim, the Holder will
retain its liens securing its Secured Claim pending payment and payment will be
made by the Debtor on the first date on which there is a Final Order providing
that such Claim is Allowed; provided, however, that the Debtor will be free to
sell the collateral securing such Claim pursuant to Bankruptcy Code (S) 363 or
other applicable law.
b. ABANDONMENT OF COLLATERAL. Each Holder of an Allowed Class 2 Claim
-------------------------
will receive its collateral in full satisfaction of its Class 2 Claim no later
than ten (10) Business Days after the Debtor elects application of this
treatment for such Claim in the manner set forth above. Pending return of the
collateral for the Claim of such Holder, such Holder will retain its liens
securing its Allowed Secured Claim.
B. TREATMENT OF UNSECURED CLAIMS.
-----------------------------
1. CLASS 1 - PRIORITY NON-TAX CLAIMS. Each Holder of an Allowed Class 1
---------------------------------
Priority Non-Tax Claim shall be paid in full by the Debtor on the later of the
Effective Date or the date that is not more than thirty (30) days after the date
on which such Claim becomes an Allowed Claim. The Allowed Amount of each Class 1
Priority Non-Tax Claim shall include interest from the date such
32
<PAGE>
Claim was payable until the date of the Distribution to the Holder at the
Reference Rate plus 1%.
2. CLASS 3 - BANK CLAIMS.
---------------------
(a) On the Effective Date, the aggregate amount of Bank Claims (including
the Undrawn Letter of Credit Claim and all fees and expenses) shall be Allowed
in the Amount of $44,277,343, or such other amount as is agreed upon by the
Debtor and the Holders of Bank Claims as of April 15, 1997 plus interest on any
letter of credit drawn between March 22, 1997 and the Effective Date. To the
extent the Effective Date is later than April 15, 1997, the aggregate amount of
Allowed Bank Claims shall increase by $10,638.55 per diem as adjusted to account
for any changes in the Reference Rate after April 15, 1997.
(b) The aggregate Allowed Amount of Class 3 Bank Claims shall be
allocated among the Holders thereof pursuant to the mutual agreement of the
Holders, as provided in writing to the Debtor prior to the Confirmation Date,
or, in the absence of such a writing, shall be delivered to the law firm of
O'Melveny & Myers to be held in trust for such Holders.
(c) Unless the Holder and the Debtor agree to a less favorable treatment,
each Holder of an Allowed Class 3 Bank Claim shall receive the following
Distributions:
(i) On the Effective Date, a Pro Rata portion of the Bank Effective
Date Payment. The Bank Effective Date Payment shall constitute a principal
payment on the Bank Notes.
(ii) Not later than thirty days following the Effective Date, Cash
(including post-Effective Date interest at
33
<PAGE>
Reference Rate plus 3-1/4%) or a Bank Note in an amount calculated as set forth
below.
(iii) In respect of an Undrawn LC Claim, the Letter of Credit Note,
to be issued solely to the issuer of the undrawn letter of credit in question.
Such Letter of Credit Note shall provide for payment in full of such Note within
thirty days of the date that such letter of credit is drawn upon by the
beneficiary thereof. Interest shall accrue on the Letter of Credit Note at the
Reference Rate plus 3 1/4% from the date of such draw until such Claim is paid
in full by Debtor. An Undrawn Letter of Credit Claim shall not include or accrue
any pre-Petition Date interest, post-Petition Date interest or any post-
Effective Date interest prior to the draw (if any) on such letter of credit.
(iv) The Letter of Credit Note shall be secured by the same
collateral that secures the Notes or disputed Class 4 Claims (if no Notes are
issued) on a pari passu basis.
(v) On the Effective Date, a portion of the Bank Professional Fee
Payment allocated by the Holders of the Bank Claims such that the Holders
collectively shall receive the entire Bank Professional Fee Payment.
(d) The amount of each Bank Note shall be the Allowed Amount of the
Holder's Class 3 Bank Claim (as allocated by the Holders) minus the sum of
the following amounts:
(i) The Bank Professional Fee Payment received by such Holder; and
(ii) Any portion of such Claim which constitutes an Undrawn LC
Claim.
34
<PAGE>
(e) Each Bank Note shall accrue interest and be repayable in accordance
with Article V of this Plan, the Indenture and the terms of the Bank Note.n
3. CLASS 4 - LARGE UNSECURED CLAIMS.
--------------------------------
(a) Unless the Holder and the Debtor agree to a less favorable treatment,
each Holder of an Allowed Large Unsecured Claim shall receive the following
Distributions:
(i) On the later of (a) the Effective Date or (b) the date not later
than thirty days after the date on which such Claim becomes an Allowed Claim, a
Pro Rata Distribution of: all of the Debtor's Available Cash as of the Effective
Date less the sum of all other payments required to be paid or reserved under
this Plan on the Effective Date, until such time as the Holders of the LUC Notes
have received Pro Rata payment on such Notes equivalent to the payment on the
Bank Notes by reason of the Bank Effective Date Payment, with any excess
Available Cash to be paid Pro Rata to the Holders of the Notes and the Reserve
Agent on account of the Disputed Claims.
(ii) Upon the later of (a) the Effective Date or (b) the date not
later than thirty days after the date on which such Claim becomes an Allowed
Claim, Cash (plus post-Effective Date interest at Reference Rate plus 3-1/4%) or
a LUC Note in the Allowed Amount of the Holder's Large Unsecured Claim.
(b) The following terms shall apply to the calculation of the Allowed
Amount of Large Unsecured Claims and the treatment of such Claims under this
Plan:
35
<PAGE>
(i) The Allowed Amount of any Large Unsecured Claim based upon an
obligation of Debtor which was due and payable prior to the Petition Date under
applicable non-bankruptcy law shall include interest from the date such
obligation was payable to the Petition Date at the lesser of (x) the rate
provided for in the Holder's contract (excluding, with respect to any contract
with a non-default rate, any increase in such rate following a default), if any,
or (y) the Reference Rate plus 1%.
(ii) The Allowed Amount of any Large Unsecured Claim which is based
on an obligation which was payable by Debtor prior to the Effective Date shall
accrue interest from the Petition Date to the Effective Date at the Reference
Rate plus 1%.
(iii) Except as expressly provided above, no Large Unsecured Claim
shall include interest as of the Effective Date.
(iv) Except as provided in this paragraph, the Allowed Amount of any
Large Unsecured Claim shall not include any professional fees or expenses. Any
such Claim for professional fees or expenses shall be satisfied in its entirety
from the Attorneys Fees Fund in accordance with the procedures set forth in
Section V.L. hereof.
(c) Each LUC Note shall accrue interest and be repayable in accordance
with Article V of this Plan, the Indenture and the terms of the LUC Note.
4. CLASS 5 - DAMAGE CLAIMS.
-----------------------
a. LIQUIDATION. Damage Claims will be subjected to the ADR process,
-----------
either prior to or after the Effective Date, which is designed to produce a
settlement with respect to such Damage Claim. If the ADR does not produce a
settlement, the Holder of a Damage
36
<PAGE>
Claim may seek relief from the Bankruptcy Court to pursue the Damage Claim in an
appropriate non-bankruptcy forum.
b. PAYMENT. In accordance with the ADR, if a Damage Claim becomes an
-------
Allowed Claim, it will be paid first from third party sources, including any
applicable Coverage from which Holders of Damage Claims may be entitled to
recover all or part of the Allowed Amount of their Claims. The Allowed Amount of
any Damage Claim shall not include interest that accrues on such Claim prior to
the liquidation thereof. Thereafter, Class 5 Damage Claims shall accrue interest
in accordance with applicable law until paid in full. To the extent that the
Coverage ultimately proves insufficient, any deficiency will receive treatment
as a Class 4 Large Unsecured Claim and in such event, interest will accrue in
accordance with this Plan.
5. CLASS 6 - AFFILIATE CLAIMS. The Holders of Class 6 Claims shall receive no
--------------------------
Distribution on account of the Affiliate Claims under the Plan.
6. CLASS 7 - SERP CLAIMS.
---------------------
a. Distributions. SERP Claims are unimpaired under the Plan. On the
-------------
Effective Date Debtor shall cure any default that occurred prior to the
Effective Date in respect of any SERP Claim. The SERP Creditors shall retain all
of their rights and benefits under the SERP Plan.
b. SERP GUARANTEE. The SERP Guarantee will be executed with respect
--------------
to all Allowed SERP Claims.
7. CLASS 8 - SMALL UNSECURED CLAIMS.
--------------------------------
a. PAYMENT. Each Holder of an Allowed Class 8 Small Unsecured Claim
-------
shall be paid in full by Debtor on the later of the
37
<PAGE>
Effective Date or the date that is not more than thirty (30) days after the date
on which such Claim becomes an Allowed Claim. The Allowed Amount of each Small
Unsecured Claim shall include interest from the date such Claim was payable
until the date of the Distribution to the Holder at the Reference Rate plus 1%,
but shall exclude any Claim for professional fees and expenses.
b. ELIGIBILITY. Creditors holding Allowed General Unsecured Claims in
-----------
an amount in excess of $17,000 may elect to have their Claim treated as a Small
Unsecured Claim by making such election on the ballot provided for voting upon
the Plan. In the event that, by reason of such election, the amount which would
otherwise be distributable with respect to Class 8 Small Unsecured Claims would
exceed $500,000, priority will be given to the Holders of the Claims which have
agreed to accept the greatest discount, as determined by the Debtor, and only
the elections of such Holders shall be effective.
8. CLASS 9 - WORKERS' COMPENSATION CLAIMS. Workers' Compensation Claims are
--------------------------------------
unimpaired under the Plan. Each Holder of a Worker's Compensation Claim shall be
entitled to all legal, equitable and contractual rights to which the Worker's
Compensation Claim entitles the Holder of such Claim. As such, the Holders shall
receive no Distribution under the Plan on account of Workers' Compensation
Claims.
9. CLASS 10 - NON-VESTED RETIREMENT CLAIMS. Non-Vested Retirement Claims are
---------------------------------------
unimpaired under the Plan. Each Holder of a Non-Vested Retirement Claim shall be
entitled to all legal, equitable and contractual rights to which the Non-Vested
Retirement Claim entitles the Holder of such Claim. As such, the Holders
38
<PAGE>
shall receive no Distributions under the Plan on account of Non-Vested
Retirement Claims.
C. TREATMENT OF EQUITY - CLASS 11.
------------------------------
The Holders shall retain their Interests under the Plan.
39
<PAGE>
ARTICLE V
VARIOUS MECHANICS FOR PAYMENT OF CLASS 3 AND 4
----------------------------------------------
GENERAL UNSECURED CLAIMS
------------------------
The primary mechanism for the payment of Bank Claims and Large Unsecured
Claims under this Plan is the payment in full in Cash or the issuance of and
payment on the Notes pursuant to the Indenture. In the event Bank Claims and
Large Unsecured Claims are not paid in full in Cash by the dates set forth in
Section IV.B.2 and IV.B.3 respectively, the mechanics of the foregoing shall be
as follows:
A. THE INDENTURE.
-------------
As soon as practicable following the Effective Date, the Debtor shall execute
the Indenture or pay Class 3 and Class 4 Claims in Cash.
B. THE NOTES.
---------
1. Not later than thirty days after the later of the Effective Date or when
any Disputed Large Unsecured Claim becomes an Allowed Claim, Debtor shall either
(a) execute and deliver a Bank Note or LUC Note (as applicable) governed by the
Indenture to the Holder in respect of each Allowed Bank Claim and Large
Unsecured Claim, or (b) satisfied in full pursuant to Section VIII.7.b. of this
Plan if the Indenture has been previously terminated in accordance with Section
V.N. The amount of each Bank Note and LUC Note shall be the Allowed Amount of
such Claim as of the Effective Date, including interest accrual calculated in
accordance with this Plan, and excluding any professional fees and expenses and
any Undrawn LC Claim. Any Distribution by Debtor to the Holder of a Bank Note
or a LUC Note prior to the issuance of
40
<PAGE>
such Note, other than the Bank Professional Fees Payment, Distributions from the
Attorneys Fee Fund, or in regard to the Letter of Credit Note, shall be deemed
to be a principal payment on the relevant Note.
2. In the Distribution of any Note, the record date upon which the Debtor
may rely as to the Holder of a Bank Claim or Large Unsecured Claim shall be the
earlier of (a) the date the Note is sent to the Holder, or (b) thirty days prior
to the Effective Date. Debtor shall be under no obligation to recognize any
transfer of a Bank Claim or Large Unsecured Claim after such date for the
purposes of the issuance of a Bank Note or LUC Note.
C. TERM OF NOTES.
-------------
The term of each Note shall be two and one-half years from the Effective Date;
provided, however, that absent notice of a default under the Indenture, SII may
- -------- -------
extend the maturity of the Notes to five years from the Effective Date upon
written notice to the Indenture Trustee any time between two years and three
months after the Effective Date and the original maturity date of the Notes.
D. INTEREST ACCRUAL UNDER THE NOTES.
--------------------------------
Interest shall accrue under the Notes at an adjustable rate equal to (a) the
Reference Rate plus 3-1/4%, payable monthly in arrears or (b) Reference Rate
plus 2-3/4%, payable monthly in arrears in the event Debtor is able to obtain a
lien on the KFC Assets prior to the Confirmation Date in form and substance
satisfactory to the Committee and the Banks. Any change in the Reference Rate
shall be effective on the next succeeding Business Day.
E. Amortization Payments.
---------------------
41
<PAGE>
1. Except for the Bank Effective Date Payment as expressly set forth in
subsection V.E.2 below, all principal payments shall be made Pro Rata to the
Holders of the Bank Notes, Holders of the LUC Notes, and the Disputed Claims
Reserve in respect of Disputed Large Unsecured Claims. The amount of each
Distribution payable to the Disputed Claims Reserve shall be calculated in
accordance with Section VIII.A.7 of this Plan.
2. Notwithstanding the foregoing, no principal shall be payable on the
Bank Notes following the Bank Effective Date Payment until the Holders of the
LUC Notes and the Reserve Agent for the benefit of Holders of Disputed Large
Unsecured Claims have received Pro Rata payments equivalent to that previously
made in respect of the Bank Notes by reason of the Bank Effective Date Payment.
3. Debtor shall make Pro Rata principal payments to the Holders of the Notes
and the Reserve Agent for the benefit of the Holders of Disputed Claims on or
before the last day of the third full calendar month following the Effective
Date and at the end of each successive three month period thereafter, until the
maturity date of the Notes in the amount of $2,125,000 minus the lesser of (a)
$25,000 or (b) one-twenty fourth of the Allowed Amount of the principal amount
of all Allowed Priority Tax Claims; provided, however, that if the Allowed
-------- -------
Amount of all Bank Claims and Large Unsecured Claims is determined by Final
Order to exceed $70,000,000, the principal amortization will increase by the
percentage that the Allowed Amount of such Claims exceeds $70,000,000; and,
provided, further, that the principal amortization, effective upon the next
- -------- -------
quarterly payment, will
42
<PAGE>
increase prospectively to the extent that the Debtor or CFI Pty receives tax
benefits on Cash paid by CFI Pty to Debtor, Holders of Notes or the Reserve
Agent. Any unpaid principal shall be due upon the maturity of the Notes.
4. All Net Proceeds from the sale of CPI Encumbered Properties shall be
payable as a Distribution on the Notes. Net Proceeds from the sale of CPI
Encumbered Properties to a maximum aggregate amount of $8,674,000 following the
Effective Date may be part or all of the mandatory amortization set forth in
Subsection V.E.3 above. Any additional Net Proceeds from the sale of CPI
Encumbered Properties shall be paid Pro Rata upon such sale as mandatory
principal payments on the Notes (with a Pro Rata Distribution payable to the
Reserve Agent on account of Disputed Large Unsecured Claims in accordance with
Section VIII.C.7 of this Plan) in the inverse order of maturity, assuming a five
year term.
5. Debtor shall make additional, mandatory principal prepayments on the
Notes and to the Reserve Agent as follows:
(i) upon the sale by a CFI Accounting Affiliate, outside the ordinary
course of business, of a KFC Asset other than to another CFI Accounting
Affiliate for a price in excess of $50,000, 75% of the Net Proceeds of the sale,
are to be applied Pro Rata against principal owing under the Notes in inverse
order of maturity, assuming a five year term (with a Pro Rata Distribution
payable to the Reserve Agent on account of Disputed Large Unsecured Claims in
accordance with Section VIII.C.7 of this Plan) Claims;
(ii) upon the sale by a CFI Accounting Affiliate, outside of the ordinary
course of business, of any fixed asset (other than
43
<PAGE>
a KFC Asset) other than to another CFI Accounting Affiliate for a price in
excess of $50,000, 75% of the Net Proceeds of the sale, to be applied Pro Rata
against principal owing under the Notes in the natural order of maturity (with a
Pro Rata portion of such Distribution payable to the Reserve Agent on account of
Disputed Large Unsecured Claims in accordance with Section VIII.C.7 of this
Plan);
(iii) upon such time as the Net Proceeds retention by the CFI Accounting
Affiliates from fixed asset sales governed by subparagraphs (i) and (ii) above
exceeds $7,000,000 in respect of the sale of KFC Assets, or $10,000,000 in
aggregate Net Proceeds (including Net Proceeds from the sale of KFC Assets), the
percentage of Net Proceeds payable pursuant to subsections (i) and (ii) above
shall increase from 75% to 100%;
(iv) upon the sale of the stock of SRI, Sizzler USA or Sizzler USA
Holdings, following the satisfaction of all indebtedness owing to the Holders of
Claims under the SRI Plan, and upon any debt or equity offering by SII or any
CFI Accounting Affiliate (other than indebtedness permitted under Section V.G.
of this Plan), 100% of the Net Proceeds shall be applied Pro Rata against the
principal owing under the Notes in the natural order of the maturity of such
payments (with a Pro Rata portion of such Distribution payable to the Reserve
Agent on account of Disputed Large Unsecured Claims in accordance with Section
VIII.C.7 of this Plan).
(v) within ninety days of the close of each of Debtor's fiscal years, all
Excess Cash Flow generated during such year shall
44
<PAGE>
be applied Pro Rata against the scheduled principal payments remaining under the
Notes (assuming Debtor exercises its right to extend the maturity to five years
from the Effective Date); provided, however, that the portion of Excess Cash
-------- -------
Flow which would be payable solely by reason of the proviso in the definition of
Excess Cash Flow shall be payable within 180 days of the close of Debtor's
fiscal year. For the purposes of this calculation, until the Allowed Amount of
all Bank Claims and Large Unsecured Claims has been determined, it will be
assumed that the principal amount of Allowed Bank Claims and Large Unsecured
Claims will be $60,000,000, but in all events, Holders of Bank Notes, Holders of
LUC Notes and the Reserve Agent on account of Disputed Large Unsecured Claims in
accordance with Section VIII.C.7 shall receive Pro Rata Distributions except for
the Bank Effective Date Payment and as set forth in Subsection V.E.2 above.
F. AFFILIATE GUARANTEES/COLLATERAL.
-------------------------------
1. Each Affiliate other than the SRI Affiliates and CFI Insurers Ltd.
(unless and until CFI Insurers Ltd. receives any assets from another CFI
Accounting Affiliate pursuant to a asset transfer permitted under the Indenture
or under this Plan) shall participate with the Debtor in this Plan by executing
an Affiliate Guarantee in respect of the Notes.
2. Debtor shall secure its repayment of the Notes with a pledge of the CFI
Stock pursuant to the SII Stock Pledge Agreement and grant a lien on essentially
all of its Assets pursuant to the SII Security Agreement.
45
<PAGE>
3. CPI, SA Pty and CFI Pty shall secure their obligations under their
respective Affiliate Guarantees by recording the Affiliate Deeds of Trust on the
Encumbered Properties.
4. Each Affiliate other than the SRI Affiliates, CFI Insurers Ltd. and the
Immaterial Affiliates shall execute appropriate Collateral Agreements in form
and substance satisfactory to the Committee and the Holders of the Bank Claims
generally encumbering all of the assets of such Affiliates; provided, however,
-------- -------
that no such lien shall be granted in respect of the KFC Assets and any
purported lien on such KFC Assets shall be ineffectual and legally void to the
extent such lien is prohibited by any master license agreement, master franchise
agreement, license agreement or development agreement; and provided, further,
-------- -------
that no such lien or security interest shall be granted upon any other asset
owned by any other Affiliate if prohibited by applicable law or any contractual
relationship of such Affiliate with any third party, as scheduled by the Debtor
prior to the approval of the Disclosure Statement. If any Affiliate shall at any
time cease to be an Immaterial Affiliate, it shall promptly execute Collateral
Agreements as set forth above.
G. COVENANTS UNDER THE INDENTURE.
-----------------------------
The Indenture shall include, without limitation, covenants consistent with the
following:
1. Debtor shall use its best efforts to cause CPI to sell all CPI Encumbered
Properties, other than Sandwich Lease Properties, in a diligent fashion. Debtor
will maintain an open broker listing on its headquarters building.
46
<PAGE>
2. Debtor will not guarantee any obligations of any entity except as
permitted in the Indenture.
3. Debtor will not permit any of its Affiliates to grant any pledge, lien or
security interest on any asset; provided, however, that Affiliates may grant
liens securing purchase money indebtedness on newly acquired assets which fall
within the indebtedness limitations as set forth below.
4. CFI Accounting Affiliates shall not be permitted to have outstanding at
any one time indebtedness in excess of $10,000,000 (including capital leases)
excluding (a) the Notes, (b) any other Allowed Claims payable under this Plan,
the SERP Guarantee, and the Affiliate Guarantees, (c) current payables, (d)
inter-CFI Accounting Affiliate indebtedness, (e) indebtedness owing by CFI
Insurers Ltd. to the Holders of the Bank Claims, and (f) capital leases and
indebtedness secured by purchase money liens on new KFC units required to be
acquired or be built by CFI Pty under CFI Pty's KFC development agreement with
Kentucky Fried Chicken Pty. Limited.
5. Debtor shall not permit any loan or distribution of any funds or assets
from SII or the CFI Accounting Affiliates to the SRI Affiliates following the
Effective Date of this Plan and the SRI Plan other than in conjunction with
ordinary course overhead and similar allocations.
6. Debtor shall make no dividends on account of Equity Securities and shall
not repurchase any Equity Securities other than in conjunction with restricted
stock cancellations in lieu of tax payments or the repurchase of restricted
stock held by
47
<PAGE>
employees upon vesting or upon termination of employment. Such repurchases shall
not exceed $500,000 in any fiscal year.
7. Debtor, Sizzler USA, SRI, CFI Pty and SA Pty shall be operated in a
manner consistent with the corporate separateness of each of those entities. SA
Pty and CFI Pty shall observe all appropriate corporate formalities.
8. Debtor and the CFI Accounting Affiliates, on the one hand,
and the SRI Affiliates, on the other hand, shall be operated in a manner
consistent with the corporate separateness of Debtor and the CFI Accounting
Affiliates from each of the entities comprising the SRI Affiliates. SII shall
observe all appropriate corporate formalities.
9. The CFI Accounting Affiliates shall maintain Operating Cash Flow as
follows to be allocated and measured quarterly (or, if the Committee and the
Banks have not agreed to the amount of such allocations by the Confirmation
Date, Operating Cash Flow measured quarterly as found to be reasonable by the
Court at the Confirmation Hearing):
Fiscal Year 1998
----------------
Quarter 1 $4,000,000
Quarter 2 $4,500,000
Quarter 3 $6,500,000
Quarter 4 $5,000,000
Fiscal Year 1999
----------------
Quarter 1 $4,800,000
Quarter 2 $5,400,000
Quarter 3 $7,800,000
48
<PAGE>
Quarter 4 $6,000,000
Fiscal Year 2000
----------------
Quarter 1 $5,200,000
Quarter 2 $5,980,000
Quarter 3 $8,320,000
Quarter 4 $6,500,000
Fiscal Year 2001
----------------
Quarter 1 $5,200,000
Quarter 2 $5,980,000
Quarter 3 $8,320,000
Quarter 4 $6,500,000
Fiscal Year 2002
----------------
Quarter 1 $5,600,000
Quarter 2 $6,440,000
Quarter 3 $8,960,000
Quarter 4 $7,000,000
10. With respect to the covenant set forth in Section V.G.9 above, an event
of default shall occur under the Indenture only if the benchmark is missed for
two consecutive quarters.
11. The CFI Accounting Affiliates shall not expend funds for capital
expenditures in excess of the following amounts, with 25% of any amount not
expended during any fiscal year available for expenditure in any succeeding
years:
Fiscal Year 1998 $8,900,000
Fiscal Year 1999 $4,100,000
Fiscal Year 2000 $6,100,000
49
<PAGE>
Fiscal Year 2001 $9,000,000
Fiscal Year 2002 $9,300,000
H. DIVIDEND PURCHASE.
-----------------
The Indenture shall further provide for the purchase by Holders of Class 3
Bank Claims of up to $1,200,000 in amount of certain of the Distributions of
principal payable to the Selling Holders as follows:
1. The Holders of the Class 3 Bank Claims shall purchase the right to
certain Distributions of the Selling Holders as follows.
2. After receipt of the Bank Effective Date Payment and the Bank
Professional Fee Payment, any principal Distribution by the Debtor on the Bank
Notes received by the Holders of Class 3 Bank Claims during the Dividend
Purchase Period shall be transferred to and distributed Pro Rata amongst the
Selling Holders, up to a maximum of $1,200,000. The amount of such transfer
shall be referred to herein as the "Purchased Amount". Notwithstanding the
foregoing, in the event that a purchase takes place before the deadline for
objecting to Claims has passed, the payment of the Purchased Amount shall be
made to the Reserve Agent on behalf of the Selling Holders and such payment
shall be deemed a payment to such Selling Holders for all purposes including for
purposes of calculating interest due to Holders of Class 3 Bank Claims on
account of the Selling Holders' Claims.
3. Upon receipt of any portion of the Purchased Amount, by the Selling
Holders, or, if applicable, by the Reserve Agent, on behalf of the Selling
Holders, the Selling Holders shall be deemed to absolutely transfer, sell and
assign to the Holders of the Class
50
<PAGE>
3 Bank Claims the right to receive any and all Distributions of principal and
interest thereon until such time as the amount of principal Distributions so
transferred and received by Holders of the Class 3 Bank Claims equals the
portion of the Purchased Amount received by the Selling Holders or the Reserve
Agent on behalf of the Selling Holders.
4. Any purchase of Distributions provided for hereunder shall be effected by
the Debtor through the payment of the Purchased Amount Pro Rata on the date of
purchase to the Selling Holders, or, if prior to July 16, 1997, to the Reserve
Agent for the benefit of the Selling Holders.
5. Any Holder of an Allowed Class 4 Large Unsecured Claim as of the
Effective Date shall be conclusively presumed to have consented to being a
Selling Holder and to receiving the benefits of the dividend sale.
I. THE RESERVE AGENT.
-----------------
1. The Reserve Agent shall hold in appropriate interest bearing accounts (1)
the Disputed Claims Reserve discussed in Article VIII of this Plan for the
benefit of the Holders of Disputed Class 4 Large Unsecured Claims, and (2) the
Purchased Amount which would otherwise be payable to the Selling Holders. The
Reserve Agent shall be required to post a bond in an amount satisfactory to the
Court.
2. In the event of the resignation of the Reserve Agent, or removal by the
Bankruptcy Court for cause shown, the Debtor will promptly seek Bankruptcy Court
approval of a successor.
51
<PAGE>
3. The Reserve Agent may perform any of its duties under this Plan by or
through its agents or employees.
4. The Reserve Agent shall make Distributions from the Disputed Claims
Reserve only in accordance with Section VIII.A.7 of this Plan.
5. As soon as practicable after July 16, 1997, the Reserve Agent shall pay
any portion of the Purchased Amount received by the Reserve Agent Pro Rata to
the Selling Holders.
6. With respect to any acts or approvals which are not required of the
Reserve Agent under this Plan, the Reserve Agent may at all times act (a) in
accordance with its own business judgement, or (b) in accordance with the
instructions of the Holders of 51% in amount of the Allowed Class 4 Large
Unsecured Claims. The Reserve Agent may at any time request instructions
from the Holders of Class 4 Large Unsecured Claims with respect to any
discretionary actions or approvals under the terms of this Plan.
7. To the extent the Reserve Agent requests instructions with respect to
discretionary acts or approvals, the Reserve Agent shall be entitled to rely
upon any written notices, statements, certificates, orders or other documents
believed by it in good faith to be genuine and correct and to have been signed,
sent or made by the proper Person. The Reserve Agent shall also be entitled to
rely upon the advice of legal counsel, independent accountants and other experts
selected by it in its sole discretion.
J. APPROVED RESERVE AGENT EXPENSES. [INTENTIONALLY OMITTED]
-------------------------------
K. RESERVE AGENT INDEMNIFICATION/EXPENSES UPON DEFAULT.
---------------------------------------------------
52
<PAGE>
1. The Reserve Agent shall have no liability to any Holder of any Large
Unsecured Claim or the Debtor absent gross negligence, intentional misconduct or
breach of this Plan.
2. The Debtor shall indemnify the Reserve Agent hereunder and hold the
Reserve Agent harmless from and against (i) all costs, expenses, reasonable
counsel fees, claims and liabilities (collectively, "Costs") resulting from any
action of the Reserve Agent under this Plan, provided, however, that in each
instance, this indemnity shall not apply to any Costs arising out of the gross
negligence or willful misconduct of the Reserve Agent. This indemnity shall
survive the payment of all amounts owing to the Holders of Class 4 Large
Unsecured Claims under this Plan.
L. THE ATTORNEYS FEE FUND.
----------------------
1. The Attorneys' Fee Fund shall be the exclusive source of recovery, from
the Debtor or Affiliates, for any Holder of any Allowed Large Unsecured Claim to
recover professional fees or expenses pursuant to contract, Bankruptcy Code (S)
503(b) or on any other basis. The establishment of the Attorneys' Fee Fund
constitutes a compromise agreed upon by the Debtor and the Committee with
respect to the issue of whether professional fees and expenses can properly be
included in the Allowed Amount of Class 4 Large Unsecured Claims in this Case.
2. The Debtor's total contribution into the Attorneys' Fee Fund shall be
$245,000 minus any amount payable by the Debtor to any Holder of an Allowed
Class 4 Large Unsecured Claim based upon a "substantial contribution" theory
pursuant to Bankruptcy Code (S) 503(b). In the event any Cash remains following
the liquidation
53
<PAGE>
of all Claims against the Attorneys' Fee Fund, the Debtor may use the remaining
Cash for general operating purposes. In the event that the Allowed Claims
against the Attorneys' Fee Fund exceed the amount of the Attorneys' Fee Fund,
the claimants against the Fund shall share the proceeds thereof Pro Rata with
all other successful Claimants against the Attorneys Fee Fund.
3. In respect of any Claim for professional fees or expenses by a Holder of
an Allowed Class 4 Large Unsecured Claim to be paid from the Attorneys' Fee
Fund, Debtor waives all arguments that such fees or expenses are not payable per
---
se by reason of such Creditor's status as the Holder of a General Unsecured
- --
Claim.
4. Any Claim for professional fees or expenses by a Holder of a Class 4
Large Unsecured Claim must be made by written notice, supported by detailed
documentation, to the Debtor and the Committee prior to the Confirmation Date.
In the event that the Debtor or Committee objects to the Claim and the Claim is
not resolved by agreement of the Holder, Debtor and the Committee prior to
twenty-one days after notice of such objection, the Holder shall be required to
file a motion with the Court to resolve the Claim.
5. No amounts shall be distributed from the Attorneys' Fee Fund until all
Claims against the Fund have been resolved by the Bankruptcy Court and been the
subject of a Final Order.
M. CONTROLLING NATURE OF THE INDENTURE.
-----------------------------------
In the event of any conflict between the terms of the Indenture and the terms
of Article V of this Plan, the terms of the Indenture shall control, although
this Plan may amplify or clarify
54
<PAGE>
terms of the Indenture that are not in conflict with the Plan. As to all other
Articles, the terms of this Plan shall control.
N. CASH ELECTION OR TERMINATION OF THE INDENTURE.
---------------------------------------------
1. If the Debtor elects to satisfy Allowed Class 3 and 4 Claims in Cash
pursuant to Article IV hereof, or elects to satisfy all Notes in full and
terminate the Indenture, the Debtor shall (a) deposit with the Reserve Agent
Cash in an amount sufficient to pay in full the Letter of Credit Note upon
redemption of the LC Note and all Notes outstanding at the time of such deposit
including all unpaid principal and interest due or to become due as of the date
of redemption and otherwise necessary to satisfy its obligation under Section
8.01 of the Indenture, plus (b) deliver to the Reserve Agent Cash in an amount
sufficient to pay in full in Cash Allowed Claims or upon redemption additional
Notes in an aggregate principal amount equal to the Undrawn Letter of Credit
Claim plus the Permitted Reserve Amount (as if such additional Notes had been
issued on the Effective Date) less any Cash already held by the Reserve Agent in
the Disputed Claim Reserve pursuant to Section VIII.7.b. of this Plan.
2. Debtor's election to satisfy Allowed Class 3 and 4 Claims in Cash
pursuant to Article IV hereof may only be exercised in respect of all Allowed
Class 3 and 4 Claims. Debtor may not make the Cash payment election solely as
to Class 3 or Class 4 Claims.
ARTICLE VI
CONDITIONS TO EFFECTIVENESS
---------------------------
Confirmation of this Plan is conditioned upon the events described below and,
where applicable, the Bankruptcy Court
55
<PAGE>
entering the following orders and findings with respect to the Claims filed
herein against the Debtor:
A. Debtor and each Affiliate participating with the Debtor in this Plan have
executed all Plan Agreements required to be executed by Debtor and such
Affiliate, to be held in escrow pending the Effective Date.
B. The Debtor, the Committee and the Holders of the Bank Claims shall have
agreed upon the form and substance of the Collateral Agreements or, in the
absence of such agreements, such Collateral Agreements shall have been approved
as in conformity with the Plan by the Court.
C. The Court shall have found that the Debtor is not required to make and is
not making more than $175,000 in "cure payments" with respect to executory
contracts excluding employment and employee compensation or bonus agreements,
and further excluding "cure" payments which are payable as Allowed Claims under
the Plan.
D. Each of the SRI Affiliates shall have affirmatively released SII and all
CFI Accounting Affiliates from all claims arising prior to the Effective Date
with such release being held in trust pending the Effective Date and the
Effective Date under the SRI Plan.
E. The Effective Date in respect of the SRI Plan shall have occurred.
F. Unless waived by Debtor, the Holders of the Bank Claims and SII shall
have reached a mutual agreement concerning the
56
<PAGE>
release by the Holders of the Bank Claims of CFI Insurers Ltd. upon the
occurrence of certain negotiated events.
G. Other than as necessary to effectuate the terms of this Plan, the Debtor
shall have released any claims against Affiliated Debtors, other than CPI, and
the Debtor shall have waived any distribution from the Buffalo Ranch and Tenly
bankruptcy cases.
H. Sizzler USA Holdings and Sizzler International Marks shall be formed
under Delaware corporate law and the Debtor shall cause CFI Pty to transfer the
stock of SRI to Sizzler USA Holdings. All issued and outstanding stock of
Sizzler International Marks shall be owned by SII.
I. CPI and CFI Pty or Sizzler International Marks shall make the
International Licensing Assets Payment.
J. SRI shall have assigned all International Licensing Assets (including the
International Licensing Executory Contracts) to Sizzler International Marks.
K. The Holders of Bank Claims shall have notified the Debtor of their mutual
agreement regarding allocation of the Allowed Bank Claims among such Holders;
provided however, that in the event all other conditions are met and the Debtor
- -------- -------
has not received such notification within thirty days of the Confirmation Date,
the Debtor shall use the allocation as set forth in the proofs of claim filed by
Holders of Bank Claims.
L. SII reserves the right to withdraw this Plan prior to Confirmation in the
event it is not accepted by the Holders of Class 3 and Class 4 Claims.
ARTICLE VII
57
<PAGE>
TREATMENT OF EXECUTORY CONTRACTS
--------------------------------
AND UNEXPIRED LEASES
--------------------
A. ASSUMPTION.
----------
To the extent any such contracts or leases remain executory or unexpired on
the Effective Date, the executory contracts and unexpired leases listed on
Exhibits "B" and "D" to this Plan shall be deemed assumed as of the Effective
Date and the amounts, if any, which are necessary to cure defaults (if any)
under such executory contracts and unexpired leases pursuant to Bankruptcy Code
(S) 365 shall be as identified on the applicable Exhibit. Debtor reserves the
right to amend Exhibits "B" and "D" at any time prior to the Confirmation Date.
A reference on Exhibit "B" or "D" to a type or class of executory contract or
unexpired lease shall constitute an assumption of all executory contracts with
such Person included within such type or class, as all such contracts and
unexpired leases with a particular contracting party may have been amended or
modified. The Confirmation Order shall constitute an order of the Bankruptcy
Court (a) approving the assumption of the executory contracts and unexpired
leases listed on Exhibits "B" or "D" to this Plan as of the Effective Date; (b)
fixing the "cure" amount with respect to such defaults by Debtor under such
contracts prior to Confirmation, and (c) establishing that Debtor (rather than
any Affiliate) is the contracting party under such contract or lease. In the
event that the non-debtor party to an assumed executory contract or unexpired
lease does not timely object, the Confirmation Order shall be binding on such
Person as to (a) the amount of any default under such contract or lease and (b)
as to
58
<PAGE>
whether Debtor (rather than any Affiliate) is the contracting party under such
contract or lease. The absence of a cure amount on Exhibit "B" or "D" relating
to any executory contract manifests Debtor's position that no amount is owing by
Debtor under such contract. Any monetary amounts found by the Bankruptcy Court
to be in default shall be satisfied, pursuant to Bankruptcy Code (S) 365(b), by
payment by Debtor of the default amount in Cash no earlier than the Effective
Date and no later than thirty days following the Effective Date. In the event of
any dispute concerning any conditions to assumption of an executory contract or
unexpired lease established by Bankruptcy Code (S) 365, the cure payments with
respect to such contract or lease required by the Bankruptcy Code shall be made
only following the entry of a Final Order resolving the dispute.
B. ASSIGNMENT.
----------
On the Effective Date, the Assumed and Assigned Executory Contracts shall be
assigned to SRI. Debtor will have no further obligation under any Assumed and
Assigned Executory Contract following such assignment.
C. REJECTION.
---------
On the Effective Date, all executory contracts and leases to which the Debtor
or the Estate was a party on or prior to Confirmation, and which have not been
assumed by the Debtor or assumed by the Debtor and assigned to a third party
pursuant to Bankruptcy Code (S) 365, will be rejected pursuant to Bankruptcy
Code (S)(S) 365 and 1123, to the extent, if any, that such contract or lease
constitutes an executory contract or unexpired lease, and without
59
<PAGE>
conceding that such contracts or leases constitute executory contracts or
unexpired leases or that the Debtor has any liability thereunder. The
Confirmation Order will constitute an order of the Bankruptcy Court approving
all such rejections, pursuant to Bankruptcy Code (S) 365, as of the date of
Confirmation.
D. CLAIMS ARISING FROM REJECTION OF CONTRACTS.
------------------------------------------
Any Claim for damages arising from the rejection hereunder or under Bankruptcy
Code (S) 365 of an executory contract or unexpired lease of the Debtor that has
not been assumed pursuant to a prior order of the Bankruptcy Court, pursuant to
this Plan or under Bankruptcy Code (S) 365: (1) will be determined and allowed
or disallowed under Bankruptcy Code (S) 502(g), and, to the extent Allowed, will
be classified in the appropriate Class; and (2) will be unenforceable against
the Debtor, the Reserve Agent or the Estate and their respective property and
will be forever barred from receiving any Distribution under this Plan unless a
proof of such Claim is filed prior to the later of (1) the Claims Bar Date and
(2) the first business day that is thirty (30) days after the entry of an order
rejecting an executory contract or unexpired lease. Notwithstanding the
rejection of any executory contract or unexpired lease at any time during this
Case, the Debtor reserves all rights and defenses which the Debtor or Estate may
have or have had against the parties to such contracts and leases.
ARTICLE VIII
MEANS FOR IMPLEMENTATION OF PLAN/RESERVES
-----------------------------------------
A. EFFECTIVE DATE TRANSACTIONS.
---------------------------
60
<PAGE>
As soon as practicable on or following the Effective Date, the following shall
occur in implementation of this Plan:
1. INCORPORATION OF SIZZLER USA HOLDINGS AND SIZZLER USA AND SIZZLER
-----------------------------------------------------------------
INTERNATIONAL MARKS. Each of Sizzler USA Holdings, Sizzler USA and Sizzler
- -------------------
International Marks shall be formed under Delaware corporate law. All issued
and outstanding stock of Sizzler USA Holdings shall be owned by SII. All issued
and outstanding stock of Sizzler International Marks shall be owned by CFI Pty.
All issued and outstanding stock of SRI and Sizzler USA shall be owned by
Sizzler USA Holdings.
2. ASSIGNMENT OF INTERNATIONAL LICENSING ASSETS TO SIZZLER INTERNATIONAL
---------------------------------------------------------------------
MARKS. SRI shall assign all International Licensing Assets (including the
- -----
International Licensing Executory Contracts) to Sizzler International Marks.
3. INTERNATIONAL LICENSING ASSETS PAYMENT. CPI and CFI Pty or Sizzler
--------------------------------------
International Marks shall make the International Licensing Assets Payment.
B. GLOBAL INTERESTATE SETTLEMENT.
-----------------------------
The Plan and the SRI Plan each incorporate a motion pursuant to Bankruptcy
Rule 9019(a) for approval of a global interestate settlement described below
(the "Global Interestate Settlement"). As one aspect of the Global Interestate
Settlement, SRI proposed the sale of the International Licensing Assets to
Sizzler International Marks in exchange for the International Licensing Asset
Payment. SRI and the Committee, which includes representatives from both SRI and
SII estates, agreed to this sale and payment in exchange for the release of all
intercompany Claims
61
<PAGE>
between SRI and its direct and indirect subsidiaries, on the one hand, and SII
and the direct and indirect subsidiaries of CFI Pty, on the other hand, on
account of, inter alia, the allocation of overhead between Affiliates, the
licensing of trademarks between Affiliates, the commingling of Cash of
Affiliates, and the making of intercompany loans between Affiliates.
C. DISTRIBUTIONS AND PLAN FUNDING.
------------------------------
1. SOURCE OF PLAN FUNDING. Such funding as may be necessary to fully
----------------------
perform the Debtor's obligations under this Plan will be provided from the
Debtor's Available Cash on the Effective Date, the operations of Debtor's
Affiliates and, for Class 5 Damage Claims only, the Coverage.
2. THE ADR. The Debtor, together with SRI, CPI, Buffalo Ranch and Tenly,
-------
has requested that the Bankruptcy Court establish the ADR for the liquidation
and payment of Damage Claims. The ADR has been implemented during the Case and
will continue after Confirmation. It is anticipated that, under the ADR, each
Damage Claim will be subjected to a process designed to produce a settlement
with respect to such Claim. If unsuccessful, the Holder of a Damage Claim may
then obtain relief from the Bankruptcy Court to pursue the Claim in an
appropriate non-bankruptcy forum.
3. ROUNDING OF AMOUNTS. Notwithstanding anything to the contrary in this
-------------------
Plan, or any Plan Agreement, any Person responsible for Distributions may round
all amounts for Distributions of Cash to the nearest whole dollar amount.
62
<PAGE>
4. NAME AND ADDRESS OF HOLDER. For purposes of all Distributions, the
--------------------------
Person responsible for such Distributions will be entitled to rely on the name
and address of the Holder of each Allowed Claim or Interest as shown on any
timely filed proof of Claim and, if none, as shown on Schedules, except to the
extent that the payor first receives adequate written notice of a transfer or
change of address, from the United States Postal Service or properly executed by
the Holder or its authorized agent.
5. CORPORATE GOVERNANCE. On the Effective Date, Debtor's existing articles
--------------------
of incorporation and bylaws shall remain as currently in effect, except for the
inclusion of a prohibition on the issuance of non-voting securities.
6. EXECUTION OF PLAN AGREEMENTS. On or before the Effective Date, Debtor
----------------------------
and each Affiliate shall execute the Plan Agreements with respect to Allowed
Claims.
