SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended August 1, 1999
OR
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934.
For the transition period from ______________ to ____________________
Commission file number 0-23420
QUALITY DINING, INC.
- ------------------------------------------------------
(Exact name of registrant as specified in its charter)
Indiana 35-1804902
- ------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4220 Edison Lakes Parkway, Mishawaka, Indiana 46545
----------------------------------------------------
(Address of principal executive offices and zip code)
(219) 271-4600
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes __X____ No ________
The number of shares of the registrant's common stock outstanding as of
September 14, 1999 was 12,754,996.
QUALITY DINING, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED AUGUST 1, 1999
INDEX
Page
--------
PART I. - Financial Information
Item 1. Consolidated Financial Statements:
Consolidated Statements of Operations....................3
Consolidated Balance Sheets..............................4
Consolidated Statements of Cash Flows....................5
Notes to Consolidated Financial Statements...............6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations...........14
Part II - Other Information
Item 1. Legal Proceedings.......................................22
Item 2. Changes in Securities...................................22
Item 3. Defaults upon Senior Securities.........................22
Item 4. Submission of Matters to a Vote of Security Holders.....22
Item 5. Other Information.......................................22
Item 6. Exhibits and Reports on Form 8-K........................22
Signatures........................................................23
Part I. FINANCIAL INFORMATION
Item 1. CONSOLIDATED FINANCIAL STATEMENTS
QUALITY DINING, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
Twelve Weeks Ended Forty Weeks Ended
August 1, August 2, August 1, August 2,
1999 1998 1999 1998
Revenues: -------- -------- -------- --------
Burger King $ 20,599 $ 20,262 $ 61,993 $ 61,276
Grady's American Grill 16,167 17,553 58,645 63,861
Chili's Grill & Bar 13,026 13,244 42,593 42,994
Italian Dining Division 3,673 3,558 12,002 11,471
------- ------- ------- -------
Total revenues 53,465 54,617 175,233 179,602
------- ------- ------- -------
Operating expenses:
Restaurant operating expenses:
Food and beverage 15,540 16,134 51,490 53,191
Payroll and benefits 15,617 15,711 50,829 51,357
Depreciation and
amortization 2,568 2,586 8,499 8,919
Other operating expenses 13,300 13,324 42,646 43,083
Total restaurant ------- ------- ------- -------
operating expenses 47,025 47,755 153,464 156,550
General and administrative 3,565 3,642 11,953 12,077
Amortization of intangibles 251 251 824 824
Impairment of assets and
facility closing costs 2,501 - 2,501 -
------- ------- ------- -------
Total operating expenses 53,342 51,648 168,742 169,451
------- ------- ------- -------
Operating income 123 2,969 6,491 10,151
Other income (expense):
Interest expense (2,280) (2,596) (7,983) (9,252)
Gain (loss) on sale of
property and equipment 1 (8) (163) 1
Interest income 17 45 91 155
Other income (expense), net 3 164 13 253
------- ------- ------- -------
Total other expense, net (2,259) (2,395) (8,042) (8,843)
------- ------- ------- -------
Income (loss) before
income taxes (2,136) 574 (1,551) 1,308
Income tax provision 219 344 570 803
------- ------- ------- -------
Net income (loss) $ (2,355) $ 230 $ (2,121) $ 505
======= ======= ======= =======
Basic net income(loss)
per share $ (0.19) $ 0.02 $ (0.17) $ 0.04
======= ======= ======= =======
Diluted net income (loss)
per share $ (0.19) $ 0.02 $ (0.17) $ 0.04
======= ======= ======= =======
Weighted average shares outstanding:
Basic 12,712 12,599 12,637 12,599
======= ======= ======= =======
Diluted 12,712 12,601 12,637 12,671
======= ======= ======= =======
See Accompanying Notes to Consolidated Financial Statements
QUALITY DINING, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
August 1, October 25,
1999 1998
ASSETS --------- ---------
Current assets:
Cash and cash equivalents $ 67 $ 3,351
Accounts receivable 2,076 2,358
Inventories 1,870 1,872
Deferred income taxes 2,618 2,848
Other current assets 1,791 1,568
------- -------
Total current assets 8,422 11,997
------- -------
Property and equipment, net 127,127 136,764
------- -------
Other assets:
Deferred income taxes 7,382 7,152
Trademarks, net 12,065 12,320