7. DISPUTED CLAIMS RESERVES.
------------------------
a. After the Effective Date, Debtor shall have the authority to object
to Claims, including Claims against the Attorneys' Fee Fund. Any objections to
Claims and Interests must be filed with the Bankruptcy Court on or before the
later of (a) July 15, 1997, (b) 120 days after the service of the proof of Claim
on Debtor's counsel in this Case or (c) if such proof of Claim was not served on
counsel for the Debtor, 120 days after a copy of such proof of Claim was
delivered to counsel for the Debtor from the Bankruptcy Court.
b. Except as otherwise set forth below, unless and until Class 4 Large
Unsecured Claims are Allowed in an aggregate
63
<PAGE>
amount which exceeds $20,000,000 or the Bankruptcy Court, upon motion by the
Debtor, establishes a lower estimated Claim amount, Debtor shall establish
Disputed Claim Reserves in an amount (the "Permitted Reserve Amount") based on
the assumption that the Allowed Amount of all Class 4 Large Unsecured Claims
will be $20,000,000. Until all Disputed Class 4 Large Unsecured Claims are
resolved by Final Order, the Debtor shall make a Pro Rata Distribution to the
Reserve Agent (to be held as a Disputed Claims Reserve) of that portion of any
Distribution which equals the Distribution to which the Holders of Disputed
Class 4 Large Unsecured Claims and would be entitled based on the foregoing
Permitted Reserve Amount.
c. Following the Effective Date, the Debtor may file a request that the
Bankruptcy Court determine, by estimating the Claims or otherwise, that an
Assumed Allowed Amount of Class 4 Large Unsecured Claims less than $20,000,000
is to be used for calculating the amounts to be placed in the Disputed Claims
Reserves; provided, however, that any such estimation shall include an
estimation of the interest accrued and to be accrued under the Plan on such
Disputed Claims.
d. From and after the Effective Date, the Debtor may periodically
file requests that the Bankruptcy Court confirm, determine, supplement or amend
prior determinations of the Permitted Reserve Amounts (which determinations may
require estimations of certain Claims).
e. Inasmuch as Class 5 Damage Claims are covered by the Policies, no
reserves will be established for Disputed Class 5
64
<PAGE>
Damage Claims. The Debtor will establish an Administrative and Priority Claims
Reserve for Disputed Priority Tax Claims and projected or actual Administrative
Claims which have not been Allowed by the Bankruptcy Court. The Distributions
due in respect of Disputed Administrative Claims will be reserved for the
Holders of Disputed and Administrative Claims and deposited in the
Administrative and Priority Claims Reserve.
f. After an objection to a Disputed Claim is withdrawn or determined by
Final Order, the Distributions due on account of any Claim will be paid by the
appropriate Person hereunder.
g. In the event an objection to a Disputed Class 4 Large Unsecured
Claim is withdrawn or determined by Final Order prior to the termination of the
Indenture, the Reserve Agent shall make the Distribution due on account of such
Claim to the extent sufficient funds exist in the Disputed Claims Reserve. To
the extent insufficient funds exist in the Disputed Claims Reserve established
by the Reserve Agent, the Debtor shall fund any remaining Distribution owing to
such Holder directly to the Holder. In each case, the Distribution shall be
made no later than the time provided in this Plan for the next regularly
scheduled principal payment on the Notes or, if there is no such further
scheduled time, within forty-five days of the date the Disputed Claim becomes an
Allowed Claim or authorized Administrative Claim. Subject to the increase in
principal amortization possible under the Notes as set forth in Section V.E.2.
hereof, any such payment or any such Distribution by the Debtor by reason of
insufficient Disputed Claims Reserves shall not increase the principal required
65
<PAGE>
to be amortized under the Notes prior to the maturity date of such Notes.
h. In the event monies are held by the Reserve Agent in a Disputed
Claims Reserve at any time in an amount which exceeds the amount of Cash which
would be necessary to make the required Distributions to the Holders of all
Disputed Class 4 Large Unsecured Claims (as of the date of calculation) if such
Disputed Claims were subsequently Allowed in full, the Reserve Agent shall pay
such excess amount Pro Rata to Holders of the Notes (net of the Pro Rata portion
allocable to remaining Disputed Claims); provided, however, that any such
-------- -------
Distribution shall not increase the principal required to be amortized under the
Notes, so that (i) any principal portion of such Distribution shall be allocated
Pro Rata to Holders of such Notes and (ii) any interest portion of such
Distribution shall be applied to the next scheduled quarterly principal payment.
Notwithstanding the foregoing, if all Allowed Bank Claims and Large Unsecured
Claims have been satisfied in full pursuant to the terms of this Plan, and the
amount of Cash which would be necessary to make the required Distributions to
Holders of any Disputed Large Unsecured Claims if such Claims were subsequently
Allowed in full, then the Reserve Agent shall promptly return the excess monies
held in such Disputed Claims Reserve to the Debtor.
i. In the event that, following the termination of the Indenture
pursuant to Section V.E.6. or if the Debtor has elected on or before the
Effective Date to satisfy Allowed Class 3 and Class 4 Claims in Cash in
accordance with Article IV of this Plan,
66
<PAGE>
either (y) the Undrawn LC Claim becomes payable by reason of a draw upon the
letter of credit in question or (z) an objection to a Disputed Class 4 Large
Unsecured Claim is withdrawn or determined by Final Order, then the Reserve
Agent shall make a Distribution in the Allowed Amount of such Claim (plus any
interest which may be payable on such Claim pursuant to this Plan) to the extent
sufficient funds exist in the Disputed Claims Reserve. To the extent
insufficient funds exist in the Disputed Claims Reserve established by the
Reserve Agent, the Debtor shall fund any remaining Distribution owing to such
Holder directly to the Holder. In each case, the Distribution shall be made
within five days of the date the Disputed Claim becomes an Allowed Claim.
8. UNCLAIMED PROPERTY. Any Unclaimed Property will be deemed paid to such
------------------
entitled Person, for the purpose of determining that Person's rights. Any
Person that does not claim its Distribution within 180 days will receive no
future distribution under the Plan.
9. DE MINIMIS DISTRIBUTIONS/RETURN OF UNDISTRIBUTED FUNDS. Notwithstanding
------------------------------------------------------ ---------------
anything to the contrary contained in this Plan, neither the Debtor nor the
- -----------------------------------------------
Reserve Agent need disburse Cash to the Holder of an Allowed Claim if the amount
of Cash otherwise due is less than Five Dollars ($5.00). Cash not so distributed
may be reserved for the Claim Holder until in excess of Five Dollars ($5.00) is
owed such Claim Holder. When and if the Reserve Agent determines in good faith
that nothing more is due hereunder to the Holders of Bank Claims and Large
Unsecured Claims, then such undisbursed funds will be promptly returned by the
Reserve Agent to the Debtor.
67
<PAGE>
D. SERVICES BY AND FEES FOR PROFESSIONALS.
--------------------------------------
1. SERVICES BY PROFESSIONALS AND CERTAIN PARTIES AFTER THE EFFECTIVE DATE.
----------------------------------------------------------------------
The Debtor, Equity Committee and the Committee retained professionals who
provided services and incurred expenses during the Case. After the Effective
Date, the professionals retained by the Debtor may be among the Persons
assisting in the effectuation of this Plan.
2. FEES FOR PROFESSIONALS AND CERTAIN PARTIES.
------------------------------------------
a. PRIOR TO THE EFFECTIVE DATE.
---------------------------
(1) GENERALLY. Fees and expenses for the professionals retained by
---------
the various committees or the Debtor for services rendered and costs incurred
after the Petition Date and prior to the Effective Date, will be fixed by the
Bankruptcy Court after notice and a hearing and such fees and expenses will be
paid (less deductions for any and all amounts thereof already paid to such
Persons) after approval by the Bankruptcy Court to the extent so approved and as
provided in this Plan.
b. FROM THE EFFECTIVE DATE. Fees owing for services rendered and costs
-----------------------
incurred and owing on and after the Effective Date by the professionals retained
by the Debtor, the Equity Committee or the Committee, and any fees and costs
incurred by the Reserve Agent or relating to prosecution of Litigation will be
paid by the Debtor from the funds held by the Debtor twenty (20) days after
submission of a bill therefor to the Debtor, if there is no objection within
such time. If there is such an objection, the fees and expenses will be fixed
by the Bankruptcy Court after notice and a hearing. The Bankruptcy Court will
retain
68
<PAGE>
jurisdiction until the Case is closed, to determine disputed post-Effective Date
fees of professionals.
E. DISSOLUTION OF COMMITTEES.
-------------------------
The Committee shall continue in existence following the Effective date solely
for the purpose of monitoring the consummation of the transactions required to
take place on or about the Effective Date of this Plan. Ninety days after the
Effective Date, the Committee and Equity Committee shall be deemed dissolved.
F. LITIGATION.
----------
a. The Debtor may commence or advance any Litigation following the Effective
Date.
b. Except as otherwise set forth in this Plan, the Debtor may, but will not
be required to, set off against any Claim and the Distributions to be made in
respect of such Claim, any Litigation it may have against the Holder of the
Claim, but neither the failure to do so nor the allowance of any Claim hereunder
will constitute a waiver or release of any such Litigation, setoff or recoupment
which the Debtor may have against such Holder.
c. Unless threatened or pending Litigation against a Creditor or other
person is expressly waived, relinquished, released, compromised or settled in
this Plan or in a Final Order, all rights with respect to such Litigation are
reserved and the Debtor may pursue such Litigation.
ARTICLE IX
MODIFICATION
------------
69
<PAGE>
Pursuant to the provisions of Bankruptcy Code (S) 1127, the Debtor reserves
the right to modify or alter the provisions of this Plan at any time prior or
subsequent to Confirmation.
ARTICLE X
EFFECT OF CONFIRMATION
----------------------
A. BINDING EFFECT OF CONFIRMATION.
------------------------------
Confirmation will bind the Debtor, all Creditors, Interest Holders and
other parties in interest to the provisions of this Plan whether or not the
Claim or Interest of such Creditor or Interest Holder is impaired under this
Plan and whether or not such Creditor or Interest Holder has accepted this Plan.
B. VESTING OF ASSETS FREE AND CLEAR OF LIENS, CLAIMS AND INTERESTS
---------------------------------------------------------------
Except as otherwise provided in this Plan or in the Confirmation Order,
upon the Effective Date, title to all Assets and property of the Debtor, and all
property of the Estate, including, pursuant to Bankruptcy Code (S)
1123(b)(3)(b), each and every claim, demand or cause of action which the Debtor
had or had power to assert immediately prior to Confirmation, will revest in the
Debtor, free and clear of all liens, Claims and Interests of Holders of Claims
and Interests. Thereafter, the Debtor will hold these Assets without further
jurisdiction, restriction or supervision of the Bankruptcy Court.
C. GOOD FAITH.
----------
Confirmation of the Plan shall constitute a finding that: (i) this Plan
has been proposed in good faith and in compliance with applicable provisions of
the Bankruptcy Code; and (ii) the solicitation of acceptances or rejections of
this Plan by all Persons
70
<PAGE>
and the offer, issuance, sale, or purchase, of a security offered or sold under
the Plan has been in good faith and in compliance with applicable provisions of
the Bankruptcy Code. Accordingly, on the Effective Date each of the officers and
directors of the Debtor, the Holders of the Bank Claims, the members of the
Committee, and the members of the Equity Committee and each of their respective
advisors and attorneys, effective as of the Effective Date, will be deemed
exculpated by Holders of Claims against and Interests in the Debtor and other
parties in interest to the Case, from any and all claims, causes of action and
other assertions of liability (including, without limitation, breach of
fiduciary duty), arising out of or related to the Debtor, the Case or the
exercise by such entities of their functions as members of or advisors to or
attorneys for any such individuals or committee or otherwise under applicable
law, in connection with or related to the Case and the formulation, negotiation,
preparation, dissemination, Confirmation and consummation of this Plan and any
agreement, instrument or other document issued hereunder or related hereto;
provided, however, that this Section X.C shall have no effect on liability for
any act or omission of the officers and directors of the Debtor, the Holders of
the Bank Claims, the members of the Committee, and the members of the Equity
Committee and each of their respective advisors and attorneys to the extent that
such act or omission is ultra vires or constitutes gross negligence or willful
misconduct.
D. NO LIMITATIONS ON EFFECT OF CONFIRMATION.
----------------------------------------
Nothing contained in this Article IX will limit the effect of Confirmation
as described in Bankruptcy Code (S) 1141.
71
<PAGE>
E. CONTINUATION OF ADR - PERMANENT INJUNCTION FOR DAMAGE CLAIMS.
------------------------------------------------------------
Notwithstanding Confirmation, the Holder of any Damage Claim that is
unliquidated in amount must first exhaust the remedies in the ADR before making
a request, from the Bankruptcy Court, to pursue liquidation of its Claim in an
appropriate non-bankruptcy forum.
The Confirmation Order will constitute a permanent injunction (1) enjoining
the Holders of Damage Claims from commencing, continuing or in any way pursuing
their claims, including but not limited to enjoining the Holders of Damage
Claims from prosecuting their Claims against the Affiliated Debtors' insurers in
any manner other than as proscribed in the Plan and (2) requiring all Holders of
Damage Claims to participate in the ADR prior to seeking relief from the
Bankruptcy Code (S) 1141(d) discharge injunction to pursue liquidation of their
Claims in an appropriate nonbankruptcy forum.
F. DISCHARGE OF CLAIMS AND TERMINATION OF INTERESTS.
------------------------------------------------
The rights afforded under the Plan and the treatment of Claims under the
Plan will be in exchange for and in complete satisfaction, discharge, and
release of all Claims. Confirmation of the Plan shall discharge Debtor from all
Claims that arose before the Confirmation Date and all Claims of all kinds
specified in Bankruptcy Code (S)(S) 502(g), (h) and (i), whether or not a proof
of Claim is filed or deemed filed (or the Holder of a Claim based on such debt
has accepted the Plan).
G. JUDICIAL DETERMINATION OF DISCHARGE.
-----------------------------------
As of the Confirmation Date, except as provided in the Plan, all Persons
shall be precluded from asserting against Debtor any other or further Claims,
debts, rights, causes of action, liabilities, or
72
<PAGE>
equity interests based on any act, omission, transaction or other activity of
any kind or nature that occurred before the Confirmation Date, and the
Confirmation Order shall be a judicial determination of discharge of all Claims
against Debtor pursuant to Bankruptcy Code (S)(S) 524 and 1141, and shall void
any judgment obtained or entered against Debtor at any time, to the extent the
judgment relates to discharged Claims.
H. INJUNCTION.
----------
As of the Confirmation Date, all Persons that have held, currently hold or
may hold a Claim or other debt or liability that is discharged or an Interest or
other right of an Equity Security Holder that is terminated pursuant to the Plan
are permanently enjoined from taking any of the following actions on account of
such discharged Claims, debts, or liabilities or terminated Interests or rights:
(a) commencing or continuing in any manner any action or other proceeding
against Debtor or its property, (b) enforcing, attaching, collecting or
recovering in any manner any judgment, award or decree against Debtor or its
property, (c) creating, perfecting or enforcing any lien or encumbrance against
Debtor or its property, (d) asserting a right of subrogation or recoupment of
any kind against any debt, liability or obligation due to Debtor or its
property, and (e) commencing or continuing any action that does not comply with
or is inconsistent with the provisions of the Plan.
ARTICLE XI
SUCCESSORS AND ASSIGNS
----------------------
This Plan and the provisions hereof will be binding upon the Debtor and its
successors and assigns.
ARTICLE XII
73
<PAGE>
RETENTION OF JURISDICTION
-------------------------
Notwithstanding Confirmation, the Bankruptcy Court will retain jurisdiction
for all of the following purposes plus such other purposes as may be provided by
the Bankruptcy Code:
1. The determination of the allowability and amount of Claims;
2. The determination of requests for payment of Claims entitled to
priority under Bankruptcy Code (S) 507(a)(1);
3. The resolution of any disputes regarding the interpretation,
enforcement, breach, performance and/or a default under this Plan;
4. The implementation, execution or consummation of the provisions of
this Plan (and any dispute with regard thereto) and entry of orders in aid of
consummation or enforcement of this Plan, including without limitation,
appropriate orders to effect the provisions of this Plan and to protect the
Debtor from Creditors' actions;
5. The modification of this Plan pursuant to Bankruptcy Code (S) 1127;
6. The adjudication of any cause of action or claim for relief brought by
the Debtor;
7. The consideration of requests by Holders of Damage Claims to liquidate
their Claims in an appropriate non-bankruptcy forum in the event that such
Holders of Damage Claims cannot resolve their Claims through the ADR;
8. The implementation of the ADR;
9. The adjudication of disputes in respect of the Indenture;
74
<PAGE>
10. The sale of property by the Debtor free and clear of liens, security
interests or interests of others pursuant to Bankruptcy Code (S) 363;
11. The determination of cure amounts under Bankruptcy Code (S) 365; and
12. The entry of a final decree closing this Case.
ARTICLE XIII
MISCELLANEOUS
-------------
A. SEVERABILITY.
------------
Should the Bankruptcy Court determine, prior to the Confirmation Date, that
any provision of the Plan is illegal as written or as applied to any Claim or
Interest, such provision shall be either unenforceable generally or as applied
to such Claim or Interest, as the case may be. A determination of
unenforceability shall in no respect limit or affect the enforceability and
operative effect of any other provision of the Plan or of that provision as
applied to other Claims or Interests.
B. RELEASE OF AVOIDANCE ACTIONS.
----------------------------
All Avoidance Actions under Bankruptcy Code (S) 547 shall be deemed
released on the Effective Date.
C. AMENDMENT, WITHDRAWAL OR REVOCATION OF THE PLAN.
-----------------------------------------------
Debtor reserves the right to amend, revoke or withdraw the Plan prior to
the Confirmation Date. If Debtor should revoke or withdraw the Plan, then the
Plan shall be null and void, and nothing contained in the Plan shall constitute
a waiver or release of any Claims by or against, or any Interests in Debtor, or
prejudice in any manner the rights of Debtor or any Affiliate.
D. HEADINGS.
--------
75
<PAGE>
The heading of the Articles and sections of the Plan are for convenience
only and shall in no way affect the interpretation of its provisions.
E. SUCCESSORS AND ASSIGNS.
----------------------
The rights, benefits and obligations of any Person referred to in the Plan
shall be binding on, and shall inure to the benefit of, the heirs, executors,
administrators, successors and assigns of such Persons.
F. STATUTORY FEES.
--------------
All fees payable pursuant to 28 U.S.C. (S) 1930 as determined at the
hearing on Confirmation shall be paid by Debtor on or before the Effective Date.
Debtor will pay all post-Effective Date fees (if any) legally required to be
paid under 28 U.S.C. (S) 1930.
G. AMENDMENT TO CHARTER.
--------------------
Debtor shall amend its charter to prohibit the issuance of nonvoting equity
securities.
ARTICLE XIV
CONFIRMATION REQUEST
--------------------
The Debtor hereby requests that the Bankruptcy Court confirm this Plan
pursuant to Bankruptcy Code (S) 1129(a), and, if necessary, pursuant to
Bankruptcy Code (S) 1129(b).
Dated: August 26, 1997 SIZZLER INTERNATIONAL, INC.,
a Delaware corporation
--------------------------------
CHRISTOPHER R. THOMAS
President and Chief
Financial Officer
PRESENTED BY:
PACHULSKI, STANG, ZIEHL & YOUNG, P.C.
76
<PAGE>
- -------------------------------------
BRAD R. GODSHALL,
Attorneys for Debtor and Debtor
in Possession
77
<PAGE>
PROOF OF SERVICE
STATE OF CALIFORNIA )
)
COUNTY OF LOS ANGELES )
I am employed in the county of Los Angeles, State of California. I am over
the age of 18 and not a party to the within action; my business address is:
10100 Santa Monica Boulevard, Suite 1100, Los Angeles, California 90067.
- ------------------------------------------------------------------------
On October 6, 1997, I served the foregoing documents described as SIZZLER
--------------- -------
INTERNATIONAL, INC.'S FIFTH AMENDED PLAN OF REORGANIZATION on interested parties
- ---------------------------------------------------------- ------------------
in this action
XXX by placing true copies thereof enclosed in sealed envelopes addressed
------- as stated on the attached mailing list;
XXX (BY FEDERAL EXPRESS) By sending by Federal Express to the addressee(s)
------- as indicated on the attached list.
Executed on October 6, 1997, at Los Angeles, California.
--------------- -----------
XXX (FEDERAL) I declare that I am employed in the office of a member of
------- the bar of this court at whose direction the service was made.
___________________________________
Gini L. Downing
78
<PAGE>
EXHIBIT 3.1
18 August 1997 18th Floor
260 Queen Street, Brisbane
G.P.O. Box 2237, Brisbane
Qld. 4001 Australia
Telephone No. (07) 3227 2513
Facsimile No. (07) 3221 9620
Mr K. Perkins, CORPORATE AND INSTITUTIONAL
President and Chief Executive Officer, BUSINESS QUEENSLAND
Collins Foods International Pty Ltd,
16 - 20 Edmondstone Street, Our ref: AMH:FGP
NEWMARKET, QLD 4051 Your ref:
Dear Kevin,
We refer to our recent negotiations/discussions and have pleasure in confirming
Westpac's approval to the provision or continuation of facilities to Collins
Foods International Pty Ltd and its wholly owned subsidiaries (the "GROUP") on
the following terms and conditions:
Please note that to the extent of any inconsistency between this letter and the
discussion papers given by Westpac to the Group, the terms of this offer shall
prevail.
"GROUP" may, as the context requires, also be used to refer to any one or more
of the companies within the Group.
Unless otherwise stated all amounts are in Australian dollars.
BORROWING COMPANIES:
- --------------------
Collins Foods International Pty Ltd A.R.B.N. 009 980 250 ("CFI"),
NEW/INCREASED/ALTERED LIMITS:
- -----------------------------
<TABLE>
<CAPTION>
Facility New Limit Change In Limit
-------- --------- ---------------
<S> <C> <C>
ON ACCOUNT OF CFI AND CFM.
--------------------------
1. Bill Facility (Joint facility of CFI and CFM) $62,000,000 +$62,000,000
2. Risk Management Line (This facility is available for use at the option
of the company in respect of the $62,000,000 Bill
Facility only)
ON ACCOUNT OF CFI AND/OR CFM AND/OR SIZZLER
-------------------------------------------
3. Revolving Lease Facility $ 5,000,000 +$ 5,000,000
</TABLE>
If accepted availability of these facilities will be subject to the execution
by the Group of Loan Facility Documentation satisfactory to Westpac.
<PAGE>
PURPOSE:
- -------
1. Initially to assist CFI repatriate funds to Sizzler International Inc for
the purpose of repaying the sum owed to US creditors under the Chapter 11
Bankruptcy plan of restructure approved by the US courts. We understand
that that repatriation shall be achieved by the repayment of intercompany
debt and the declaration of a dividend.
2. To be used exclusively for hedging interest rate exposure on the Bill
Facility.
3. To absorb the existing amortising lease facility and assist with the
acquisition of new ovens and other equipment for its businesses.
TERMINATION DATE:
- -----------------
The termination dates of the following facilities shall be:
<TABLE>
<CAPTION>
Facility New Termination Date
-------- --------------------
<C> <S>
Bill Facility The Bill Facility is to clear in full on or before the last
day of the month in which the day which is five (5) years
from the day that facility is first drawn occurs.
</TABLE>
TOTAL FACILITIES:
- -----------------
Total facilities available to the Group will be as follows provided that the
amount outstanding under each facility does not exceed the corresponding
limit:
<TABLE>
<CAPTION>
Facility Facility Limit
- -------- --------------
<S> <C>
ON ACCOUNT OF CFI AND CFM
- -------------------------
Bill Facility (Joint facility of CFI and CFM) $62,000,000.00
Risk Management Line
ON ACCOUNT OF CFI AND/OR CFM AND/OR SIZZLER
- -------------------------------------------
Revolving Lease Facilities (Each company shall have a separate $ 5,000,000.00
facility. The Facility Limit shall be split between the three
facilities as required from time to time.)
ON ACCOUNT OF CFI
- -----------------
Bank Guarantee Facility $ 235,087.00
ON ACCOUNT OF SIZZLER
- ---------------------
Bank Guarantee Facility $ 76,500.00
TNA $ 400,000.00
ON ACCOUNT OF CFM
- -----------------
Bank Guarantee Facility $ 5,000.00
Cheque Cashing Facility $ 2,500.00
TNA $ 915,000.00
</TABLE>
FACILITY USAGE
- --------------
The companies are not obliged to sign any documentation, fulfil any condition
precedent or use the facilities. However Westpac is not obliged to provide
the facilities until the Securities (defined in the section titled "SECURITY"
below) have been executed and conditions precedent
<PAGE>
(described in the section titled "CONDITIONS PRECEDENT") discharged in
accordance with the terms of this letter.
SPECIAL CONDITIONS:
- -------------------
This offer and the continued availability of facilities are subject to the
following conditions:
EXPIRY
------
This offer is open for acceptance until it expires upon close of business
on 31 August 1997 or such later date as Westpac may agree in writing and
is subject to there not occurring between the date of this offer and the
signing of documentation any event which, in the opinion of Westpac,
might affect the value or acceptability of security offered to or held by
Westpac or the ability of the Group to repay its facilities.
REVIEW
------
The continuation of facilities (and the terms and conditions of each
facility), other than the Bill Facility and Revolving Lease Facility, is
subject to review at such times as Westpac shall consider appropriate.
To determine whether facilities will continue to be extended Westpac must
be supplied with:
-- the Group's (on an individual and consolidated basis), audited
balance sheet and profit and loss statement for the financial year
ending 30 April 1997 (by 31 October 1997).
-- Such other information on the financial condition and operations
of the Group as Westpac may reasonably request from time to time.
If Westpac does not receive this material by the date specified, Westpac
may, after giving 30 days notice of its intention to do so, notify the
Group that the facilities have been cancelled and require immediate
repayment of all monies owing (actually or contingently) to it. The Group
may rectify any failure to provide Westpac with information during the
30 day period.
INCREASED COSTS
---------------
If there is any change in, any making of, or any change in the
interpretation or application of any law or any control, request or
directive of the Reserve Bank of Australia or any other authority
(including, without limitation, with respect to taxation, reserve,
liquidity, capital adequacy, special deposit or similar requirements)
Westpac reserves the right to vary any of the terms of the Group's
facilities.
WITHHOLDING TAX
---------------
All payments made to Westpac are to be made net of any withholding tax
payable thereon. The Group shall provide such evidence of the payment of
this tax as may be reasonably requested by Westpac.
CHANGE OF OWNERSHIP
-------------------
The continuation of facilities will be subject to review if any one or
more of the Group becomes the subsidiary of another company which is not
a guarantor of the facilities, or there is otherwise a change of
ownership or control of the Group, or any company giving security or
comfort for the facilities extended. Upon the occurrence of such an
event, Westpac shall have the right to terminate the Group's facilities
or vary any of the terms of those facilities.
<PAGE>
EXTERNAL ADMINISTRATION
-----------------------
The Group's facilities shall become immediately due and payable if:
-- The Board of Directors of the Group resolves to appoint an
Administrator or an Administrator is appointed to the Group
pursuant to the provisions of the Corporations Law; or
-- Any person becomes a Controller of any of the property of the
Group for the purposes of the Corporations Law; or
-- Any company within the Group resolves that it be wound up (except
where Westpac otherwise consents for the purposes of solvent
reconstruction); or
-- A Liquidator or Provisional Liquidator is appointed to any company
within the Group (except where Westpac otherwise consents for the
purposes of solvent reconstruction); or
-- An event which is analogous to any of the events described in the
preceding paragraphs or which has a substantially similar effect
occurs under any other law applicable to the Group.
SHARE BUY BACK
--------------
The Group will not directly or indirectly acquire, or support the
acquisition or proposed acquisition of either its/their own shares or
shares in any other company which has a direct or indirect shareholding
in it without Westpac's written consent.
Breach of this undertaking will, at the option of Westpac, render all
facilities payable in full forthwith.
FACILITY REPAYABLE ON DEMAND
----------------------------
Except for the Bill Facility and the Revolving Lease facility, these
facilities are available at the discretion of Westpac. Westpac may at
any time (before the facilities mature) require the immediate payment by
the Group of:
-- All monies owing under the facilities.
-- An amount equal to the face amount of all outstanding
accommodation bills discounted accepted or endorsed by Westpac
(notwithstanding that those bills have not yet matured).
-- All monies which Westpac may become liable to pay to any other
person under the facilities, including (without limiting the
generality) monies which may become payable by Westpac under any
guarantees, undertakings, letters of credit and/or forward
exchange contracts which Westpac may have entered into at the
request (express or implied) of the company.
The Bill Facility agreement and the Revolving Floating Rate Master Lease
Agreement (to be agreed between the Group and Westpac) will contain
events of default applying to those facilities.
PROPERTY VALUATIONS
-------------------
The continuation of facilities will be subject to revaluation of the
freehold security property(ies) on a vacant possession basis and on a
going concern basis by 30 April 2000 or before that date if in Westpac's
opinion the value has diminished by not less than 10%. Valuation is to
be for mortgage security purposes and be attended to by a registered
valuer acceptable to Westpac.
<PAGE>
Westpac reserves its rights to vary the terms and conditions of the
facility(ies) if the valuation report discloses matters materially
adverse to Westpac's security over the properties.
All costs associated with the obtaining of valuation reports are for the
account of the company.
JOINT FACILITIES:
- -----------------
Where a facility is made available to more than one company on a joint basis
(eg. the Bill Facility), each company shall be primarily liable for the
amount drawn by it (whether jointly or severally).
Subject to the terms of any guarantee given by it, it shall not be liable for
amounts drawn by another company or interest and fees thereon unless those
amounts are drawn jointly by that company and another company or companies.
All such companies shall be jointly and severally liable for all other
amounts owing under the relevant facility.
UTILISATION:
- ------------
The facilities will be made available (upon completion of securities to
Westpac's satisfaction and where appropriate, formal letters noting limit and
agreements) as follows:
BILL FACILITY
-------------
by individual bills for a fixed period ranging between 30 and 180 days
(inclusive) each for a sum of:
$100,000,
$500,000, or
$1,000,000 (or such other amount as the Group and Westpac may agree)
Where Westpac is to discount the bills itself and is authorised by the
Group to prepare those bills on the Group's behalf, Westpac may prepare
one bill having a face amount equal to the aggregate amount of the bills
referred to in the relevant drawdown notice.
DRAWDOWN NOTICES MUST BE GIVEN
Drawdown notices must be given at least 1 clear day (or such lesser time
as Westpac may agree) before drawdown. That notice shall specify (among
other things) the face value of the bills being discounted, the term for
which they are to be discounted, which company is to issue them and the
drawdown date for those bills. The Group may also request Westpac to
prepare and sign those bills on its behalf.
ONLY ONE COMPANY MAY HAVE BILLS OUTSTANDING AT ANY ONE TIME
Westpac shall not be obliged to accept a drawdown notice from CFM or CFI
if at any time during which the bills referred to in that notice are
outstanding, bills drawn by the other company would be outstanding.
The first bills drawn under the Bill Facility must be drawn pursuant to a
drawdown notice issued by CFI. Subject to the following condition (marked
"Switching") subsequent drawdown notices may be issued by either CFI or
CFM.
<PAGE>
SWITCHING
A "SWITCH" occurs when (subject to the foregoing restrictions) CFI ceases
to draw bills and CFM commences drawing bills under the Bill Facility, or
vice versa.
The Group may not Switch if the last Switch was less than 12 months
earlier.
RISK MANAGEMENT LINE
--------------------
as required by the Group, but only for hedging discount amounts payable
to Westpac under the Bill Facility. The expiry date for each "hedge" is
to correspond to the day on which the relevant bills mature. Having
regard to the repayment schedule, a "hedge" may be taken out in
anticipation of bills being drawn some time in the future.
REVOLVING LEASE FACILITY
------------------------
by individual leases negotiated between the Group and Westpac.
Each lease shall only be granted to one of the companies on whose account
the facility has been extended. The aggregate amount outstanding under
all leases granted to CFI, CFM and Sizzler must not exceed the Revolving
Lease Facility Limit
Each lease shall be subject to the terms of a master lease agreement and
be for a term of not more than 5 years.
BANK GUARANTEE FACILITY
-----------------------
by individual undertakings issued by Westpac, negotiated between the
Group and Westpac. The Group is to give Westpac an indemnity for each
undertaking issued by it.
TNA
---
as required by the Group.
CHEQUE CASHING AUTHORITIES
--------------------------
as required by the Group.
BILL FACILITY LIMIT REDUCTIONS:
- -------------------------------
REDUCTIONS
----------
The Bill Facility Limit shall be reduced by:
(a) (SCHEDULED REDUCTIONS):
(i) $1,500,000 on 31 December 1997;
(ii) $1,500,000 on 30 March 1998;
(iii) $2,000,000 on the last business day of each quarter thereafter,
commencing 30 June 1998;
PROVIDED that Westpac shall give CFI and CFM 60 days to remedy a failure
to pay an amount due on the date of a Scheduled Reduction if the
following conditions exist:
(1) Westpac is satisfied that on the date of a Scheduled Reduction CFI
does not have credit working funds available to it of more than
$4,000,000 after making the deductions set out in sub-paragraphs
(b)(i) a) to d) below; and
(2) The total amount of Scheduled Reductions and Asset Based Reductions
paid by CFI and CFM are not less than an amount being 125% of the
Scheduled Reductions due in accordance with the following formulae:
<PAGE>
a) During the first year of the Bill Facility in relation to the
third and fourth Scheduled Reductions only, where the total
amount paid in reductions by CFI and CFM to Westpac is not less
than 125% of the sum of the previous Scheduled Reductions; and
b) During each subsequent year where the total amount paid in
reductions by CFI and CFM to Westpac over the previous 365 days
(not counting the Scheduled Reduction due on the corresponding
day of the previous calendar year and reductions whose due date
for payment fell more than 365 days ago) is not less than 125%
of the sum of the first three Scheduled Reductions falling due
in that period
AND PROVIDED that:
(1) CFI or CFM shall make payment of such part of the relevant
Scheduled Reduction as is equal to the "excess" referred to in sub-
paragraph (b)(i) below after adding back the reduction referred to
in sub-paragraph (b)(i)a) on the due date of that Scheduled
Reduction; and
(2) the unpaid amount or part of any Scheduled Reduction shall attract
the same rate of interest as any amount due and owing but unpaid to
Westpac under the terms of the Bill Facility agreement.
(b) (ASSET BASED REDUCTIONS):
(i) an amount agreed between CFI and Westpac equal to credit funds
held in excess of $4,000,000 after making the following
deductions:
a) a reduction, referred to in paragraph (a) above, which falls
due on the same day as this reduction;
b) anticipated tax payments during the following quarter;
c) capital expenditure due in the following quarter and consented
to by Westpac; and
d) unpresented cheques forwarded to external trade creditors
(including KFC Australia Pty Ltd) during that quarter
on the last business day of the relevant quarter on the business
day following that quarter and commencing 31 December 1997. (The
procedure for determining this amount is described below.)
(ii) an amount equal to:
a) 50% of the proceeds from the sale (other than a sale for the
purpose of a sale and leaseback) of unprofitable Sizzler stores
received before 30 April 1998; and
b) 75% of the proceeds of any other asset sales
on the day the settlement proceeds are received by the Group.
However if the day upon which settlement proceeds are received by
the Group does not coincide with a bill rollover date the Bill
Facility Limit reduction shall take place on the first bill
rollover date occurring after that provided that the proceeds of
sale have been deposited with Westpac in a specially nominated
account over which Westpac has an immediate right of set-off and
appropriation.
CANCELLATION
------------
The Bill Facility Limit shall be cancelled on the Termination Date.
AGREEING THE REDUCTION AMOUNT REFERRED TO IN (B)(I) ABOVE
---------------------------------------------------------
The amount of the reduction described in paragraph (b)(i) (the REDUCTION
AMOUNT) shall be agreed as follows:
(a) At least two business days before the end of each quarter CFI shall
deliver a certificate (signed by two directors) to Westpac. That
certificate shall certify:
<PAGE>
(i) the projected cash balance on last business day of the quarter;
(ii) the relevant reduction referred to in paragraph (a) of the
section headed "REDUCTIONS" above;
(iii) anticipated tax payments during the following quarter;
(iv) planed capital expenditure due in the following quarter; and
(v) unpresented cheques forwarded to external trade creditors
(including KFC Australia Pty Ltd) during that quarter.
The certificate is to state the proposed Reduction Amount due at the
end of that quarter.
(b) Westpac shall then either confirm the Reduction Amount or propose an
alternative Reduction Amount.
(c) The alternative Reduction Amount shall be negotiated in good faith.
(d) The amounts described above may be rounded to the nearest $100,000.00.
Unpresented cheques (described in (v) above) aggregating less than
$100,000.00 need not be included in the certificate.
REPAYMENT:
- ----------
BILL ACCEPTANCE AND DISCOUNT LINES
----------------------------------
cover to be provided on maturity date of each bill. Bills may be
"rolled over" at maturity, but in any event, the maturity date of any
bill is not to be later than the Termination Date.
SECURITY:
- ---------
That already held by Westpac. Furthermore it is a condition precedent to the
granting of the facilities that the security described in Schedule A (the
"SECURITY") be provided.
The Security is to be in form and substance acceptable to Westpac.
This letter confers no rights on Westpac to enforce the giving of the
security, but there is no obligation to make all or any part of the
facilities available until it is signed and delivered in a form satisfactory
to Westpac.
CONDITIONS PRECEDENT:
- ---------------------
The following are conditions precedent to the availability of the facilities:
-- the execution and delivery to Westpac of the Security in form and
substance acceptable to Westpac;
-- the giving to Westpac of CFI's consent to Westpac discussing with
Pepsico Restaurants Inc (or as the case may be its subsidiaries,
"PRI") Westpac's involvement with CFI with the view of working
amicably with PRI in the event of a default situation;
-- the delivery to Westpac of:
<PAGE>
. the valuations referred to in the paragraph marked "PROPERTY
--------
VALUATIONS" above;
----------
. details of the breakup between the dividends and intercompany
loan repayment referred to in item 1 of the paragraph marked
"PURPOSE" above;
-------
. consolidated balance sheet and profit and loss statements as at
21 July 1997 for each of the following:
== the Group (CFI and subsidiaries); and
== Sizzler International Marks Inc. and its subsidiaries ("SIM
GROUP"), and
. a combined consolidated balance sheet and profit and loss
statements of the Group and SIM Group [financial ratio
covenants shall be tested against this consolidation]; and
. a complete list of all intercompany liabilities as at 21 July
1997 and a list of projected intercompany liabilities following
drawdown of the Bill Facility;
-- the execution and delivery to Westpac of such ancillary
documentation (including bill rollover notices), formal letters
and agreements as Westpac may require;
-- Approval by the United States Bankruptcy Court Central Division of
California to an amendment to the Plan of Reorganisation inserting
a provision enabling payment of a lump sum amount by Sizzler
International Inc in full discharge of the obligations of the
Group and the SIM Group under the Plan. (This condition cannot be
waived by Westpac);
-- confirmation from US counsel (acceptable to Westpac) that:
. the amended plan of reorganisation (sanctioning a transaction
of this nature) has been approved by the United States
Bankruptcy Court Central Division of California;
. the facilities and the Security will be unaffected by the
remaining Chapter 11 arrangements;
. intercompany loans will be effectively subordinated to these
facilities;
. none of the companies within the Group and within the SIM Group
will have guarantee obligations to the creditors in relation to
the obligations of Sizzler International Inc or its other
subsidiaries; and
. the securities are enforceable on their terms;
-- the satisfaction by the Group of any conditions stated in any
agreement relating to the provision of finance to be conditions
precedent to the drawdown of funds under the facilities;
-- the payment to Westpac by the Group of the Establishment Fee;
-- (in the case where there will be no certificate of title available
for properties mortgages in favour of Westpac) the lodgement of
the abovementioned bill of mortgage at the Lands Registry Office
and receipt by Westpac of a search (conducted by it) confirming
registration of the said mortgage;
-- the delivery to Westpac of an up-to-date copy of the Group's
insurance policy(ies) insuring all assets forming part of
Westpac's security for full replacement value against fire and
other risks duly signed by the insurance company(ies) and having
the interest of Westpac noted thereon as mortgagee; and
-- the execution of a certificate by Westpac's legal advisers
(including advisers in the United States) in relation to
legalities and the capacity of the Group and the sureties to
<PAGE>
grant the security and enter into the facilities under the
relevant laws (including Chapter 11 of the US Bankruptcy law).
INTEREST RATES:
- ---------------
UNARRANGED EXCESSES
-------------------
Any amount owing in excess of arrangements will attract an interest
charge equal to the rate then charged by Westpac on current accounts
overdrawn without arrangements (presently the Unarranged Loan Rate of
19.499%). This rate is subject to fluctuation from time to time and is
frequently advertised in major news publications.
Interest on overdrawn accounts and loan accounts is calculated on daily
balances and is payable on the full amount from time to time owing by you
in such accounts. Interest may be debited by Westpac to those accounts
on such days and at the end of such periods as Westpac may from time to
time determine and on the basis that interest so debited shall itself
carry interest from date of debiting.
ACCEPTANCE FEE:
- ---------------
The Acceptance Fee will be based on a sliding scale, based on the ratio of
Total Senior Debt/EBIT, as follows:
a) not less than 3.5, 1.50%;
b) less than 3.5 but not less than 3.0, 1.25%;
c) less than 3.0 but not less than 2.5, 1.00%;
d) less than 2.5 but not less than 2.0, 0.75%; and
e) less than 2.0, 0.50%.
It shall be calculated on face value of bills and payable in advance.
"TOTAL SENIOR DEBT" means finance debt (including bill facilities and finance
lease and hire purchase obligations) other than intercompany debt
subordinated to Westpac's debt.
DISCOUNT RATE:
- --------------
Discount shall be the bid rate quoted on Reuters' page BBSY corresponding to
the tenor of each bill and, expressed as a yield to maturity, per annum.
ESTABLISHMENT FEE:
- ------------------
BILL FACILITY
-------------
An establishment fee of $612,000.00 is payable as follows:
-- $306,000.00 upon acceptance; and
-- $306,000.00 on completion of the documentation.
Amounts already paid towards the establishment fee shall be deducted from
that portion of the fee payable on acceptance.
A further establishment fee may be payable in the future should these
facilities be increased, extended or substantially varied (the amount of
the fee would normally be related to the amount of the revised facility).
If the Bill Facility is not drawn down the first $153,000.00 of the
establishment fee shall be payable (or as the case may be, non-
refundable).
<PAGE>
BANK GUARANTEE FACILITY
-----------------------
An establishment fee of $50.00 is payable in relation to each bank
guarantee issued by Westpac on behalf of the Group. This fee is payable
when the relevant bank guarantee is issued.
OTHER FEES:
- -----------
BILL FACILITY
-------------
-- a line fee of 0.75% pa calculated quarterly in advance on the Bill
--------
Facility Limit will be payable on the first business day of April,
July, October and January.
-- a bill rollover fee of $100.00 shall be payable on each occasion bills
-----------------
are drawndown or rolled over.
BANK GUARANTEE FACILITY
-----------------------
-- a bank guarantee fee of 0.50% of the amount of each outstanding bank
------------------
guarantee shall be payable each half year in advance
ALL OTHER FACILITIES
--------------------
Fees payable in relation to all other facilities shall be subject to
separate agreements between the Group and Westpac.
OTHER CHARGES:
- --------------
All stamp duty (including penalty), statutory fees, registration fees, etc if
applicable attaching to the facilities, their utilisation and the associated
documentation (including this letter) are for the Group's account
(Accordingly the Group should satisfy itself by reference to its own legal
advisers as to the incidence of such duty and fees).
Solicitors' or legal fees or other expenses incurred by Westpac in connection
with the preparation, execution, stamping and registration of documentation
will be a charge for the Group's account. Westpac shall use its best
endeavours to minimise external legal costs, however the extent to which it
instructs and uses external lawyers remains wholly within Westpac's
discretion.
Document handling fees will be charged on each occasion it becomes necessary
to upstamp security documents throughout the life of the facilities.
PREPAYMENT:
- -----------
FOR OTHER THAN FIXED RATE FACILITIES
------------------------------------
Allowable upon reasonable notice in writing to Westpac, but in respect of
bill lines, only on maturity dates of the underlying bills.
FOR FIXED RATE FACILITIES
-------------------------
Prepayment is at the discretion of Westpac and the Group will be liable
for any costs incurred by Westpac in unwinding the facility - such costs
may be substantial.
<PAGE>
FIXED RATE FACILITIES:
- ----------------------
Any agreement by Westpac to provide the Group with a fixed rate bill line or
term loan for a specified period is not to be taken as a limitation of
Westpac's rights to seek payment or repayment of monies owing to it at any
time in accordance with the terms set out herein.
Should Westpac for any reason require early payment or repayment of monies
owing to it under fixed rate facilities the company shall be liable for and
shall indemnify Westpac against the cost of unwinding the underlying fixed
rate arrangements.
ACCEPTANCE:
- -----------
Should the foregoing terms and conditions (which have been expressed in broad
terms) be acceptable to the Group, would you please arrange for CFI, CFM and
Sizzler to signify acceptance by having the duplicate of this letter signed
on behalf of those companies by company officers acting under the authority
of an appropriate resolution of the Board of Directors.
<PAGE>
SCHEDULE A
----------
THE SECURITY
UNLIMITED FULLY INTERLOCKING GUARANTEE AND INDEMNITY by:
- ----------------------------------------------------
. Buffalo Ranch Australia Pty Ltd
. Collins Finance and Management Pty Ltd,
. Collins Foods Australia Pty Ltd,
. Collins Foods International Pty Ltd,
. Collins International Inc,
. Collins Property Development Pty Ltd,
. Furnace Concepts Australia Corp.,
. Gulliver's Australia Pty Ltd,
. Restaurant Concepts Australia Pty Ltd,
. Restaurant Concepts International Inc,
. Sizzler Australia Pty Ltd,
. Sizzler International Marks Inc.,
. Sizzler New Zealand Limited,
. Sizzler South Pacific Pty Ltd,
. Sizzler South-East Asia Inc, and
. The Italian Oven Australia Pty Ltd
whereby each guarantor guarantees the obligations of every other guarantor
(whether or not those liabilities are joint with one or more of them) to
Westpac.
This security will be supported by each of the following securities.
NEGATIVE PLEDGE WITH FINANCIAL RATIO COVENANTS by:
- --------------------------------------------------
. Buffalo Ranch Australia Pty Ltd
. Collins Finance and Management Pty Ltd,
. Collins Foods Australia Pty Ltd,
. Collins Foods International Pty Ltd,
. Collins International Inc,
. Collins Property Development Pty Ltd,
. Furnace Concepts Australia Corp.,
. Gulliver's Australia Pty Ltd,
. Restaurant Concepts Australia Pty Ltd,
. Restaurant Concepts International Inc,
. Sizzler Australia Pty Ltd,
. Sizzler International Marks Inc.,
. Sizzler New Zealand Limited,
. Sizzler South Pacific Pty Ltd,
. Sizzler South-East Asia Inc, and
. The Italian Oven Australia Pty Ltd
that these companies and their controlled subsidiaries will or, (as the case may
be) will not do those things described in the panel marked "NEGATIVE PLEDGE
COVENANTS" below.
SUBORDINATION AGREEMENTS
- ------------------------
Principal, interest and dividends of any internal or shareholder loan (or
financial instrument equivalent) to be fully subordinated to the Senior Debt.
Subordination to be documented in an agreement between Westpac, CFI, Sizzler
International Inc and other companies affected by the subordination agreement.
That agreement is to include:
<PAGE>
(1) CLAWBACK ARRANGEMENTS - An agreement by the subordinated party to pay to
Westpac moneys received in contravention of the subordination agreement.
(2) ACCELERATION - In the event that Westpac waives an event of default,
initiated either through default on the Senior Debt Facilities or cross
default on any subordinated shareholder/internal loan or any other default,
then any subordinated shareholder or internal loan provider forfeits its
right to accelerate repayment of that loan.
EACH OF THE BELOW LISTED SECURITIES SHALL SECURE OBLIGATIONS OWED BY THE
FOLLOWING PARTIES TO WESTPAC:
. the respective Mortgagor/Chargor
. Collins Foods International Pty Ltd
. Sizzler (Australia) Pty Ltd; and
. Collins Finance and Management Pty Ltd
FIRST REGISTERED CHARGE by Collins Foods International Pty Ltd over:
- -----------------------
. All its assets, undertaking and uncalled capital OTHER THAN THE KFC FRANCHISE
AGREEMENTS
. This charge is to be registered both in Nevada, USA and Australia.
UNDERTAKING by Collins Foods International Pty Ltd to grant Westpac a charge in
- -----------
registrable form over its interest in the KFC Franchise Agreements should:
(1) KFC agree to consent to it without onerous conditions (in CFI's reasonable
opinion) being imposed on CFI;
or
(2) CFI attempt to create or permit the creation of a charge over all or any
part of its interest in the franchise agreements in favour of another party.
UNDERTAKING by Collins Foods International Pty Ltd and Sizzler Australia Pty Ltd
to use their best endeavours to:
(1) obtain the consent of each lessor to the mortgage granted to Westpac; and
(2) procure that each lessor signs and returns to Westpac a consent and right of
entry in form and substance acceptable to Westpac
within 3 months of the day the Bill Facility is first drawn down.
FIRST REGISTERED CHARGE by Collins International Inc over:
- -----------------------
. All its assets, undertaking and uncalled
FIRST REGISTERED CHARGE by Restaurant Concepts International Inc. over:
- -----------------------
. All its assets, undertaking and uncalled capital
FIRST REGISTERED CHARGE by Collins Foods Australia Pty Ltd over:
- -----------------------
. All its assets, undertaking and uncalled capital
FIRST REGISTERED CHARGE by Collins Finance and Management Pty Ltd over:
- -----------------------
. All its assets, undertaking and uncalled capital
FIRST REGISTERED CHARGE by Sizzler Australia Pty Ltd over:
- -----------------------
. All its assets, undertaking and uncalled capital
FIRST REGISTERED CHARGE by Sizzler South Pacific Pty Ltd over:
- -----------------------
. All its assets, undertaking and uncalled capital
<PAGE>
FIRST REGISTERED CHARGE by Collins Property Development Pty Ltd over:
- -----------------------
. All its assets, undertaking and uncalled capital
FIRST REGISTERED CHARGE by Gulliver's Australia Pty Ltd over:
- -----------------------
. All its assets, undertaking and uncalled capital
FIRST REGISTERED CHARGE by Buffalo Ranch Australia Pty Ltd over:
- -----------------------
. All its assets, undertaking and uncalled capital
FIRST REGISTERED CHARGE by The Italian Oven Pty Ltd over:
- -----------------------
. All its assets, undertaking and uncalled capital
FIRST REGISTERED CHARGE by Sizzler International Marks Inc over:
- -----------------------
. All its assets and undertaking
FIRST REGISTERED CHARGE by Sizzler South-East Asia Inc over:
- -----------------------
. All its assets and undertaking
FIRST REGISTERED CHARGE by Furnace Concepts Australia Corp over:
- -----------------------
. All its assets and undertaking
FIRST REGISTERED CHARGE by Restaurant Concepts Australia Pty Ltd over:
- -----------------------
. All its assets and undertaking
FIRST REGISTERED CHARGE by Sizzler New Zealand Limited over:
- -----------------------
. All its assets and undertaking
REGISTERED FIRST MORTGAGE by Collins Foods International over:
- -------------------------
. Each freehold property owned by the company
REGISTERED FIRST MORTGAGE by Collins Foods International over:
- -------------------------
. Each leasehold property held by the company (subject to the Undertaking above)
REGISTERED FIRST MORTGAGE by Sizzler Australia Pty Ltd over:
- -------------------------
. Each leasehold property held by the company (subject to the Undertaking above)
REGISTERED FIRST MORTGAGE by Sizzler Australia Pty Ltd over:
- -------------------------
. Each freehold property owned by the company
REGISTERED FIRST MORTGAGE by Gulliver's Australia Pty Ltd over:
- -------------------------
. Each freehold property owned by the company
<PAGE>
NEGATIVE PLEDGE COVENANTS
Negative Pledge and Financial Ratio Covenants shall be given by each company
within the Group and Sizzler International Marks Inc and Sizzler South-East Asia
inc.
FINANCIAL RATIO COVENANTS SHALL BE TESTED AGAINST THE COMBINED CONSOLIDATED
BALANCE SHEET AND PROFIT AND LOSS STATEMENTS OF THE GROUP, AND SIZZLER
INTERNATIONAL MARKS INC. AND ITS SUBSIDIARIES.
NEGATIVE PLEDGES
Each company pledges that it will not, without Westpac's prior written consent:
(1) pledge, charge or otherwise encumber their assets,
(2) dispose of assets except in the ordinary course of day to day trading
(3) without limiting 2. above, transfer their assets to any company which has
not granted Westpac a charge over all its assets, undertaking and uncalled
capital to secure the same moneys as secured by the Fully Interlocking
Guarantee and Indemnity described above.
FINANCIAL RATIO COVENANTS
Each company Undertakes that the Group and the SIM Group will maintain the
following financial ratios on a combined Group and SIM Group basis (unless
Westpac otherwise agrees to vary them, whether temporarily or otherwise):
1. EARNINGS GEARING - the sum of outstandings under financial indebtedness
(including finance lease obligations) (TOTAL SENIOR DEBT) to be not more
than:
(a) 4.5 times EBIT, until 30 April 1998, inclusive;
(b) 3.0 times EBIT, from 1 May 1998 to 30 April 1999, inclusive; and
(c) 2.5 times EBIT, thereafter.
2. EBIT/SENIOR INTEREST - EBIT to be not less than:
(a) 2.0 times (until 30 April 1998, inclusive); and
(b) 3.0 times (thereafter)
the sum of interest charged on the Term Facility and Overdraft, and the
interest component of finance lease charges (SENIOR INTEREST).
3. TOTAL LIABILITIES/TOTAL TANGIBLE ASSETS - Total Liabilities is not to exceed
[to be acceptable to and advised by Westpac]% of Total Tangible Assets.
4. CAPITAL OUTFLOW CAP - payments other than the proceeds of the first drawdown
of the Bill Facility (including dividend, intercompany loans or other
payments of a capital or income nature) to Sizzler International Inc or its
associated companies (other than Group companies) are to be capped at [a sum
to be advised by Westpac].
5. CAPITAL EXPENDITURE - In each of the following financial years Group capital
expenditure (including the Cost of leased assets and assets subject to hire
purchase agreements) is not to exceed the corresponding amounts without
Westpac's prior written consent. Year ending 30 April:
(a) 1998, $11,200,000.00;
(b) 1999, $10,300,000.00;
(c) 2000, $ 7,800,000.00;
(d) 2001, $11,300,000.00; and
(e) 2002, $11,900,000.00.
These capital expenditure limits are to be reviewed annually (commencing in
1998) following delivery to Westpac of the budgets referred to in the section
marked "REPORTING" below. Amendments, to these limits, agreed between CFI and
Westpac must be in writing and signed by CFI and Westpac.
<PAGE>
6. TOTAL GROUP DEBT CAP - Total Group debt (definition to be agreed, but
excluding trade creditors, subordinated debt owing to Sizzler International
Inc or its subsidiaries, Transaction Negotiation Authorities and cheque
cashing authorities) to be not more than:
(a) AUD65 million (until 30 April 1998, inclusive);
(b) AUD55 million (until 30 April 1999, inclusive);
(c) AUD45 million (thereafter).
7. LIMITATION ON INDEBTEDNESS - No additional borrowings, including finance
leases (in excess of $10 million in total), to be incurred without the prior
written consent of Westpac.
8. LIMITATION ON OPERATING LEASES - No operating lease to be entered into beyond
an initially agreed figure without the prior written consent of the Bank.
9. MINIMUM TANGIBLE NET WORTH - Tangible Net Worth of the Group at all times to
exceed the greater of
(a) AUD80 million; and
(b) 85% of the previous year's Tangible Net Worth.
NOTE: THE COVENANT LEVELS WILL BE SUBJECT TO POSSIBLE REVISION FOLLOWING FINAL
- --------------------------------------------------------------------------------
DUE DILIGENCE AND FURTHER DISCUSSION
- ------------------------------------
The following General Undertakings will apply and include, without limitation:
REPORTING - The Group and Sizzler International Marks Inc. and its subsidiaries
are to provide to Westpac, without limitation:
1. Audited consolidated annual accounts (not later than 120 days from balance
date) of:
(a) the Group;
(b) Sizzler International Marks Inc. and its subsidiaries (the "SIM GROUP");
and
(c) the combined Group and SIM Group;
2. Consolidated annual three year projections and budgets (not later than 120
days from balance date) for:
(a) the Group;
(b) the SIM Group; and
(c) the combined Group and SIM Group;
3. Consolidated semi-annual accounts (within forty five days after the end of
the first half) of:
(a) the Group;
(b) the SIM Group; and
(c) the combined Group and SIM Group;
4. Consolidated quarterly management accounts of:
(a) the Group;
(b) the SIM Group; and
(c) the combined Group and SIM Group,
including, without limitation (Not later than thirty days from the end of
the relevant quarter and signed by two directors):
== a statement of interest rate and foreign exchange exposures at the time
of the report and details of hedging or other risk reduction strategies
applied by management to the exposures;
== financial covenant reporting completed on a rolling annual basis (this
certificate to be signed annually by the Company's auditors - at the time
of production of the annual accounts);
== balance sheet;
<PAGE>
== profit and loss account;
== cash flow statement; and
== performance against budget and revised forecast for the month, quarter,
year to date and corresponding period last year,
5. At Westpac's request quarterly meetings to review quarterly management
accounts (within 14 days after receipt of the quarterly management accounts);
6. Any other information in relation to the Group's and SIM Group's financial
condition or business which Westpac may reasonably request; and
7. Any correspondence with a Government Agency which is likely to have a
material adverse affect on the Group's or SIM Group's business or assets.
ACCOUNTING PRINCIPLES - the Group and SIM Group will ensure that each annual
balance sheet, profit and loss account and cash flow statement provided to
Westpac:
1. In respect of annual accounts complies with:
(a) accounting principles and practices generally accepted in Australia or
the United States of America as appropriate consistently applied except
to the extent disclosed in them; and
(b) all applicable laws,
2. Gives a true and fair view in respect of all accounts of the respective
group's consolidated and unconsolidated state of affairs and the result of
the respective group's consolidated operations, at the date, and for the
period ending on the date, to which those statements are prepared.
<PAGE>
The terms and conditions outlined above apply only insofar as they are not
inconsistent with existing terms and conditions applying to facilities which are
subject to specific written agreements which remain unchanged.
Yours sincerely,
...............................
SENIOR RELATIONSHIP MANAGER
- ---------------------------
CORPORATE BANKING QUEENSLAND
- ----------------------------
PLEASE READ THIS IMPORTANT NOTICE
---------------------------------
THE COMMISSIONER OF STAMP DUTIES RECENTLY RULED THAT CERTAIN LETTERS CONTAINING
OFFERS OF FINANCE (ESPECIALLY WHEN AD VALORUM MORTGAGE DUTY IS NOT PAID ON THE
SECURITY HELD WITH RESPECT TO THE FACILITY) CONSTITUTE DEBENTURES WITHIN THE
MEANING OF THE STAMP ACT AND CONSEQUENTLY ATTRACT STAMP DUTY AT THE RATE OF
$0.40 PER $100.00 OR PART THEREOF.
THE COMMISSIONER'S RULING WAS APPEALED IN THE SUPREME COURT AND OVERTURNED.
NEVERTHELESS A NUMBER OF STAMP DUTY ISSUES REMAIN CONTENTIOUS AND YOU SHOULD
OBTAIN YOUR OWN LEGAL ADVICE IN RESPECT OF THE STAMP DUTY PAYABLE ON THIS
DOCUMENT.
The foregoing terms and conditions are acknowledged this..................day
of........19......
For and on behalf of COLLINS FOODS INTERNATIONAL PTY LTD
.....................................
..................................... ..../..../....
Director
..................................... ..../..../....
Director/Secretary
<PAGE>
For and on behalf of SIZZLER AUSTRALIA PTY LTD
..............................................
.............................................. ..../..../....
Director
.............................................. ..../..../....
Director/Secretary
For and on behalf of COLLINS FINANCE AND MANAGEMENT PTY LTD
..............................................
.............................................. ..../..../....
Director
.............................................. ..../..../....
Director/Secretary
<PAGE>
Exhibit 3.2
18th Floor
260 Queen Street, Brisbane
6 October, 1997 G.P.O. Box 2237, Brisbane
Qld. 4001 Australia
Telephone No. (07) 3227 2513
Facsimile No. (07) 3221 9620
CORPORATE AND INSTITUTIONAL
BUSINESS QUEENSLAND
The Secretaries,
Collins Foods International Pty Ltd and
Collins Finance and Management Pty Ltd, Our ref:
16 - 20 Edmonstone Street,
Newmarket, Qld 4051 Your ref:
Dear Sirs,
A$63,500,000.00 BILL ACCEPTANCE AND DISCOUNT FACILITY
Westpac Banking Corporation (WESTPAC) is pleased to offer Collins Foods
International Pty Ltd A.R.B.N. 009 980 250 (incorporated in Nevada) (CFI) and
Collins Finance and Management Pty Ltd A.C.N. 009 996 721 (CFM) (together the
BORROWERS and each a BORROWER) a facility on the following terms.
Please confirm the Borrowers' acceptance of this offer by signing the
accompanying copy of this letter and returning it before the expiry date of 30
September 1997.
Some terms used in this letter are defined in the text or in Clause 2.
- --------------------------------------------------------------------------------
1. FACILITY DETAILS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C>
1.1 MAXIMUM FACE The lesser of:
AMOUNT OF BILLS (a) $63,500,000.00 (Sixty three million five hundred
OUTSTANDING AT ANY thousand Australian dollars); and
TIME:
(b) Bills having an aggregate face amount such that,
when discounted, the proceeds of discounting
after deducting fees equal USD45,000,000.00
as reduced from time to time (the COMMITMENT).
Each time the Commitment is reduced (or when the
Commitment is cancelled) the relevant Borrower which
last utilised the Facility shall retire sufficient
Bills to ensure that the maximum face amount of
outstanding Bills does not at any time exceed the
Commitment.
- --------------------------------------------------------------------------------
</TABLE>
(c) This letter is subject to copyright.
Reproduction without permission stictly prohibited.
Page 1
<PAGE>
Page 2
- --------------------------------------------------------------------------------
The Commitment will be automatically cancelled on the
last day of the Term.
If the face amount of the Bills maturing on any day
exceeds the face amount of Bills accepted and
discounted on that day, the Commitment will reduce by
the amount of that excess.
The Borrower which last utilised the Facility shall
pay to Westpac, and the Commitment will automatically
reduce by:
(a) (SCHEDULED REDUCTIONS):
(i) $1,500,000 on 31 December 1997;
(ii) $1,500,000 on 30 March 1998;
(iii) $2,000,000 on the last Business Day of
each quarter thereafter, commencing 30
June 1998;
PROVIDED THAT if the following conditions exist
on the due date of a Scheduled Reduction:
(1) Westpac is satisfied that the Combined
Group does not have credit working funds
available to it of more than $4,000,000
after making the deductions set out in
paragraph (b)(i) below;
(2) in the case of the third or fourth
Scheduled Reduction, the total amount of
Scheduled Reductions and Asset Based
Reductions falling due and paid to date is
not less than 125% of the sum of the
previous Scheduled Reductions;
(3) in the case of the fifth and subsequent
Scheduled Reductions, the total amount of
Scheduled Reductions and Asset Based
Reductions falling due and paid in the
preceding year is not less than 125% of the
first three Scheduled Reductions falling
due in that period,
the relevant Borrower shall:
(4) within 60 days of the due date of the
Scheduled Reduction, pay to Westpac the
lesser of the Scheduled Reduction and the
amount obtained by deducting from
$4,000,000 the credit funds held by the
Combined Group on the due date of the
Scheduled Reduction after making the
deductions set out in paragraph (b)(i)
below;
(5) on the due date of the Scheduled Reduction,
pay to Westpac the difference (if any)
between the Scheduled Reduction and the
amount payable under sub-paragraph (4); and
(6) pay interest in accordance with clause 123,
on the amount payable under sub-paragraph
(4) from the due date of the Scheduled
Reduction until that amount is paid in
full,
- --------------------------------------------------------------------------------
(c) Allen Allen & Hemsley
Reproduction without permission strictly prohibited.
<PAGE>
Page 3
- --------------------------------------------------------------------------------
and upon each of the dates specified in sub-
paragraphs (4) and (5), the Commitment will
automatically reduce by the amount of the payment due
on that date.
(b) (ASSET BASED REDUCTIONS):
(i) an amount to be agreed between CFI and
Westpac (the REDUCTION AMOUNT) (in
accordance with the procedure set out in
paragraph 1.1A below) equal to credit funds
held by the Combined Group in excess of
$4,000,000 on the last Business Day of each
quarter (commencing on 31 December 1997)
after making the following deductions:
(A) the Scheduled Reduction which falls
due on that day;
(B) anticipated tax payments during the
following quarter;
(C) capital expenditure due in the
following quarter and consented to by
Westpac (for the purposes of this
clause Westpac shall be deemed to have
consented to the Capital Expenditure
in clause 12.4(b) of the Cross
Guarantee and Negative Pledge); and
(D) unpresented cheques forwarded to
external trade creditors (including
KFC Australia Pty Ltd) during that
quarter
The relevant payment shall be made, and the
Commitment will reduce, in accordance with
paragraph 1.1A.
(ii) an amount equal to:
(A) 50% of the proceeds from the sale
(other than a sale for the purpose of
a sale and leaseback) of unprofitable
Sizzler stores received before 30
April 1998; and
(B) 75% of the proceeds of any other asset
sales by a Guarantor
on the day the settlement proceeds are received
by or on behalf of a Guarantor. However, if the
day upon which settlement proceeds are received
("SETTLEMENT DAY") does not coincide with a day
upon which outstanding Bills mature ("BILL
ROLLOVER DATE") the reduction in the Commitment
shall take place on the first Bill Rollover Date
occurring after that Settlement Day and the
proceeds of sale will be deposited with Westpac
in a specially nominated interest bearing
account (over which Westpac has an immediate
right of set-off and appropriation) until that
Bill Rollover Date, at which time they will be
applied towards meeting the Bills maturing on
that date.
- --------------------------------------------------------------------------------
(c) Allen Allen & Hemsley
Reproduction without permission strictly prohibited.
<PAGE>
Page 4
- --------------------------------------------------------------------------------
1.1A AGREEING THE (a) At least two Business Days before the end of
REDUCTION AMOUNT each quarter CFI shall deliver a certificate
(signed by two directors) to Westpac. That
certificate shall certify:
(i) the projected cash balance on the last
Business Day of the quarter;
(ii) the Scheduled Reductions due on the last
Business Day of the quarter;
(iii) anticipated tax payments during the
following quarter;
(iv) planned capital expenditure due in the
following quarter; and
(v) unpresented cheques forwarded to external
trade creditors (including KFC Australia
Pty Ltd) during that quarter. Unpresented
cheques aggregating less than $100,000.00
need not be included in the certificate.
(b) The certificate is to state the proposed
Reduction Amount.
(c) Westpac shall then either confirm the proposed
Reduction Amount or propose an alternative
Reduction Amount before the close of business on
the last Business Day of the end of the relevant
quarter. Otherwise, the Reduction Amount shall
be the amount proposed by CFI.
(d) If Westpac proposes an alternative Reduction
Amount, the alternative Reduction Amount shall
be negotiated in good faith.
(e) If CFI and Westpac agree the Reduction Amount
before the close of business on the last
Business Day of the quarter, the relevant
payment shall be made, and the Commitment will
reduce, on the first Business Day of the
following quarter.
(f) If CFI and Westpac cannot agree the Reduction
Amount before the close of business on the last
Business Day of the relevant quarter, then on
the first Business Day of the following quarter:
(i) the relevant Borrower shall pay to
Westpac, and the Commitment will be
reduced by, the higher of the Reduction
Amounts proposed by CFI and Westpac (the
HPA);
(ii) Westpac will provide to the Borrower an
overdraft (the TEMPORARY OVERDRAFT) having
a limit equal to the difference between
the HPA and the Reduction Amount proposed
by CFI to assist it to make that payment.
(g) If, within the first 10 days of the following
quarter (the RELEVANT PERIOD), CFI and Westpac
agree on a Reduction Amount less than the HPA,
the Commitment will (from the
- --------------------------------------------------------------------------------
(c) Allen Allen & Hemsley
Reproduction without permission strictly prohibited.
<PAGE>
Page 5
- --------------------------------------------------------------------------------
date agreement is reached) increase by the
difference between the agreed amount and the HPA
and the Borrower may require Westpac to accept
and discount Bills having a corresponding face
amount for the purpose of assisting it to repay
the Temporary Overdraft.
The amounts described above may be rounded to the
nearest $100,000.00.
- --------------------------------------------------------------------------------
1.1B TEMPORARY (a) The Borrower shall repay the Temporary Overdraft
OVERDRAFT (and all interest accrued on it) on the earlier
of the date the Reduction Amount is agreed and
the last day of the Relevant Period.
(b) Interest shall be charged on a daily basis on
the Temporary Overdraft at the rate which is the
aggregate of the Reuters BBSY 1 month bid rate
(on the day the overdraft is created) and the
Acceptance Fee.
- --------------------------------------------------------------------------------
1.2 DISCOUNT RATE: For each Bill, the Reuters BBSY bid rate for a period
equal to the term of the Bill, on the date on which
the Bill is to be discounted, or if there is no BBSY
rate for that term, the rate selected by Westpac as
equivalent (DISCOUNT RATE).
- --------------------------------------------------------------------------------
1.3 FEES:
- - ESTABLISHMENT FEE: $612,000.00 is payable as follows:
(a) $306,000.00 upon acceptance of the Offer Letter;
and
(b) $306,000.00 on execution of the documentation by
the Borrowers.
Amounts already paid towards the establishment fee
shall be deducted from that portion of the fee
payable on acceptance of the Offer Letter.
If the Facility is not drawn down the first
$153,000.00 of the establishment fee shall be non-
refundable.
- - LINE FEE: 0.75% per annum of the daily amount of the Commitment
from the date of acceptance of this letter payable
quarterly in advance on the first Business Day of
each calendar quarter and on the date of acceptance
of this letter (or at any other intervals designated
by Westpac from time to time). If the Commitment is
cancelled or reduced in the quarter the relevant
amount of fee is refundable.
- - ACCEPTANCE FEE: Where the ratio of Total Group Debt to EBIT (as last
determined under the Cross Guarantee and Negative
Pledge) is:
(a) not less than 3.5, 1.50% per annum;
(b) less than 3.5 but not less than 3.0, 1.25% per
annum;
(c) less than 3.0 but not less than 2.5, 1.00% per
annum;
(d) less than 2.5 but not less than 2.0, 0.75% per
annum; and
(e) less than 2.0, 0.50% per annum
(the ACCEPTANCE FEE) calculated on the face amount of
each Bill accepted from and including the date of
acceptance until the Bill's maturity date.
- --------------------------------------------------------------------------------
(c) Allen Allen & Hemsley
Reproduction without permission strictly prohibited.
<PAGE>
Page 6
- --------------------------------------------------------------------------------
- - PREPARATION FEE: $100.00 per Drawdown Notice given in terms of Clause
4 other than the first Drawdown Notice given by CFI.
- --------------------------------------------------------------------------------
1.4 TERM: 5 years from the last day of the month in which Bills
are first accepted and discounted pursuant to this
letter or as otherwise agreed (the TERM).
IF THE TERM DOES NOT COMMENCE WITHIN A REASONABLE
TIME
If in Westpac's opinion the day on which Bills are
first accepted and discounted pursuant to this letter
does not occur reasonably promptly after the earlier
to occur of:
(a) the day upon which the Conditions Precedent
described in Clause 5.2 are completed; or
(b) the day on which Westpac advises the Borrower
that it may draw Bills pursuant to this letter,
the relevant day shall be substituted for the day on
which Bills are first accepted and discounted
pursuant to this letter when calculating the Term.
- --------------------------------------------------------------------------------
1.5 PURPOSE: To assist CFI repatriate funds to Sizzler
International Inc (by repayment of intercompany debt
or repayment of intercompany debt and declaration of
a dividend) for the purpose of repaying the sum owed
to US creditors of Sizzler International Inc. under
the Chapter 11 Bankruptcy plan of restructure
approved by the US courts.
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1.6 SECURITY: The security described in the paragraph marked
"SECURITY" in the Offer Letter plus all existing
security securing the Borrowers' obligations to
Westpac.
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2. DEFINITIONS
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In this letter the following definitions apply.
ACCEPTANCE FEE has the meaning given in Clause 1.3.
ASSET BASED REDUCTION means a payment by a Borrower, and a reduction of the
Commitment, under Clause 1.1(b).
BANK DOCUMENT has the meaning given in the Cross Guarantee and Negative Pledge.
BILL means a BILL OF EXCHANGE as defined in the Bills of Exchange Act 1909 which
is, or is to be, accepted or discounted under this letter or is taken to be
accepted or discounted under this letter (whether or not it physically exists).
It includes a bill which bears a purported signature on behalf of a Borrower
which has been discounted by Westpac under this letter, even if that signature
was not authorised or forged.
BUSINESS DAY means any weekday on which Westpac is open at the address referred
to on the signature page and at the address at which Bills drawn under this
letter are to be accepted and discounted.
CFI GROUP has the meaning given in the Cross Guarantee and Negative Pledge.
COMBINED GROUP means the CFI Group and the CFM Group.
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COMMITMENT has the meaning given in Clause 1.1.
CROSS GUARANTEE AND NEGATIVE PLEDGE means the agreement titled "Cross Guarantee
and Indemnity with Negative Pledge and Financial Ratio Covenants" between CFI
and its Subsidiaries, Sizzler International Marks Inc. and certain of its
Subsidiaries and Westpac, and dated on or about the date the Borrowers accept
this letter.
DISCOUNT RATE has the meaning given in Clause 1.2.
DRAWDOWN NOTICE means a notice in the form of Schedule B.
EBIT has the meaning given in the Cross Guarantee and Negative Pledge.
EVENT OF DEFAULT has the meaning given in the Cross Guarantee and Negative
Pledge.
FACILITY means the facility provided under this letter.
GUARANTOR has the meaning given in the Cross Guarantee and Negative Pledge.
OFFER LETTER means the letter of offer describing, among other things, this
facility, given by Westpac to the Borrowers and dated 18 August 1997.
"REFERENCE LENDING RATE" means the rate Westpac regularly publishes in major
metropolitan newspapers as its "Reference Lending Rate" or such other rate as
may superceede Westpac's Reference Lending Rate and apply as a base rate to
loans made by Westpac over $1,000,000.
SCHEDULED REDUCTION means a payment by a Borrower, and a reduction of the
Commitment, under Clause 1.1(a).
SIM GROUP has the meaning given in the Cross Guarantee and Negative Pledge.
SUBSIDIARY of a corporation is an entity whose accounts are included in that
corporation's consolidated accounts.
TOTAL GROUP DEBT has the meaning given in the Cross Guarantee and Negative
Pledge.
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3. INTERPRETATION
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A reference to an OUTSTANDING Bill is to a Bill which has been accepted or
discounted under this letter (or in respect of which a Borrower has not paid the
face amount or provided cash cover under this letter). This applies whether or
not the Bill has matured, been presented for payment or been paid on
presentation by Westpac.
In relation to periods of time, a reference to a BUSINESS DAY is a reference to
a whole Business Day.
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4. WHO MAY ISSUE DRAWDOWN NOTICES AND DRAW BILLS
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4.1 DRAWDOWNS
CFI must issue the first Drawdown Notice. Either Borrower may issue subsequent
Drawdown Notices.
4.2 JOINT DRAWDOWNS NOT PERMITTED
The Borrowers may not draw Bills jointly. A Borrower must not require Westpac to
accept and discount Bills if at the time there are outstanding Bills drawn by
the other Borrower.
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4.3 SWITCHING
Switching occurs when the Borrower who did not draw the last Bills accepted and
discounted pursuant to this letter draws Bills pursuant to this letter and the
other Borrower ceases to draw Bills for the time being.
The Borrowers may not switch the Facility if the last switch occurred less than
one year earlier unless Westpac otherwise consents in writing. For the sake of
clarity, the first drawdown by CFI is not a switch.
4.4 WHEN NOTICE OF A SWITCH MUST BE GIVEN
The Borrowers must give Westpac notice of their intention to switch the
Facility. That notice must be in the form of Schedule C and must be given to
Westpac not less than 2 Business Days before the switch occurs.
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5. THE FACILITY
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5.1 FACILITY
A Borrower can require Westpac to accept Bills and discount them under the
Facility on any Business Day.
5.2 CONDITIONS PRECEDENT TO ISSUE OF THE FIRST DRAWDOWN NOTICE
Before a Borrower can require the acceptance and discount of Bills, the
Borrowers must:
(a) sign and deliver the Offer Letter;
(b) sign and return a copy of this letter;
(c) deliver the following in form and substance satisfactory to Westpac:
(i) the following security documents
(A) the Cross Guarantee and Negative Pledge;
(B) a Stock Pledge by Sizzler International Inc. of its shares in
CFI and Sizzler International Marks Inc.;
(C) a first party charge by each Guarantor over all its assets and
undertaking;
(D) first mortgages over all freehold or Crown leasehold and
commercial leasehold property of the Guarantors situated in
Australia; and
(E) the subordination agreements and undertakings referred to in
the paragraph marked "SECURITY" in the Offer Letter; and
(ii) a verification certificate from each Guarantor in the form attached
to this letter;
(d) satisfy the conditions precedent described in the paragraph marked
"CONDITIONS PRECEDENT" in the Offer Letter;
(e) satisfy Westpac's requirements in relation to the security documents
referred to in paragraph (c)(i); and
(f) pay the establishment fee.
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5.3 DRAWDOWN NOTICE REQUIRED
The obligation of Westpac to accept or discount Bills pursuant to this letter is
subject to a Borrower giving Westpac a Drawdown Notice by 10am (Brisbane time)
at least 1 Business Day before the proposed date for accepting and discounting
Bills (the DRAWDOWN DATE)
5.4 NO DEFAULT
Westpac is not obliged to accept or discount Bills under this letter if on the
Drawdown Date there is:
(a) a continuing Event of Default; or
(b) a breach or other event which with notice or time or both would become an
Event of Default.
However, Westpac may at its discretion make available to the relevant Borrower
an amount not exceeding the face amount of the Bills requested. That amount, if
provided at all by Westpac, will be provided as a loan which is repayable on the
earlier of:
(c) demand by Westpac for repayment of that amount, and
(d) notice by Westpac under Clause 12 (Westpac's Remedies and Powers) below.
The relevant Borrower shall pay interest monthly in arrears on the loan. The
interest will accrue from day to day at a rate equal to 2.0% per annum plus
Westpac's Reference Lending Rate then applicable.
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6. FACILITY PROCEDURES
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6.1 FORM OF BILLS
Bills prepared under this letter must:
(a) be in a form acceptable to Westpac and, to the extent practicable, have a
face amount of $100,000, $500,000, or $1,000,000 or any other amount
specified by Westpac,
(b) be expressed to be drawn by the relevant Borrower and signed by it as
drawer,
(c) be payable at Westpac's office at: 3rd Floor, 255 Elizabeth Street, Sydney,
NSW 2000, or any other address which Westpac may specify,
(d) have the name of the payee left blank,
(e) have a term, as required by the relevant Borrower (or, in the case where the
fixed rate discount option applies, Westpac), of 30, 60, 90, 120, 150 or 180
days or any other term Westpac and the relevant Borrower may agree, and
(f) mature on a Business Day which is not later than the last day of the Term.
Each Borrower must select terms for Bills in order to comply with the reductions
in Commitment specified in Clause 1.1 so that the total face amount of
outstanding Bills will not at any time exceed the reduced Commitment.
6.2 PREPARATION OF BILLS
Westpac will ordinarily prepare Bills itself, but it may require the Borrower
giving a Drawdown Notice to prepare Bills under this letter. If Westpac prepares
Bills, it may
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prepare one Bill having a face amount equal to the aggregate face amount of
Bills having the same maturity date and referred to in the relevant Drawdown
Notice.
6.3 AUTHORITY
Each Borrower irrevocably and for value authorises Westpac:
(a) to complete and deliver Bills under this letter,
(b) on behalf of that Borrower and in its name to prepare Bills complying with
this letter and to sign them as drawer and if applicable, endorse them, and
to alter any non-complying Bills.
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7. ACCEPTANCE AND DISCOUNT
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7.1 ACCEPTANCE AND DISCOUNT
When it is obliged under this letter to accept and discount Bills Westpac shall:
(a) accept those Bills,
(b) if necessary, insert as payee itself or any other person who is to buy those
Bills, and
(c) discount those Bills and pay to the relevant Borrower or as it directs an
amount equal to the sum of the face amount of those Bills less the sum of:
(i) a discount amount for each Bill which would result in a yield to
maturity on that Bill calculated at the Discount Rate (expressed as a
yield percent per annum) or, where a fixed rate applies to that Bill,
that fixed rate,
(ii) the Acceptance Fee for the Bills,
(iii) the preparation fee for the Bills,
(iv) any applicable stamp duty or other tax payable by Westpac on or in
respect of the Bills or any payment under this letter (including
financial institutions duty), and
(v) any other amount owing by either Borrower to Westpac under this
letter.
7.2 FIXED RATE OPTION
In a Drawdown Notice the Borrower may request Westpac to inform it of the fixed
rate at which Westpac will discount a series of Bills with the total face amount
nominated in the Drawdown Notice and during the period nominated in the Drawdown
Notice. That period must not be less than 180 days. It must end no later than
the last day of the Term.
Westpac shall quote to the Borrower by telephone the fixed rate by 9.45 am
(Brisbane time) on the relevant date specified in the Drawdown Notice . The
rate will be expressed as a percent per annum and a yield to maturity. If the
Borrower wishes to accept that quote, it shall do so by telephone while that
quote is current.
If the Borrower does accept the quote, then during that period except as set out
in Clause 73:
(a) Westpac on behalf of the Borrower or, at Westpac's request, the Borrower
shall prepare, sign as drawer, complete, and deliver Bills with terms
selected by Westpac, so that at all times during that period there are Bills
outstanding which have a total face amount equal to the amount nominated,
and
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(b) Westpac shall discount those Bills at that rate in accordance with this
letter.
If the Borrower does not accept that quote, the ordinary procedures for setting
the discount rate under this letter will apply.
Westpac is entitled to rely on a facsimile communication purporting to be signed
by an authorised signatory of the Borrower if Westpac believes the communication
to be genuine.
7.3 PREPAYMENT DURING FIXED RATE PERIOD
During the period a fixed rate applies, a Borrower can prepay all or part of the
total face amount of the Bills for which it selected a fixed rate on giving two
Business Days irrevocable notice in writing. If that occurs, or if the
Commitment is cancelled, Westpac's obligation to prepare and discount Bills at
the fixed rate is correspondingly reduced or cancelled.
If for that or any other reason (excluding default by Westpac), Bills of the
total face amount are not drawn and discounted for the full fixed rate period,
then the Borrower shall pay Westpac the amount which Westpac certifies to be the
cost or loss resulting from the liquidation or re-employment of deposits or
other funds acquired or contracted for by Westpac to fund or maintain the
discounting of Bills at the fixed rate, and the termination or reversing of any
agreement or arrangement entered into by Westpac to fix, hedge or limit the
effective cost of funding or maintaining Bills under the fixed rate option.
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8. PAYMENT OBLIGATIONS
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8.1 INDEMNITY
Each Borrower shall indemnify Westpac on demand against all liabilities of
Westpac as acceptor or endorser of Bills drawn by that Borrower.
8.2 LIABILITY ON BILLS
As between Westpac and a Borrower, the Borrower is primarily liable in respect
of all Bills accepted by Westpac on its behalf. Accordingly:
(a) the liability of the relevant Borrower with respect to any Bill will not be
discharged because Westpac becomes the holder of that Bill before, on or
after its maturity, and
(b) not later than 11 am on the maturity date for each Bill, the relevant
Borrower shall pay to Westpac an amount equal to the face amount of that
Bill.
8.3 NETTING OFF
Where new Bills are to be drawn and accepted on the maturity date of old Bills,
only the net amount as between the amounts payable on that date:
(a) to Westpac under this Clause 8 in respect of the face amount of the old
Bills, and
(b) by Westpac by way of proceeds of the new Bills under Clause 7 (Acceptance
and Discount),
need be paid.
8.4 FEES
The Borrowers will pay fees as set out in this letter.
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8.5 REPAYMENTS
The Facility will terminate at the expiry of the Term, and at that time the
Borrower will pay to Westpac:
(a) all money owing by it to Westpac under or in connection with the Facility ,
and
(b) the face amount of all outstanding Bills drawn by it.
8.6 CANCELLATION OF COMMITMENT
The Borrowers can cancel all or part of the undrawn Commitment by giving two
Business Days irrevocable notice to Westpac.
8.7 METHOD OF PAYMENT
Each Borrower will make all payments at the address on the signature page of
this letter or as specified by Westpac. Payments must be in cleared funds and
free of any set-off or deduction, except for taxes where required by law. All
payments will be made by 11am (local time) in the place of payment.
Unless otherwise stated, amounts payable under Clause 10 (Yield Protection and
Additional Payments) below are payable within 2 Business Days of demand.
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9. PROPERTY VALUATIONS
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9.1 VALUATION OF FREEHOLD SECURITY PROPERTIES
The Borrowers will at their expense cause all freehold properties mortgaged to
Westpac by the Guarantors to be revalued on a vacant possession basis and on a
going concern basis by 30 April 2000 or before that date if in Westpac's opinion
the aggregate value of those properties as at the date of this letter has
diminished by not less than 10%. Those valuations are to be for mortgage
security purposes and be attended to by a registered valuer acceptable to
Westpac.
9.2 RIGHT TO VARY TERMS OF FACILITIES SECURED
If a valuation report discloses a diminution in the aggregate value of the
properties by not less than 10% or matters which are materially adverse to
Westpac's security over the properties Westpac may vary the terms and conditions
of the Facility after first giving the Borrowers 90 days notice of its intention
to do so.
This Clause shall not affect Westpac's rights under Clause 14.1 of the Cross
Guarantee and Negative Pledge.
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10. YIELD PROTECTION AND ADDITIONAL PAYMENTS
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10.1 YIELD PROTECTION
Whenever Westpac determines that a Change in Law (as defined below) has the
effect of:
(a) increasing its costs of funding or maintaining the Facility, or reducing its
return or amounts received in respect of the Facility; or
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(b) reducing its return on capital allocated to the Facility (including because
more capital needs to be allocated to the Facility or cannot be used
elsewhere),
then it will promptly notify the Borrowers, and they must pay Westpac the amount
it certifies is necessary to compensate it. That certificate will give an
outline of the calculation, and will be conclusive and bind the Borrowers in the
absence of manifest error.
If the Borrowers so request, Westpac will negotiate in good faith with a view to
finding a means of minimising the effect, but it is not a defence that the
effect could have been avoided or minimised.
A CHANGE IN LAW is the introduction of, or a change in, any law, official
directive, ruling or request or a change in its interpretation. If it does not
have the force of law, it must be one with which responsible Australian banks
would comply. Without limitation, it includes any of these circumstances which
occurs with respect to capital adequacy, special deposit, liquidity, reserve,
prime assets, tax or prudential requirements (except a change in tax on overall
net income).
10.2 INDEMNITY AND COSTS
Each Borrower will indemnify Westpac against any liability, loss, cost or
expense (including legal costs on a full indemnity basis) it incurs as a result
of an Event of Default or the actual or contemplated enforcement of this letter
or any Bank Document.
Each Borrower will pay Westpac's reasonable external legal costs in relation to
the preparation of each Bank Document, any amendment of it, or any consent or
waiver under it.