Franchise fees and development costs, net 8,888 9,259
Goodwill, net 8,178 8,594
Notes receivable, less allowance 10,294 6,000
Liquor licenses, net 2,718 2,859
Other 1,173 1,330
------- -------
Total other assets 50,698 47,514
------- -------
Total assets $ 186,247 $ 196,275
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of capitalized lease and
long-term debt $ 1,361 $ 370
Accounts payable 5,762 7,086
Accrued liabilities 17,272 19,288
------- -------
Total current liabilities 24,395 26,744
Long-term debt 107,502 112,756
Capitalized lease and non-competition
obligations, principally to related parties,
less current portion 5,529 5,849
------- -------
Total liabilities 137,426 145,349
------- -------
Stockholders' equity:
Preferred stock, without par value:
5,000,000 shares authorized; none issued
Common stock, without par value: 50,000,000
shares authorized; 12,754,996 and 12,619,444
shares issued, respectively 28 28
Additional paid-in capital 236,887 236,420
Accumulated deficit (187,393) (185,272)
Unearned compensation (451) -
------- -------
49,071 50,926
Less treasury stock, at cost, 20,000 shares 250 250
------- -------
Total stockholders' equity 48,821 50,926
------- -------
Total liabilities and stockholders' equity $ 186,247 $ 196,275
======= =======
See Accompanying Notes to Consolidated Financial Statements.
QUALITY DINING, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Forty Weeks Ended
August 1, August 2,
1999 1998
Cash flows from operating activities: -------- -------
Net income (loss) $ (2,121) $ 505
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of
property and equipment 8,765 8,643
Amortization of other assets 1,778 2,304
Asset impairment charge and facility
closing costs 2,501 -
Loss(gain)on sale of property and equipment 163 (1)
Deferred income taxes - 575
Changes in assets and liabilities:
Net decrease (increase)in current assets 61 3,619
Net decrease in current liabilities (3,340) (5,034)
Other 16 -
Net cash provided by ------- -------
operating activities 7,823 10,611
------- -------
Cash flows from investing activities:
Purchase of note receivable (4,294) -
Proceeds from sales of property and equipment 2,704 839
Purchase of property and equipment (4,496) (5,067)
Other (288) (145)
------- -------
Net cash used in investing activities (6,374) (4,373)
------- -------
Cash flows from financing activities:
Borrowings of long-term debt 5,800 -
Repayment of long-term debt (10,100) (11,600)
Repayment of capitalized lease obligations
and non-competition obligations (283) (200)
Loan financing fees (150) -
------- -------
Net cash used by financing activities (4,733) (11,800)
------- -------
Net decrease in cash and cash equivalents (3,284) (5,562)
Cash and cash equivalents, beginning of period 3,351 7,500
------- -------
Cash and cash equivalents, end of period $ 67 $ 1,938
======= =======
See Accompanying Notes to Consolidated Financial Statements.
QUALITY DINING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 1, 1999
(Unaudited)
Note 1: Description of Business.
Nature of Business Quality Dining, Inc. (the "Company") operates four distinct
restaurant concepts. It owns the Grady's American Grill(R) and two Italian
Dining concepts and operates Burger King(R) restaurants and Chili's Grill &
Bar(TM) ("Chili's"(R)) as a franchisee of Burger King Corporation and Brinker
International, Inc. ("Brinker"), respectively. The Company operates its
Italian Dining restaurants under the tradenames of Papa Vino's Italian Kitchenr
("Papa Vino's"(R)) and Spageddies Italian Kitchen(R) ("Spageddies"). As of
August 1, 1999, the Company operated 144 restaurants, including 71 Burger King
restaurants, 28 Chili's, 37 Grady's American Grill restaurants, four Spageddies
and four Papa Vino's.
Note 2: Basis of Presentation.
The accompanying consolidated financial statements include the accounts of
Quality Dining, Inc. and its wholly owned subsidiaries. All significant
intercompany balances and transactions have been eliminated.
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X promulgated by the Securities and Exchange
Commission. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for annual
financial statement reporting purposes. In the opinion of management, all
adjustments, consisting only of normal recurring accruals, considered necessary
for a fair presentation have been included. Operating results for the forty
week period ended August 1, 1999 are not necessarily indicative of the results
that may be expected for the 53-week year ending October 31, 1999.