10.3 TAX
If a Borrower is required to deduct any tax from any payment under a Bank
Document (except a tax on Westpac's overall net income), then:
(a) the Borrower must pay that amount to the appropriate authority and promptly
give Westpac evidence of payment; and
(b) the amount payable is increased so that (after deducting that tax, and
paying any taxes on the increased amount) Westpac receives the same amount
it would have received had no deduction been made.
10.4 CURRENCY INDEMNITY
Each Borrower will indemnify Westpac if any amount payable under or in
connection with a Bank Document is received in a currency which is different
from that in which it is required to be paid under this letter. This indemnity
applies whatever the reason for receipt of the amount in a different currency.
10.5 STAMP DUTY
Each Borrower will pay all stamp, transaction and other similar duties and
charges in relation to this letter, any Bill accepted and discounted under it,
any Bank Document and any transaction under them. This includes financial
institutions duty and debits tax. Each Borrower will also pay any fines and
penalties unless they result from a failure by Westpac to lodge a document for
stamping in sufficient time, having received from a Borrower the amount of stamp
duty in good time.
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11. REPRESENTATIONS AND WARRANTIES
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Each Borrower makes the representations and warranties and gives the
undertakings described in the Cross Guarantee and Negative Pledge.
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12. WESTPAC'S REMEDIES AND POWERS
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12.1 EVENT OF DEFAULT
If an Event of Default occurs then Westpac may either or both:
(a) terminate the Facility and cancel the Commitment; and
(b) by written notice require each Borrower to pay to Westpac:
(i) all money actually or contingently owing by it to Westpac under or in
connection with the Facility, and
(ii) the face amount of all Bills drawn by it and outstanding as at the
date of that notice.
Each Borrower will pay those amounts immediately.
12.2 AMOUNTS PAID ON UNMATURED BILLS AND CONTINGENT AMOUNTS
(a) Any amount paid to Westpac under this Clause in respect of any unmatured
Bill or in respect of any sum contingently owing, and
(b) interest credited under this clause,
will accrue and be credited with interest at a rate and in a manner which
Westpac determines would under its normal procedures apply to deposits of a
similar amount at call (or of any other term specified by Westpac).
Westpac may apply it in or towards satisfaction of any sum at any time payable
to Westpac under or in relation to this letter or any Bank Document, including
in respect of Bills.
It is repayable by Westpac to the extent only that on any day it exceeds the
amount of all money owing to Westpac under or in connection with this letter or
any Bank Document (including, without limitation, the total face amount of the
outstanding Bills and all amounts which are then or may subsequently become
contingently owing).
12.3 DEFAULT INTEREST
Interest will accrue each day on each amount due but unpaid. The rate will be
Westpac's Reference Lending Rate then applicable plus 2% per annum. That
interest accrues before and after any judgment.
Westpac may debit the relevant Borrower's account with accrued interest under
this paragraph on any day. If it does not do so more often it will be taken to
have done so monthly. That interest will then itself bear interest.
12.4 APPLICATION OF MONEY - SET-OFF
If a Borrower does not pay an amount when due, Westpac may apply any money in
any of the Borrower's accounts (whether or not matured) in payment of any amount
payable under this letter. It need not do so. It can convert currencies using
its normal procedures.
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12.5 NO WAIVER
No failure to exercise a power, and no delay in exercising a power, operates as
a waiver. Waivers must be in writing.
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13. GENERAL
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13.1 STATEMENT
A written statement by Westpac as to any amount due under this letter or a Bank
Document will be sufficient evidence of that amount unless the relevant Borrower
proves it wrong.
13.2 JOINT LIABILITY
Except as otherwise provided in this letter, the Borrowers shall be jointly and
severally liable for the payment of all amounts payable to Westpac under this
letter.
13.3 ASSIGNMENT
Neither Borrower may assign its rights under this letter. Westpac may transfer
any part of its rights and, with the Borrowers' consent, obligations. The
Borrowers will not withhold that consent unreasonably. Westpac may disclose
information to a potential transferee or sub-participant.
Where Westpac wants to transfer part of its obligations the Borrowers will sign
when reasonably requested by Westpac a document which will effect that transfer
and which does not increase the Borrowers' obligations. Westpac will bear its
own costs and stamp duty on that document.
13.4 NOTICES AND WESTPAC AUTHORISED SIGNATORIES
Any notice, demand, statement, certificate or other communication by Westpac may
be given by any person whose title includes the word "manager", "head",
"counsel" or "president", or any attorney authorised to do so. Any such person
may sign a Bill on behalf of Westpac or a Borrower.
Notices must be in writing. They may be sent by facsimile, post or any other
means to the recipient's address or number set out on the signature page or any
other address or number notified to the sender by the recipient.
Notices will be taken to have been given if delivered or left at that address,
on the dates on which they are delivered or left.
13.5 AUTHORISED SIGNATORIES
All documents (including Bills) required to be signed by a Borrower under this
letter shall be signed on its behalf by one or more authorised signatories
referred to in the verification certificate given in respect of that Borrower,
or any other or additional authorised signatories subsequently appointed, whose
names and specimen signatures have been notified to Westpac.
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13.6 GOVERNING LAW AND JURISDICTION
This letter is governed by Queensland law. Each Borrower accepts the non-
exclusive jurisdiction of the courts having jurisdiction there.
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SCHEDULE A -- FORM OF VERIFICATION CERTIFICATE
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QUEENSLAND
----------
TO WIT
- ------
We, ..................................., and .................................,
of .................................... and ..................................
in the State of Queensland do solemnly and sincerely declare as follows:
(a) We are Directors of ......................................................
Pty Ltd ACN ___ ___ ___ (the COMPANY), of.................................
..........................................................................
(b) On.................................., 19.... a duly convened meeting of the
Directors of the Company was held, at which a quorum was present. The
Directors met to consider entering into the documents referred to below and
the transactions they evidence, to secure (among other things) financial
accommodation of $63,500,000.00 (the ACCOMMODATION) made available or
continuing to be made available (at the request of the Company) by Westpac
Banking Corporation (WESTPAC) to Collins Foods International Pty Ltd and
Collins Finance and Management Pty Ltd (the BORROWERS).
(c) The following documents (the BANK DOCUMENTS) submitted by Westpac to the
Company and required by Westpac (among others) as security for the
Accommodation, were tabled at the meeting:
. [complete as appropriate]
(d) The Directors considered the terms on which the Accommodation was being
offered, including the terms of the Bank Documents and passed resolutions
that:
(i) The Company confirms its request to Westpac for the Accommodation made
available or continuing to be made available to the Borrowers;
(ii) In order to secure the payment to Westpac of:
(A) the Accommodation;
(B) all other moneys specifically agreed to be paid by the Company to
Westpac in the Bank Documents; and
(C) all moneys at any time owing by the Company or the Borrowers to
Westpac on any account (including interest).
the Company execute and deliver the Bank Documents.
(e) It was also duly resolved that ............................................
and .......................................................................
be authorised to affix the common seal of the Company to the Bank Documents.
(f) The resolutions were duly passed in all respects in accordance with the
Memorandum and Articles of Association of the Company and the Corporations
Law or, as the case may be, the laws governing such matters in the Company's
place of incorporation (the RELEVANT LAW).
(g) The Bank Documents were duly executed in accordance with the resolutions,
the Company's constituent documents and the Relevant Law.
(h) Before passing the resolutions, the Directors considered the interests of
the Company and determined that entering into the Bank Documents was in the
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Company's interests, for the proper purposes of the Company, and not
prejudicial to its creditors.
(i) The Secretary was authorised and directed to sign all documents and do other
things necessary to enable the Bank Documents to be duly stamped and
registered (if applicable).
(j) Each Director at the meeting declared to the meeting prior to the passing of
the resolutions (or had previously disclosed) all interests and any
conflicts of interest and duty on that Director's part (including detailed
particulars of the full nature and extent of such interests and where a
general notice of a Director's interest had previously been given, detailed
particulars of any change in the extent of that interest) as required by the
constituent documents of the Company and the Relevant Law. The Secretary
was directed to record every such declaration by the Directors at the
meeting in the minutes of the meeting, in accordance with the Relevant Law.
(k) Since the date of its incorporation, the Company has not in general meeting
or otherwise at any time made or passed any resolution or taken any action
nor has any other event happened, as a result of which the Company is
prevented from giving guarantees or indemnities or executing the Bank
Documents or as a result of which the right or power of the Company to
guarantee and indemnify and to give security over its assets has been
abrogated or restricted, nor has the Company in general meeting or otherwise
at any time passed any resolution or taken any other action or proceedings
having the effect of in any way altering or otherwise affecting in whole or
in part its Memorandum or Articles of Association which has not been fully
disclosed to Westpac.
(l) Since the date of its incorporation, the Company has not in general meeting
or otherwise at any time passed any resolution not to call up unpaid calls
on shares nor has any meeting of the Company been convened for the purpose
of considering or passing any such special resolution.
(m) There is no unsatisfied judgement in any court nor any writ of execution
issued out of any court which might be enforced against any part of the
property or assets of the Company nor is there (to the best of its knowledge
and belief after making due enquiry) pending any action or suit against the
Company which has not been disclosed to Westpac or in relation to the
winding up of the Company nor has any resolution been passed for the winding
up of the Company.
(n) The Company is solvent and there are reasonable grounds to expect that, on
execution of each Bank Document to which it is a party, it will continue to
be able to pay all its debts as and when they become due and payable.
(o) The copy of the constituent documents of the Company provided to Westpac on
or about ...................................... is a true and up to date
copy of the same.
(p) All the shares referred to in the Schedule below are held beneficially by
the person referred to as holding them and no shares are held on trust or
for any other person or corporation (except as expressly disclosed in the
Schedule).
(q) At the date of this declaration the Company has not given any charge or
charges and does not intend to give any charges prior to entering into the
Bank Documents to Westpac.
(r) We certify that the Company is not prohibited under Part 3.2A of the
Corporations Law, or under any similar provisions in any other Relevant Law,
from entering into the Bank Documents.
- --------------------------------------------------------------------------------
(c) Allen Allen & Hemsley
Reproduction without permission strictly prohibited.
<PAGE>
Page 19
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(s) We certify that at the date of this declaration the particulars described in
the Schedule below are true and correct.
(t) The Directors have caused a duly convened meeting of all shareholders of the
Company to be held, which ratified the decisions of the Directors to cause
the Company to enter into and perform the Bank Documents and all ancillary
documents, and all other decisions and acts of the Directors in that regard
notwithstanding:
(i) any actual or potential:
(A) conflict between a Director's duty to the Company and such
Director's own interests or the interests of others; or
(B) breach by any Director of the obligation to prefer the interests
of the Company to such Director's own interests or the interests
of others;
(ii) any actual or potential benefit which any Director may obtain in
causing the Company to enter into the Bank Documents;
(iii) that the Company may not receive any readily apparent commercial
benefit from entering into the Bank Documents.
At the shareholders' meeting the Directors made full and detailed disclosure of
the full nature and extent of all interests on their respective parts and all
actual or potential conflicts of interest or breaches of duty on their
respective parts and the financial consequence to the Company in respect of the
Borrowers' obtaining of Accommodation and the Company's entering into the Bank
Documents. This disclosure was made prior to the Shareholders' ratification
being given, and Directors were present at the meeting to answer shareholder's
questions in that regard.
THE SCHEDULE
------------
SHAREHOLDERS & SHARES HELD (PARAGRAPH P)
[Please complete details]
NAME AND ADDRESS OF SECRETARY (PARAGRAPH S)
[Please complete details]
AND we make this solemn declaration conscientiously believing the same to be
true and by virtue of the provisions of the "Oaths Act 1867 (Queensland).
DECLARED before me at ....................this )
...................day of ............... 19.... ) .......................
) Director
)
)
(Full name to be printed) ) .......................
A Justice of the Peace ) Director
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(c) Allen Allen & Hemsley
Reproduction without permission strictly prohibited.
<PAGE>
Page 20
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SCHEDULE B -- FORM OF DRAWDOWN NOTICE
- --------------------------------------------------------------------------------
TO: [Name]
Westpac Banking Corporation,
[address]
*COLLINS FOODS INTERNATIONAL PTY LTD A.R.B.N. 009 980 250 / *COLLINS FINANCE AND
MANAGEMENT PTY LTD A.C.N. 009 996 721 (the BORROWER) [*DELETE AS APPROPRIATE]
A$63,500,000.00 BILL ACCEPTANCE AND DISCOUNT FACILITY
I refer to the facility letter dated [INSERT DATE OF LETTER].
I am authorised to give this irrevocable notice on behalf of the Borrower. The
representations by the Borrower in the letter are true as of today. No Event of
Default (as defined in the letter) or event has occurred. No breach or other
event has occurred which with notice or both would become an Event of Default.
The Borrower requests you to prepare, complete, draw, endorse (if necessary),
sign and deliver on the Borrower's behalf Bills (details of which appear in the
schedule below) drawn by the Borrower on Westpac. The Borrower acknowledges
that, unless Westpac specially requires it to prepare and draw Bills, Westpac
will do so.
The Borrower requests Westpac to do as follows on [INSERT DATE] 19[INSERT YEAR]:
[NOTE: DATE MUST BE A BUSINESS DAY.]
(1) accept the Bills for the Borrower's accommodation;
(2) complete the name of the payee on the Bills, buy them or at Westpac's option
sell them to any person and credit the net proceeds after deducting any
moneys payable under (3) below to the Borrower's Account Number [INSERT
ACCOUNT NUMBER] at the [INSERT BRANCH NAME] Branch of Westpac; and
(3) deduct from the proceeds referred to in (2) above the amount of Westpac's
acceptance and other fees and any stamp or other duty payable in respect of
the Bills; [and]
(4) [state the fixed rate at which Westpac would be prepared to discount a
series of Bills having a total face amount of $[*] during a period of [*]
months.]
SCHEDULE
- --------------------------------------------------------------------------------
DRAWER DATE OF EXECUTION MATURITY DATE FACE AMOUNT NO. OF BILL
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signed for and on behalf of *COLLINS FOODS INTERNATIONAL PTY LTD / *COLLINS
FINANCE AND MANAGEMENT PTY LTD [*DELETE AS APPROPRIATE]
___________________________________________
Authorised Officer of the Borrower
Dated [*]
[To be signed by authorised signatory whose signature and status have been
verified to Westpac].
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(c) Allen Allen & Hemsley
Reproduction without permission strictly prohibited.
<PAGE>
Page 21
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SCHEDULE C -- SWITCHING NOTICE
- --------------------------------------------------------------------------------
TO: [Name]
Westpac Banking Corporation,
Corporate Business Queensland,
[address]
COLLINS FOODS INTERNATIONAL PTY LTD A.R.B.N. 009 980 250
COLLINS FINANCE AND MANAGEMENT PTY LTD A.C.N. 009 996 721
A$63,500,000.00 BILL ACCEPTANCE AND DISCOUNT FACILITY
We refer to the facility letter dated [INSERT DATE OF LETTER].
WE are authorised to give this irrevocable notice on behalf of the Borrowers.
From [INSERT DATE OF SWITCH] would you please switch the Facility from [*COLLINS
FOODS INTERNATIONAL PTY LTD / COLLINS FINANCE AND MANAGEMENT PTY LTD] to
[*COLLINS FINANCE AND MANAGEMENT PTY LTD / COLLINS FOODS INTERNATIONAL PTY LTD].
Would you please use the proceeds of the Bills to reduce [*COLLINS FOODS
INTERNATIONAL PTY LTD'S / COLLINS FINANCE AND MANAGEMENT PTY LTD'S] liability to
Westpac for its maturing Bills. We confirm that [*COLLINS FINANCE AND MANAGEMENT
PTY LTD / COLLINS FOODS INTERNATIONAL PTY LTD] is receiving a commercial benefit
for this transaction.
[*DELETE AS APPROPRIATE]
Signed for and on behalf of COLLINS FOODS INTERNATIONAL PTY LTD
- ---------------------------------------------------------
Authorised Officer of Collins Foods International Pty Ltd
Dated [*]
Signed for and on behalf of COLLINS FINANCE AND MANAGEMENT PTY LTD
- ---------------------------------------------------------
Authorised Officer of the Collins Finance and Management Pty Ltd
Dated [*]
[To be signed by authorised signatory whose signature and status have been
verified to Westpac].
- --------------------------------------------------------------------------------
(c) Allen Allen & Hemsley
Reproduction without permission strictly prohibited.
<PAGE>
Page 22
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SIGNED for WESTPAC BANKING CORPORATION by its Attorneys
..................................... ................................
Senior Manager Manager Legal
ADDRESS: 18th floor, 260 Queen Street, Brisbane Qld. 4001
FACSIMILE: (07) 3221 9620
Accepted by COLLINS FOODS INTERNATIONAL PTY LTD A.R.B.N. 009 980 250
Date of Acceptance:......................
THE COMMON SEAL of )
COLLINS FOODS INTERNATIONAL PTY LTD )
was duly affixed by authority of the Board )
of Directors in the presence of ) ..............................
) Authorised officer
)
(insert name) ........................... )
and )
) ..............................
(insert name) ........................... ) Authorised officer
ADDRESS: .............................................................
.............................................................
FACSIMILE: ..................................
Accepted by COLLINS FINANCE AND MANAGEMENT PTY LTD ACN 009 996 721
Date of Acceptance: .....................
THE COMMON SEAL of )
COLLINS FINANCE AND MANAGEMENT PTY LTD )
was duly affixed by authority of the Board )
of Directors in the presence of ) ..............................
) Authorised officer
)
(insert name) ........................... )
and )
)
) ..............................
(insert name) ........................... ) Authorised officer
ADDRESS: .............................................................
.............................................................
FACSIMILE: ..................................
- --------------------------------------------------------------------------------
(c) Allen Allen & Hemsley
Reproduction without permission strictly prohibited.
<PAGE>
EXHIBIT 3.3
Dated the ........................day of.....................19.....
COLLINS FOODS INTERNATIONAL PTY LTD
A.R.B.N. 009 980 250
AND THE OTHER COMPANIES LISTED IN SCHEDULE A
In Account with
WESTPAC BANKING CORPORATION
A.R.B.N. 007 457 141
UNLIMITED CROSS GUARANTEE AND
INDEMNITY AND NEGATIVE PLEDGE WITH
FINANCIAL RATIO COVENANTS
BY THE GUARANTORS LISTED IN SCHEDULE A
<PAGE>
UNLIMITED CROSS GUARANTEE AND
-----------------------------
INDEMNITY AND NEGATIVE PLEDGE WITH
----------------------------------
FINANCIAL RATIO COVENANTS
-------------------------
THE GUARANTEES, INDEMNITIES, NEGATIVE PLEDGES AND FINANCIAL RATIO COVENANTS IN
THIS AGREEMENT ARE GIVEN
BY EACH OF THE COMPANIES LISTED IN SCHEDULE A (each, a "GUARANTOR")
TO WESTPAC BANKING CORPORATION (ARBN 007 457 141) ("WESTPAC") of 18th Floor,
260 Queen Street, Brisbane, Queensland
FOR the liabilities and obligations to Westpac of EACH OTHER OF THE COMPANIES
LISTED IN SCHEDULE A (each, a "CUSTOMER") on the conditions set out in
this Agreement
IN EXCHANGE FOR Westpac providing or continuing credit to one or more (whether
jointly or severally) of the Customers, or not taking immediate action to
enforce those Customers' obligations to Westpac.
THE LIABILITIES AND OBLIGATIONS WHICH THE GUARANTORS GUARANTEE TO WESTPAC ARE:
All liabilities and obligations of the Customer to Westpac of any kind and for
any reason, now or in the future, whether or not currently contemplated,
including where Westpac obtains rights because of an assignment or transfer
(as amended, the "GUARANTEED OBLIGATIONS") and all money which the Customer may
owe to Westpac, now or in the future, for any reason under or in relation to the
Guaranteed Obligations, whether the money is or becomes owed:
(a) by the Customer alone, or together with one or together with one or more
others, or
(b) actually or contingently,
(including amounts referred to in Clause 1) (the "GUARANTEED MONEY").
Each Guarantor's liability as guarantor under this Agreement is unlimited.
<PAGE>
DEFINITIONS AND INTERPRETATION
------------------------------
1. DEFINITIONS
In this Agreement:
"ADMINISTRATION" includes bankruptcy, administration arising out of mental
illness or incapacity, administration of an insolvent estate, administration of
a corporation, arrangement, receivership or winding up, dissolution or anything
similar.
"AGREEMENT" includes any document or instrument of any kind, any deed, agreement
or arrangement.
"ANYONE" includes without limitation anyone who signs this Agreement, the
Customer or anyone else who gives a Security.
"AUTHORISATION" includes any consent, registration, filing, lodgment, agreement,
certificate, notarisation, permission, licence, approval, authority or
exemption, from by or with any Governmental Agency. Where a Governmental Agency
can prohibit or restrict something if it acts within a specified period after
formal notification of it (for example lodgment, registration or filing),
Authorisation includes the expiry of that period without that action.
"BANK DOCUMENT" means this Agreement, any agreement the performance of which is
secured or guaranteed by this Agreement, any agreement that documents the terms
of any Finance Debt between Westpac and any one or more Guarantors, any
Security, or any agreement or document issued under or entered into in
connection with any of them including without limitation any subordination
agreement. It includes any amendment or replacement of any of them.
"BILL FACILITY" means the bill acceptance and discount facility described in the
agreement between CFI, Collins Finance and Management Pty Ltd A.C.N. 009 996 721
and Westpac and dated on or about the date of this Agreement.
"CFI" means Collins Foods International Pty Ltd A.R.B.N. 009 980 250.
"CFI GROUP" means CFI and its subsidiaries.
"EBIT" means in respect of any 12 month period, the consolidated operating
profit before tax, abnormal items, extraordinary items and Interest Expense in
respect of that period for the CFI Group and the SIM Group, determined in
accordance with generally accepted accounting principles and by reference to the
information provided to Westpac under paragraphs 121(a)(iv), (v), (x) and (xi).
"EVENT OF DEFAULT " has the meaning given in clause 13 below.
"FINANCE DEBT" includes any indebtedness, present or future, actual or
contingent in relation to money borrowed or raised or any other financing. It
includes any such indebtedness under or in respect of any of the following: a
Guarantee, a discounting arrangement, a Finance Lease, deferred purchase price
(for more than 90 days), or an obligation to deliver property or provide
services paid for in advance by a financier. It also includes exposure under
any interest, commodity, securities, index, or currency exchange, option, hedge,
swap or other similar arrangement.
"FINANCE LEASE" means a Lease which under Australian Accounting Standard 17 is
(or would if that Standard was applied to the relevant company or the Lease was
regarded as a "lease" for the purposes of that Standard be) regarded as a
finance lease or which under any other applicable Accounting Standard would be
regarded as a finance lease.
<PAGE>
"FRANCHISOR" means a franchisor under any franchise agreement to which a
Relevant Company is a party.
"GOVERNMENTAL AGENCY" means any government or any governmental, semi-
governmental, statutory, judicial entity or authority. It includes any self-
regulatory organisation established under statute and any stock exchange.
"GUARANTEE" means any guarantee, indemnity, letter of comfort or other assurance
against loss. It includes any obligation to be responsible for the solvency or
financial condition of another party, or for payment of a debt or obligation of
another party, either directly or indirectly (for example, by acquiring the debt
or obligation). "GUARANTEED" has a corresponding meaning.
"GUARANTEED MONEY" includes at any time:
(a) money which the Customer would have owed Westpac under or in relation to the
Guaranteed Obligations but for some reason as described in Clause 9;
(b) money which the Customer is or may become liable to pay to Westpac as surety
for the liabilities of another person;
(c) money owed because of an assignment to Westpac;
(d) money which will become payable to Westpac by the Customer only if
particular circumstances occur, even though the Customer may not at a
particular time be under an existing obligation to pay that money (for
example damages or compensation).
"GUARANTEED OBLIGATIONS" includes at any time obligations and liabilities which
the Customer would have owed Westpac but for some reason as described in Clause
9.
"GUARANTOR" means any party which gives any Guarantee or Security Interest in
relation to the obligations of a Customer to Westpac now or in the future.
"INTEREST EXPENSE" means all gross interest expenses and all other outgoings in
the nature of interest (including, without limitation, Finance Lease charges)
incurred by CFI Group and SIM Group in respect of Total Group Debt as disclosed
by the Latest Financial Information.
"LATEST FINANCIAL INFORMATION" means the most recent consolidated or aggregated
(as the case may be) financial information (after making such adjustments as in
the opinion of CFI's auditor or, as the case may be, SIM's auditor, are
necessary for the proper determination of the financial condition of CFI Group
or SIM Group) as at or prior to the date at which an examination is being made
to determine Tangible Net Worth, Total Liabilities or Total Tangible Assets for
the purposes of this Agreement.
"LEASE" means:
(a) any lease, charter, hire purchase or hiring arrangement of any property;
(b) any other agreement under which any property is or may be used or operated
by a person other than the owner; or
(c) any agreement or arrangement under which any property is or may be managed
or operated for or on behalf of the owner or another person by a person
other than the owner, and the operator or manager or its related body
corporate (as defined in the Corporations Law) (whether in the same or
another agreement or arrangement) is required to make or assure minimum,
fixed and/or floating rate payments of a periodic nature.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the financial
condition of the Relevant Companies on a consolidated basis, their ability to
meet their payment obligations under the Bank Documents, or the Security.
<PAGE>
"OPERATING LEASE" means a Lease which under the Australian Accounting Standard
17 is (or would if that Standard was applied to the relevant Company or the
Lease was regarded as a 'lease' for the purposes of that Standard) regarded as
an operating lease or which under any other applicable Accounting Standard would
be regarded as an operating lease.
"POTENTIAL EVENT OF DEFAULT" means any event, thing or circumstance which with
the giving of notice or passage of time or both would become an Event of
Default. It includes any breach of a Bank Document.
"REFERENCE LENDING RATE" means the rate Westpac regularly publishes in major
metropolitan newspapers as its "Reference Lending Rate" or such other rate as
may supercede its Reference Lending Rate.
"RELEVANT COMPANY" means any Guarantor or Customer or any Subsidiary of any of
them.
"SECURITY" is any Security Interest, claim or other right held by Westpac from
or against the Customer or anyone else in relation to the Guaranteed Obligations
or the Guaranteed Money, now or in the future. It includes the rights against
any Guarantor under this Agreement.
"SECURITY INTEREST" includes any mortgage, pledge, lien, charge or other
security or any arrangement which gives a creditor a preferential right to an
asset or its proceeds.
"SERP GUARANTEE" means the guarantee given or to be given to Rushton O. Backer,
Robert Barrett, Richard R. Bermingham, Lee Clancy, Thomas L. Gregory, Michael
Minchin, William R. Scarpino, James A. Collins and Benjamin Stone under Sizzler
International Inc.'s Sixth Amended Plan of Reorganisation under Case number SV
96-16075-AG in the United States Bankruptcy Court Central District of
California.
"SIM" means Sizzler International Marks Inc.
"SIM GROUP" means SIM and its subsidiaries."SUBSIDIARY" of a corporation is an
entity whose accounts are included in that corporation's consolidated accounts.
TANGIBLE ASSETS means all assets other than future tax benefits, goodwill,
patents, trademarks, trade names, design rights, franchises, underwriting and
formation expenses and other items of a like nature which according to current
accounting practice are regarded as intangible assets.
TANGIBLE NET WORTH means at any time the consolidated shareholder's funds of CFI
Group and SIM Group as disclosed by the Latest Financial Information, but
excluding:
(a) all intangible assets;
(b) all future tax benefits;
(c) all deferred income tax liabilities; and
(d) all minority interests.
TOTAL GROUP DEBT means at any time the aggregate amount (as disclosed by the
Latest Financial Information) of all outstanding Finance Debt of CFI Group and
SIM Group other than trade creditors, TNA's (Transaction Negotiation
Authorities), Cheque Cashing Authorities and Finance Debt owing to Sizzler
International Inc. or any of its subsidiaries which is subordinated to monies
owing to Westpac.
TOTAL LIABILITIES means at any time the aggregate amount (as disclosed by the
Latest Financial Information) of all secured and unsecured liabilities of CFI
Group and SIM Group.
TOTAL TANGIBLE ASSETS means at any time the aggregate of the book values of all
Tangible Assets of CFI Group and SIM Group as disclosed by the Latest Financial
Information.
<PAGE>
"VERIFICATION CERTIFICATE" means a certificate described in any Bank Document
and given by a director or secretary of any Guarantor confirming the matters
described therein.
Where an EXAMPLE is given, it does not limit what else might be included.
Unless otherwise stated all references to MONEY are references to Australian
dollars.
References to ANY DOCUMENT include references to the document as varied,
supplemented or novated.
References to any GENDER include all genders.
References to PERSONS include references to any entity including without
limitation any individual or body corporate.
References to the PLURAL include the SINGULAR and vice versa.
<PAGE>
CONDITIONS OF GUARANTEE AND INDEMNITY
-------------------------------------
2. GUARANTEE
The Guarantor guarantees to Westpac that the Customer will:
(a) pay to Westpac on time all the Guaranteed Money, and
(b) perform the Guaranteed Obligations.
If the Customer does not pay an amount of the Guaranteed Money when it is due,
Westpac may demand that the Guarantor pay that amount. The Guarantor must then
immediately pay that amount to Westpac. Westpac can make any number of demands
and demand can be made:
(c) for all or part of the Guaranteed Money; and
(d) even if Westpac does not take action to recover the Guaranteed Money from
the Customer.
3. EXTENT OF GUARANTEE
This Agreement is a guarantee for the full amount of the Guaranteed Money and is
a principal obligation and shall not be treated as ancillary or collateral to
any other right or obligation.
4. CONTINUING GUARANTEE
The Guarantor's obligations under this Agreement are continuing. Even though
Westpac receives payments from or makes arrangements with the Customer or anyone
else, the Guarantor is still liable for the Guaranteed Money and the Guaranteed
Obligations now and in the future.
The guarantee hereunder is a guarantee of payment, and not merely of
collectibility, and may be enforced against any Guarantor without first
proceeding against the Customer or any collateral for or other guarantees of the
Guaranteed Obligations.
5. INSOLVENCY
If:
(a) the Customer or anyone goes into Administration, and
(b) in the Administration, Westpac makes a claim which in any way relates to any
of the Guaranteed Money or other money owed to Westpac by the Customer,
then if Westpac receives money as a result of making such a claim or for any
other reason, it may set that money aside.
Westpac need not use the money set aside to pay the Guaranteed Money until it
has received enough in respect of the Guaranteed Money (including the amount set
aside) to pay all of the Guaranteed Money. Until that happens, the Guarantor is
fully liable for the Guaranteed Money, as if Westpac had not received the money
set aside.
<PAGE>
Until the Guaranteed Money has been irrevocably paid and discharged in full, the
Guarantor shall not be entitled either directly or indirectly to prove in any
Administration of the Customer or claim or receive any benefit of any such
Administration.
6. VARIATION OF ARRANGEMENTS WITH CUSTOMER
This Agreement applies automatically to all dealings between Westpac and the
Customer, whether or not those dealings increase the Guarantor's liability and
whether or not Westpac notifies, or obtains the consent of, the Guarantor
including:
(a) a change in the Guaranteed Obligations or Guaranteed Moneys, or
(b) new or replacement obligations.
7. UNCONDITIONAL OBLIGATION
The Guarantor's liability under this Agreement is unconditional. It is not
affected by anything which might release the Guarantor from or limit all or part
of its obligations, including if:
(a) Westpac does not exercise any of its Security or rights against the Customer
or anyone,
(b) Westpac makes any arrangement, transaction or compromise with the Customer
or anyone, including one which varies, takes away or limits its Security or
rights or its freedom to exercise them,
(c) Westpac gives the Customer or anyone a full or partial discharge or release
or time to pay or any other concession,
(d) this or any document or Security is temporarily or permanently
unenforceable, is not taken by Westpac, is lost, is not signed by anyone or
is not binding on anyone intended to give a Guarantee or Security,
(e) there is a change in the nature or constitution of the Customer or anyone
including its members,
(f) that or any other Guarantor, the Customer or anyone dies, becomes insolvent
or incapacitated or goes into some form of Administration, or
(g) the Customer or anyone has any claim against Westpac.
8. REFUND OF PAYMENTS
For some reason (for example, a law about Administration or directors' duties)
Westpac may have to refund or give up any money which the Customer or anyone
else has paid to it, or which it recovers in any way. If that happens the
Guarantor owes Westpac all the money that it would have owed if the amount
refunded or given up had never been paid to or received by Westpac. The
Guarantor will do everything it can to restore to Westpac any rights against the
Guarantor or its property which Westpac had before it received the money which
it later had to refund or give up.
<PAGE>
9. INDEMNITY
If for any reason (for example, lack of capacity or authority, Administration,
illegality or inadequate or improper execution or stamping):
(a) Westpac has no legal right to recover an amount of the Guaranteed Money from
the Customer or enforce the Guaranteed Obligations, or
(b) the Customer is not bound by obligations that would otherwise have been
Guaranteed Obligations or owe an amount that would otherwise have been
included in the Guaranteed Money,
the amount will be taken to be part of the Guaranteed Money, and the Guarantor
will pay it to Westpac whenever Westpac demands, and the obligations will be
taken to be part of the Guaranteed Obligations. This applies even if Westpac
knew or should have known of the problem, and even if, because of the problem,
the Customer could never have been required to pay Westpac the amount. This is
a principal and independent obligation.
10. OTHER SECURITY
Any other Security held by Westpac for all or part of the Guaranteed Money or
the Guaranteed Obligations is independent of this Agreement. Nothing affecting
any Security will affect the Guarantor's liability under this Agreement.
Westpac can enforce this Agreement and any Security in any order it wishes, or
can choose not to enforce any Security at all.
Until the Guaranteed Money is paid in full, the Guarantor cannot claim the
benefit of, and has no right to, the Security held by Westpac.
<PAGE>
NEGATIVE PLEDGE AND FINANCIAL RATIO
-----------------------------------
COVENANTS
---------
11. REPRESENTATIONS AND WARRANTIES
Each Guarantor makes the following representations and warranties to the extent
they relate to it.
(a) (STATUS) Each Relevant Company is incorporated in the place stated by the
Guarantor to Westpac. Any Bank Document to which a Relevant Company is
expressed to be a party is its binding obligation enforceable against it,
and does not breach any document or agreement binding on it or any other
Guarantor or Relevant Company or any law or the memorandum and articles of
association or any other constituent documents of the Relevant Company.
(b) (AUTHORITY) It has the power to enter into each Bank Document to which it is
a party and to carry out any transaction or obligation contemplated by it.
Furthermore, no further corporate action is necessary for it to enter into
the Bank Documents to which it is party and draw under any facility provided
to it under a Bank Document. Each person held out in a Verification
Certificate or other document signed by a secretary or director as having
that authority, is authorised to sign a draw down or other notice on its
behalf.
(c) (INFORMATION) All information provided by it to Westpac is or was true when
given and is not misleading by omission or otherwise.
(d) (DISCLOSURE) It has no material obligation other than those incurred in the
ordinary course of day to day trading (whether to pay money or otherwise and
whether or not contingent) to any person outside of the CFI Group or the SIM
Group which it has not disclosed in writing to Westpac prior to the date of
this Agreement.
(e) (ACCOUNTS) Its holding company's most recent consolidated and
unconsolidated accounts give a true and fair view under generally accepted
accounting principles. There has been no material adverse change or Material
Adverse Effect since the period they cover. They disclose all material
Finance Debt and material contingent liabilities.
(f) (LITIGATION) No litigation, tax claim, dispute or other proceeding is
current or, to its knowledge, threatened, which is likely to have a Material
Adverse Effect.
(g) (NO TRUSTEE) No Relevant Company is a trustee, except for a Subsidiary
which is a trustee of its superannuation funds and except for any implied
constructive or resulting trust which arises under its ordinary course of
business.
(h) (NO DEFAULT) There is no subsisting Event of Default, or Potential Event of
Default.
(i) (OTHER SECURITY INTERESTS) The execution and performance of this Agreement
and each other Bank Document to which it is a party does not result in a
Security Interest (other than under a Bank Document) being created on, or a
charge crystallising over, its or any other Guarantor's or Relevant
Company's assets.
(j) (SOLVENCY) It is solvent and there are reasonable grounds to expect that, on
execution of each Bank Document to which it is a party, it will continue to
be able to pay all its debts as and when they become due and payable.
<PAGE>
(k) (ENVIRONMENTAL LAW) No environmentally hazardous substance affects any of
its property the subject of a Security in breach of any law or the
requirements of any Governmental Agency.
Without limiting clause 121(a)(v)(B), the above representations and warranties
are repeated on each day on which a Customer draws down or otherwise makes use
of any facility provided by Westpac under a Bank Document.
12. UNDERTAKINGS
Each of SIM and CFI undertakes as follows unless Westpac otherwise consents in
writing.
12.1 INFORMATION
(a) (INFORMATION) It will provide the following to Westpac:
(i) Audited consolidated or aggregated (as the case may be) annual
accounts (not later than 120 days from balance date);
(ii) Consolidated or aggregated (as the case may be) annual three year
projections and budgets (not later than 120 days from balance date);
(iii) Consolidated or aggregated (as the case may be) semi-annual accounts
(within 45 days after the end of the half); and
(iv) Consolidated or aggregated (as the case may be) quarterly management
accounts (within 30 days after the end of the quarter),
which relate to CFI Group, SIM Group and the combined CFI Group and SIM
Group,
(v) a certificate by two of its directors (not later than 30 days from
the end of each accounting quarter and on production of the audited
consolidated and aggregated (as the case may be) annual accounts)
including the following representations/information:
(a) that nothing has occurred which constitutes an Event of Default
or Potential Event of Default;
(b) that the representations and warranties by each Guarantor in
this Agreement are true as though they had been made at the date
of the certificate in respect of the facts and circumstances
then subsisting;
(c) that it and each Guarantor has complied with and continues to
comply with the financial undertakings in clauses 122 (Negative
Pledges) and 123 (Financial Ratio Covenants); and
(d) the CFI Group's and SIM Group's consolidated:
(1) interest rate and foreign exchange exposures at the time of
the report and details of hedging or other risk reduction
strategies applied by management to the exposures;
(2) balance sheet;
(3) profit and loss account;
(4) cash flow statement; and
<PAGE>
(5) performance against budget and revised forecast for the
month, quarter, year to date and corresponding period of the
preceding year,
In the case of audited accounts, the certificate should have
attached a certificate by the auditor as to compliance with the
financial undertakings;
(vi) details of any material property or real estate acquired or
purchased by a Relevant Company;
(vii) promptly, details of any actual or proposed sale of any asset the
proceeds of which must be dealt with under clause 1.1(b)(ii) of the
Bill Facility;
(viii) promptly, all documents issued by it to any stock exchange or
shareholders;
(ix) promptly, details of any substantial dispute between a Relevant
Company and a Governmental Agency, or a proposal by a Governmental
Agency to acquire compulsory all or a substantial part of any
Relevant Company's assets;
(x) promptly, details of any substantial dispute between a Relevant
Company and a Franchisor;
(xi) promptly, notice of any litigation to which it or a Relevant Company
is a party which may have a Material Adverse Effect;
(xii) promptly, any other information reasonably requested by Westpac;
(xiii) promptly, any other information in relation to the CFI Group's and
SIM Group's financial condition or business which Westpac may
reasonably request; and
(xiv) promptly, any correspondence between a Relevant Company and a
Government Agency which is likely to have a material adverse affect
on the CFI Group's or SIM Group's business or assets.
(b) (QUARTERLY MEETINGS) At Westpac's request, it will meet with Westpac
quarterly to review the consolidated and aggregated quarterly management
accounts (within 14 days after receipt by Westpac of the consolidated and
aggregated quarterly management accounts);
(c) (NOTICE OF DEFAULT) It will immediately notify Westpac as soon as it
becomes aware of any Event of Default or Potential Event of Default.
(d) (INSURANCE POLICIES) It will deliver to Westpac up-to-date copies of
insurance policy(ies) insuring all assets forming part of Westpac's Security
for full replacement value against fire and other risks duly signed by the
insurance company(ies) and having the interest of Westpac noted as
mortgagee.
12.2 NEGATIVE PLEDGES
(a) (NEGATIVE PLEDGE) It will not create or allow, nor permit any Relevant
Company to create, or allow a Security Interest over any of its assets or
enter any other transaction or arrangement which gives a creditor a
preferential right to an asset owned or used by it except a lien or
statutory charge which arises by operation of law in the ordinary course of
its day to day business and does not secure Finance Debt, but only so long
as it pays the amount secured promptly, except where that amount is being
contested in good faith;
(b) (ASSETS) It will not dispose, nor permit any Relevant Company to dispose, of
all or any part of its assets or an interest in them or agree or attempt to
do so (whether in one or more related or unrelated transactions) except:
<PAGE>
(i) disposals in the ordinary course of its day to day trading;
(ii) in the case of a Guarantor which is not a member of the CFI Group,
disposals to any Guarantor which has granted Westpac a charge over
all its assets, to secure the same moneys as secured by this
Agreement;
(iii) in the case of a Guarantor which is a member of the CFI Group,
disposals to any other Guarantor which is a member of the CFI Group
and which has granted Westpac a charge over all its assets, to
secure the same moneys as secured by this Agreement;
(iv) disposals of surplus assets no longer required for its business; or
(v) disposals at arms length such that the aggregate disposals of CFI
Group and SIM Group are not more than $1,000,000.00 in value in any
financial year.
Where a Subsidiary issues shares and its holding company does not acquire
all of the shares, or a rateable portion of its shares according to its then
shareholding, the holding company will be taken to have disposed of the
shares that it does not acquire.
(c) (CHANGE OF BUSINESS) It will ensure that the Relevant Companies will not
substantially change the nature of the main business or businesses carried
on by them as a whole, and that no Relevant Company will take any action
which would have that effect, whether by disposal, acquisition or otherwise.
(d) (NEW SUBSIDIARY) It will ensure that no Relevant Company will create or
acquire a new subsidiary unless within 3 months that Subsidiary becomes a
party to a Guarantee in relation to the Bank Documents satisfactory to
Westpac, and provides evidence satisfactory to Westpac that it is bound by
the Guarantee.
(e) (ARMS LENGTH DEALINGS) It will ensure that no Relevant Company will deal
with any other party except at arms length for full commercial consideration
in the ordinary course of business.
(f) (PARTNERSHIP) It will not enter into any partnership without Westpac's
consent. For this purpose Westpac consents to the existing arrangements with
Sizzler Steak Seafood Salad Pte Ltd in Singapore.
12.3 FINANCIAL RATIO COVENANTS
(a) It will maintain the following financial ratios on a combined CFI Group and
SIM Group basis (unless Westpac otherwise agrees to vary them, whether
temporarily or otherwise):
(i) (EARNINGS GEARING) At any time, in respect of the previous 12
months, Total Group Debt to be not more than:
(A) 4.5 times EBIT, until 30 April 1998, inclusive;
(B) 3.0 times EBIT, from 1 May 1998 to 30 April 1999, inclusive; and
(C) 2.5 times EBIT, thereafter.
(ii) (EBIT/Interest Expense) At any time, in respect of the previous 12
months, EBIT to be not less than:
(A) 2.0 times Interest Expense (until 30 April 1998, inclusive); and
(B) 3.0 times Interest Expense (thereafter).
(iii) (TOTAL LIABILITIES/TOTAL TANGIBLE ASSETS) At any time, Total
Liabilities is not to exceed 60% of Total Tangible Assets.
<PAGE>
12.4 FINANCIAL COVENANTS
(a) (CAPITAL OUTFLOW CAP) If:
(i) no Finance Debt is due under a Bank Document and is unpaid; and
(ii) no Event of Default or Potential Event of Default has occurred or
will occur as a result of the payment;
then it may make the following payments:
(iii) the payments referred to in Clause 1.5 of the Bill Facility
agreement;
(iv) subject to clause 12.2(b), payments to Guarantors in the ordinary
course of business;
(v) subject to clause 12.2 (b), payments to Sizzler International, Inc.
or its associated companies (other than any Guarantors) or under the
SERP Guarantee, such that the aggregate of all payments made by all
members of the CFI Group and the SIM Group does not at any time
exceed the following amounts during the following periods:
PERIOD USD AMOUNT PER WEEK
from 26/9/97 to 30/4/98 39,791.18
from 1/5/98 to 30/4/99 41,780.74
from 1/5/99 to 30/4/00 43,869.78
from 1/5/00 to 30/4/01 46,063.26
from 1/5/01 to 30/4/02 48,366.43
from 1/5/02 to 30/9/02 50,784.75
(vi) a single loan of USD1,740,000 by CFI to Sizzler International, Inc.
or its associated companies to be made before 30 April 1998.
Except as detailed above it will not make any payments (whether dividend or
relating to any Finance Debt or any other payments of a capital or income
nature) to Sizzler International, Inc. or its associated companies or under
the SERP Guarantee.
(b) (CAPITAL EXPENDITURE) It will ensure that in each of the following financial
years capital expenditure of CFI Group and SIM Group (including the cost of
assets subject to any Lease) does not exceed the following amounts at the
following times without Westpac's prior written consent. Year ending 30
April:
(i) 1998, $11,200,000.00;
(ii) 1999, $10,300,000.00;
(iii) 2000, $7,800,000.00;
(iv) 2001, $11,300,000.00; and
(v) 2002, $11,900,000.00.
(c) (TOTAL GROUP DEBT CAP) It will ensure that the Total Group Debt does not at
any time exceed:
(i) $65 million (until 30 April 1998, inclusive);
(ii) $55 million (until 30 April 1999, inclusive);
(iii) $45 million (thereafter).
<PAGE>
(d) (LIMITATION ON INDEBTEDNESS) It will ensure that, unless Westpac otherwise
consents in writing, Total Group Debt owed actually or contingently to any
persons other than Westpac does not at any time exceed $10 million minus the
total aggregate principal amounts actually or contingently payable under all
Finance Leases between members of the CFI Group or SIM Group and Westpac.
(e) (LIMITATION ON OPERATING LEASES) It will not enter into any operating lease
without the prior written consent of Westpac if upon entry into such
Operating Lease the aggregate amount payable under operating leases entered
into by CFI Group and SIM Group will exceed $1,000,000.00.
(f) (MINIMUM TANGIBLE NET WORTH) Tangible Net Worth of CFI Group and SIM Group
at all times to exceed the greater of:
(i) $67.9 million; and
(ii) 85% of the Tangible Net Worth at the end of the previous financial
year.
12.5 GENERAL UNDERTAKINGS
(a) (BANK ACCOUNTS) It will conduct its bank accounts with Westpac.
(b) (ACCOUNTING PRINCIPLES) It will ensure that each balance sheet, profit and
loss account and cash flow statement provided to Westpac:
(i) complies with:
(A) accounting principles and practices generally accepted in
Australia or the United States of America as appropriate
consistently applied except to the extent disclosed in them; and
(B) all applicable laws,
(ii) gives a true and fair view in respect of all accounts of the
respective group's consolidated and unconsolidated state of affairs
and the result of the respective group's consolidated operations, at
the date, and for the period ending on the date, to which those
statements are prepared.
(c) (AUTHORISATIONS) It will ensure that each Relevant Company will keep in
force and comply with all Authorisations required in relation to the
performance and enforceability of the Bank Documents. In addition, it will
keep in force, renew and comply with all material Authorisations required in
relation to its business as carried on now or in the future.
(d) (COMPLIANCE WITH LAW) It will ensure that each Relevant Company will comply
with all laws binding on it where failure to comply is likely to have a
Material Adverse Effect.
(e) (PAY TAXES) It will ensure that each Relevant Company will pay its taxes
when due, except taxes which it is contesting in good faith where failure to
pay those contested taxes will not have a Material Adverse Effect.
(f) (INSURANCE) It will ensure that each Relevant Company will keep in force
insurance for its business and assets as would a prudent business of its
size conducting its business and owning its assets.
(g) (MORTGAGE) It will comply with any Security Interest over any of its
property.
(H) (MATERIAL AGREEMENTS) In respect of any material agreement, including
without limitation any franchise agreement, to which it is party:
(i) it will comply with its obligations under the agreement;
<PAGE>
(ii) it will not terminate the agreement;
(iii) it will promptly notify Westpac of any material breach of the
agreement by any party to it and any action taken by any party to it
to terminate the agreement;
(iv) it will not agree to any material variation to or grant a waiver in
respect of a material obligation contained in the agreement,
without Westpac's prior written consent.
(i) (INTELLECTUAL PROPERTY) In respect of any right title or interest it has in
respect of or in connection with any trade marks, confidential information,
copyright, patents, design rights, reports, drawings, specifications
("INTELLECTUAL PROPERTY RIGHTS") or any right to apply for registration of
such Intellectual Property Rights:
(i) it will maintain or apply, if applicable, for registration of such
Intellectual Property Rights;
(ii) it will not dispose of such Intellectual Property Rights;
(iii) it will comply with any material agreement relating to such
Intellectual Property Rights and will not agree to any material
variation to or grant any waiver in relation to a material obligation
in any such agreement; and
(iv) it will promptly notify Westpac of any material breach or termination
or proposed termination of any agreement in relation to such
Intellectual Property Rights.
12.6 UNDERTAKINGS BY GUARANTORS
Each Guarantor gives the undertakings contained in this Clause 12, other than
the undertakings contained in Sub-clauses 121 (a)(i) - (v), 121(b) and 121(d)
unless Westpac otherwise consents in writing.
12.7 REVIEW
The capital expenditure limits referred to in Clause 124() are to be reviewed
annually (commencing in 1998) following delivery to Westpac of the budgets
referred to in Clause 121. Amendments, to these limits, agreed between CFI and
Westpac must be in writing and signed by CFI and Westpac.
13. EVENTS OF DEFAULT
Each of the following is an Event of Default (even if outside the control of any
Relevant Company) except as stated below.
(a) (OBLIGATIONS UNDER TRANSACTION DOCUMENTS) Any Relevant Company fails to do
any of the following (to the extent applicable to it):
(i) pay principal under a Bank Document or any interest or other amount
under a Bank Document on the due date;
(ii) comply with any of its financial undertakings in clauses 122 (Negative
Pledges) and 123 (Financial Ratio Covenants); or
(iii) comply with any other obligation in the Bank Documents and, if that
failure can be remedied within 30 days of written notice from Westpac,
it does not
<PAGE>
remedy that failure within 30 days of written notice from Westpac of
that failure.
(b) (MISREPRESENTATION) A representation or statement by or on behalf of a
Relevant Company in a Bank Document, or in a document provided under it, is
misleading in a material respect.
(c) (CROSS DEFAULT) Finance Debt of a Relevant Company totalling at least
$50,000.00 or an equivalent sum in any currency:
(i) is not paid when due (or within an applicable grace period) except
where it is being contested in good faith; or
(ii) becomes due and payable before its stated maturity, except as a result
of an exercise of a prepayment right in the absence of default; or
(iii) an obligation to provide finance to a Relevant Company totalling at
least that amount is terminated except as a result of voluntary
termination in the absence of default, or
an event of default as defined in any other Bank Document occurs.
(d) (WINDING UP) An application or order is made, or a resolution is passed or
proposed in a notice of meeting, for:
(i) the winding up, dissolution, official management or administration of
a Relevant Company or any analogous process; or
(ii) an arrangement compromise or composition with its creditors or a class
of them, or
(iii) an application is made for any of the above except one which is
frivolous and vexatious.
(e) (ENFORCEMENT AGAINST ASSETS) A receiver, receiver and manager,
administrator or similar officer is appointed over a Relevant Company or a
material asset or any material portion of its assets. A Security Interest is
enforced, or distress or other execution levied, against a material asset or
any material portion of the assets of a Relevant Company.
(f) (REDUCTION OF CAPITAL) A Guarantor or Customer reduces its capital, cancels
its uncalled capital or buys back its shares to an extent which is likely to
cause a breach of the financial undertakings in clause 12.
(g) (INSOLVENCY) A Relevant Company is insolvent or is deemed or presumed
insolvent under any applicable law. A Relevant Company ceases or threatens
to cease carrying on its business or paying its debts. A Relevant Company
disposes or threatens to dispose of a substantial part of its assets.
(h) (BANK DOCUMENTS) All or a material part of a Bank Document is for any
reason:
(i) terminated or of no force or limited force; or
(ii) terminable at the option of the Relevant Company, except as expressly
provided under that Bank Document.
(iii) A Relevant Company alleges that it is so.
(i) (INVESTIGATION) An investigator or any other form of enquiry is instituted
under the Corporations Law or similar legislation into the affairs of a
Relevant Company which in the reasonable opinion of Westpac is likely to
have a Material Adverse Effect.
<PAGE>
(j) (REVOCATION OF AUTHORISATION) An Authorisation which is material to the
business of a Guarantor or to the performance by the Relevant Companies of
the Bank Documents or their validity or enforceability ceases to have effect
and is not replaced by another Authorisation acceptable to Westpac.
(k) (MATERIAL ADVERSE CHANGE) There are any other circumstances including a
material adverse change to the business assets or financial condition of CFI
or the Relevant Companies taken as a whole which may in the opinion of
Westpac have a Material Adverse Effect.
(l) (CONTROL) Any Relevant Company or its holding company becomes controlled by
another person or there is a substantial change in the control of CFI or
SIM.
(m) (FUNDING APPLIED FOR ANY OTHER PURPOSE) Funding by Westpac to any Relevant
Company is applied for any purpose other than the purpose it was provided
for.
(n) (PRIOR INTEREST NOT DISCLOSED) A Relevant Company did not disclose to
Westpac in writing, before or at the time this Agreement was executed, the
fact that a Security Interest, trust, option or other third party right or
interest affects its property, assets and rights the subject of a Security.
(o) (CHANGE IN CONSTITUENT DOCUMENTS) Any Relevant Company alters its Memorandum
or Articles of Association or other constituent documents in any material
way without the consent of Westpac.
(p) (COMPULSORY ACQUISITION):
(i) All or any material part of any Relevant Company's property the
subject of a Security is compulsorily acquired by or by order of any
Governmental Agency or under any law and the amount of compensation
received or to be received by that Relevant Company in respect of that
acquisition is, in the opinion of Westpac, substantially less than the
value of the property acquired or that amount is not dealt with in
accordance with this Agreement;
(ii) Any Governmental Agency orders the sale, vesting or divesting of all
or any material part of a Relevant Company's property the subject of a
Security and the amount of any compensation received or to be received
by that Relevant Company in respect of that sale, vesting or divesting
is, in the opinion of Westpac, substantially less that the value of
the property sold, vested or divested or that amount is not dealt with
in accordance with this Agreement; or
(iii) Any Governmental Agency takes any step for the purposes of any of the
above,
the result of which (whether individually or cumulatively) has a Material
Adverse Effect).
Nothing in paragraph (d) or (f) is an Event of Default if done for the purpose
of solvent reorganisation previously approved by Westpac.
<PAGE>
14. WESTPAC'S REMEDIES AND POWERS
14.1 EVENT OF DEFAULT
In addition to any other rights provided by law or any Bank Document at any time
after an Event of Default (whether or not it is continuing) Westpac may do
either or both of the following:
(a) terminate any facility provided under any Bank Document; and
(b) by written notice require the Customer to repay all amounts lent or provided
to it under any Bank Document (subject to the provisions of the Bank
Document), and all other amounts actually or contingently outstanding by it
under this Agreement or any Bank Document, and the respective Customer must
pay them immediately.
(c) by written notice require the Guarantor to pay all the amounts Guaranteed by
it under this Agreement or any Bank Document (whether or not contingently
due), and the respective Guarantor must pay them immediately.
If an amount is paid to Westpac to cover an amount contingently owing, Westpac
will hold that amount in an interest bearing account until the amount becomes
actually owing or ceases to be contingently owing. Westpac will then apply the
amount in the account (including interest) in payment of the amount actually
owing and return the balance to the relevant Guarantor.
14.2 NO WAIVER
No failure to exercise a right or power, and no delay in exercising a right or
power, operates as a waiver. Waivers must be in writing.
<PAGE>
GENERAL PROVISIONS
------------------
15. PAYMENTS
15.1 PAYMENTS
The Guarantor will make all payments under this Agreement when Westpac demands
them and without deducting any amounts the Guarantor may claim from Westpac.
Payments must be in cleared funds and free of any set-off or deduction, except
for taxes where required by law. The Guarantor must pay:
(a) in the currency in which the amounts demanded are denominated, and
(b) at Westpac's address set out on the front cover or any other address which
Westpac gives from time to time.
If any amount is received by Westpac in a currency other than that in which it
was demanded, the Guarantor will compensate Westpac for any exchange loss.
If the Guarantor is required to deduct any tax from any payment (except a tax on
Westpac's overall net income), then:
(a) it must pay that amount to the appropriate authority and promptly give
Westpac evidence of payment, and
(b) the amount payable is increased so that (after deducting that tax, and
paying any taxes on the increased amount) Westpac receives the same amount
it would have received had no deduction been made.
15.2 TIME OF PAYMENT
Unless otherwise stated, amounts payable under any of the Clauses 16 (Yield
Protection) and 17 (Additional Payments), are payable within two Business Days
of demand.
15.3 INTEREST
The Guarantor will pay interest on any amount which has been demanded by Westpac
but remains unpaid at the rate at which overdue amounts bear interest under the
Bank Documents. If several rates are provided for in the Bank Documents,
interest under these conditions will be payable at the highest of those rates.
Interest will accrue each day on each amount due under a Bank Document but
unpaid. Unless otherwise specified in the Bank Document, the rate will be
Westpac's Reference Lending Rate' then applicable plus:
(a) in the case of a facility governed by a Bank Document, any margin applied by
Westpac under the relevant Bank Document plus 2% per annum; and
(b) otherwise, 4% per annum.
That interest accrues before and after any judgment. Unless it does so more
often, Westpac will be taken to have debited monthly the Guarantor's account
with accrued interest under this paragraph. That interest will then itself bear
interest.
Despite any other provision in any other Bank Document, but only for the purpose
of calculating interest, if Westpac is paid moneys by one or more of the
Guarantors under a Bank Document and Westpac, although being entitled to apply
those moneys to reduce the Secured Moneys, decides instead to deposit the moneys
into one or more suspense
<PAGE>
accounts, interest on the Secured Moneys will be calculated on the difference
between the Secured Moneys and the aggregate of all amounts held in such
suspense account(s).
16. YIELD PROTECTION
Whenever Westpac determines that a Change in Law (as defined below) has the
effect of:
(a) increasing its costs of funding or maintaining a facility under a Bank
Document, or reducing its return or amounts received in respect of the
facility; or
(b) reducing its return on capital allocated to a facility under a Bank Document
(including because more capital needs to be allocated to the facility or
cannot be used elsewhere),
then it will promptly notify the relevant Guarantor, who must pay Westpac the
amount Westpac certifies is necessary to compensate it. That certificate will
give an outline of the calculation, and will be conclusive and bind the
Guarantor in the absence of manifest error.
If the Guarantor so requests, Westpac will negotiate in good faith with a view
to finding a means of minimising the effect, but it is not a defence that the
effect could have been avoided or minimised.
A CHANGE IN LAW is the introduction of, or a change in, any law, official
directive, ruling or request or a change in its interpretation. If it does not
have the force of law, it must be one with which responsible Australian banks
would comply. Without limitation, it includes any occurrence which is a "Change
in Law" as described above and which relates to capital adequacy, special
deposit, liquidity, reserve, prime assets, tax or prudential requirements
(except a change in tax on overall net income).
17. ADDITIONAL PAYMENTS
17.1 INDEMNITY AND COSTS
Each Guarantor will indemnify Westpac against any liability, loss, cost or
expense (including legal costs on a full indemnity basis and the cost to Westpac
of in house counsel at reasonable rates) it incurs in or as a result of an Event
of Default or Potential Event of Default or a breach of its obligations, or
actual or contemplated enforcement of this Agreement or any Bank Document to
which it is a party or any Security.
17.2 CURRENCY INDEMNITY
Each Guarantor will indemnify Westpac if any amount payable under or in
connection with a Bank Document is received in a currency which is different
from that in which it is required to be paid under this Agreement. This
indemnity applies whatever the reason for receipt of the amount in a different
currency.
17.3 EXPENSES
The Guarantor will pay:
(a) all stamp, transaction and other similar duties and charges, plus
(b) all external legal costs which Westpac incurs (on a full indemnity basis),
<PAGE>
in relation to this Agreement or any Bank Document to which it is a party and
any Security and any transaction under them. This includes financial
institutions duty and debits tax.
The Guarantor will on a full indemnity basis pay all amounts which Westpac
incurs in relation to the enforcement of this Agreement or any Security.
Each Guarantor will also pay any fines and penalties unless they result from a
failure by Westpac to lodge a document for stamping in sufficient time, having
received from the Guarantor the amount of stamp duty in good time.
18. GENERAL
18.1 TERM
This Agreement will continue so long as there is any liability, obligation,
document or agreement between Westpac and any Guarantor or Westpac releases it.
18.2 STATEMENTS
The Guarantor agrees that a written statement by Westpac, setting out the amount
which the Guarantor owes under this Agreement, is sufficient proof that the
Guarantor owes the amount stated, unless it is proved wrong.
18.3 NOTICES
Any notice, demand, statement, certificate or other communication by Westpac
under any Bank Document may be given by any person whose title includes the word
"manager", "counsel", "head" or "president", or any attorney authorised to do
so.
Notices may be sent by facsimile, post or any other means to the recipient's
address or number set out on the signature page of this Agreement or in any
other address or number notified to the sender by the recipient.
Notices will be taken to have been given if delivered or left at that address on
the date on which it is delivered or left.
18.4 AGENT FOR SERVICE OF PROCESS
Each Guarantor having its registered office outside Queensland:
(a) irrevocably appoints Collins Finance and Management Pty Ltd A.C.N. 009 996
721 ("COLLINS FINANCE") as its agent for service of process relating to any
proceedings before the courts and appellate courts of the State of
Queensland in connection with each Bank Document; and
(b) agrees that failure by Collins Finance to notify it of the process will not
invalidate the proceedings concerned.
19. APPROPRIATION AND SET-OFF
19.1 APPROPRIATION
Any money paid to Westpac to reduce the Customer's debts to Westpac may be used
to pay off any part of the Customer's debts which Westpac chooses.
<PAGE>
19.2 SET-OFF
If the Guarantor has any money in any account with Westpac, Westpac may use it
to pay money the Guarantor owes to Westpac under this Agreement, but it need not
do so. It can convert currencies using its normal procedures.
To the maximum extent allowed by law, the Guarantor gives up any right to set
off any amounts Westpac owes it against amounts owed by the Guarantor under this
Agreement.
20. ASSIGNMENT AND TRANSFER
Westpac can transfer its rights under this Agreement to someone else. If
Westpac does, this Agreement will apply to the transferee as if it were Westpac.
To the maximum extent allowed by law, any transfer will be free of any set off,
equity or cross-claim which but for this paragraph the Guarantor would have had
against Westpac or the transferee of this Agreement. Westpac may disclose
information concerning the Guarantee or the Guarantor to a potential transferee
or sub-participant of this Agreement, the Guaranteed Obligations or the
Guaranteed Money.
No Guarantor may assign its rights under any Bank Document.
21. RELIANCE
The Guarantor acknowledges that it did not sign this Agreement relying on any
promises or statements made by Westpac. It does not matter whether they were
made in response to any question or not.
The only terms which apply to this Agreement are contained in it.
Westpac is not required to do anything in relation to, or tell the Guarantor
anything concerning, the Customer's financial and business condition and affairs
or its transactions with Westpac.
22. MULTIPLE PARTIES
22.1 MULTIPLE GUARANTORS
The terms of this Agreement apply to each Guarantor individually and to all
Guarantors as a group. Each Guarantor is individually liable for the full
amount of the Guaranteed Moneys, even if one or more of the others:
(a) has not signed or is not bound by it, or
(b) in the future stops being liable (for example, because Westpac releases that
Guarantor).
Westpac can demand payment from one or more of the Guarantors without demanding
it from the others.
References to "the Guarantor", "a Guarantor" or "Guarantors" shall be construed
accordingly.
<PAGE>
22.2 MULTIPLE CUSTOMERS
The terms of the guarantee and this Agreement apply to each Customer
individually and to all of them as a group. Without limiting the above, this
Agreement applies to money owed by any one or more of them.
References to "the Customer", "a Customer" or "Customers" shall be construed
accordingly
23. NEW GUARANTORS
A party can join this Agreement as a guarantor. To do so the party must sign
an accession agreement in the form attached. Upon signing the agreement the
party will automatically become a guarantor under this Agreement and it, as well
as the other parties to this Agreement, will have the same obligations and
rights as if the party were named in it as a Guarantor and Customer, and as if
the party had signed this Agreement.
24. LAW AND JURISDICTION
This Agreement is governed by Queensland law. The Guarantor accepts the non-
exclusive jurisdiction of the courts having jurisdiction there.
Any law that allows the Guarantor or the Customer to avoid or defer payment, or
that gives the Guarantor or Customer rights not contained in this Agreement,
does not apply, unless the law is one which applies despite an agreement to the
contrary. If any part of this Agreement is prohibited or unenforceable, it will
not affect the remaining part.
25. COUNTERPARTS
This Agreement may be executed in any number of counterparts. All of such
counterparts, taken together, shall be deemed to constitute the one instrument.
26. ATTORNEYS
Each attorney executing this agreement states that he has no notice of
revocation of his power of attorney.
27. INCONSISTENCY
To the extent that there is any express inconsistency between the terms of this
Agreement and any other Bank Document the terms of this Agreement shall prevail.
<PAGE>
SCHEDULE A -- GUARANTORS
------------------------
<TABLE>
<CAPTION>
NAME OF COMPANY ACN/ARBN/ POSTAL ADDRESS
PLACE OF
INCORPORATION
<S> <C> <C>
Buffalo Ranch Australia Pty Ltd 009 937 900 16 Edmondstone Street,
Newmarket, Qld 4051
Collins Finance and Management Pty Ltd 009 996 721 16 Edmondstone Street,
Newmarket, Qld 4051
Collins Foods Australia Pty Ltd 009 914 103 16 Edmondstone Street,
Newmarket, Qld 4051
Collins Foods International Pty Ltd 009 980 250 16 Edmondstone Street,
Nevada Newmarket, Qld 4051
Collins International Inc Delaware 16 Edmondstone Street,
Newmarket, Qld 4051
Collins Property Development Pty Ltd 010 539 616 16 Edmondstone Street,
Newmarket, Qld 4051
Furnace Concepts Australia Corp. 070 065 468 16 Edmondstone Street,
Nevada Newmarket, Qld 4051
Furnace Concepts International Inc Nevada 16 Edmondstone Street,
Newmarket, Qld 4051
Gulliver's Australia Pty Ltd 009 988 381 16 Edmondstone Street,
Newmarket, Qld 4051
Restaurant Concepts of Australia Pty Ltd Nevada 16 Edmondstone Street,
(Deregistered in Australia 24-04-96, code Newmarket, Qld 4051
s350, Formerly A.R.B.N. 010 761 770)
Restaurant Concepts International Inc Nevada 16 Edmondstone Street,
Newmarket, Qld 4051
Sizzler Australia Pty Ltd 010 060 876 16 Edmondstone Street,
Newmarket, Qld 4051
Sizzler Franchise Development Limited Bermuda 16 Edmondstone Street,
Newmarket, Qld 4051
Sizzler International Marks Inc. Delaware 16 Edmondstone Street,
Newmarket, Qld 4051
Sizzler New Zealand Limited Nevada 16 Edmondstone Street,
Newmarket, Qld 4051
Sizzler Restaurant Services Inc Nevada 16 Edmondstone Street,
Newmarket, Qld 4051
Sizzler South Pacific Pty Ltd 010 713 852 16 Edmondstone Street,
Nevada Newmarket, Qld 4051
Sizzler South-East Asia Inc Nevada 16 Edmondstone Street,
Newmarket, Qld 4051
The Italian Oven Australia Pty Ltd 010 102 388 16 Edmondstone Street,
Newmarket, Qld 4051
</TABLE>
<PAGE>
SCHEDULE B -- FORM OF ACCESSION AGREEMENT
-----------------------------------------
THIS ACCESSION AGREEMENT is made the .................. day of .......... 19...
BY [*] A.C.N. [*] of [*] (the "NEW GUARANTOR")
AND EACH OF THE COMPANIES LISTED IN THE SCHEDULE (each an "EXISTING GUARANTOR")
TO WESTPAC BANKING CORPORATION A.R.B.N. 007 457 141 ("WESTPAC").
THIS ACCESSION AGREEMENT IS ENTERED INTO IN EXCHANGE FOR Westpac giving credit,
or continuing to provide it, or not taking immediate action to enforce the
obligations of any Customer referred to in the Cross Guarantee and Indemnity and
Negative Pledge with Financial Ratio Covenants dated [*] between Westpac and the
Existing Guarantors (as amended from time to time, the "GUARANTEE") and for
other good and valuable consideration.
Expressions defined in the Guarantee have the same meaning in this Accession
Agreement.
THE NEW GUARANTOR AND THE EXISTING GUARANTORS agree with and acknowledge to
Westpac:
(a) That the New Guarantor shall as and from the date of this Accession
Agreement be subject in all respects to all those obligations to Westpac,
and the Existing Guarantors shall have the same liability with respect to
the indebtedness of the New Guarantor as if the New Guarantor was a
Guarantor and Customer respectively named as a party to the Guarantee and
all the terms of the Guarantee shall apply to and bind the Guarantors
(including the New Guarantor) accordingly.
(b) That at the time of executing this Accession Agreement the New Guarantor is
aware that the Existing Guarantors have already incurred liabilities to
Westpac and that the existence of such liabilities is not to diminish or
release in any way the liabilities of the New Guarantor arising under clause
(a) of this Accession Agreement or Westpac's rights powers and remedies
arising because of this Accession Agreement.
(c) [That at the time of executing this Accession Agreement the Existing
Guarantors are aware that the New Guarantor has already incurred liabilities
to Westpac and that the existence of such liabilities is not to diminish or
release in any way the liabilities of the Existing Guarantors arising under
the Guarantee.] [insert if the New Guarantor has existing liabilities to
Westpac]
This Agreement may be executed in any number of counterparts. All of such
counterparts, taken together, shall be deemed to constitute the one instrument.
Clause 184 of the Guarantee applies to this Agreement as if stated in it (with
"Guarantor" being read to include the New Guarantor).
SCHEDULE
--------
<TABLE>
<CAPTION>
NAME OF COMPANY ACN/ARBN/ POSTAL ADDRESS
PLACE OF
INCORPORATION
<S> <C> <C>
Buffalo Ranch Australia Pty Ltd 009 937 900 16 Edmondstone Street,
Newmarket, Qld 4051
Collins Finance and Management Pty Ltd 009 996 721 16 Edmondstone Street,
Newmarket, Qld 4051
Collins Foods Australia Pty Ltd 009 914 103 16 Edmondstone Street,
Newmarket, Qld 4051
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME OF COMPANY ACN/ARBN/ POSTAL ADDRESS
PLACE OF
INCORPORATION
<S> <C> <C>
Collins Foods International Pty Ltd 009 980 250 16 Edmondstone Street,
Nevada Newmarket, Qld 4051
Collins International Inc Delaware 16 Edmondstone Street,
Newmarket, Qld 4051
Collins Property Development Pty Ltd 010 539 616 16 Edmondstone Street,
Newmarket, Qld 4051
Furnace Concepts Australia Corp. 070 065 468 16 Edmondstone Street,
Nevada Newmarket, Qld 4051
Furnace Concepts International Inc Nevada 16 Edmondstone Street,
Newmarket, Qld 4051
Gulliver's Australia Pty Ltd 009 988 381 16 Edmondstone Street,
Newmarket, Qld 4051
Restaurant Concepts of Australia Pty Ltd Nevada 16 Edmondstone Street,
(Deregistered in Australia 24-04-96, code Newmarket, Qld 4051
s350, Formerly A.R.B.N. 010 761 770)
Restaurant Concepts International Inc Nevada 16 Edmondstone Street,
Newmarket, Qld 4051
Sizzler Australia Pty Ltd 010 060 876 16 Edmondstone Street,
Newmarket, Qld 4051
Sizzler Franchise Development Limited Bermuda 16 Edmondstone Street,
Newmarket, Qld 4051
Sizzler International Marks Inc. Delaware 16 Edmondstone Street,
Newmarket, Qld 4051
Sizzler New Zealand Limited Nevada 16 Edmondstone Street,
Newmarket, Qld 4051
Sizzler Restaurant Services Inc Nevada 16 Edmondstone Street,
Newmarket, Qld 4051
Sizzler South Pacific Pty Ltd 010 713 852 16 Edmondstone Street,
Nevada Newmarket, Qld 4051
Sizzler South-East Asia Inc Nevada 16 Edmondstone Street,
Newmarket, Qld 4051
The Italian Oven Australia Pty Ltd 010 102 388 16 Edmondstone Street,
Newmarket, Qld 4051
</TABLE>
<PAGE>
EXECUTED AS AN AGREEMENT in
THE COMMON SEAL of )
) ...............................
was duly affixed by authority of the Board ) Director
of Directors in the presence of )
)
(insert name).............................. ) ...............................
and ) Director/Secretary
)
(insert name).............................. )
[ONE EXECUTION TO BE INCLUDED FOR EACH NEW GUARANTOR AND EACH EXISTING
GUARANTOR]
<PAGE>
EXECUTION
---------
EXECUTED AS AN AGREEMENT in
ON
THE COMMON SEAL of )
)
BUFFALO RANCH AUSTRALIA PTY LTD ) ..............................
was duly affixed by authority of the Board ) Authorised officer
of Directors in the presence of )
) ..............................
(insert name).............................. ) Authorised officer
and )
)
(insert name).............................. )
THE COMMON SEAL of )
)
COLLINS FINANCE AND MANAGEMENT PTY LTD ) ..............................
was duly affixed by authority of the Board ) Authorised officer
of Directors in the presence of )
)
(insert name).............................. ) ..............................
and ) Authorised officer
)
(insert name).............................. )
THE COMMON SEAL of )
)
COLLINS FOODS AUSTRALIA PTY LTD ) ..............................
was duly affixed by authority of the Board ) Authorised officer
of Directors in the presence of )
)
(insert name).............................. ) ..............................
and ) Authorised officer
)
(insert name).............................. )
Page i
<PAGE>
THE COMMON SEAL of )
)
COLLINS FOODS INTERNATIONAL PTY LTD ) ..............................
was duly affixed by authority of the Board ) Authorised officer
of Directors in the presence of )
)
(insert name).............................. ) ..............................
and ) Authorised officer
)
(insert name).............................. )
THE COMMON SEAL of )
)
COLLINS INTERNATIONAL INC. ) ..............................
was duly affixed by authority of the Board ) Authorised officer
of Directors in the presence of )
)
(insert name).............................. ) ..............................
and ) Authorised officer
)
(insert name).............................. )
THE COMMON SEAL of )
)
COLLINS PROPERTY DEVELOPMENT PTY LTD ) ..............................
was duly affixed by authority of the Board ) Authorised officer
of Directors in the presence of )
)
(insert name).............................. ) ..............................
and ) Authorised officer
)
(insert name).............................. )
Page ii
<PAGE>
THE COMMON SEAL of )
)
FURNACE CONCEPTS AUSTRALIA CORP. ) ..............................
was duly affixed by authority of the Board ) Authorised officer
of Directors in the presence of )
)
(insert name).............................. ) ..............................
and ) Authorised officer
)
(insert name).............................. )
THE COMMON SEAL of )
)
FURNACE CONCEPTS INTERNATIONAL INC. ) ..............................
was duly affixed by authority of the Board ) Authorised officer
of Directors in the presence of )
)
(insert name).............................. ) ..............................
and ) Authorised officer
)
(insert name).............................. )
THE COMMON SEAL of )
)
GULLIVER'S AUSTRALIA PTY LTD ) ..............................
was duly affixed by authority of the Board ) Authorised officer
of Directors in the presence of )
)
(insert name).............................. ) ..............................
and ) Authorised officer
)
(insert name).............................. )
Page iii
<PAGE>
THE COMMON SEAL of )
)
RESTAURANT CONCEPTS OF AUSTRALIA PTY LTD ) ..............................
was duly affixed by authority of the Board ) Authorised officer
of Directors in the presence of )
)
(insert name).............................. ) ..............................
and ) Authorised officer
)
(insert name).............................. )
THE COMMON SEAL of )
)
RESTAURANT CONCEPTS INTERNATIONAL INC. ) ..............................
was duly affixed by authority of the Board ) Authorised officer
of Directors in the presence of )
)
(insert name).............................. ) ..............................
and ) Authorised officer
)
(insert name).............................. )
THE COMMON SEAL of )
)
SIZZLER AUSTRALIA PTY LTD ) ..............................
was duly affixed by authority of the Board ) Authorised officer
of Directors in the presence of )
)
(insert name).............................. ) ..............................
and ) Authorised officer
)
(insert name).............................. )
Page iv
<PAGE>
THE COMMON SEAL of )
)
SIZZLER FRANCHISE DEVELOPMENT LIMITED ) ..............................
was duly affixed by authority of the Board ) Authorised officer
of Directors in the presence of )
) ..............................
(insert name).............................. ) Authorised officer
and )
)
(insert name).............................. )
THE COMMON SEAL of )
)
SIZZLER INTERNATIONAL MARKS INC. ) ..............................
was duly affixed by authority of the Board ) Authorised officer
of Directors in the presence of )
)
(insert name).............................. ) ..............................
and ) Authorised officer
)
(insert name).............................. )
THE COMMON SEAL of )
)
SIZZLER NEW ZEALAND LIMITED ) ..............................
was duly affixed by authority of the Board ) Authorised officer
of Directors in the presence of )
)
(insert name).............................. ) ..............................
and ) Authorised officer
)
(insert name).............................. )
Page v
<PAGE>
THE COMMON SEAL of )
)
SIZZLER RESTAURANT SERVICES INC. ) ..............................
was duly affixed by authority of the Board ) Authorised officer
of Directors in the presence of )
)
(insert name).............................. ) ..............................
and ) Authorised officer
)
(insert name).............................. )
THE COMMON SEAL of )
)
SIZZLER SOUTH PACIFIC PTY LTD ) ..............................
was duly affixed by authority of the Board ) Authorised officer
of Directors in the presence of )
)
(insert name).............................. ) ..............................
and ) Authorised officer
)
(insert name).............................. )
THE COMMON SEAL of )
)
SIZZLER SOUTH-EAST ASIA INC. ) ..............................
was duly affixed by authority of the Board ) Authorised officer
of Directors in the presence of )
)
(insert name).............................. ) ..............................
and ) Authorised officer
)
(insert name).............................. )
Page vi
<PAGE>
THE COMMON SEAL of )
)
THE ITALIAN OVEN AUSTRALIA PTY LTD ) ..............................
was duly affixed by authority of the Board ) Authorised officer
of Directors in the presence of )
)
(insert name).............................. ) ..............................
and ) Authorised officer
)
(insert name).............................. )
Page vii
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C>
UNLIMITED CROSS GUARANTEE AND INDEMNITY AND NEGATIVE
PLEDGE WITH FINANCIAL RATIO COVENANTS.................................................. 1
DEFINITIONS AND INTERPRETATION............................................................... 2
1. Definitions............................................................................... 2
CONDITIONS OF GUARANTEE AND INDEMNITY........................................................ 6
2. Guarantee................................................................................. 6
3. Extent of Guarantee....................................................................... 6
4. Continuing Guarantee...................................................................... 6
5. Insolvency................................................................................ 6
6. Variation of Arrangements with Customer................................................... 7
7. Unconditional Obligation.................................................................. 7
8. Refund of Payments........................................................................ 7
9. Indemnity................................................................................. 8
10. Other Security........................................................................... 8
NEGATIVE PLEDGE AND FINANCIAL RATIO COVENANTS................................................ 9
11. Representations and Warranties........................................................... 9
12. Undertakings............................................................................. 10
12.1 Information....................................................................... 10
12.2 Negative Pledges.................................................................. 11
12.3 Financial Ratio Covenants......................................................... 12
12.4 Financial Covenants............................................................... 13
12.5 General Undertakings.............................................................. 14
12.6 Undertakings by Guarantors........................................................ 15
12.7 Review............................................................................ 15
13. Events of Default........................................................................ 15
14. Westpac's Remedies and Powers............................................................ 18
14.1 Event of Default.................................................................. 18
14.2 No waiver......................................................................... 18
GENERAL PROVISIONS........................................................................... 19
15. Payments................................................................................. 19
15.1 Payments.......................................................................... 19
15.2 Time of payment................................................................... 19
15.3 Interest.......................................................................... 19
16. Yield Protection......................................................................... 20
17. Additional Payments...................................................................... 20
17.1 Indemnity and costs............................................................... 20
17.2 Currency Indemnity................................................................ 20
17.3 Expenses.......................................................................... 20
18. General.................................................................................. 21
</TABLE>
Page viii
<PAGE>
<TABLE>
<S> <C>
18.1 Term.............................................................................. 21
18.2 Statements........................................................................ 21
18.3 Notices........................................................................... 21
18.4 Agent for Service of Process...................................................... 21
19. Appropriation and Set-Off................................................................ 21
19.1 Appropriation..................................................................... 21
19.2 Set-Off........................................................................... 22
20. Assignment and Transfer.................................................................. 22
21. Reliance................................................................................. 22
22. Multiple Parties......................................................................... 22
22.1 Multiple Guarantors............................................................... 22
22.2 Multiple Customers................................................................ 23
23. New Guarantors........................................................................... 23
24. Law and Jurisdiction..................................................................... 23
25. Counterparts............................................................................. 23
26. Attorneys................................................................................ 23
27. Inconsistency............................................................................ 23
28........................................................................................... 23
SCHEDULE A -- GUARANTORS..................................................................... 24
SCHEDULE B -- FORM OF ACCESSION AGREEMENT.................................................... 26
EXECUTION.................................................................................... i
TABLE OF CONTENTS............................................................................ viii
</TABLE>
Page ix
<PAGE>
SUBORDINATION DEED
DEED dated 1997
BETWEEN BUFFALO RANCH AUSTRALIA PTY LTD ACN 009 937 900
COLLINS FINANCE AND MANAGEMENT PTY LTD
ACN 009 996 721
COLLINS FOODS AUSTRALIA PTY LTD ACN 009 914 103
COLLINS FOODS INTERNATIONAL PTY LTD ARBN 009 980 250
COLLINS INTERNATIONAL INC, A COMPANY INCORPORATED IN
DELAWARE, UNITED STATES OF AMERICA
COLLINS PROPERTY DEVELOPMENT PTY LTD
ACN 010 539 616
FURNACE CONCEPTS AUSTRALIA CORP. ARBN 070 065 468
GULLIVER'S AUSTRALIA PTY LTD ACN 009 988 381
RESTAURANT CONCEPTS OF AUSTRALIA, PTY LTD
RESTAURANT CONCEPTS INTERNATIONAL INC, A COMPANY
INCORPORATED IN NEVADA, UNITED STATES OF AMERICA
SIZZLER AUSTRALIA PTY LTD ACN 010 060 876
SIZZLER INTERNATIONAL MARKS INC., A COMPANY
INCORPORATED IN DELAWARE, UNITED STATES OF AMERICA
SIZZLER NEW ZEALAND LIMITED, A COMPANY INCORPORATED IN
NEVADA, UNITED STATES OF AMERICA
SIZZLER SOUTH PACIFIC PTY LTD ARBN 010 713 952
SIZZLER SOUTH-EAST ASIA INC, A COMPANY INCORPORATED IN
NEVADA, UNITED STATES OF AMERICA
THE ITALIAN OVEN AUSTRALIA PTY LTD ACN 010 102 388
SIZZLER FRANCHISE DEVELOPMENT LIMITED, A COMPANY
INCORPORATED IN, UNITED STATES OF AMERICA
SIZZLER RESTAURANT SERVICES, INC,
A COMPANY INCORPORATED IN NEVADA, UNITED STATES OF AMERICA
FURNACE CONCEPTS INTERNATIONAL, INC, A COMPANY
INCORPORATED IN NEVADA, UNITED STATES OF AMERICA
EACH OF OR C/- 16 EDMONDSTONE STREET, NEWMARKET, BRISBANE,
QUEENSLAND, AUSTRALIA
(EACH A 'DEBTOR')
AND SIZZLER INTERNATIONAL, INC., A COMPANY INCORPORATED IN
DELAWARE, UNITED STATES OF AMERICA
COLLINS PROPERTIES, INC., A COMPANY INCORPORATED IN
,UNITED STATES OF AMERICA
EACH OF C/- 16 EDMONDSTONE STREET, NEWMARKET, BRISBANE,
QUEENSLAND, AUSTRALIA
(EACH A 'JUNIOR CREDITOR')
AND WESTPAC BANKING CORPORATION ARBN 007 457 141, OF
260 QUEEN STREET, BRISBANE
('SENIOR CREDITOR')
RECITAL
The Senior Creditor, each Junior Creditor and each Debtor have agreed that the
Subordinated
<PAGE>
2
Debt will be subordinated to the Senior Debt on the terms and to the extent
provided in this document.
AGREEMENT
1. INTERPRETATION
1.1 DEFINITIONS
In this document:
'ACCESSION DEED' means an Accession Deed substantially in the form of
annexure 'A'.
'AUTHORISED OFFICER' means, in relation to a body corporate, a person for
the time being holding or acting in the office of director, chief
executive, deputy chief executive or secretary of that body corporate or a
person the title of whose office at the body corporate includes the word
'Manager' or the word 'Director' or the like.
'BUSINESS DAY' means a day on which the Senior Creditor is generally open
for business except a Saturday, Sunday or public holiday.
'CONTROLLER' means an administrator, receiver, receiver and manager,
trustee, provisional liquidator, liquidator, inspector, statutory manager
or any other person (however described) holding or appointed to an
analogous office or acting or purporting to act in an analogous capacity
whether pursuant to any statute, the order or authority of any Public
Authority, a Security Interest or otherwise.
'EVENT OF DEFAULT' means any event of default or other event in relation to
or under any document or arrangement evidencing the Subordinated Debt or
Senior Debt which entitles a Junior Creditor or the Senior Creditor to
accelerate the due date for payment or discharge of any liability.
'GUARANTEE' means a guarantee, indemnity, letter of credit, letter of
comfort or any other obligation whatever called and of whatever nature by
which a person is responsible for an obligation or debt of another.
'JUNIOR CREDITOR' includes the parties specified as such on the first page
of this documents and any person who becomes a Junior Creditor under an
Accession Deed;
'NEGATIVE PLEDGE' means the Unlimited Cross Guarantee and Indemnity and
Negative Pledge with Financial Ratio Covenants dated on or around the date
of this document between the Senior Creditor, Collins Foods International
Pty Ltd and others.
'POTENTIAL EVENT OF DEFAULT' means any event, thing or circumstance which
with the giving of notice or passage of time or both would become an Event
of Default.
'PUBLIC AUTHORITY' means the Crown, any government or minister or any
governmental, semi-governmental or judicial entity, department,
instrumentality or authority.
'SECURITY INTEREST' means any mortgage, pledge, lien, charge or other
preferential right, trust arrangement, agreement or arrangement of any kind
given or created as or by way of security.
<PAGE>
3
'SENIOR DEBT' means all money, debts and liabilities now or in the future
owing or remaining unpaid by any Debtor to the Senior Creditor (whether
actually or contingently and whether alone or with any other person) on any
account or in any way whatever.
'SIZZLER INTERNATIONAL' means Sizzler International Inc. a company
incorporated in Delaware, United States of America.
'SUBORDINATED DEBT' means all money, debts and liabilities now or in the
future owing or remaining unpaid by any Debtor to any Junior Creditor
(whether actually or contingently and whether alone or with any other
person) on any account or in any way whatever.
'SUBSIDIARY' has the same meaning it has in the Negative Pledge.
'SURETY', in respect of a Debtor, means a person other than the Debtor who
at any time has given a Guarantee, alone or jointly or jointly and
severally in respect of the Debtor's Senior Debt or Subordinated Debt.
'WINDING UP' of or in relation to a person includes:
(a) the dissolution, receivership, administration, liquidation,
provisional liquidation or bankruptcy of that person and any form of
administration of that person under any law relating to insolvency or
bankruptcy; and
(b) any equivalent or analogous procedure (however described) to which
that person may be subject under the law of any jurisdiction.