These financial statements should be read in conjunction with the Company's
audited financial statements for the fiscal year ended October 25, 1998
included in the Company's Annual Report on Form 10-K filed with the Securities
and Exchange Commission.
Note 3: Disposition of Bagel-Related Businesses
On October 20, 1997, the Company sold its bagel-related businesses to Mr.
Nordahl L. Brue, Mr. Michael J. Dressell and an entity controlled by them and
their affiliates. The Company's board of directors determined to sell the
bagel-related businesses after a careful evaluation of the future prospects for
the bagel business, the competitive environment that then existed in the bagel
segment, and the historical performance of the Company's bagel-related
businesses. The sale included the stock of Bruegger's Corporation and the
stock of all of the other bagel-related businesses. The total proceeds from
the sale were $45,164,000. The consideration included the issuance by
Bruegger's Corporation of a junior subordinated note in the amount of
$10,000,000, which was recorded as $6,000,000 due to a $4,000,000 reserve for
legal indemnification, the transfer of 4,310,740 shares of the Company's common
stock valued at $21,823,000, owned by Messrs. Brue and Dressell, which were
retired, a receivable for purchase price adjustment of $500,000, and
$16,841,000 in cash. The subordinated note has an annual interest rate of 12%
QUALITY DINING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
August 1, 1999
(Unaudited)
and matures in October 2004. The note provides for interest to be accrued and
added to the principal amount of the note through October 2000 and to be paid
in cash for the remaining life of the note. The Company has not recognized any
interest income from this note. The cash component of the proceeds included an
adjustment for the calculation of the net working capital deficit. The
calculation used was subject to final adjustment and is being disputed by
Messrs. Brue and Dressell. In addition, on or about September 13, 1999,
Messrs. Brue and Dressell asserted a claim for $10 million for breach of
representations and warranties under the Share Exchange Agreement.
The Company does not expect the ultimate resolution of these disputes to
have a material adverse effect on the Company's financial position or
results of operations but there can be no assurance thereof.
Note 4: Impairment of Long-Lived Assets and Facility Closure Expense
The Company recorded non-cash charges totaling $2,501,000 during the third
quarter of fiscal 1999 consisting primarily of $650,000 for the disposal of
obsolete point of sale equipment in its full service dining restaurants that
the Company identified as a result of installing its new point of sale system,
$1,047,000 for the estimated costs associated with the anticipated closing of
two regional offices and three restaurant locations and $804,000 primarily for
a non-cash asset impairment write down for two under-performing restaurants.
This non-cash asset impairment charge resulted from the Company's determination
that an impairment write down should be considered for certain locations when
there is a sustained trend of negative operating performance as measured by
restaurant level cash flow. The non-cash facility closure charges include
amounts for the write off of fixed assets and other costs related to the
closing of these facilities. Each of these non-cash charges represents a
reduction of the carrying amount of the assets to their estimated fair market
values. The Company anticipates that the point of sale equipment disposal and
the facilities closures will occur prior to the end of fiscal 1999.
Note 5: Commitments.
As of August 1, 1999, the Company had commitments aggregating approximately
$2,580,000 for restaurant construction and the purchase of new equipment.
Note 6: Long-Term Debt.
On August 3, 1999 the Company completed the refinancing of its existing debt
with a financing package totaling $125,066,000, consisting of a $76,000,000
revolving credit agreement and a $49,066,000 mortgage facility, as described
below. The revolving credit agreement was executed with Chase Bank of Texas, as
agent for a group of six banks, providing for borrowings of up to $76,000,000
with interest payable at the adjusted LIBOR rate plus a contractual spread. The
revolving credit agreement is collateralized by the stock of certain
subsidiaries of the Company, the $10 million junior subordinated note issued by
Bruegger's Corporation, certain interests in the Company's franchise agreements
with Brinker and Burger King Corporation and substantially all of the Company's
personal property not pledged in the mortgage financing. The revolving credit
agreement will mature on October 31, 2002, at which time all amounts
outstanding thereunder are due.
QUALITY DINING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
August 1, 1999
(Unaudited)
The revolving credit agreement contains, among other provisions, certain
restrictive covenants including maintenance of certain prescribed debt and
fixed charge coverage ratios, limitations on the incurrence of additional
indebtedness, limitations on consolidated capital expenditures, restrictions on
the payment of dividends (other than stock dividends) and limitations on the
purchase or redemption of shares of the Company's capital stock.