1.2 CONSTRUCTION
In this document, headings are for reference only and do not affect its
meaning and unless the contrary intention appears:
(a) the singular includes the plural and vice versa and words importing a
gender include other genders;
(b) other grammatical forms of defined words or expressions have
corresponding meanings;
(c) where there are two or more persons bound or to be bound an agreement
or obligation binds those persons severally and any two or more of
them jointly;
(d) a reference to a party to this document includes that party's
successors and permitted assigns;
(e) a reference to a document or agreement, including this document,
includes a reference to that document or agreement as novated,
altered or replaced from time to time;
(f) a reference to writing includes any mode of representing or
reproducing words in a visible form;
(g) a reference to any thing includes the whole or any part of that thing
and a
<PAGE>
4
reference to a group of things or persons includes each thing or
person in that group;
(h) a reference to 'dollar' or '$' is a reference to Australian currency;
(i) a reference to any legislation or statutory instrument or regulation
is to be construed in accordance with the Acts Interpretation Act
1901 (Cth) or the equivalent State legislation, as applicable, as if
this document were an Act; and
(j) words and expressions importing natural persons include partnerships,
bodies corporate, associations and Public Authorities.
2. CONSIDERATION
Each Junior Creditor and each Debtor acknowledge entering into and
incurring obligations and giving rights under this document in
consideration of the Senior Creditor continuing to provide financial
accommodation to or at the request of any Debtor.
3. SUBORDINATION
3.1 SUBORDINATION OF DEBT
Until the Senior Creditor has received payment of the Senior Debt in full:
(a) no Debtor will:
(i) except as permitted under clause 5, pay or allow payment of the
Subordinated Debt owed by it;
(ii) permit or assist a Junior Creditor to recover the Subordinated
Debt owed by it; or
(iii) set off the Subordinated Debt owed by it against any
indebtedness to the Junior Creditor to which that Subordinated
Debt is owed; and
(b) no Junior Creditor will;
(i) except as permitted under clause 5, accept payment of the
Subordinated Debt owed to it;
(ii) demand payment of, sue for or take other action to cause
payment or acceleration of payment of the Subordinated Debt
owed to it;
(iii) take or be a party to any proceeding or action for the purpose
of the appointment of a Controller in respect of or the Winding
Up of any Debtor; or
(iv) exercise any right of set off or combination of accounts in
respect of any Debtor.
3.2 WINDING UP PROCEEDINGS
<PAGE>
5
In any proceedings for the Winding Up of a Debtor:
(a) payment of the Debtor's Subordinated Debt is conditional on the
Senior Creditor having received payment of the Senior Debt in full;
(b) until the Senior Creditor has received payment of the Senior Debt in
full no Junior Creditor will, except on request from the Senior
Creditor, prove for any of its Subordinated Debt and will on proving
immediately send a copy of its notice of proof to the Senior
Creditor; and
(c) until the Senior Creditor has received payment of the Senior Debt in
full, each Junior Creditor will on request from the Senior Creditor
prove for the whole of its Subordinated Debt and will on proving send
a copy of its notice of proof to the Senior Creditor.
3.3 PROCEEDS
If, before the Senior Creditor has received payment of the Senior Debt in
full, a Junior Creditor receives any payment or recovers any amount in
respect of the Subordinated Debt owed to it which is not permitted under
clause 5 ('RECEIPT'):
(a) the Junior Creditor will pay an amount equal to the Receipt to the
Senior Creditor to be applied in reduction of the Senior Debt; and
(b) to the extent that this does not create any Security Interest which
would:
(i) breach any law or directive of any Public Authority; or
(ii) require registration in order not to be void or voidable in
full or against certain parties,
the Receipt will be held for and on behalf of the Senior Creditor by the
Junior Creditor and will be paid by the Junior Creditor in accordance with
clause 3.3(a).
3.4 NON-RETAINABLE RECEIPT
If any payment received by the Senior Creditor in respect of the Senior
Debt is subsequently avoided or repaid or conceded to be or compromised as
being void, voidable or repayable under any law relating to insolvency or
the protection of creditors or to any other matter or event whatever then
despite any release, discharge, acknowledgement or notice of revocation of
this document having been given on the basis of any such payment, the
payment will be deemed not to have been made and the Senior Creditor's
right to receive the full amount of the Senior Debt under this document
prior to any payment by any Debtor of the whole or any part of the
Subordinated Debt owed by it (other than as permitted under clause 5) will
not be prejudiced or affected.
4. REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS AND WARRANTIES OF JUNIOR CREDITORS AND DEBTORS
Each Junior Creditor and Debtor represents and warrants to the Senior
Creditor that:
<PAGE>
6
(a) it is a corporation and is properly incorporated and validly
existing;
(b) it is empowered to enter into this document and to carry out any
transaction or obligation contemplated by this document and all
necessary actions have been taken to render this document valid and
binding on it and to enable it to carry out any transaction or
obligation contemplated by this document;
(c) the execution and performance of this document by it has not and will
not:
(i) result in the contravention of a law or a directive of any
Public Authority;
(ii) result in the creation of a Security Interest on or the
crystallisation of a charge over any asset of it; or
(iii) conflict with the operation or terms of any document or
arrangement which binds it;
(d) Sizzler International and Collins Properties, Inc. are the only
members of the Sizzler International, Inc. group of companies which:
(i) are not Debtors; and
(ii) are owed or have the benefit of any obligation in the nature of
Subordinated Debt.
4.2 RELIANCE BY SENIOR CREDITOR
Each Junior Creditor and Debtor acknowledges that the Senior Creditor has
entered into this document in reliance upon the representations and
warranties given in this clause 4.
5. PERMITTED PAYMENTS
So long as:
(a) no Senior Debt is due and unpaid;
(b) no Event of Default or Potential Event of Default has occurred; and
(c) neither a Debtor nor a Junior Creditor is in breach of the provisions
of this document,
each Debtor may pay, and each Junior Creditor may receive and retain
payment of:
(d) such payments in respect of the Subordinated Debt owed by it or to it
(as the case may be) as are permitted under the Negative Pledge; and
(e) such payments as the Senior Creditor may allow by notice to the
relevant Debtor and relevant Junior Creditor.
6. RESTRICTIONS ON INDEBTEDNESS
<PAGE>
7
(a) Each Debtor undertakes that it will not become in any way indebted to
any Subsidiary of Sizzler International (other than a Junior Creditor
or a Debtor); and
(b) Sizzler International undertakes that it will not permit any Debtor to
become so indebted to any Subsidiary of Sizzler International (other
than a Junior Creditor),
unless each party to this document and the relevant Subsidiary first
executes and delivers to the Senior Creditor an Accession Deed under which
the relevant Subsidiary agrees to be bound by this Deed as a Junior
Creditor. Each Debtor and Junior Creditor irrevocably authorises each
Authorised Officer of the Senior Creditor to execute any Accession Deed on
its behalf. This authority is given as security for the obligations of the
party giving it to the Senior Creditor.
7. UNDERTAKINGS
7.1 DEBTOR'S UNDERTAKINGS
Each Debtor undertakes that:
(a) it will not novate, vary, replace or rescind any agreement or
instrument under which the Debtor's obligations in respect of the
Subordinated Debt owed by it arise without the written consent of the
Senior Creditor (such consent not to be unreasonably withheld);
(b) it will not permit any Guarantee to be given in respect of the
Subordinated Debt owed by it;
(c) it will not grant or permit to be granted a Security Interest in
respect of the Subordinated Debt owed by it;
(d) it will notify the Senior Creditor immediately it receives a demand
for payment of any part of the Subordinated Debt owed by it; and
(e) it will promptly provide the Senior Creditor with copies of all
documents evidencing the Subordinated Debt owed by it and any
amendments, waivers or variations to or in relation to such
documents.
7.2 JUNIOR CREDITOR'S UNDERTAKINGS
Each Junior Creditor undertakes that:
(a) it will not novate, vary, replace or rescind any agreement or
instrument under which a Debtor's obligations in respect of the
Subordinated Debt owed to it arise without the written consent of the
Senior Creditor (such consent not to be unreasonably withheld);
(b) it will not assign the Subordinated Debt owed to it or any interest
in it without the prior written consent of the Senior Creditor;
<PAGE>
8
(c) it will not accept the benefit of a Guarantee in respect of the
Subordinated Debt owed to it;
(d) it will not take or permit to exist a Security Interest in respect of
the Subordinated Debt owed to it;
(e) it will not waive payment of or release any Debtor or any of the
Debtor's Sureties from an obligation to pay the Subordinated Debt
owed to it or cause or permit its right to be paid the Subordinated
Debt owed to it to be prejudiced;
(f) it will exercise any voting power it has as shareholder of any Debtor
to ensure that the Debtor does not breach its obligations under this
document;
(g) it will use its best efforts to ensure that no Debtor breaches its
obligations under this document;
(h) it will notify the Senior Creditor of any default in any agreement or
instrument under which a Debtor's obligations in respect of the
Subordinated Debt owed to it arise; and
(i) it will promptly provide the Senior Creditor with copies of all
documents evidencing the Subordinated Debt owed to it and any
amendments, waivers or variations to or in relation to such
documents.
7.3 SIZZLER INTERNATIONAL'S UNDERTAKINGS
Sizzler International undertakes that:
(a) it will exercise any voting power it has as shareholder of any other
Junior Creditor to ensure that the Junior Creditor does not breach
its obligations under this document;
(b) it will use its best efforts to ensure that no other Junior Creditor
breaches its obligations under this document.
8. PRESERVATION OF SENIOR CREDITOR'S RIGHTS
8.1 CONTINUING SUBORDINATION
The subordination of the Subordinated Debt on the terms of this document
constitutes a continuing subordination and will not be affected by the
repayment in whole or in part from time to time of the Senior Debt.
8.2 OBLIGATIONS NOT AFFECTED
The subordination of the Subordinated Debt on the terms of this document
and the obligations of each Junior Creditor under this document will not be
abrogated, prejudiced or affected by:
(a) the granting of time or any other indulgence by the Senior Creditor
to any Debtor or to any other person;
<PAGE>
9
(b) the taking, variation, compromise, exchange, renewal, or release of
or failure to perfect any rights against any asset of or any rights
under any Security Interest in respect of the Senior Debt;
(c) the unenforceability, impossibility, illegality or invalidity of any
obligation of any Debtor to the Senior Creditor in respect of any
agreement or instrument under which the Debtor's obligations in
respect of the Senior Debt arise; or
(d) any other dealing, matter or thing which but for this provision could
or might operate to affect or discharge the obligations of any Junior
Creditor under this document.
9. NO COMPETITION
Until the Senior Creditor has received payment of the Senior Debt in full
no Junior Creditor will by reason of any payment or performance under this
document:
(a) be subrogated to any right or security which the Senior Creditor may
hold in respect of the Senior Debt or be entitled to any right of
contribution or indemnity; or
(b) claim, rank, prove or vote as a creditor of any Debtor or any of the
Debtor's Sureties in competition with the Senior Creditor.
10. OTHER SECURITY
Each Junior Creditor waives any right it may have of requesting the Senior
Creditor to proceed against or enforce any other Security Interest or to
claim payment from any person before claiming the benefit of this document.
11. COSTS AND EXPENSES
Each Debtor indemnifies the Senior Creditor against and must pay on demand
to the Senior Creditor all taxes, registration fees, costs, charges,
expenses and liabilities (including, but not limited to, all legal costs
and disbursements on a full indemnity basis) which the Senior Creditor may
be liable to pay in connection with:
(a) the negotiation, preparation, completion, registration or stamping of
this document; and
(b) the protection, enforcement or exercise or attempted enforcement or
exercise of any right, power, authority or remedy conferred on the
Senior Creditor under this document, by law or otherwise.
12. SET OFF
The Senior Creditor may without any demand or notice, set off and apply any
or all indebtedness at any time owing by the Senior Creditor to any Junior
Creditor against any debt owing by that Junior Creditor to the
SeniorCreditor whether or not that indebtedness or that debt is immediately
due and payable.
13. ASSIGNMENT
<PAGE>
10
The Senior Creditor may at any time assign or otherwise deal with or
dispose of all or any of its rights or benefits under this document.
14. POWER OF ATTORNEY
14.1 GRANT
Each Junior Creditor for valuable consideration irrevocably appoints the
Senior Creditor and each Authorised Officer of the Senior Creditor
severally to be the Junior Creditor's attorneys and in the Junior
Creditor's name (or in the name of the attorney) and on the Junior
Creditor's behalf after the occurrence of an Event of Default or Potential
Event of Default:
(a) to do anything which the Junior Creditor is obliged to do under this
document;
(b) to do anything which in the opinion of the attorney:
(i) is necessary or expedient to give effect to any right, power
or remedy conferred on the Senior Creditor; or
(ii) it is necessary or expedient that the Junior Creditor do,
under this document;
(c) to sign or enter into (or both) all transactions, documents,
agreements and instruments which in the opinion of the attorney it is
necessary or expedient that the Junior Creditor sign or enter into
under this document; and
(d) generally to use the Junior Creditor's name in the exercise of all or
any of the powers conferred on the Senior Creditor by or under this
document, statute, the general law or otherwise,
and the Junior Creditor undertakes to ratify anything done by an attorney
under this power of attorney.
14.2 DELEGATION BY ATTORNEY
Any attorney may delegate its powers (including the power to delegate) to
any person for any period and may revoke any delegation.
14.3 STATEMENT OF PURPOSE
The power of attorney created under this clause 14 is irrevocable and is
granted to secure the performance by each Junior Creditor of the Junior
Creditor's obligations under this document.
15. CERTIFICATES
A certificate signed by an Authorised Officer of the Senior Creditor about
a matter or about a sum payable to the Senior Creditor in connection with
this document is admissible in proceedings and is, except where there is
manifest error, conclusive
<PAGE>
11
evidence of the matters stated.
16. NOTICES
16.1 WHO MAY SIGN A NOTICE
Any notice from or demand by the Senior Creditor to or on a Debtor or
Junior Creditor may (without limiting any other valid form of execution) be
signed by an Authorised Officer of the Senior Creditor or by any solicitor
acting for the Senior Creditor, whose signature may be handwritten or
printed or otherwise reproduced by mechanical means.
16.2 HOW A NOTICE MAY BE SENT
In addition to any method of service provided for by statute, a notice or
demand by or on behalf of the Senior Creditor is taken to have been given
to or made on a Debtor or Junior Creditor if:
(a) sent by telex or facsimile to the telex or facsimile number of the
Debtor or the Junior Creditor last known to the Senior Creditor or,
if more than one telex or facsimile number is known to the Senior
Creditor, to any such telex or facsimile number;
(b) left for the Debtor or the Junior Creditor or sent by mail (and by
airmail if to an address outside Australia) to the Debtor or the
Junior Creditor at:
(i) any address of the Debtor or the Junior Creditor set out in
this document;
(ii) the Debtor or the Junior Creditor's usual abode or place of
business last known to the Senior Creditor;
(iii) the Debtor or the Junior Creditor's registered office; or
(iv) any premises owned or occupied by the Debtor or the Junior
Creditor.
16.3 VALIDITY OF NOTICE
Service under clause 16.2 is valid even if:
(a) the Winding Up of the relevant Debtor or Junior Creditor has occurred
or the Debtor or Junior Creditor is absent from the place at or to
which the notice or demand is left, delivered or sent; or
(b) where the notice or demand is sent by post or otherwise, it is
returned unclaimed.
16.4 RECEIPT OF NOTICE
Any notice or demand is taken to have been received by the relevant Debtor
or Junior Creditor:
(a) if left or delivered personally, on the same day;
<PAGE>
12
(b) if sent by post to an address in Australia, on the second Business
Day after the date of posting;
(c) if sent by post to an address outside Australia, on the fourth
Business Day after the date of posting;
(d) if sent by telex, on receipt of the Debtor or the Junior Creditor's
answerback code; and
(e) if sent by facsimile, on production of a transmission report by the
sender's facsimile machine indicating that the notice or demand has
been sent to the relevant number.
17. SEVERABILITY
17.1 PREFERRED CONSTRUCTION
A construction of this document which results in all provisions being
enforceable is to be preferred to a construction which does not so result.
17.2 SEVERANCE
If, despite the application of clause 17.1 a provision of this document is
illegal or unenforceable:
(a) if the provision would not be illegal or unenforceable if a word or
words were omitted, that word or those words will be severed; and
(b) in any other case, the whole provision will be severed,
and the remainder of this document will continue to have full force and
effect.
18. GOVERNING LAW AND JURISDICTION
This document is governed by the law of Queensland and each Debtor and
Junior Creditor irrevocably and unconditionally submits to the non-
exclusive jurisdiction of the courts of Queensland.
19. AGENT FOR SERVICE OF PROCESS
Each Debtor and Junior Creditor having its registered office outside
Queensland:
(a) irrevocably appoints Collins Finance and Management Pty Ltd ACN 009
996 721 ('Collins Finance') as its agent for service of process
relating to any proceedings before the courts and appellate courts of
the State of Queensland in connection with this document;
(b) agrees that failure by Collins Finance to notify it of the process
will not invalidate the proceedings concerned; and
(c) agrees that nothing shall affect the right to serve process in any
other manner permitted by law.
<PAGE>
13
20. ATTORNEYS
Each attorney executing this document states that he or she has no notice
of the revocation of his or her power of attorney.
EXECUTED as a deed.
THE COMMON SEAL of BUFFALO RANCH )
AUSTRALIA PTY LTD ACN 009 937 900 is )
affixed in accordance with its )
constituent documents in the presence of )
......................................... ...................................
Authorised Officer/Director Authorised Officer/Director
......................................... ...................................
Please Print Full Name Please Print Full Name
THE COMMON SEAL of COLLINS FINANCE )
AND MANAGEMENT PTY LTD ACN 009 996 )
721 is affixed in accordance with its )
constituent documents in the presence of )
......................................... ...................................
Authorised Officer/Director Authorised Officer/Director
......................................... ...................................
Please Print Full Name Please Print Full Name
THE COMMON SEAL of COLLINS FOODS )
AUSTRALIA PTY LTD ACN 009 914 103 is )
affixed in accordance with its constituent)
documents in the presence of )
......................................... ...................................
Authorised Officer/Director Authorised Officer/Director
......................................... ...................................
Please Print Full Name Please Print Full Name
<PAGE>
14
THE COMMON SEAL of COLLINS FOODS )
INTERNATIONAL PTY LTD ARBN 009 980 250 )
is affixed in accordance with its )
constituent documents in the presence of )
......................................... ...................................
Authorised Officer/Director Authorised Officer/Director
......................................... ...................................
Please Print Full Name Please Print Full Name
THE COMMON SEAL of COLLINS )
INTERNATIONAL INC is affixed in accordance)
with its constituent documents in the )
presence of )
......................................... ...................................
Authorised Officer/Director Authorised Officer/Director
......................................... ...................................
Please Print Full Name Please Print Full Name
THE COMMON SEAL of COLLINS )
PROPERTY DEVELOPMENT PTY LTD ACN 010 )
539 616 is affixed in accordance with its )
constituent documents in the presence of )
......................................... ...................................
Authorised Officer/Director Authorised Officer/Director
......................................... ...................................
Please Print Full Name Please Print Full Name
THE COMMON SEAL of FURNACE )
CONCEPTS AUSTRALIA CORP ARBN 070 065 )
<PAGE>
15
468 is affixed in accordance with its )
constituent documents in the presence of )
......................................... ...................................
Authorised Officer/Director Authorised Officer/Director
......................................... ...................................
Please Print Full Name Please Print Full Name
THE COMMON SEAL of GULLIVER'S )
AUSTRALIA PTY LTD ACN 009 988 381 is )
affixed in accordance with its constituent)
documents in the presence of )
......................................... ...................................
Authorised Officer/Director Authorised Officer/Director
......................................... ...................................
Please Print Full Name Please Print Full Name
THE COMMON SEAL of RESTAURANT )
CONCEPTS OF AUSTRALIA, PTY LTD is affixed)
in accordance with its constituent )
documents in the presence of )
......................................... ...................................
Authorised Officer/Director Authorised Officer/Director
......................................... ...................................
Please Print Full Name Please Print Full Name
THE COMMON SEAL of RESTAURANT )
CONCEPTS INTERNATIONAL INC is affixed in )
accordance with its constituent documents )
in the presence of )
......................................... ...................................
<PAGE>
16
Authorised Officer/Director Authorised Officer/Director
......................................... ...................................
Please Print Full Name Please Print Full Name
THE COMMON SEAL of SIZZLER )
AUSTRALIA PTY LTD ACN 010 060 876 is )
affixed in accordance with its constituent)
documents in the presence of )
......................................... ...................................
Authorised Officer/Director Authorised Officer/Director
......................................... ...................................
Please Print Full Name Please Print Full Name
THE COMMON SEAL of SIZZLER )
INTERNATIONAL MARKS INC is affixed in )
accordance with its constituent documents )
in the presence of )
......................................... ...................................
Authorised Officer/Director Authorised Officer/Director
......................................... ...................................
Please Print Full Name Please Print Full Name
THE COMMON SEAL of SIZZLER NEW )
ZEALAND LIMITED is affixed in accordance )
with its constituent documents in the )
presence of )
......................................... ...................................
Authorised Officer/Director Authorised Officer/Director
......................................... ...................................
Please Print Full Name Please Print Full Name
<PAGE>
17
THE COMMON SEAL of SIZZLER SOUTH )
PACIFIC PTY LTD ARBN 010 713 952 is )
affixed in accordance with its )
constituent documents in the presence of )
......................................... ...................................
Authorised Officer/Director Authorised Officer/Director
......................................... ...................................
Please Print Full Name Please Print Full Name
THE COMMON SEAL of SIZZLER SOUTH- )
EAST ASIA INC is affixed in accordance )
with its constituent documents in the )
presence of )
......................................... ...................................
Authorised Officer/Director Authorised Officer/Director
......................................... ...................................
Please Print Full Name Please Print Full Name
THE COMMON SEAL of THE ITALIAN )
OVEN AUSTRALIA PTY LTD ACN 010 102 388 )
is affixed in accordance with its )
constituent documents in the presence of )
......................................... ...................................
Authorised Officer/Director Authorised Officer/Director
......................................... ...................................
Please Print Full Name Please Print Full Name
THE COMMON SEAL of SIZZLER )
FRANCHISE DEVELOPMENT LIMITED is affixed )
in accordance with its constituent )
documents in the presence of )
<PAGE>
18
......................................... ...................................
Authorised Officer/Director Authorised Officer/Director
......................................... ...................................
Please Print Full Name Please Print Full Name
THE COMMON SEAL of SIZZLER )
RESTAURANT SERVICES, INC is affixed in )
accordance with its constituent documents )
in the presence of )
......................................... ...................................
Authorised Officer/Director Authorised Officer/Director
......................................... ...................................
Please Print Full Name Please Print Full Name
THE COMMON SEAL of FURNACE )
CONCEPTS INTERNATIONAL, INC is affixed in )
accordance with its constituent documents )
in the presence of )
......................................... ...................................
Authorised Officer/Director Authorised Officer/Director
......................................... ...................................
Please Print Full Name Please Print Full Name
THE COMMON SEAL of SIZZLER )
INTERNATIONAL, INC. is affixed in )
accordance with its constituent documents )
in the presence of )
......................................... ...................................
Authorised Officer/Director Authorised Officer/Director
<PAGE>
19
......................................... ...................................
Please Print Full Name Please Print Full Name
THE COMMON SEAL of COLLINS )
PROPERTIES, INC. is affixed in accordance)
with its constituent documents in the )
presence of )
......................................... ...................................
Authorised Officer/Director Authorised Officer/Director
......................................... ...................................
Please Print Full Name Please Print Full Name
SIGNED for and on behalf of WESTPAC )Westpac Banking Corporation by its
BANKING CORPORATION ARBN 007 457 141 )duly constituted Attorney:
by its duly constituted Attorney )
)
who certifies that he/she has no notice of)
revocation of the powers granted pursuant )
to Power of Attorney No. )...................................
in the presence of )
)
.........................................
A Justice of the Peace
<PAGE>
20
ANNEXURE 'A'
ACCESSION DEED
DEED dated 199#/200#
BETWEEN [NAME] Incorporated in [#] of [#] (the 'New Junior Creditor')
AND WESTPAC BANKING CORPORATION ARBN 007 457 141 of 260 Queen
Street, Brisbane ('Senior Creditor') for itself and on behalf
of all other parties to the Subordination Deed
RECITAL
A. The Senior Creditor, Sizzler International, Inc and others entered into a
Subordination Deed dated 1997 ('Subordination Deed').
B. The New Junior Creditor proposes to become a Junior Creditor under the
Subordination Deed.
AGREEMENT
21. INTERPRETATION
21.1 Definitions
Expressions defined in the Subordination Deed have the same meaning in this
document.
21.2 Construction
Clause 1.2 of the Subordination Deed applies to this document as if stated
in it.
22. NOVATION
With effect from the date of this document:
(a) the New Junior Creditor and each of the parties to the Subordination
Deed shall assume obligations towards each other and acquire rights
against each other as though the New Junior Creditor were originally
named in the Subordination Deed as a Junior Creditor; and
<PAGE>
21
(b) the New Junior Creditor shall be deemed a party to the Subordination
Deed as a Junior Creditor.
23. NOTICES
For the purposes of the Subordination Deed, the address for correspondence
of the New Junior Creditor is the address set out in the Schedule.
24. COUNTERPARTS
This document may be executed in any number of counterparts. All of such
counterparts taken together shall be deemed to constitute the one
instrument.
25. GOVERNING LAW AND JURISDICTION
This document is governed by the law of Queensland and each party to it
irrevocably and unconditionally submits to the non-exclusive jurisdiction
of the Courts of Queensland.
26. AGENT FOR SERVICE OF PROCESS
Each of the Debtors, Junior Creditors and New Junior Creditor having its
registered office outside Queensland:
(a) irrevocably appoints Collins Finance and Management Pty Ltd ACN 009
996 721 ('Collins Finance') as its agent for service of process
relating to any proceedings before the courts and appellate courts of
the State of Queensland in connection with this document;
(b) agrees that failure by Collins Finance to notify it of the process
will not invalidate the proceedings concerned; and
(c) agrees that nothing shall affect the right to serve process in any
other manner permitted by law.
27. ATTORNEYS
Each attorney executing this document states that he or she has no notice
of the revocation of his or her power of attorney.
<PAGE>
22
SCHEDULE
[ADDRESS OF NEW JUNIOR CREDITOR]
EXECUTED as a deed.
NEW JUNIOR CREDITOR:
SIGNED SEALED and DELIVERED for )
and on behalf of [#] by its attorney in )
the presence of )
......................................... ....................................
Signature of witness Attorney
.........................................
Name of witness (print)
OTHER PARTIES:
SIGNED SEALED and DELIVERED for )
and on behalf of WESTPAC BANKING )
CORPORATION for itself and on behalf of )
the other parties to the Subordination )
Deed by )
..........................................)
its duly constituted attorney in the
presence of:
......................................... ....................................
Signature of witness Attorney
.........................................
Name of witness (print)
<PAGE>
23
BUFFALO RANCH AUSTRALIA PTY LTD ACN 009 937 900
COLLINS FINANCE AND MANAGEMENT PTY LTD ACN 009 996 721
COLLINS FOODS AUSTRALIA PTY LTD ACN 009 914 103
COLLINS FOODS INTERNATIONAL PTY LTD ARBN 009 980 250
COLLINS INTERNATIONAL INC
COLLINS PROPERTY DEVELOPMENT PTY LTD ACN 010 539 616
FURNACE CONCEPTS AUSTRALIA CORP ARBN 070 065 468
GULLIVER'S AUSTRALIA PTY LTD ACN 009 988 381
RESTAURANT CONCEPTS OF AUSTRALIA, PTY LTD
RESTAURANT CONCEPTS INTERNATIONAL INC
SIZZLER AUSTRALIA PTY LTD ACN 010 060 876
SIZZLER INTERNATIONAL MARKS INC
SIZZLER NEW ZEALAND LIMITED
SIZZLER SOUTH PACIFIC PTY LTD ARBN 010 713 952
SIZZLER SOUTH-EAST ASIA INC
THE ITALIAN OVEN AUSTRALIA PTY LTD ACN 010 102 388
SIZZLER FRANCHISE DEVELOPMENT LIMITED
SIZZLER RESTAURANT SERVICES, INC
FURNACE CONCEPTS INTERNATIONAL, INC
(EACH A 'DEBTOR')
SIZZLER INTERNATIONAL, INC.
COLLINS PROPERTIES, INC.
(EACH A 'JUNIOR CREDITOR')
WESTPAC BANKING CORPORATION ARBN 007 457 141
('SENIOR CREDITOR')
SUBORDINATION DEED
MINTER ELLISON
Lawyers
Waterfront Place
1 Eagle Street
BRISBANE QLD 4000
DX 102 BRISBANE
Telephone (07) 3226 6333
<PAGE>
24
Facsimile (07) 3229 1066
ARF PAK 9703949
<PAGE>
i
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. INTERPRETATION..................................................................... 2
1.1 Definitions.................................................................. 2
1.2 Construction................................................................. 3
2. CONSIDERATION...................................................................... 4
3. SUBORDINATION...................................................................... 4
3.1 Subordination of debt........................................................ 4
3.2 Winding Up proceedings....................................................... 5
3.3 Proceeds..................................................................... 5
3.4 Non-retainable receipt....................................................... 5
4. REPRESENTATIONS AND WARRANTIES..................................................... 6
4.1 Representations and warranties of Junior Creditors and Debtors............... 6
4.2 Reliance by Senior Creditor.................................................. 6
5. PERMITTED PAYMENTS................................................................. 6
6. RESTRICTIONS ON INDEBTEDNESS....................................................... 7
7. UNDERTAKINGS....................................................................... 7
7.1 Debtor's undertakings........................................................ 7
7.2 Junior Creditor's undertakings............................................... 8
7.3 Sizzler International's Undertakings......................................... 8
8. PRESERVATION OF SENIOR CREDITOR'S RIGHTS........................................... 9
8.1 Continuing subordination..................................................... 9
8.2 Obligations not affected..................................................... 9
9. NO COMPETITION..................................................................... 9
10. OTHER SECURITY..................................................................... 9
11. COSTS AND EXPENSES................................................................. 10
12. SET OFF............................................................................ 10
13. ASSIGNMENT......................................................................... 10
14. POWER OF ATTORNEY.................................................................. 10
14.1 Grant....................................................................... 10
14.2 Delegation by attorney...................................................... 11
14.3 Statement of purpose........................................................ 11
15. CERTIFICATES....................................................................... 11
16. NOTICES............................................................................ 11
</TABLE>
<PAGE>
ii
<TABLE>
<S> <C>
16.1 Who may sign a notice....................................................... 11
16.2 How a notice may be sent.................................................... 11
16.3 Validity of notice.......................................................... 12
16.4 Receipt of notice........................................................... 12
17. SEVERABILITY....................................................................... 12
17.1 Preferred Construction...................................................... 12
17.2 Severance................................................................... 12
18. GOVERNING LAW AND JURISDICTION..................................................... 13
19. AGENT FOR SERVICE OF PROCESS....................................................... 13
</TABLE>
<PAGE>
STOCK PLEDGE
DEED dated 1997
BETWEEN SIZZLER INTERNATIONAL, INC., a Delaware Corporation, United States
of America C/- Sizzler Australia Pty Ltd ACN 010 060 876 of 16
Edmondstone Street, Newmarket, Brisbane, Australia
(`CHARGOR')
AND WESTPAC BANKING CORPORATION ARBN 007 457 141 of 260 Queen Street,
Brisbane, Australia
(`FINANCIER')
1. INTERPRETATION
2.1 DEFINITIONS
In this document:
`ATTORNEY' means an attorney appointed under a Relevant Agreement.
`AUTHORISED OFFICER' means a person holding or acting in the office of
director, chief executive or secretary, or whose title includes the word
`Manager' or `Director'.
`BUSINESS DAY' means a day on which banks (as defined in the Banking Act
1959 (Cth)) are open for general banking business in Brisbane, excluding
Saturdays and Sundays and public holidays.
`CHARGE' means the charge over, and security interest in the Charged
Property created under this document.
`CHARGED PROPERTY' means:
(a) one thousand (1,000) shares of the common stock of Collins Foods
International, Pty Ltd ('CFI'), represented by Certificate Number 2;
(b) one hundred (100) shares of the common stock of Sizzler
International Marks, Inc. (`SIM'), represented by Certificate
Number 1;
(c) all other shares of capital stock of whatever class of CFI and SIM,
that are now or hereafter owned by the Chargor, together with the
certificates representing such shares;
(d) all shares, securities, moneys or property representing any
dividends, distributions, warrants, rights and options relating to
such shares;
(e) without affecting the provisions of any Relevant Agreement
prohibiting a consolidation or merger, in the event of any
consolidation or merger of CFI or SIM, all shares of each class of
capital stock of the successor corporation,
<PAGE>
together with the certificates representing such shares; and
(f) all proceeds of the foregoing.
`COLLATERAL SECURITY' means a Guarantee, Security Interest or negotiable
instrument held or given, whether before or after this document is
executed, as security for or otherwise in connection with the Secured
Money.
`DEBTOR' means a Customer or Guarantor as defined in the Negative Pledge.
`EVENT OF DEFAULT' has the meaning given to it in the Negative Pledge and
includes the Events of Default contained in clauses 13(a)(iii) (without the
word `other' in the first line), (b), (d), (e) (with respect to the first
sentence only), (g) (with respect to the first sentence only) and (p) of
the Negative Pledge as if the Chargor were a Relevant Company.
`GUARANTEE' means a guarantee, indemnity, letter of credit, letter of
comfort or any other obligation (whatever it is called and whatever its
nature) by which a person is responsible for another person's obligation or
debt.
`LIQUIDATION' includes official management, receivership, compromise,
arrangement, amalgamation, administration, reconstruction, winding up,
dissolution, assignment for the benefit of creditors, arrangement or
compromise with creditors, bankruptcy or death.
`NEGATIVE PLEDGE' means the Unlimited Cross Guarantee and Indemnity and
Negative Pledge with Financial Ratio Covenants dated on or around the date
of this document between the Financier, Collins Foods International Pty Ltd
and others.
`PERMITTED SECURITY INTEREST' means:
(a) a Security Interest which the Financier has consented to. It does
not include a Security Interest which the Financier has consented to
on one or more conditions if those conditions are not complied with;
and
(b) a lien or charge on the Charged Property arising by operation of law
in the ordinary course of the Chargor's ordinary business. It does
not include a lien or charge which secures overdue debts.
`POTENTIAL EVENT OF DEFAULT' means any event, thing or circumstance which
with the giving of notice or passage of time or both would become an Event
of Default.
`PUBLIC AUTHORITY' means the Crown, a government, a minister of a
government, a government department, a statutory corporation, or a semi-
government or judicial entity.
`RECEIVER' means a receiver or receiver and manager appointed under this
document. When two or more persons are appointed, the expression
`Receiver' refers to each of those persons severally as well as to two or
more of them jointly.
`RECORDS' means all the information which relates in any way to a specified
person's business or any transaction entered into by the person, whether
the information is recorded electronically, magnetically or otherwise.
`RELEVANT AGREEMENT' means:
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3
(a) this document; and
(b) a Collateral Security; and
(c) an agreement between:
(i) the Financier and the Chargor; or
(ii) the Financier and a Debtor; or
(iii) the Financier and any combination of the Chargor and one or
more Debtors;
that relates to the Secured Money or another Relevant Agreement or
contains terms on which the Secured Money remains outstanding; and
(d) a document that the Chargor and the Financier agree is a Relevant
Agreement.
`SECURED MONEY' means all money that the Chargor or a Debtor is liable to
pay to the Financier at or after the date of this document on any account
and in any way whatever, and whether:
(a) the Chargor or Debtor is liable alone or together with another person;
or
(b) the Chargor or Debtor is liable as principal debtor, surety, partner,
trustee, beneficiary or otherwise; or
(c) the relevant liability:
(i) is actual or contingent, ascertained or unascertained, fixed or
fluctuating;
(ii) is in respect of principal, interest, Guarantee obligations,
purchase obligations, fees or damages; or
(iii) is in dollars, another currency or a combination of currencies,
or is of any other character.
Without limitation, `Secured Money' includes:
(d) all Taxes and all reasonable costs and expenses (including, but not
limited to, legal costs and expenses on a full indemnity basis) which
the Financier or a Receiver or Attorney pays, or is liable to pay, in
connection with:
(i) a Relevant Agreement, or negotiating, preparing, completing,
registering or stamping a Relevant Agreement; or
(ii) maintaining, preserving or protecting the Charged Property; or
(iii) surveying, valuing, inspecting or reporting on the Charged
Property; or
(iv) obtaining or attempting to obtain payment of the Secured Money
from
<PAGE>
4
any person; or
(v) protecting, enforcing or exercising a right, power or remedy of
the Financier or a Receiver or Attorney under or in connection
with a Relevant Agreement; or
(vi) an Event of Default or Potential Event of Default; or
(vii) the Financier providing financial accommodation to or at the
request of the Chargor; or
(viii) a receipt or payment of money under, or a transaction
contemplated by, a Relevant Agreement; and
(e) interest on all of the foregoing at the rates specified in the
Relevant Agreements. If no rate is specified, the rate is as
reasonably determined by the Financier. Interest accrues from day to
day, computed from the time:
(i) the Secured Money became owing (whether or not it is
immediately payable); or
(ii) in relation to costs and expenses, the relevant amount was
incurred.
Interest on Secured Money may be capitalised monthly or at the times
agreed between the parties. It then bears interest on itself.
Interest continues to be payable despite the Winding Up of any person,
or any judgement obtained against any person.
`SECURITY INTEREST' means a mortgage, pledge, lien, charge, preferential
right, trust arrangement, agreement or other arrangement given, arising or
created as security.
`TAX' includes a tax, levy, duty or charge (and associated penalty or
interest) imposed by a Public Authority. It includes income, withholding,
stamp and transaction taxes and duties but does not include income tax on
the overall net income of the Financier.
`WINDING UP' includes:
(a) dissolution, liquidation, provisional liquidation and bankruptcy; and
(b) a procedure which is equivalent or analogous in any jurisdiction.
3.1 OTHER EXPRESSIONS
In this document, unless the contrary intention appears:
(a) the singular includes the plural and vice versa;
(b) other grammatical forms of defined words or expressions have
corresponding meanings;
(c) if this document binds two or more persons, it binds them severally
and jointly;
<PAGE>
5
(d) a reference to a party to this document includes that party's
successors and permitted assigns;
(e) a reference to a document or agreement includes that document or
agreement as novated, altered or replaced;
(f) when two or more persons are named as Chargor, the term `Chargor' is a
reference to each of them alone and also to any two or more of them
together. The same applies to the term `Debtor';
(g) a reference to any thing includes the whole or any part of that thing
and a reference to a group of things or persons includes each thing or
person in that group;
(h) `dollars' and `$' refer to Australian currency;
(i) words implying natural persons include partnerships, bodies corporate,
associations and Public Authorities;
(j) a reference to any legislation or statutory instrument or regulation
is construed in accordance with the Acts Interpretation Act 1901 (Cth)
or the equivalent State legislation, as applicable.
4. CHARGE
5.1 CREATING THE CHARGE
The Chargor charges, pledges and grants a security interest in the Charged
Property in favour of the Financier as security for the payment of the
Secured Money.
6.1 FIXED CHARGE
The Charge is a fixed charge.
7.1 CONTINUING SECURITY AND DISCHARGING THE CHARGE
The Charge is a continuing security. It remains in effect until the
Financier gives a final discharge to the Chargor. The Chargor is only
entitled to a final discharge if:
(a) all of the Secured Money has been paid; and
(b) the Financier is satisfied that there are no amounts which will
subsequently fall within the description of the Secured Money.
In satisfying itself under paragraph (b), the Financier may consider any
matters it thinks relevant, including (without limitation) the possibility
that a payment to reduce the Secured Money might be repayable, void or
voidable under a law relating to insolvency or protecting creditors.
8.1 FIRST PRIORITY SECURITY INTEREST
The Charge is a first charge. With respect to any Charged Property as to
which the law
<PAGE>
6
of any state of the United States of America governs the granting,
perfection or effect of perfection of a security interest, the Charge
created hereunder is a first priority perfected security interest.
9. [INTENTIONALLY OMITTED]
10. CHARGOR'S OBLIGATIONS
11.1 POSITIVE OBLIGATIONS
The Chargor must:
(a) pay when due the Taxes assessed, levied or imposed on the Charged
Property (other than those being contested in good faith) or the
Financier in connection with the Charged Property; and
(b) comply with all laws and with the mandatory requirements of any
Public Authority concerning the Charged Property except where the
requirement to do so is being contested in good faith; and
(c) operate each Debtor that it owns, directly or indirectly, in a manner
designed to avoid an Event of Default; and
(d) prosecute and defend (at the Chargor's expense) all legal proceedings
which are advisable, or which the Financier advises the Chargor that
it considers advisable, to avoid a material adverse effect on the
Charged Property; and
(e) do everything necessary to ensure that the Charged Property at all
times includes all of the issued and outstanding shares of capital
stock of Collins Foods International, Pty Ltd. and Sizzler
International Marks, Inc.
12.1 NEGATIVE OBLIGATIONS
The Chargor must not, without the consent of the Financier:
(a) deal with or dispose of the Charged Property; or
(b) permit a Security Interest (other than a Permitted Security Interest)
to affect the Charged Property; or
(c) apply for or obtain money, goods or services from a Public Authority,
fail to pay an amount to a Public Authority (unless the Chargor is
contesting the liability to pay in good faith and has set aside
sufficient reserves to meet the liability) or do anything else which
might lead to a liability or Tax being imposed on the Charged
Property; or
(d) do or allow anything to be done which may (other than in an
immaterial way) prejudice the Financier's security or rights under a
Relevant Agreement.
13.1 OBLIGATIONS CONCERNING CHARGED PROPERTY
<PAGE>
7
The Chargor must:
(a) immediately deposit with the Financier all certificates, documents of
title or other documents that from time to time represent or evidence
the Charged Property, endorsed in blank by the Chargor by an
effective endorsement;
(b) on demand by the Financier, deposit with it stock powers or transfers
executed in blank by the Chargor;
(c) punctually pay all calls, instalments and other moneys which may at
any time be payable on any of the Charged Property (other than those
being contested in good faith) or which, if unpaid, may result in the
creation of a Security Interest over any of the Charged Property;
(d) promptly notify the Financier in writing when the Chargor becomes
entitled to any of the rights or property referred to in paragraphs
(c) - (f) of the definition of 'Charged Property';
(e) deliver to the Financier, promptly after receipt by the Chargor, a
copy of:
(i) any notice convening a meeting of the holders of any of the
Charged Property; and
(ii) any report, accounts, notice or circular issued to the holders
of any of the Charged Property;
14.1 OBLIGATIONS CONCERNING VOTING RIGHTS AND DIVIDENDS
The Chargor:
(a) may until an Event of Default or Potential Event of Default occurs
exercise voting rights conferred upon it as the holder of any of the
Charged Property, but it must not in doing so permit or cause
anything to occur that would be an Event of Default or Potential
Event of Default or otherwise be inconsistent with the terms of this
document. However, if an Event of Default or Potential Event of
Default occurs, the Chargor may no longer exercise any of those
voting rights, except with the prior written consent of the
Financier; and
(b) may, until an Event of Default occurs and subject to paragraph (a):
(i) acquire any of the rights or property referred to in paragraphs
(c) - (f) of the definition of `Charged Property'; and
(ii) receive and use in the ordinary course of its business cash
dividends payable in relation to the Charged Property.
However, if an Event of Default occurs:
(iii) the Chargor may not do any of the things specified in
paragraphs (i) or (ii) and from then on only the Financier, a
Receiver or Attorney may do those things; and
<PAGE>
8
(iv) the Chargor must (at its cost) do all things necessary to
enable the Financier, Receiver or Attorney to do the things
specified in paragraphs (i) and (ii); and
(c) must immediately pay to the Financier any money it receives in
connection with the Charged Property (other than dividends referred
to in paragraph (b)(ii)). The Financier may apply that money to
reduce the Secured Money in the manner specified in clause 16.9.
15. CHARGOR'S REPORTING OBLIGATIONS
16.1 NOTICES TO THE FINANCIER
The Chargor must notify the Financier as soon as an Authorised Officer of
the Chargor becomes aware of:
(a) an Event of Default or Potential Event of Default; or
(b) a representation or warranty in any Relevant Agreement becoming
materially false or misleading (giving full details); or
(c) a material requirement or notice of a Public Authority in connection
with the Charged Property and must give the Financier a copy of any
related document it has and full details of all relevant facts known
to the Chargor concerning the requirement or notice; or
(d) any other requirement, notice, order or direction relating to the
Charged Property given to the Chargor and must give to the Financier
a copy of any related document served on the Chargor, giving full
particulars of all relevant facts known to the Chargor.
17. ACCESS TO AND INVESTIGATION OF RECORDS
18.1 GIVING ACCESS TO RECORDS
The Chargor must:
(a) ensure that the Records of the Chargor relating to the Charged
Property are available for inspection at reasonable times by the
Financier and persons acting on the Financier's behalf; and
(b) allow the Financier and persons acting on the Financier's behalf to
inspect and to take copies of or extracts from the Chargor's Records
during business hours and give reasonable assistance to them.
19. BETTER SECURITY AND RIGHTS FOR FINANCIER
20.1 BETTER SECURITY AND RIGHTS
The Chargor must, at the Chargor's cost, do whatever the Financier
reasonably requires to:
<PAGE>
9
(a) more satisfactorily secure the Charged Property as security to the
Financier for the payment of the Secured Money; or
(b) enable the Financier to better exercise its rights over the Charged
Property,
and must use its best efforts to make anyone else who has an interest in
the Charged Property or claims under or in trust for the Chargor do the
same.
21.1 EXAMPLES
This includes, but is not limited to:
(a) executing a further Security Interest (including a legal mortgage)
over, or other documents relating to, the Charged Property; and
(b) delivering the stock certificates or other title documents
representing or evidencing the Charged Property to the Financier,
endorsed in blank by an effective endorsement, or accompanied by a
stock power or transfer in blank,
in a form reasonably satisfactory to the Financier.
22. REPRESENTATIONS AND WARRANTIES
23.1 The Chargor represents and warrants to the Financier that:
(a) the Chargor was properly incorporated and validly exists; and
(b) the Chargor has the power to enter into this document and to carry
out any transaction or obligation contemplated by it; and
(c) all necessary actions have been taken to make this document valid and
binding on the Chargor and to enable the Chargor to carry out any
transaction or obligation contemplated by this document; and
(d) no Event of Default or Potential Event of Default has occurred; and
(e) the Chargor executing and performing this document and any other
Relevant Agreements does not result in a Security Interest (other
than under a Relevant Agreement) being created or crystallised on an
asset of the Chargor; and
(f) neither this document nor any other Relevant Agreement conflicts with
the operation or terms of any document or arrangement which binds the
Chargor; and
(g) all information provided to the Financier by or on behalf of the
Chargor is accurate and not misleading by omission; and
(h) the shares comprised in the Charged Property are duly authorised,
validly existing, fully paid and nonassessable; and
(i) it has the right and power to charge the Charged Property in the
manner set out in this document; and
<PAGE>
10
(j) it is the sole legal and beneficial owner of the Charged Property and
the Charged Property is free from:
(i) all Security Interests or third party rights and interests of
any kind; and
(ii) any restriction on transfer or rights of pre-emption;
(k) it has disclosed to the Financier the share capital in each of
Collins Foods International Pty Ltd and Sizzler International Marks,
Inc. No person has the right to call for shares, capital stock,
securities or other rights in any of those companies to be issued to
it; and
(l) the issuance of shares comprised in the Charged Property does not
contravene any law, rule or directive of any Public Authority or of
any stock exchange.
24.1 The representations and warranties in this clause are repeated on each day
on which the representations and warranties in the Negative Pledge are
repeated.
25. EFFECT OF EVENT OF DEFAULT
After an Event of Default the Financier may declare the Secured Money
payable. If so, the Secured Money becomes immediately payable, unless the
Financier specifies otherwise.
26. FINANCIER'S POWERS
27.1 GENERALLY
(a) After an Event of Default, the Financier may do the things which a
mortgagee and an absolute owner could do to the Charged Property and
exercise the rights, powers and remedies of a mortgagee and an
absolute owner of the Charged Property. These include, but are not
limited to, the things and powers described in this clause 10, and
the rights, powers and remedies of a secured party under the Uniform
Commercial Code of any jurisdiction in the United States of America;
(b) The Financier need not make a demand or give notice to anyone before
doing these things or exercising these powers, except if notice is
required as described in clause 10.10.
28.1 TO TAKE POSSESSION OF CHARGED PROPERTY
After an Event of Default the Financier may:
(a) take possession of the Charged Property; and
(b) receive the income, dividends, proceeds and profits from the Charged
Property.
29.1 TO DEAL WITH THE CHARGED PROPERTY
<PAGE>
11
After an Event of Default the Financier may do any of the following:
(a) (EXERCISE RIGHTS) exercise the rights and powers of an absolute owner
and do everything expedient in connection with shares, securities or
other rights which form part of the Charged Property. The Chargor
appoints the Financier and any Authorised Officer of the Financier
nominated by the Financier for this purpose, severally and jointly,
to be the authorised representative and proxy of the Chargor to do
the things described in this paragraph; and
(b) (TRANSFERS) complete and procure the registration of any transfers or
other documents that may have been lodged with the Financier in
relation to the Charged Property; and
(c) (BANK ACCOUNTS) open and operate bank accounts in the name of the
Chargor (alone or together) to the exclusion of the Chargor; and
(d) (CONTRACTUAL RIGHTS)
(i) perform the Chargor's obligations under; and
(ii) enforce or exercise or not exercise the Chargor's rights and
powers under; and
(iii) agree to vary or rescind,
a contract, instrument, arrangement or right forming part of the
Charged Property; and
(e) (COMPROMISE) settle, compromise or submit to arbitration a dispute in
connection with the Charged Property; and
(f) (PERFORM CHARGOR'S OBLIGATIONS) do everything it may to comply with
the obligations of the Chargor under a Relevant Agreement; and
(g) (REMEDY BREACH) do everything it may to make good a breach or default
inherent in an Event of Default, to its own satisfaction; and
(h) (DEPOSIT MONEY IN SUSPENSE OR OTHER ACCOUNTS) invest, deposit or hold
the Charged Property in any way that, and for as long as, the
Financier thinks fit and vary, transpose or reinvest the Charged
Property; and
(i) (RECOVER, PROTECT CHARGED PROPERTY) do everything the Financier
thinks necessary to recover or protect the Charged Property; and
(j) (LEGAL PROCEEDINGS) commence, prosecute, defend and settle
proceedings which the Financier considers expedient in connection
with this document or the Charged Property in or before a Public
Authority in the name of the Chargor or otherwise; and
(k) (EXCHANGE) exchange the Charged Property for any other property or
rights (with or without giving or receiving any other consideration
for the exchange); and
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12
(l) (TRANSFER OBLIGATIONS) effect a novation of or otherwise transfer to
any person obligations of the Chargor which arise under a Relevant
Agreement or otherwise; and
(m) (IMPROVE CHARGED PROPERTY) do anything which the Financier considers
would help improve the value of the Charged Property, obtain income
or returns from it or make it saleable or more saleable. Without
limitation, the Financier may improve or alter the Charged Property,
acquire additional property in the name of the Chargor and undertake
any marketing or publicity campaign; and
(n) (EXECUTE DOCUMENTS) enter into agreements and execute documents
itself or on behalf of the Chargor for any purpose in connection with
the Charged Property; and
(o) (BORROW, SECURE) in the name of the Chargor or otherwise:
(i) obtain financial accommodation (including, but not limited to,
from a party associated with the Financier) for any purpose
which the Financier considers expedient in connection with the
Charged Property; and
(ii) secure the payment or repayment of indebtedness relating to
that financial accommodation by a Security Interest over the
Charged Property, however it ranks for priority with the Charge
or a Collateral Security; and
(p) (EMPLOY AND APPOINT PERSONS) employ staff and appoint professionals
and consultants for any purpose, and at the remuneration, that the
Financier thinks fit; and
(q) (DELEGATE) delegate to any person for any time that the Financier
thinks fit any of the powers of the Financier under this document,
including this right of delegation; and
(r) (INCIDENTAL POWER) do anything the Financier thinks expedient in its
interests and incidental to any of its powers under this document,
without limiting those powers; and
(s) (SPEND MONEY) spend money in exercising its powers in this document.
That money then forms part of the Secured Money.
30.1 TO DISCHARGE OR ACQUIRE PRIOR SECURITY INTEREST
After an Event of Default the Financier may:
(a) purchase the debt secured by a prior Security Interest; or
(b) pay the amount required to discharge or satisfy that debt (including,
but not limited to, a debt secured by a Permitted Security Interest);
or
(c) take a transfer or assignment of that Security Interest and any
Guarantee,
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13
document or right ancillary or collateral to it.
31.1 EXERCISE OF RIGHTS UNDER CLAUSE 10.4
If the Financier exercises its rights under clause 10.4:
(a) the Charged Property is security for the same amount paid by the
Financier. This does not limit any other debt acquired by the
Financier; and
(b) that debt is immediately payable to the Financier and forms part of
the Secured Money and interest accrues on the unpaid amount of that
debt under clause 3.2; and
(c) the Financier need not enquire whether the money claimed to be owing
is actually owing in connection with the prior Security Interest, or
an ancillary or collateral document; and
(d) the person with the benefit of the prior Security Interest need not
enquire whether there is any money owing under a Relevant Agreement;
and
(e) the Chargor directs any person with the benefit of a prior Security
Interest to give the Financier any information it requires in
connection with the prior Security Interest. This includes, but is
not limited to, the state of accounts for that Security Interest.
32.1 TO SELL AND GIVE OPTIONS
After an Event of Default the Financier may do any of the following:
(a) (SELL) sell or help sell the Charged Property on the terms and in the
manner it thinks fit, whether or not the Financier has taken
possession; and
(b) (OPTIONS) give an option to purchase the Charged Property on the
terms it thinks fit; and
(c) (SELL TOGETHER WITH OTHER PROPERTY) sell the Charged Property with
any other property in any manner that the Financier thinks expedient;
and
(d) (HIVE OFF ASSETS OR OBLIGATIONS) promote the formation of any company
so that the company may purchase or acquire the Charged Property or
assume obligations of the Chargor or both; and
(e) (EFFECT HIVE-OFF) sell or assign the Charged Property or assume the
Chargor's obligations.
33.1 TO APPOINT RECEIVERS
After an Event of Default, the Financier may:
(a) appoint one or more persons to be a Receiver or Receivers of the
Charged Property, with the powers and rights described in this clause
10 (or such lesser powers as the Financier determines); and
<PAGE>
14
(b) remove that Receiver or those Receivers; and
(c) if a Receiver is removed, retires or dies, appoint another or others
in his or her place; and
(d) in the case of removal or retirement of a Receiver, reappoint that
person.
34.1 TO APPOINT MORE THAN ONE RECEIVER
If the Financier appoints two or more persons to be the Receiver, the
Financier may appoint them to act jointly, severally or jointly and
severally. If it is not specified in the instrument of appointment, the
Receivers are appointed to act severally.
35.1 TO PAY THE RECEIVER
The Financier may fix the remuneration of a Receiver at an amount agreed
between the Financier and the Receiver.
36.1 NOTICE OR LAPSE OF TIME REQUIRED BEFORE RIGHTS EXERCISED
(a) If notice or lapse of time is required under any statute before the
Financier can exercise its power of sale or any other rights
available to it under this document or by law, then that notice or
lapse of time is dispensed with.
(b) Paragraph (a) only applies if the relevant statute allows notice or
lapse of time to be dispensed with.
(c) If the relevant statute does not allow notice or lapse of time to be
dispensed with, but allows it to be shortened, then for the purposes
of this document, the period of notice or lapse of time is one day.
37.1 TO GIVE UP POSSESSION AND TERMINATE RECEIVERSHIP
The Financier may:
(a) give up possession of the whole or any part of the Charged Property;
or
(b) terminate a receivership,
or both.
38.1 PERSONS DEALING NOT BOUND TO ENQUIRE
A person dealing with the Financier or a Receiver or Attorney:
(a) need not enquire whether there has been a default by the Chargor
under a Relevant Agreement or whether the Financier, Receiver or
Attorney has acted properly; or
(b) need not enquire whether the Financier, a Receiver or an Attorney has
executed or registered an instrument or exercised a right, power or
remedy properly or
<PAGE>
15
with authority,
and whenever the Financier, a Receiver or an Attorney deals with the
Charged Property, that dealing is authorised and valid as far as anyone
involved with that dealing is concerned. The receipt of the Financier or a
Receiver or Attorney for any money payable to the Chargor discharges the
person paying that money to the extent of the payment.
39.1 RESPONSIBILITY FOR LOSS
The Financier is not responsible for a loss arising in connection with it
exercising or failing to exercise its powers under a Relevant Agreement nor
for an act or failure of an employee or agent of the Financier or any
Receiver. The Financier need not account for more money than it actually
receives.
40. RECEIVER'S POWERS
41.1 GENERAL
Unless the terms of the Receiver's appointment say otherwise, the Receiver
has the following powers over the Charged Property which the Receiver is
appointed to deal with:
(a) all the rights and powers given by law to mortgagees in possession,
receivers or receivers and managers; and
(b) all the rights and powers of the Financier under this document and at
law (other than the power to appoint Receivers); and
(c) power to obtain financial accommodation from the Financier, alone or
together with any other person, for a purpose and on the terms that
the Receiver considers expedient in connection with the Charged
Property; and
(d) power to secure the payment or repayment of indebtedness relating to
that financial accommodation by a Security Interest over the Charged
Property, however it ranks for priority with the Charge or a
Collateral Security.
The Receiver may exercise these rights and powers in the name of the
Chargor or otherwise.
42.1 RECEIVER IS AGENT OF CHARGOR
A Receiver is the agent of the Chargor. The Chargor alone is responsible
for the Receiver's acts and defaults. But the Receiver, to the extent
required by law, ceases to be the agent of the Chargor if a resolution is
passed or an order is made to Wind Up the Chargor. The Receiver may become
the agent of the Financier if the Financier gives a notice to the Receiver
in writing to that effect. The Financier may appoint a further Receiver,
despite that resolution or order.
43.1 ACCOUNTABILITY OF RECEIVER
A Receiver is not responsible for a loss arising in connection with the
exercise or
<PAGE>
16
execution of the Receiver's powers, nor for any act or default of an
employee or agent of the Financier or the Receiver. A Receiver need not
account for more money than the Receiver actually receives.
44. POWER OF ATTORNEY
45.1 APPOINTMENT AND POWERS
The Chargor for valuable consideration irrevocably appoints the Financier,
each Authorised Officer of the Financier and each Receiver separately as
its attorneys to do the following on the Chargor's behalf and in the name
of the Chargor or the Attorney after the occurrence of an Event of Default
or Potential Event of Default:
(a) anything which the Chargor must do under a Relevant Agreement; and
(b) anything which, in the opinion of the Attorney:
(i) would give effect to a right, power or remedy of the Financier
or a Receiver; or
(ii) the Chargor should do,
under a Relevant Agreement or by law; and
(c) enter into or execute transactions, documents and agreements which,
in the opinion of the Attorney, the Chargor should enter into or
execute under a Relevant Agreement; and
(d) use the Chargor's name to exercise the powers of the Financier or a
Receiver under a Relevant Agreement, the law or otherwise; and
(e) obtain the issue of duplicate certificates for the shares, securities
or other rights comprised in the Charged Property if the original
certificates are lost or destroyed or believed to be so; and
(f) direct payment or any delivery of a dividend, notice, scrip or attend
to any other matter relating to the Charged Property; and
(g) give any direction or instruction to any person that the attorney
reasonably considers is necessary or desirable to better secure the
Charged Property to the Financier or to permit or facilitate the
exercise or preservation of a right or power of the Financier under a
Relevant Agreement; and
(h) perfect a security given by the Chargor in favour of the Financier
over the Charged Property; and
(i) exercise voting rights or any other power, right or remedy relating
to the Charged Property,
and the Chargor agrees to ratify anything done by an Attorney under this
power of attorney.
<PAGE>
17
46.1 ATTORNEY MAY DELEGATE POWERS
An Attorney may delegate its powers (including the power to delegate) to
any person for any period and may revoke the delegation.
47.1 PURPOSE
The power of attorney created under this clause is irrevocable and is
granted to secure the performance by the Chargor of the Chargor's
obligations under each Relevant Agreement to which the Chargor is a party.
48. NOTICES AND DEMANDS FROM THE FINANCIER
49.1 SIGNING
A notice from or demand by the Financier to or on the Chargor may be signed
by an Authorised Officer of the Financier or by a solicitor acting for the
Financier. This signature may be handwritten or printed or reproduced by
other means.
50.1 SENDING
In addition to any method of service provided for by statute, a notice from
or demand by the Financier is given to or made on the Chargor if it is:
(a) sent by facsimile to the facsimile number of the Chargor last known
to the Financier or, if more than one facsimile number is known to
the Financier, to any of those facsimile numbers; or
(b) left for the Chargor or sent by prepaid mail (and by airmail if to an
address outside Australia) to the Chargor at:
(i) the address of the Chargor set out in this document; or
(ii) the Chargor's usual place of business last known to the
Financier; or
(iii) the Chargor's registered office; or
(iv) premises owned or occupied by the Chargor.
51.1 VALIDITY
A notice or demand is validly given even if:
(a) the Chargor has been Wound Up or the Chargor is absent from the place
the notice or demand is left at, or delivered or sent to; or
(b) the notice or demand is returned unclaimed.
52.1 RECEIPT
A notice or demand is taken to have been received by the Chargor:
<PAGE>
18
(a) if delivered personally, on the same day; and
(b) if posted to an address in Australia, on the second Business Day
after it was posted; and
(c) if posted to an address outside Australia, on the fourth Business Day
after it was posted; and
(d) if sent by facsimile, when a transmission report is produced by the
sender's facsimile machine indicating that the notice or demand has
been sent to the relevant number.
53. PRESERVING THE FINANCIER'S RIGHTS, POWERS AND REMEDIES
54.1 PRESERVATION
(a) The fact that the Financier does not exercise, or delays the exercise
of, any right, power or remedy does not affect any of its other
rights, powers or remedies.
(b) The fact that the Financier delays the exercise of any right, power or
remedy does not constitute a waiver of that right, power or remedy.
(c) The fact that the Financier exercises a right, power or remedy does
not prevent the Financier from exercising that right, power or remedy
again.
(d) This document does not operate to extinguish or prejudice any right,
power or remedy of the Financier under a Relevant Agreement or in
connection with the Secured Money.
55.1 MORATORIUM LEGISLATION
A moratorium does not apply to a Relevant Agreement or the recovery of the
Secured Money except if:
(a) the Financier agrees in writing that it does; or
(b) it cannot be excluded by law.
56.1 REINSTATING OR REPLACING RIGHTS
If any payment made to the Financier in reduction of the Secured Money is
repaid or void or conceded to be void, voidable or repayable for any
reason, then, despite any release, settlement or discharge in connection
with the Secured Money:
(a) that payment has not discharged the relevant liability; and
(b) the Financier may recover the amount of that payment from the Charged
Property; and
(c) the Chargor must immediately do all acts and things the Financier
requires to replace or reinstate the Charge and any Collateral
Security which has been
<PAGE>
19
released in connection with that payment.
57.1 EFFECT OF RELEASE
(a) A full or partial release of this Charge by the Financier does not
release the Charged Property under this document until the Financier
receives the Secured Money, regardless of any:
(i) receipt given, payout figure quoted or other form of account
stated; or
(ii) error or miscalculation by the Financier.
58. THIRD PARTY PROVISIONS
59.1 INDEPENDENT SECURITY
Neither this document nor the obligations of the Chargor under this
document will be abrogated, prejudiced or affected by:
(a) the granting of time or any other indulgence, consideration or
concession to the Chargor, a Debtor or any other person;
(b) the release, discharge, abandonment, waiver, loss, impairment,
relinquishment, transfer or other dealing with (either in whole or in
part and whether with or without consideration) any Relevant
Agreement or any right of the Financier against the Chargor, a Debtor
or any other person;
(c) any transaction or arrangement that may take place between the
Financier and a Debtor or any other person;
(d) the Financier varying, exchanging, renewing or releasing any Relevant
Agreement or refusing to do so;
(e) any variation of a transaction, arrangement or document between the
Financier and any other person (including, but not limited to any
increase in the amount of financial accommodation provided or agreed
to be provided to any Debtor);
(f) the capitalising and adding to principal of all interest accrued on
the Secured Money (or any part of the Secured Money) but not yet
paid;
(g) any Collateral Security or right which the Financier now holds or in
the future may obtain;
(h) the Financier failing or neglecting to recover any of the Secured
Money by the realisation of any Collateral Security or otherwise;
(i) any laches, acquiescence, delay, and omission or mistake on the part
of the Financier or any other person;
(j) the insolvency, Winding Up or incapacity or change in the legal
capacity of the Chargor or a Debtor;
<PAGE>
20
(k) any judgment or order against the Chargor, a Debtor or other person;
(l) any lack of power by the Chargor or a Debtor to enter into any
Relevant Agreement or give any Collateral Security either in its own
right or in the capacity in which it is purporting to act;
(m) the liability of the Chargor, a Debtor or any other person to the
Financier ceasing from any cause (including but not limited to being
released or discharged by the Financier);
(n) any Collateral Security or any other security taken or held at any
time by the Financier being in whole or in part void, defective in
form or substance or unenforceable;
(o) property secured under a Collateral Security being destroyed,
forfeited, extinguished, surrendered, resumed or determined;
(p) any impossibility or illegality of performance of any Relevant
Agreement or any provision of any Relevant Agreement;
(q) any default, misrepresentation, negligence, misconduct or other
action or inaction of any kind by any person;
(r) any irregularity or deficiency in the execution of this document or
any Collateral Security by the Chargor or any Debtor or any lack of
authority or power of any person in relation to such execution;
(s) the failure to give notice to, or the lack of consent of the Chargor
or a Debtor before or after the happening of any of the acts or
events mentioned in this subclause or before the making of any
agreement or transaction between the Financier and the Chargor, a
Debtor or other person;
(t) any other dealing, matter or thing which, but for this provision
could or might operate to affect or discharge the liability of the
Charged Property under this document.
60.1 NO OBLIGATION TO PROCEED
The Financier will not be required to proceed against any Debtor or exhaust
any remedies it may have against any Debtor or enforce any Collateral
Security but shall be entitled to demand and receive payment from any
Debtor or realise upon the Charged Property when any payment is due under
any Relevant Agreement and whether due from that person or not.
61.1 NO OBLIGATION TO MARSHAL
The Financier will not be obliged to marshal in favour of the Chargor any
security held by the Financier or any funds or assets that the Financier
may be entitled to receive or have a claim upon.
62.1 WINDING UP OF DEBTOR
<PAGE>
21
On the Winding Up of any Debtor the Chargor authorises the Financier:
(a) to prove for all money which has been paid under any Relevant
Agreement; and
(b) to retain and to carry to a suspense account and appropriate at the
Financier's discretion any dividends received;
until the Financier has been paid in full.
63.1 EXCLUSION OF RIGHTS
The Chargor must not:
(a) until the Financier has received all the Secured Money and the
Financier is satisfied that it will not have to repay any money
received by it in connection with the Secured Money (either directly
or indirectly):
(i) claim or exercise any right of set-off, counter-claim or other
right or release at law or in equity which has or might have
the effect of reducing or discharging the Secured Money;
(ii) claim or exercise any right of subrogation or otherwise claim
the benefit of any Collateral Security;
(iii) prove or claim in the liquidation or bankruptcy of any Debtor
in competition with the Financier or otherwise claim or receive
the benefit of any distribution, dividend or payment arising
out of the liquidation or bankruptcy of a Debtor; or
(iv) claim or recover any sum paid by the Chargor pursuant to this
document from any person or commence any action in respect of
any right which may accrue to the Chargor in respect of sums
paid by the Chargor under this document; or
(b) whether or not the Secured Money has been paid in full call upon the
Financier to sue or take proceedings against any Debtor or raise a
defence, set-off or counter-claim of itself or any Debtor in
reduction of its liability under this document.
64. MISCELLANEOUS
65.1 NO OBLIGATION TO EXERCISE RIGHTS OR GIVE CONSENT
Each of the Financier and a Receiver may:
(a) exercise or not exercise any right, power or remedy; and
(b) give or not give consent; and
(c) make or not make a decision,
under this document, in its absolute discretion without giving a reason and
without being
<PAGE>
22
liable or accountable for the consequences. In relation to the giving or
not giving of consent, the Financier will act in a manner which the
Financier determines in its absolute discretion to be reasonable. Such
determination shall not be questioned by the Chargor.
66.1 CONSENT MUST BE IN WRITING
A consent given or a right, power or remedy waived by the Financier is
effective only if given or waived in writing.
67.1 NOTIFICATION FROM CHARGOR
If the Chargor is required under this document to notify the Financier
about anything, the Chargor must do so in writing.
68.1 FINANCIER MAY SET OFF
Without any demand or notice, the Financier may set off and apply
indebtedness it owes to the Chargor (whatever the currency) against the
Secured Money:
(a) whether the indebtedness is owed alone or with any other person; and
(b) whether or not the Secured Money or that indebtedness is immediately
payable.
69.1 CHARGOR MUST NOT SET OFF
The Chargor must not claim, exercise or attempt to exercise a right of set-
off or any other right which might reduce or discharge the Secured Money.
70.1 NO MARSHALLING
The Financier need not resort to a Collateral Security or other Security
Interest before exercising a power under this document.
71.1 SUSPENSE ACCOUNT
The Financier may credit money received in or towards satisfaction of the
Secured Money to a suspense account. The Financier may keep the money in
that account for as long as the Financier thinks fit. Interest will not
accrue on such account. The Financier may apply the money to reduce the
Secured Money whenever it thinks fit.
72.1 SURPLUS PROCEEDS
If surplus money remains in the hands of the Financier or a Receiver after
payment of all the Secured Money (and satisfaction of any obligation
ranking in priority to the Secured Money or secured by a Security Interest
over the Charged Property):
(a) no trust arises over that surplus money; and
(b) that surplus money does not carry interest and the Financier or
Receiver may pay it to an account in the name of the Chargor (whether
or not opened by the Financier or Receiver for that purpose). The
Financier or Receiver is then no longer liable for the surplus money.
<PAGE>
23
73.1 APPLYING RECEIPTS
The Financier may apply or appropriate money received to reduce the Secured
Money in the order, and to satisfy whatever part of the Secured Money, the
Financier sees fit.
74.1 TACKING
For the purpose of applying section 282 of the Corporations Law or any
equivalent provision in any jurisdiction, if the Financier is obliged to
make further advances under a Relevant Agreement, that Relevant Agreement
is taken to be incorporated in this document so that this document imposes
on the Financier an obligation to advance that money.
75.1 THE FINANCIER MAY ASSIGN RIGHTS
The Financier may assign or otherwise deal with its rights and benefits
under this document.
76.1 THE FINANCIER MAY DISCLOSE INFORMATION
The Financier may disclose to a potential assignee or participant any
information about the Chargor, any Debtor or a Relevant Agreement which it
considers appropriate.
77.1 CERTAIN NOTICES OR DEMANDS
A notice from or demand by the Financier stating:
(a) that a specified sum of money is owing or payable (or both) under a
Relevant Agreement; or
(b) that an Event of Default has occurred; or
(c) something relevant to the rights or obligations of the Financier or
the Chargor under a Relevant Agreement,
is admissible in proceedings and is conclusive evidence of the matters
stated except if there is manifest error.
78.1 IF DUE DATE NOT A BUSINESS DAY
If anything should be done under this document on a day that is not a
Business Day, it must be done on the previous Business Day.
79.1 SEVERABILITY
(a) A construction of this document that results in all provisions being
enforceable is to be preferred to a construction that does not so
result.
(b) If, despite the application of paragraph (a), a provision of this
document is illegal or unenforceable:
<PAGE>
24
(i) and it would be legal and enforceable if a word or words were
omitted, that word or those words are severed; and
(ii) in any other case, the whole provision is severed,
and the remainder of this document continues in force.
80.1 GOVERNING LAW AND JURISDICTION
This document is governed by the law of Queensland except:
(a) as required by mandatory provisions of law; and
(b) to the extent that the validity, perfection or enforceability of any
of the security interests hereunder, or remedies hereunder, are
dependent on the laws of a jurisdiction other than Queensland, in
which case the governing law shall (to that extent only) be the law of
that jurisdiction.
The parties hereto agree and intend that:
(c) a proper forum/jurisdiction for any litigation or process arising out
of or related to this Agreement shall be any court located in
Queensland; and
(d) a proper forum/jurisdiction for any litigation or process in respect
of any of the Charged Property located in a jurisdiction other than
Queensland shall be any court located either in Queensland or that
other jurisdiction.
The Chargor irrevocably and unconditionally submits to the non-exclusive
jurisdiction of the courts of Queensland and/or the other jurisdiction
referred to in paragraph (d) (as the case may be). The Chargor, to the
extent permitted by applicable laws, hereby expressly waives any defence or
objection to jurisdiction or venue based on the doctrine of forum non
conveniens, and stipulates that the courts of Queensland and/or that other
jurisdiction (as the case may be) shall have in personam jurisdiction and
venue over it for the purpose of any such litigation or process arising out
of or related to this document.
81.1 FINANCIER NEED NOT EXECUTE
This document is enforceable by the Financier even if the Financier does
not execute it.
82. LIMITED RECOURSE
83.1 LIMITATION
(a) Subject to paragraphs (b) and (c), but notwithstanding any other term
of this document, the Financier's (or a Receiver's or Attorney's)
sole recourse against the Chargor will be limited to the Chargor's
rights (including, without limitation, rights to income) and interest
in the Charged Property, the proceeds of sale and other disposal of
or dealing with the Charged Property, and the proceeds of the Charged
Property (including, without limitation, cash dividends) received by
the Chargor after an Event of Default has occurred and while it is
continuing;
(b) Nothing in paragraph (a) limits the liability of the Chargor to the
Financier
<PAGE>
25
under any other document;
(c) Nothing in paragraph (a) limits the liability of the Chargor to the
Financier for breach of representation or undertaking caused by the
Chargor's negligence, fraud or wilful misconduct;
(d) Nothing in paragraph (a) will prejudice or affect the rights of the
Financier, a Receiver or an Attorney to seek a monetary judgement or
other remedy against the Chargor to enforce this document or realise
upon the Charged Property.
84.1 UNRESTRICTED REMEDIES
(a) Nothing in Clause 17.1 limits the Financier or any Receiver or
Attorney in:
(i) exercising its powers in relation to the Charged Property;
(ii) obtaining or taking any proceedings to obtain an injunction or
other order to restrain any breach of this document; or
(iii) obtaining or taking proceedings to obtain declaratory relief in
relation to any provision of this document.
EXECUTED as a deed.
THE COMMON SEAL of SIZZLER )
INTERNATIONAL, INC. is affixed in )
accordance with its articles of association in )
the presence of )
<TABLE>
<CAPTION>
<S> <C>
- ------------------------------------------------ ------------------------------------------
Witness Director/Authorised Officer
- ------------------------------------------------ ------------------------------------------
Name (print) Name (print)
</TABLE>
<PAGE>
SIZZLER INTERNATIONAL, INC.
WESTPAC BANKING CORPORATION
ARBN 007 457 141
STOCK PLEDGE
MINTER ELLISON
Lawyers
Waterfront Place
1 Eagle Street
BRISBANE QLD 4000
DX 102 BRISBANE
Telephone (07) 3226 6333
Facsimile (07) 3229 1066
ARF PAK 9703949
<PAGE>
INDEX
<TABLE>
<S> <C>
1. INTERPRETATION 1
1.1 DEFINITIONS.................................................... 1
1.2 OTHER EXPRESSIONS.............................................. 4
10. FINANCIER'S POWERS.................................................... 10
10.10 NOTICE OR LAPSE OF TIME REQUIRED BEFORE RIGHTS EXERCISED..... 14
10.11 TO GIVE UP POSSESSION AND TERMINATE RECEIVERSHIP............. 15
10.12 PERSONS DEALING NOT BOUND TO ENQUIRE......................... 15
10.13 RESPONSIBILITY FOR LOSS...................................... 15
10.2 TO TAKE POSSESSION OF CHARGED PROPERTY........................ 11
10.3 TO DEAL WITH THE CHARGED PROPERTY............................. 11
10.4 TO DISCHARGE OR ACQUIRE PRIOR SECURITY INTEREST............... 13
10.5 EXERCISE OF RIGHTS UNDER CLAUSE 10.4.......................... 13
10.6 TO SELL AND GIVE OPTIONS...................................... 13
10.7 TO APPOINT RECEIVERS.......................................... 14
10.8 TO APPOINT MORE THAN ONE RECEIVER............................. 14
10.9 TO PAY THE RECEIVER........................................... 14
11. RECEIVER'S POWERS..................................................... 15
11.1 GENERAL....................................................... 15
11.2 RECEIVER IS AGENT OF CHARGOR.................................. 16
11.3 ACCOUNTABILITY OF RECEIVER.................................... 16
12. POWER OF ATTORNEY..................................................... 16
12.1 APPOINTMENT AND POWERS........................................ 16
12.2 ATTORNEY MAY DELEGATE POWERS.................................. 17
12.3 PURPOSE....................................................... 17
13. NOTICES AND DEMANDS FROM THE FINANCIER................................ 17
13.1 SIGNING....................................................... 17
13.2 SENDING....................................................... 17
13.3 VALIDITY...................................................... 18
13.4 RECEIPT....................................................... 18
14. PRESERVING THE FINANCIER'S RIGHTS, POWERS AND REMEDIES................ 18
14.1 PRESERVATION.................................................. 18
14.2 MORATORIUM LEGISLATION........................................ 19
14.3 REINSTATING OR REPLACING RIGHTS............................... 19
14.4 EFFECT OF RELEASE............................................. 19
15. THIRD PARTY PROVISIONS................................................ 19
15.1 INDEPENDENT SECURITY.......................................... 19
15.2 NO OBLIGATION TO PROCEED...................................... 21
15.3 NO OBLIGATION TO MARSHAL...................................... 21
15.4 WINDING UP OF DEBTOR.......................................... 21
15.5 EXCLUSION OF RIGHTS........................................... 21
16. MISCELLANEOUS......................................................... 22
16.1 NO OBLIGATION TO EXERCISE RIGHTS OR GIVE CONSENT.............. 22
16.10 TACKING...................................................... 23
16.11 THE FINANCIER MAY ASSIGN RIGHTS.............................. 23
16.12 THE FINANCIER MAY DISCLOSE INFORMATION....................... 24
16.13 CERTAIN NOTICES OR DEMANDS................................... 24
16.14 IF DUE DATE NOT A BUSINESS DAY............................... 24
16.15 SEVERABILITY................................................. 24
16.16 GOVERNING LAW AND JURISDICTION............................... 24
16.17 FINANCIER NEED NOT EXECUTE................................... 25
16.2 CONSENT MUST BE IN WRITING.................................... 22
16.3 NOTIFICATION FROM CHARGOR..................................... 22
</TABLE>
<PAGE>
<TABLE>
<S> <C>
16.4 FINANCIER MAY SET OFF......................................... 22
16.5 CHARGOR MUST NOT SET OFF...................................... 23
16.6 NO MARSHALLING................................................ 23
16.7 SUSPENSE ACCOUNT.............................................. 23
16.8 SURPLUS PROCEEDS.............................................. 23
16.9 APPLYING RECEIPTS............................................. 23
17. LIMITED RECOURSE...................................................... 25
17.1 LIMITATION.................................................... 25
17.2 UNRESTRICTED REMEDIES......................................... 25
2. CHARGE................................................................. 5
2.1 CREATING THE CHARGE............................................ 5
2.2 FIXED CHARGE................................................... 5
2.3 CONTINUING SECURITY AND DISCHARGING THE CHARGE................. 5
2.4 FIRST PRIORITY SECURITY INTEREST............................... 6
3. [INTENTIONALLY OMITTED]................................................ 6
4. CHARGOR'S OBLIGATIONS.................................................. 6
4.1 POSITIVE OBLIGATIONS........................................... 6
4.2 NEGATIVE OBLIGATIONS........................................... 6
4.3 OBLIGATIONS CONCERNING CHARGED PROPERTY........................ 7
4.4 OBLIGATIONS CONCERNING VOTING RIGHTS AND DIVIDENDS............. 7
5. CHARGOR'S REPORTING OBLIGATIONS........................................ 8
5.1 NOTICES TO THE FINANCIER....................................... 8
6. ACCESS TO AND INVESTIGATION OF RECORDS................................. 8
6.1 GIVING ACCESS TO RECORDS....................................... 8
7. BETTER SECURITY AND RIGHTS FOR FINANCIER............................... 9
7.1 BETTER SECURITY AND RIGHTS..................................... 9
7.2 EXAMPLES....................................................... 9
8. REPRESENTATIONS AND WARRANTIES......................................... 9
9. EFFECT OF EVENT OF DEFAULT............................................. 10
</TABLE>
<PAGE>
EXHIBIT 3.6
COLLINS FOODS INTERNATIONAL PTY LTD
ARBN 009 980 250
WESTPAC BANKING CORPORATION
ARBN 007 457 141
FIXED AND FLOATING CHARGE
MINTER ELLISON
Lawyers
Waterfront Place
1 Eagle Street
BRISBANE QLD 4000
DX 102 BRISBANE
Telephone (07) 3226 6333
Facsimile (07) 3229 1066
<PAGE>
FIXED AND FLOATING CHARGE
DEED dated 1997
BETWEEN COLLINS FOODS INTERNATIONAL PTY LTD ARBN 009 980 250 OF 16
EDMONDSTONE STREET, NEWMARKET, BRISBANE, QUEENSLAND, AUSTRALIA
(`CHARGOR')
AND WESTPAC BANKING CORPORATION ARBN 007 457 141 OF 260 QUEEN STREET,
BRISBANE, AUSTRALIA (`FINANCIER')
1. INTERPRETATION
2.1 DEFINITIONS
In this document:
`ATTACHMENT NOTICE' means a notice or direction under which a Public
Authority requires money, which would otherwise be payable to the Chargor,
to be paid or transferred to it or to the Crown. This includes notices
under section 218 or section 255 of the Income Tax Assessment Act 1936
(Cth) or under section 74 of the Sales Tax Assessment Act 1992 (Cth).
`ATTORNEY' means an attorney appointed under a Relevant Agreement.
`AUTHORISED OFFICER' means a person holding or acting in the office of
director, chief executive or secretary, or whose title includes the word
`Manager' or `Director'.
`BUSINESS DAY' means a day on which banks (as defined in the Banking Act
1959 (Cth)) are open for general banking business in Brisbane, excluding
Saturdays and Sundays and public holidays.
`CHARGE' means the charge over, and security interest in, the Charged
Property created under this document.
`CHARGED PROPERTY' means all the property, assets and rights of the
Chargor, whether acquired before or after this document is executed,
wherever located. This includes all property, assets and rights held by
the Chargor as trustee and wherever located. The Charged Property
includes, without limitation, all the property, assets and rights of the
Chargor described in Schedule A hereto.
`COLLATERAL SECURITY' means a Guarantee, Security Interest or negotiable
instrument held or given, whether before or after this document is
executed, as security for or otherwise in connection with the Secured
Money.
`DEBTOR' means a person any of whose present or future, actual or
contingent indebtedness or liabilities to the Financier is or are
supported or secured by a present or future Guarantee or Security Interest
given or entered into by the Chargor.
<PAGE>
`EVENT OF DEFAULT' has the meaning given to it in the Negative Pledge.
`GUARANTEE' means a guarantee, indemnity, letter of credit, letter of
comfort or any other obligation (whatever it is called and whatever its
nature) by which a person is responsible for another person's obligation
or debt.
`LIQUIDATION' includes official management, receivership, compromise,
arrangement, amalgamation, administration, reconstruction, winding up,
dissolution, assignment for the benefit of creditors, arrangement or
compromise with creditors, bankruptcy or death.
`LIQUOR ACT' means any Statute regulating the sale, disposal and
consumption of liquor;
`LIQUOR LICENCE' means any licence or permit issued now or in the future,
to or acquired by the Chargor pursuant to a Liquor Act;
`MARKETABLE SECURITIES' has the meaning given to it in the Corporations
Law.
`NEGATIVE PLEDGE' means the Unlimited Cross Guarantee and Indemnity and
Negative Pledge with Financial Ratio Covenants dated on or around the date
of this document between the Financier, Collins Foods International Pty
Ltd and others.
`PERMITTED SECURITY INTEREST' means:
(a) a Security Interest which the Financier has consented to. It does
not include a Security Interest which the Financier has consented to
on one or more conditions if those conditions are not complied with;
and
(b) a lien or charge on the Charged Property arising by operation of law
in the ordinary course of the Chargor's ordinary business. It does
not include a lien or charge which secures overdue debts.
`POTENTIAL EVENT OF DEFAULT' means any event, thing or circumstance which
with the giving of notice or passage of time or both would become an Event
of Default.
`PUBLIC AUTHORITY' means the Crown, a government, a minister of a
government, a government department, a statutory corporation, or a semi-
government or judicial entity.
`RECEIVER' means a receiver or receiver and manager appointed under this
document. When two or more persons are appointed, the expression
`Receiver' refers to each of those persons severally as well as to two or
more of them jointly.
`RECORDS' means all the information which relates in any way to a
specified person's business or any transaction entered into by the person,
whether the information is recorded electronically, magnetically or
otherwise.
`RELEVANT AGREEMENT' means:
(a) this document; and
(b) a Collateral Security; and
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3
(c) an agreement between:
(i) the Financier and the Chargor; or
(ii) the Financier and a Debtor; or
(iii) the Financier and any combination of the Chargor and one or
more Debtors;
that relates to the Secured Money or another Relevant Agreement or
contains terms on which the Secured Money remains outstanding; and
(d) a document that the Chargor and the Financier agree is a Relevant
Agreement.
`SECURED MONEY' means all money that the Chargor or a Debtor is liable to
pay to the Financier at or after the date of this document on any account
and in any way whatever, and whether:
(a) the Chargor or Debtor is liable alone or together with another
person; or
(b) the Chargor or Debtor is liable as principal debtor, surety,
partner, trustee, beneficiary or otherwise; or
(c) the relevant liability:
(i) is actual or contingent, ascertained or unascertained, fixed
or fluctuating;
(ii) is in respect of principal, interest, Guarantee obligations,
purchase obligations, fees or damages; or
(iii) is in dollars, another currency or a combination of
currencies,
or is of any other character.
`SECURITY INTEREST' means a mortgage, pledge, lien, charge, preferential
right, trust arrangement, agreement or other arrangement given, arising or
created as security.
`SUBSIDIARY' has the meaning given to it in the Negative Pledge.
`TAX' includes a tax, levy, duty or charge (and associated penalty or
interest) imposed by a Public Authority. It includes income, withholding,
stamp and transaction taxes and duties but does not include income tax on
the overall net income of the Financier.
`WINDING UP' includes:
(a) dissolution, liquidation, provisional liquidation and bankruptcy;
and
(b) a procedure which is equivalent or analogous in any jurisdiction.
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4
3.1 OTHER EXPRESSIONS
In this document, unless the contrary intention appears:
(a) the singular includes the plural and vice versa;
(b) other grammatical forms of defined words or expressions have
corresponding meanings;
(c) if this document binds two or more persons, it binds them severally
and jointly;
(d) a reference to a party to this document includes that party's
successors and permitted assigns;
(e) a reference to a document or agreement includes that document or
agreement as novated, altered or replaced;
(f) when two or more persons are named as Chargor, the term `Chargor' is
a reference to each of them alone and also to any two or more of
them together. The same applies to the term `Debtor';
(g) a reference to any thing includes the whole or any part of that
thing and a reference to a group of things or persons includes each
thing or person in that group;
(h) `dollars' and `$' refer to Australian currency;
(i) words implying natural persons include partnerships, bodies
corporate, associations and Public Authorities;
(j) a reference to any legislation or statutory instrument or regulation
is construed in accordance with the Acts Interpretation Act 1901
(Cth) or the equivalent State legislation, as applicable.
4. CHARGE
5.1 CREATING THE CHARGE
(a) Subject to paragraph (b), the Chargor charges and grants a security
interest in the Charged Property in favour of the Financier as
security for the payment of the Secured Money.
(b) If any part of the Charged Property is prohibited under an agreement
entered into by the Chargor in good faith with an independent third
party from being made the subject of the Charge without the consent
of that third party, then the Charge shall not take effect over that
part of the Charged Property until that consent is obtained.
6.1 FIXED CHARGE
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5
The Charge is a fixed charge over:
(a) real property; and
(b) plant, equipment and machinery other than stock-in-trade and work-
in-progress; and
(c) Marketable Securities; and
(d) negotiable or other instruments; and
(e) the benefit of any Guarantee or Security Interest held by the
Chargor; and
(f) the benefit of any contract or agreement to which the Chargor is a
party; and
(g) any right to recover money or property (other than book debts) by
legal proceedings; and
(h) capital, including premiums and uncalled and called but unpaid
capital; and
(i) licences connected with the Chargor's business; and
(j) goodwill, patents, trade marks, service marks, copyrights, and
registered designs; and
(k) the Chargor's Records and all software and other means used to
access the Chargor's Records; and
(l) all certificates of title and other documents evidencing title to
the Charged Property; and
(m) insurance policies and proceeds; and
(n) the interest of the Chargor in any partnership or joint venture; and
(o) accounts and deposits with the Financier where there is some
restriction on the right of the Chargor to withdraw or use the funds
in those accounts or deposits; and
(p) all book debts owed to the Chargor not included in the above which
arise in the ordinary course of trading, but this does not include
proceeds of those debts which are received before the first to occur
of:
(i) the Charge being enforced; and
(ii) the Financier requiring those proceeds to be paid into an
account or deposit of the type mentioned in sub-paragraph (o)
(the Financier may
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6
require the proceeds to be paid into such an account at any
time after an Event of Default or Potential Event of
Default); and
(q) any other personal property that is not acquired for disposal in the
ordinary course of the Chargor's business; and
(r) interests in any of the property, assets or rights described in this
subclause.
7.1 FLOATING CHARGE
The Charge is a floating charge on the rest of the Charged Property.
8.1 THE FLOATING CHARGE BECOMES FIXED
The floating charge becomes fixed:
(a) over any part of the Charged Property not already subject to a fixed
charge under this document:
(i) if, unless with the prior written consent of the Financier or
as expressly permitted under a Relevant Agreement, the
Chargor:
(A) creates or allows any Security Interest over;
(B) sells, leases, licences or otherwise disposes of;
(C) creates or allows any interest in; or
(D) parts with possession of,
that asset or agrees or attempts to do so or takes any step
towards doing so;
(ii) on any step being taken with a view to levying or enforcing
any distress, attachment or other execution on that part of
the Charged Property or to enforcing any Security Interest in
respect of that part of the Charged Property;
(iii) on a Public Authority signing an Attachment Notice which will
affect that part of the Charged Property; or
(b) over all of the Charged Property:
(i) if any order is made or a resolution is passed for the Winding
Up of the Chargor or the Chargor is otherwise subjected to or
enters into Liquidation; or
(ii) on this document being enforced in any way following the
occurrence of
<PAGE>
7
an Event of Default or Potential Event of Default; or
(c) over any part of the Charged Property not already subject to a fixed
charge under this document:
(i) if the Financier notifies the Chargor that the Charge is fixed
over a specified part of the Charged Property; or
(ii) when it becomes fixed by law.
Except where expressly stated, no notice or action by the Financier is
necessary for the floating charge to become fixed.
9.1 THE PARTIES TREAT THE FIXED CHARGE AS FLOATING AGAIN
(a) The Financier may notify the Chargor that the Charge is no longer
fixed on the assets specified in the Financier's notice (`RELEVANT
ASSETS'), with effect from the date specified in that notice.
(b) From the date specified in that notice, the Relevant Assets (whether
acquired before or after that date) are subject to the floating
charge until the Charge crystallises under clause 2.4.
10.1 CONTINUING SECURITY AND DISCHARGING THE CHARGE
The Charge is a continuing security. It remains in effect until the
Financier gives a final discharge to the Chargor. The Chargor is only
entitled to a final discharge if:
(a) all of the Secured Money has been paid; and
(b) the Financier is satisfied that there are no amounts which will
subsequently fall within the description of the Secured Money.
In satisfying itself under paragraph (b), the Financier may consider any
matters it thinks relevant, including (without limitation) the possibility
that a payment to reduce the Secured Money might be repayable, void or
voidable under a law relating to insolvency or protecting creditors.
11.1 PRIORITY AMOUNT - MAXIMUM PROSPECTIVE LIABILITY
The maximum prospective liability secured by the Charge is
$200,000,000.00. This amount and this clause:
(a) apply only to fix priority under section 282(3) of the Corporations
Law; and
(b) do not affect any obligation of the Chargor under a Relevant
Agreement including, but not limited to, its obligation to pay the
Secured Money; and
(c) do not in any way fix a limit on the amount which may be secured by
this
<PAGE>
8
document.
12.1 FIRST PRIORITY SECURITY INTEREST
The Charge is a first charge. With respect to any Charged Property as to
which the law of any state of the United States of America governs the
granting, perfection or effect of perfection of a security interest, the
Charge created hereunder is a first priority perfected security interest.
13. PAYMENT OBLIGATIONS
14.1 SECURED MONEY
The Chargor must pay the Secured Money (free from any deduction, set-off
or counter-claim):
(a) at the times and in the way specified in the Relevant Agreements;
and
(b) otherwise, on demand to or as directed by the Financier.
15.1 INTEREST
The Chargor must pay interest on the Secured Money to or as directed by
the Financier, at the rates specified in the Relevant Agreements. If no
rate is specified, the rate is as determined by the Financier. Interest
accrues from day to day, computed from the time:
(a) the Secured Money became owing (whether or not it is immediately
payable); or
(b) in relation to money payable under clause 3.3, the relevant amount
was incurred.
Interest may be capitalised monthly or at the times agreed between the
parties. It then bears interest itself under this clause. Interest
continues to be payable despite the Winding Up of any person, or any
judgment obtained against any person.
16.1 COSTS AND EXPENSES
The Chargor indemnifies the Financier against, and must pay on demand to
the Financier, all Taxes and all reasonable costs and expenses
(including, but not limited to, legal costs and expenses on a full
indemnity basis) which the Financier or a Receiver or Attorney pays, or is
liable to pay, in connection with:
(a) a Relevant Agreement, or negotiating, preparing, completing,
registering or stamping a Relevant Agreement; or
(b) maintaining, preserving or protecting the Charged Property; or
(c) surveying, valuing, inspecting or reporting on the Charged Property;
or
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9
(d) obtaining or attempting to obtain payment of the Secured Money from
any person; or
(e) protecting, enforcing or exercising a right, power or remedy of the
Financier or a Receiver or Attorney under or in connection with a
Relevant Agreement; or
(f) an Event of Default or Potential Event of Default; or
(g) the Financier providing financial accommodation to or at the request
of the Chargor; or
(h) a receipt or payment of money under, or a transaction contemplated
by, a Relevant Agreement.
17.1 CONTINGENT LIABILITIES
If the Financier has declared the Secured Money to be immediately payable
(under clause 9 or a similar provision in a Relevant Agreement), the money
which the Chargor must immediately pay to the Financier includes an amount
equal to the sum of:
(a) the contingent liability of the Chargor or a Debtor under a
Guarantee; and
(b) the aggregate face value of all negotiable instruments:
(i) drawn, accepted or endorsed by the Financier at the express or
implied request of the Chargor or a Debtor; and
(ii) which have not yet matured or which have not yet been
discharged to the satisfaction of the Financier; and
(c) any other amount which may become payable by the Chargor to the
Financier in connection with a contingent liability.
18.1 LOSS RESULTING FROM EVENT OF DEFAULT
The Chargor indemnifies the Financier against all losses (including
foregone profits) the Financier suffers in connection with or as a result
of an Event of Default.
19.1 INDEMNIFIED AMOUNTS IN FOREIGN CURRENCY
Where under this document the Chargor must reimburse or indemnify the
Financier against an amount denominated in a currency other than
Australian dollars, the Chargor must pay the amount in the relevant
currency, except as follows. The Financier may request it be paid in
Australian dollars. In that case, the Chargor will pay the amount of
Australian dollars which the Financier certifies that it used to buy the
relevant amount of the other currency at the rate determined by the
Financier to be its usual selling rate for the other currency.
20.1 CURRENCY INDEMNITY
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10
The Chargor promises to indemnify the Financier on demand against any
shortfall which arises whenever, for any reason (including as a result of
a judgment or order, or Liquidation):
(a) the Financier receives or recovers an amount in one currency
(`PAYMENT CURRENCY') in respect of an amount due to it in another
currency (`DUE CURRENCY'); and
(b) the amount actually received or recovered by the Financier at its
usual rate of exchange in accordance with its normal practice when
it converts the Payment Currency into the Due Currency is less than
the relevant amount of the Due Currency.
21. CHARGOR'S OTHER OBLIGATIONS
22.1 POSITIVE OBLIGATIONS
The Chargor must:
(a) carry on its business in a proper and efficient way and obtain,
renew and maintain all material licences, consents and approvals
advisable in connection with the Chargor's business; and
(b) maintain proper and adequate books and records in accordance with
applicable accounting standards; and
(c) pay when due the Taxes assessed, levied or imposed on the Chargor
(other than those being contested in good faith, provided sufficient
reserves have been set aside to meet the potential liability), the
Charged Property or the Financier in connection with the Charged
Property; and
(d) comply with each term of each material lease and material contract
to which it is a party unless the term is the subject of a bona fide
dispute or is legally unenforceable; and
(e) ensure that each of its Subsidiaries complies with clauses 4.1(a),
(b), (c) and (d) for its own business and property; and
(f) ensure that each of its Subsidiaries has granted and registered or
promptly grants and registers a charge to the Financier over all of
its property, assets and rights in form and substance satisfactory
to the Financier;
(g) comply with all laws and with the mandatory requirements of any
Public Authority and promptly carry out work required by a Public
Authority concerning the Charged Property except where the
requirement to do so is being contested in good faith; and
<PAGE>
11
(h) do everything necessary to ensure no Event of Default occurs; and
(i) prosecute and defend (at the Chargor's expense) all legal
proceedings which are advisable, or which the Financier advises the
Chargor that it considers advisable, to avoid a material adverse
effect on the Charged Property; and
(j) protect the Charged Property, keep it in good repair and good
working condition and, if requested by the Financier, replace any
part of the Charged Property which, in the Financier's opinion,
needs replacement; and
(k) give the Financier the certificates of title and other documents
evidencing title to that part of the Charged Property over which the
Charge is a fixed charge as soon as they are available to the
Chargor or its agents; and
(l) promptly give the Financier the Security Interests (and documents in
connection with the Security Interests) in favour of the Chargor
which secure the performance of any obligation or the payment of any
money owed to the Chargor; and
(m) take whatever action the Financier reasonably requires in connection
with environmentally hazardous substances.
23.1 NEGATIVE OBLIGATIONS
The Chargor must not, without the consent of the Financier:
(a) materially change the scope or nature of its business as it is
carried on at the date of this document; or
(b) do or allow anything to be done in derogation of the Financier's
rights, powers or remedies under any Relevant Agreement; or
(c) deal with or dispose of:
(i) the Charged Property over which the Charge is fixed; or
(ii) the Charged Property over which the Charge is floating, except
in the ordinary course of the ordinary business of the
Chargor;
except as permitted under clause 12.2(b) of the Negative Pledge;
(d) permit a Security Interest (other than a Permitted Security
Interest) to affect the Charged Property; or
(e) apply for or obtain money, goods or services from a Public
Authority, fail to pay an amount to a Public Authority (unless the
Chargor is contesting the liability to pay in good faith and has set
aside sufficient reserves to meet the liability) or do anything else
which might lead to a liability or Tax being imposed on the Charged
Property; or
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12
(f) other than in the ordinary course of the Chargor's business
materially alter or remove a building, improvement or fixture which
is part of the Charged Property; or
(g) acquire or dispose of an asset, or incur a liability, except in the
ordinary course of the Chargor's ordinary business and on `arm's
length' terms or as permitted under clause 12.2(b) of the Negative
Pledge; or
(h) dispose of any book debts owed to it, or any of its monetary claims
or revenue, other than as part of the `global interestate
settlement' approved by the United States Bankruptcy Court for the
Central District of California in In re Sizzler International, Inc.
Case No. SV 96-16076-AG, by order entered August 6, 1997.; or
(i) deposit money:
(i) on terms that the money is redeemable, repayable or may be
withdrawn only if the Chargor pays some other debt or performs
some other obligation; or
(ii) if a right of set-off (however described) may be exercised
against the deposit,
except that the Chargor may lodge security deposits required to be
lodged under leases entered into at arms' length or with Public
Authorities (other than in respect of moneys which are delinquent);
or
(j) buy or agree to buy anything on terms reserving title to any person
until paid for (except stock purchases in the ordinary course of
business); or
(k) call up uncalled capital or uncalled premiums of the Chargor or
receive it in advance of calls or apply it except to pay the Secured
Money; or
(l) allow an environmentally hazardous substance to be released on or
from the Charged Property in breach of any law or the requirements
of any Public Authority; or
(m) do or allow anything to be done which may (other than in an
immaterial way) prejudice the Financier's security or rights under a
Relevant Agreement.
24.1 UNDERTAKINGS RELATING TO LIQUOR LICENCE
If the Chargor at any time holds a Liquor Licence the Chargor undertakes
to the Financier that:
(a) (i) it will personally carry on the business in respect of which the
Liquor Licence is held upon the premises to which the Liquor
Licence relates
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13
(`LICENSED PREMISES') or cause that business to be carried on
by a person previously nominated by it and who is acceptable
to the relevant licencing authority;
(ii) it will perform and observe the provisions and requirements
of:
(A) the Liquor Act;
(B) all other statutes affecting or relating to the licensed
premises and the business carried on at the licensed
premises; and
(C) any order or notice given, sent or served upon the
Financier or the Chargor pursuant to or by virtue of the
Liquor Act or any other statute;
(iii) it will apply for all licenses, permits and renewals of
licences and permits necessary or desirable for the conduct of
the business carried on at the licensed premises and will
oppose any application to restrict or cancel any such licence;
and
(iv) it will not:
(A) change the use of the licensed premises;
(B) remove or apply to remove the Liquor Licence or allow
the Liquor Licence to be removed from the licensed
premises to other premises;
(C) surrender or attempt to surrender, suspend or attempt to
suspend, or transfer or attempt to transfer the Liquor
Licence or vary any of the conditions of the Liquor
Licence; or
(D) mortgage, charge, assign, transfer, lease or part with
possession of the licensed premises or any part of them
to any person or attempt to do so,
without the Financier's prior written consent.
(b) If and when required by the Financier after the occurrence of an
Event of Default, the Chargor shall use its best endeavours to
obtain a transfer of the Liquor Licence to the Financier or its
nominee.
25. CHARGOR'S INSURANCE OBLIGATIONS
26.1 POSITIVE OBLIGATIONS
The Chargor must:
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14
(a) maintain, with underwriters and on terms reasonably acceptable to
the Financier:
(i) insurance over the Charged Property for its full insurable
value (or such other amount as the Financier specifies)
against loss, damage or destruction resulting from theft,
fire, storm and the other risks usually covered by insurance,
and the risks the Financier specifies; and
(ii) worker's compensation, public risk, business interruption,
loss of rent insurance and the other insurance which a prudent
person would have if involved in a business similar to the
Chargor's; and
(iii) the other insurance which the Financier reasonably specifies;
(b) ensure that this insurance:
(i) has the interest of the Financier as chargee or mortgagee
endorsed on the policy; or
(ii) if the Financier directs, is in both the names of the Chargor
and the Financier for their respective rights and interests;
and
(c) deliver to the Financier:
(i) the insurance policies relating to this insurance (`INSURANCE
POLICIES'); and
(ii) all alterations and additions to the Insurance Policies,
immediately after they are issued; and
(d) on request, give the Financier certificates of currency for the
Insurance Policies; and
(e) punctually pay the sums (including stamp duty) necessary to maintain
every Insurance Policy and give the Financier promptly on request
the receipt for the premium sum paid; and
(f) notify the Financier immediately after becoming aware of anything
which might give rise to a claim or right to claim under an
Insurance Policy which claim might or will exceed $1,000,000.00.
27.1 NEGATIVE OBLIGATIONS
The Chargor must not without the consent of the Financier:
(a) do or allow anything to be done which might cause an Insurance
Policy to be prejudiced; or
(b) take steps to bring about a material change to the cover under an
Insurance Policy;
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15
or
(c) insure the Charged Property other than as specified in clause 5.1;
or
(d) make, enforce, settle or compromise a claim or do anything
inconsistent with the powers of the Financier under clause 5.3.
28.1 INSURANCE CLAIMS
The Chargor may not without the consent of the Financier:
(a) make, enforce, settle and compromise insurance or compensation
claims in connection with the Charged Property; or
(b) sue for, recover, receive and give discharges for money payable in
connection with the Insurance Policies,
where such claims or money payable exceed $1,000,000.00.
29.1 INSURANCE PROCEEDS
(a) If the Chargor receives money payable under an Insurance Policy
before a final discharge of this Charge, the Chargor must, if a
Potential Event of Default or Event of Default has occurred or, in
any event, if the amount received is in excess of $1,000,000.00, pay
it to the Financier immediately;
(b) the Financier may apply money received under an Insurance Policy
either:
(i) if a Potential Event of Default or Event of Default has
occurred and is outstanding, in or towards payment of the
Secured Money, whether due or not; or
(ii) in replacing, rebuilding or repairing, under the supervision
of the Financier, or the Financier's builder or architect, the
property destroyed or damaged.
30. CHARGOR'S REPORTING OBLIGATIONS
31.1 NOTICES TO THE FINANCIER
The Chargor must notify the Financier as soon as an Authorised Officer of
the Chargor becomes aware of:
(a) an Event of Default or Potential Event of Default; or
(b) a representation or warranty in any Relevant Agreement becoming
materially false or misleading (giving full details); or
(c) the Charged Property being acquired or resumed by a Public Authority
or a
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16
proposal to do so; or
(d) the Chargor acquiring or intending to acquire a Subsidiary; or
(e) a material requirement or notice of a Public Authority in connection
with the Charged Property and must give the Financier a copy of any
related document it has and full details of all relevant facts known
to the Chargor concerning the requirement or notice; or
(f) any environmentally hazardous substance released from or affecting
the Charged Property in breach of any law or the requirements of any
Public Authority.
32. ACCESS TO AND INVESTIGATION OF RECORDS AND LAND
33.1 GIVING ACCESS TO RECORDS AND LAND
The Chargor must:
(a) ensure that the Records of the Chargor and its Subsidiaries are
available for inspection at reasonable times by the Financier and
persons acting on the Financier's behalf; and
(b) allow the Financier and persons acting on the Financier's behalf to
inspect and to take copies of or extracts from the Chargor's and its
Subsidiaries' Records during business hours and give reasonable
assistance to them; and
(c) allow, or obtain for the Financier and persons acting on the
Financier's behalf, full access at all times during business hours
to the Charged Property and to any land or building:
(i) occupied by the Chargor or its Subsidiaries; or
(ii) forming or containing part of the Charged Property,
and give reasonable assistance to them.
34.1 INVESTIGATING ACCOUNTANTS
If the Financier at any time is of the opinion that an Event of Default or
Potential Event of Default has occurred or is likely to occur, the
Financier may appoint a firm of independent accountants or other experts
(`INVESTIGATING ACCOUNTANTS') to investigate the affairs and financial
position of the Chargor and, if the Financier requires, of the
Subsidiaries of the Chargor. The Chargor:
(a) unconditionally authorises the Investigating Accountants to take the
action which is reasonably necessary for the investigation. This
does not include the power to manage the Chargor's business (unless
an Event of Default has occurred and the Financier is exercising
enforcement rights under this document); and
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17
(b) agrees to give the Investigating Accountants all reasonable
assistance and access to all relevant records and information for
that purpose; and
(c) unconditionally authorises the Investigating Accountants to disclose
to the Financier and its advisers all information and documentation
in connection with the investigation.
The Chargor must pay the reasonable costs and expenses of the
investigations to the Investigating Accountants on demand and reimburse
the Financier for its costs and expenses.
35. BETTER SECURITY AND RIGHTS FOR FINANCIER
36.1 BETTER SECURITY AND RIGHTS
The Chargor must, at the Chargor's cost, do whatever the Financier
reasonably requires to:
(a) more satisfactorily secure to the Financier the payment of the
Secured Money; or
(b) enable the Financier to better exercise its rights over the Charged
Property,
and must use its best efforts to make anyone else who has an interest in
the Charged Property or claims under or in trust for the Chargor do the
same.
37.1 EXAMPLES
This includes, but is not limited to, executing:
(a) a Security Interest (including a legal mortgage) over the Charged
Property;
(b) ancillary Guarantees or other documents; and
(c) financing statements suitable for filing or recording in any state
of the United States of America,
in a form reasonably satisfactory to the Financier.
38. EFFECT OF EVENT OF DEFAULT
After an Event of Default the Financier may declare the Secured Money
payable. If so, the Secured Money becomes immediately payable, unless the
Financier specifies otherwise.
39. FINANCIER'S POWERS
40.1 GENERALLY
(a) After an Event of Default, the Financier may do the things which a
mortgagee and an absolute owner could do to the Charged Property and
exercise the rights,
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18
powers and remedies of a mortgagee and an absolute owner of the
Charged Property. These include, but are not limited to, the things
and powers described in this clause 10, and the rights, powers and
remedies of a secured party under the Uniform Commercial Code of any
jurisdiction in the United States of America.
(b) The Financier need not make a demand or give notice to anyone before
doing these things or exercising these powers, except if notice is
required as described in clause 10.10.
41.1 TO TAKE POSSESSION OF CHARGED PROPERTY
After an Event of Default the Financier may:
(a) take possession of the Charged Property; and
(b) receive the rents and profits of the Charged Property.
42.1 TO DEAL WITH THE CHARGED PROPERTY AND CHARGOR'S BUSINESS
After an Event of Default the Financier may do any of the following:
(a) (CARRY ON BUSINESS) carry on or participate in the Chargor's
business in the name of the Chargor or the Financier or otherwise;
and
(b) (BANK ACCOUNTS) operate bank accounts in the name of the Chargor
(alone or together) to the exclusion of the Chargor; and
(c) (NEGOTIABLE INSTRUMENTS) deal with negotiable instruments in the
name of the Chargor; and
(d) (CONTRACTUAL RIGHTS)
(i) perform the Chargor's obligations under; and
(ii) enforce or exercise or not exercise the Chargor's rights and
powers under; and
(iii) agree to vary or rescind,
a contract, instrument, arrangement or right forming part of the
Charged Property; and
(e) (COMPROMISE) settle, compromise or submit to arbitration a dispute
in connection with the Charged Property; and
(f) (PERFORM CHARGOR'S OBLIGATIONS) do everything it may to comply with
the obligations of the Chargor under a Relevant Agreement; and
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19
(g) (REMEDY BREACH) do everything it may to make good a breach or
default inherent in an Event of Default, to its own satisfaction;
and
(h) (DEPOSIT MONEY IN SUSPENSE OR OTHER ACCOUNTS) invest, deposit or
hold the Charged Property in any way that, and for as long as, the
Financier thinks fit and vary, transpose or reinvest the Charged
Property; and
(i) (MAKE CALLS) make calls on the members of the Chargor for the
uncalled capital or uncalled premiums subject to the Charge; and
(j) (RECOVER, PROTECT CHARGED PROPERTY) do everything the Financier
thinks necessary to recover or protect the Charged Property
including, but not limited to, Winding Up debtors of the Chargor;
and
(k) (LEGAL PROCEEDINGS) commence, prosecute, defend and settle
proceedings which the Financier considers expedient in connection
with this document or the Charged Property in or before a Public
Authority in the name of the Chargor or otherwise; and
(l) (MARKETABLE SECURITIES) exercise the rights and powers of an
absolute owner in connection with Marketable Securities which form
part of the Charged Property. The Chargor appoints the Financier
and each Authorised Officer of the Financier separately to be the
authorised representative and proxy of the Chargor to do the things
described in this paragraph; and
(m) (EXCHANGE) exchange the Charged Property for any other property or
rights (with or without giving or receiving any other consideration
for the exchange); and
(n) (TRANSFER OBLIGATIONS) effect a novation of or otherwise transfer to
any person obligations of the Chargor which arise under a Relevant
Agreement or otherwise; and
(o) (IMPROVE CHARGED PROPERTY) do anything which the Financier considers
would help improve the value of the Charged Property, obtain income
or returns from it or make it saleable or more saleable. Without
limitation, the Financier may improve or alter the Charged Property,
acquire additional property in the name of the Chargor, reorganise
or restructure the Chargor's business or any process or procedure
carried on by the Chargor, and undertake any marketing or publicity
campaign; and
(p) (BUILD, PULL DOWN, REBUILD OR ALTER)
(i) build a new building or improvement; and
(ii) pull down, rebuild or alter a building or improvement,
on land which, or an interest in which, is part of the Charged
Property; and
(q) (EXECUTE DOCUMENTS) enter into agreements and execute documents
itself or on
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20
behalf of the Chargor for any purpose in connection with a Relevant
Agreement; and
(r) (BORROW, SECURE) in the name of the Chargor or otherwise:
(i) obtain financial accommodation (including, but not limited to,
from a party associated with the Financier) for any purpose
which the Financier considers expedient in connection with its
powers under a Relevant Agreement; and
(ii) secure the payment or repayment of indebtedness relating to
that financial accommodation by a Security Interest over the
Charged Property, however it ranks for priority with the
Charge or a Collateral Security; and
(s) (EMPLOY AND APPOINT PERSONS) employ staff and appoint professionals
and consultants for any purpose, and at the remuneration, that the
Financier thinks fit; and
(t) (DELEGATE) delegate to any person for any time that the Financier
thinks fit any of the powers of the Financier under this document,
including this right of delegation; and
(u) (INCIDENTAL POWER) do anything the Financier thinks expedient in its
interests and incidental to any of its powers under this document,
without limiting those powers; and
(v) (SPEND MONEY) spend money in exercising its powers in this document.
That money then forms part of the Secured Money.
43.1 TO DISCHARGE OR ACQUIRE PRIOR SECURITY INTEREST
After an Event of Default the Financier may:
(a) purchase the debt secured by a prior Security Interest; or
(b) pay the amount required to discharge or satisfy that debt
(including, but not limited to, a debt secured by a Permitted
Security Interest); or
(c) take a transfer or assignment of that Security Interest and any
Guarantee, document or right ancillary or collateral to it, at the
Chargor's cost.
44.1 EXERCISE OF RIGHTS UNDER CLAUSE 10.4
If the Financier exercises its rights under clause 10.4:
(a) the Chargor is indebted to the Financier for the same amount paid by
the Financier. This does not limit any other debt acquired by the
Financier; and
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21
(b) that debt is immediately payable to the Financier and forms part of
the Secured Money and interest accrues on the unpaid amount of that
debt under clause 3.2; and
(c) the Financier need not enquire whether the money claimed to be owing
is actually owing in connection with the prior Security Interest, or
an ancillary or collateral document; and
(d) the person with the benefit of the prior Security Interest need not
enquire whether there is any money owing under a Relevant Agreement;
and
(e) the Chargor directs any person with the benefit of a prior Security
Interest to give the Financier any information it requires in
connection with the prior Security Interest. This includes, but is
not limited to, the state of accounts for that Security Interest.
45.1 TO SELL AND LEASE
After an Event of Default the Financier may do any of the following:
(a) (SELL) sell or help sell the Charged Property on the terms and in
the manner it thinks fit, whether or not the Financier has taken
possession; and
(b) (OPTIONS) give an option to purchase the Charged Property on the
terms it thinks fit; and
(c) (SEVER FIXTURES) sever fixtures belonging to the Chargor and sell
them apart from the Charged Property; and
(d) (LEASE, ETC) lease the Charged Property or give licences or rights
over the Charged Property in the name of the Chargor or otherwise
(whether or not the Financier has taken possession) for whatever
term, at whatever rent or fee and on whatever terms the Financier
thinks fit; and
(e) (DEAL WITH LEASES) renew, vary, accept the surrender of or terminate
a lease or licence of the Charged Property; and
(f) (SELL OR LEASE TOGETHER WITH OTHER PROPERTY) sell or lease the
Charged Property with any other property in any manner that the
Financier thinks expedient, with full power to apportion costs,
expenses, purchase money and rent between the properties sold or
leased; and
(g) (HIVE OFF ASSETS OR OBLIGATIONS) promote the formation of any
company so that the company may purchase or acquire the Charged
Property or assume obligations of the Chargor or both; and
(h) (EFFECT HIVE-OFF) sell or assign the Charged Property or assume the
Chargor's obligations.
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46.1 TO APPOINT RECEIVERS
After an Event of Default, the Financier may:
(a) appoint one or more persons to be a Receiver or Receivers of the
Charged Property, with the powers and rights described in this
clause 10 (or such lesser powers as the Financier determines); and
(b) remove that Receiver or those Receivers; and
(c) if a Receiver is removed, retires or dies, appoint another or others
in his or her place; and
(d) in the case of removal or retirement of a Receiver, reappoint that
person.
47.1 TO APPOINT MORE THAN ONE RECEIVER
If the Financier appoints two or more persons to be the Receiver, the
Financier may appoint them to act jointly, severally or jointly and
severally. If it is not specified in the instrument of appointment, the
Receivers are appointed to act severally.
48.1 TO PAY THE RECEIVER
The Financier may fix the remuneration of a Receiver at an amount agreed
between the Financier and the Receiver.
49.1 NOTICE OR LAPSE OF TIME REQUIRED BEFORE RIGHTS EXERCISED
(a) If notice or lapse of time is required under any statute before the
Financier can exercise its power of sale or any other rights
available to it under this document or by law, then that notice or
lapse of time is dispensed with.
(b) Paragraph (a) only applies if the relevant statute allows notice or
lapse of time to be dispensed with.
(c) If the relevant statute does not allow notice or lapse of time to be
dispensed with, but allows it to be shortened, then for the purposes
of this document, the period of notice or lapse of time is one day.
50.1 TO GIVE UP POSSESSION AND TERMINATE RECEIVERSHIP
The Financier may:
(a) give up possession of the whole or any part of the Charged Property;
or
(b) terminate a receivership,
or both.
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23
51.1 PERSONS DEALING NOT BOUND TO ENQUIRE
A person dealing with the Financier or a Receiver or Attorney:
(a) need not enquire whether there has been a default by the Chargor
under a Relevant Agreement or whether the Financier, Receiver or
Attorney has acted properly; or
(b) need not enquire whether the Financier, a Receiver or an Attorney
has executed or registered an instrument or exercised a right, power
or remedy properly or with authority,
and whenever the Financier, a Receiver or an Attorney deals with the
Charged Property, that dealing is authorised and valid as far as anyone
involved with that dealing is concerned. The receipt of the Financier or
a Receiver or Attorney for any money payable to the Chargor discharges the
person paying that money to the extent of the payment.
52.1 RESPONSIBILITY FOR LOSS
The Financier is not responsible for a loss arising in connection with it
exercising or failing to exercise its powers under a Relevant Agreement
nor for an act or failure of an employee or agent of the Financier or any
Receiver. The Financier need not account for more money than it actually
receives.
53. RECEIVER'S POWERS
54.1 GENERAL
Unless the terms of the Receiver's appointment say otherwise, the Receiver
has the following powers over the Charged Property which the Receiver is
appointed to deal with:
(a) all the rights and powers given by law to mortgagees in possession,
receivers or receivers and managers; and
(b) all the rights and powers of the Financier under this document and
at law (other than the power to appoint Receivers); and
(c) power to obtain financial accommodation from the Financier, alone or
together with any other person, for a purpose and on the terms that
the Receiver considers expedient in connection with the Charged
Property; and
(d) power to secure the payment or repayment of indebtedness relating to
that financial accommodation by a Security Interest over the Charged
Property, however it ranks for priority with the Charge or a
Collateral Security.
The Receiver may exercise these rights and powers in the name of the
Chargor or otherwise.
55.1 RECEIVER IS AGENT OF CHARGOR
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24
A Receiver is the agent of the Chargor. The Chargor alone is responsible
for the Receiver's acts and defaults. But the Receiver, to the extent
required by law, ceases to be the agent of the Chargor if a resolution is
passed or an order is made to Wind Up the Chargor. The Receiver may
become the agent of the Financier if the Financier gives a notice to the
Receiver in writing to that effect. The Financier may appoint a further
Receiver, despite that resolution or order.
56.1 ACCOUNTABILITY OF RECEIVER
A Receiver is not responsible for a loss arising in connection with the
exercise or execution of the Receiver's powers, nor for any act or default
of an employee or agent of the Financier or the Receiver. A Receiver need
not account for more money than the Receiver actually receives.
57. POWER OF ATTORNEY
58.1 APPOINTMENT AND POWERS
The Chargor for valuable consideration irrevocably appoints the Financier,
each Authorised Officer of the Financier and each Receiver separately as
its attorneys to do the following on the Chargor's behalf and in the name
of the Chargor or the Attorney after the occurrence of an Event of Default
or Potential Event of Default:
(a) anything which the Chargor must do under a Relevant Agreement; and
(b) anything which, in the opinion of the Attorney:
(i) would give effect to a right, power or remedy of the Financier
or a Receiver; or
(ii) the Chargor should do,
under a Relevant Agreement or by law; and
(c) enter into or execute transactions, documents and agreements which,
in the opinion of the Attorney, the Chargor should enter into or
execute under a Relevant Agreement; and
(d) use the Chargor's name to exercise the powers of the Financier or a
Receiver under a Relevant Agreement, the law or otherwise,
and the Chargor agrees to ratify anything done by an Attorney under this
power of attorney.
59.1 ATTORNEY MAY DELEGATE POWERS
An Attorney may delegate its powers (including the power to delegate) to
any person for any period and may revoke the delegation.
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60.1 PURPOSE
The power of attorney created under this clause is irrevocable and is
granted to secure the performance by the Chargor of the Chargor's
obligations under each Relevant Agreement to which the Chargor is a party.
61. NOTICES AND DEMANDS FROM THE FINANCIER
62.1 SIGNING
A notice from or demand by the Financier to or on the Chargor may be
signed by an Authorised Officer of the Financier or by a solicitor acting
for the Financier. This signature may be handwritten or printed or
reproduced by other means.
63.1 SENDING
In addition to any method of service provided for by statute, a notice
from or demand by the Financier is given to or made on the Chargor if it
is:
(a) sent by facsimile to the facsimile number of the Chargor last known
to the Financier or, if more than one facsimile number is known to
the Financier, to any of those facsimile numbers; or
(b) left for the Chargor or sent by prepaid mail (and by airmail if to
an address outside Australia) to the Chargor at:
(i) the address of the Chargor set out in this document; or
(ii) the Chargor's usual place of business last known to the
Financier; or
(iii) the Chargor's registered office; or
(iv) premises owned or occupied by the Chargor.
64.1 VALIDITY
A notice or demand is validly given even if:
(a) the Chargor has been Wound Up or the Chargor is absent from the
place the notice or demand is left at, or delivered or sent to; or
(b) the notice or demand is returned unclaimed.
65.1 RECEIPT
A notice or demand is taken to have been received by the Chargor:
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(a) if delivered personally, on the same day; and
(b) if posted to an address in Australia, on the second Business Day
after it was posted; and
(c) if posted to an address outside Australia, on the fourth Business
Day after it was posted; and
(d) if sent by facsimile, when a transmission report is produced by the
sender's facsimile machine indicating that the notice or demand has
been sent to the relevant number.
66. PRESERVING THE FINANCIER'S RIGHTS, POWERS AND REMEDIES
67.1 PRESERVATION
(a) The fact that the Financier does not exercise, or delays the
exercise of, any right, power or remedy does not affect any of its
other rights, powers or remedies.
(b) The fact that the Financier delays the exercise of any right, power
or remedy does not constitute a waiver of that right, power or
remedy.
(c) The fact that the Financier exercises a right, power or remedy does
not prevent the Financier from exercising that right, power or
remedy again.
(d) This document does not operate to extinguish or prejudice any right,
power or remedy of the Financier under a Relevant Agreement or in
connection with the Secured Money.
68.1 MORATORIUM LEGISLATION
A moratorium does not apply to a Relevant Agreement or the recovery of the
Secured Money except if:
(a) the Financier agrees in writing that it does; or
(b) it cannot be excluded by law.
69.1 REINSTATING OR REPLACING RIGHTS
If any payment made to the Financier in reduction of the Secured Money is
repaid or void or conceded to be void, voidable or repayable for any
reason, then, despite any release, settlement or discharge in connection
with the Secured Money:
(a) that payment has not discharged the relevant liability; and
(b) the Financier may recover the amount of that payment from the
Chargor; and
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(c) the Chargor must:
(i) immediately do all acts and things the Financier requires to
replace or reinstate the Charge and any Collateral Security
which has been released in connection with that payment; and
(ii) indemnify the Financier against and pay on demand all costs
and expenses in connection with replacing or reinstating the
Charge and any Collateral Securities.
70.1 EFFECT OF RELEASE
(a) A full or partial release of this Charge by the Financier does not
release the Chargor from personal liability under this document
until the Financier receives the Secured Money, regardless of any:
(i) receipt given, payout figure quoted or other form of account
stated; or
(ii) error or miscalculation by the Financier.
(b) Each indemnity given by the Chargor to the Financier under this
document is a continuing indemnity. A full or partial release of
this Charge does not release the Chargor from liability under an
indemnity unless the release is specifically of that indemnity.
71. MISCELLANEOUS
72.1 NO OBLIGATION TO EXERCISE RIGHTS OR GIVE CONSENT
Each of the Financier and a Receiver may:
(a) exercise or not exercise any right, power or remedy; and
(b) give or not give consent; and
(c) make or not make a decision,
under this document, in its absolute discretion without giving a reason
and without being liable or accountable for the consequences. In relation
to the giving or not giving of consent, the Financier will act in a manner
which the Financier determines in its absolute discretion to be
reasonable. Such determination shall not be questioned by the Chargor.
73.1 CONSENT MUST BE IN WRITING
A consent given or a right, power or remedy waived by the Financier is
effective only if given or waived in writing.
74.1 NOTIFICATION FROM CHARGOR
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If the Chargor is required under this document to notify the Financier
about anything, the Chargor must do so in writing.
75.1 FINANCIER MAY SET OFF
Without any demand or notice, the Financier may set off and apply
indebtedness it owes to the Chargor (whatever the currency) against the
Secured Money:
(a) whether the indebtedness is owed alone or with any other person; and
(b) whether or not the Secured Money or that indebtedness is immediately
payable.
76.1 CHARGOR MUST NOT SET OFF
The Chargor must not claim, exercise or attempt to exercise a right of
set-off or any other right which might reduce or discharge the Secured
Money.
77.1 NO MARSHALLING
The Financier need not resort to a Collateral Security or other Security
Interest before exercising a power under this document.
78.1 SUSPENSE ACCOUNT
The Financier may credit money received in or towards satisfaction of the
Secured Money to a suspense account. The Financier may keep the money in
that account for as long as the Financier thinks fit. Interest will not
accrue on such account. The Financier may apply the money to reduce the
Secured Money whenever it thinks fit.
79.1 SURPLUS PROCEEDS
If surplus money remains in the hands of the Financier or a Receiver after
payment of all the Secured Money (and satisfaction of any obligation
ranking in priority to the Secured Money or secured by a Security Interest
over the Charged Property):
(a) no trust arises over that surplus money; and
(b) that surplus money does not carry interest and the Financier or
Receiver may pay it to an account in the name of the Chargor
(whether or not opened by the Financier or Receiver for that
purpose). The Financier or Receiver is then no longer liable for
the surplus money.
80.1 APPLYING RECEIPTS
The Financier may apply or appropriate money received to reduce the
Secured Money in the order, and to satisfy whatever part of the Secured
Money, the Financier sees fit.
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81.1 TACKING
For the purpose of applying section 282 of the Corporations Law or any
equivalent provision in any jurisdiction, if the Financier is obliged to
make further advances under a Relevant Agreement, that Relevant Agreement
is taken to be incorporated in this document so that this document imposes
on the Financier an obligation to advance that money.
82.1 THE FINANCIER MAY ASSIGN RIGHTS
The Financier may assign or otherwise deal with its rights and benefits
under this document.
83.1 THE FINANCIER MAY DISCLOSE INFORMATION
The Financier may disclose to a potential assignee or participant any
information about the Chargor, any Debtor or a Relevant Agreement which it
considers appropriate.
84.1 CERTAIN NOTICES OR DEMANDS
A notice from or demand by the Financier stating:
(a) that a specified sum of money is owing or payable (or both) under a
Relevant Agreement; or
(b) that an Event of Default has occurred; or
(c) something relevant to the rights or obligations of the Financier or
the Chargor under a Relevant Agreement,
is admissible in proceedings and is conclusive evidence of the matters
stated except if there is manifest error.
85.1 IF DUE DATE NOT A BUSINESS DAY
If anything should be done under this document on a day that is not a
Business Day, it must be done on the previous Business Day.
86.1 SEVERABILITY
(a) A construction of this document that results in all provisions being
enforceable is to be preferred to a construction that does not so
result.
(b) If, despite the application of paragraph (a), a provision of this
document is illegal or unenforceable:
(i) and it would be legal and enforceable if a word or words were
omitted, that word or those words are severed; and
(ii) in any other case, the whole provision is severed,
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30
and the remainder of this document continues in force.
87.1 GOVERNING LAW AND JURISDICTION
This document is governed by the law of Queensland, except:
(a) as required by mandatory provisions of law;
(b) to the extent that the validity, perfection or enforceability of any
of the security interests hereunder, or remedies hereunder, are
dependent on the laws of a jurisdiction other than Queensland, in
which case the governing law shall (to that extent only) be the law
of that jurisdiction.
The parties hereto agree and intend that:
(c) a proper forum/jurisdiction for any litigation or process arising
out of or related to this Agreement shall be any court located in
Queensland; and
(d) a proper forum/jurisdiction for any litigation or process in respect
of any of the Charged Property located in a jurisdiction other than
Queensland shall be any court located either in Queensland or that
other jurisdiction.
The Chargor irrevocably and unconditionally submits to the non-exclusive
jurisdiction of the courts of Queensland and/or the other jurisdiction
referred to in paragraph (e) (as the case may be). The Chargor, to the
extent permitted by applicable laws, hereby expressly waives any defence
or objection to jurisdiction or venue based on the doctrine of forum non
conveniens, and stipulates that the courts of Queensland and/or that other
jurisdiction (as the case may be) shall have in personam jurisdiction and
venue over it for the purpose of any such litigation or process arising
out of or related to this document.
88.1 FINANCIER NEED NOT EXECUTE
This document is enforceable by the Financier even if the Financier does
not execute it.
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SCHEDULE A
The Charged Property includes, without limitation, all of the following
property, assets and rights of the Chargor, whether now owned or hereafter
acquired: accounts, general intangibles, rights to payment of money,
rights and benefits under contracts and agreements, tax refunds, insurance
proceeds, instruments, chattel paper, letters of credit, promissory notes,
drafts, bills of exchange, trade acceptances, documents, inventory, goods,
copyrights, patents, trademarks, equipment, motor vehicles, documents of
title, investment property, and all other tangible and intangible
property, including without limitation, proceeds and products of the
foregoing, and books and records relating to the foregoing.
All terms used in this Schedule A shall have the definitions set forth in
the Commercial Code of the State of California.
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EXECUTED as a deed.
THE COMMON SEAL of COLLINS FOODS )
INTERNATIONAL PTY LTD ARBN 009 980 250 is )
affixed in accordance with its )
constituent documents in the presence of )
..................................... ......................................
Authorised Officer/Director Authorised Officer/Director
..................................... ......................................
Please Print Full Name Please Print Full Name