The $49,066,000 mortgage facility has 34 separate mortgage notes and the term
of each mortgage note is either 15 or 20 years. The notes have fixed rates of
interest of either 9.79% or 9.94%. The notes require equal monthly interest
and principal payments. The Company used the proceeds of the mortgage facility
to repay indebtedness under its existing revolving credit agreement. The
mortgage notes are collateralized by a first mortgage/deed of trust and
security agreement on the real estate, improvements and equipment on 19 of the
Company's Chili's restaurants and 15 of the Company's Burger King restaurants.
The mortgage notes contain, among other provisions, certain restrictive
covenants including maintenance of a consolidated fixed charge coverage ratio
for the financed properties.
As a result of the August 3, 1999 refinancing, the Company has classified its
outstanding borrowings as of August 1, 1999 as long-term debt.
Note 7: Earnings (Loss) Per Share
The Company had outstanding at August 1, 1999 common shares totaling
12,754,996. The Company has also granted options to purchase common shares to
its employees and outside directors. These options have a dilutive effect on
the calculation of earnings per share. The following is a reconciliation of
the numerators and denominators of the basic and diluted earnings per share
computation as required by SFAS 128.
Twelve weeks ended Forty weeks ended
August 1, August 2, August 1, August 2,
1999 1998 1999 1998
-------- -------- -------- --------
(In thousands, except per share amounts)
Basic net income (loss) per share:
Net income (loss) available to
common shareholders (numerator) $(2,355) $ 230 $(2,121) $ 505
======= ======= ======= =======
Weighted average common shares
outstanding (denominator) 12,712 12,599 12,637 12,599
======= ======= ======= =======
Basic net income (loss) per share $ (0.19) $ 0.02 $ (0.17) $ 0.04
======= ======= ======= =======
QUALITY DINING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
August 1, 1999
(Unaudited)
Twelve weeks ended Forty weeks ended
August 1, August 2, August 1, August 2,
1999 1998 1999 1998
-------- -------- -------- --------
(In thousands, except per share amounts)
Diluted net income (loss) per share:
Net income (loss) available to
common shareholders (numerator) $(2,355) $ 230 $(2,121) $ 505
======= ======= ======= =======
Weighted average common shares
outstanding 12,712 12,599 12,637 12,599
Effect of dilutive securities:
Options on common stock - 2 - 72
------- ------- ------ ------
Total common shares and dilutive
securities(denominator) 12,712 12,601 12,637 12,671
======= ======= ======= =======
Diluted net income per share $ (0.19) $ 0.02 $ (0.17) $ 0.04
======= ======= ======= =======
Note 8: Contingencies.
The Company and certain of its officers and directors are parties to various
legal proceedings relating to the Company's purchase, operation and financing
of the Company's bagel-related businesses.
Quality Baking, LLC, a franchisee of Bruegger's Franchise Corporation, and Mark
Ratterman, Chris Galloway and Peter Shipman, principals of Quality Baking, LLC,
commenced an action on July 9, 1997 filed in the United States District Court,
for the Eastern District of Missouri, Eastern Division, against the Company,
Bruegger's Corporation, Bruegger's Franchise Corporation, Nordahl Brue, Michael
Dressell, Daniel B. Fitzpatrick and John Firth.
On April 22, 1998, the Court granted the defendants' Motion to Transfer this
matter to the United States District Court for the Northern District of
Indiana. The complaint alleges that the plaintiffs purchased their franchises
based upon financial representations that have not materialized, that they
purchased preferred stock in Bruegger's Corporation based upon false
representations, that the defendants falsely represented their intentions with
respect to repurchasing bakeries from the plaintiffs, and that the defendants
violated implied covenants of good faith and fair dealing. On July 28, 1999,
the court dismissed all counts against all of the individual defendants,
dismissed the count alleging violations of implied covenants of good faith and
fair dealing and dismissed all fraud claims against the Company. The case
continues to proceed against the Company on allegations that the Company
breached an agreement to repurchase bakeries from the plaintiffs and against
the Bruegger's entities on allegations that the plaintiffs purchased their
franchises and preferred stock of Bruegger's Corporation based upon false
representations and on allegations that Bruegger's Franchise Corporation
breached the plaintiffs' franchise and development agreements.
QUALITY DINING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
August 1, 1999
(Unaudited)
D & K Foods, Inc., Pacific Capital Ventures, Inc., and PLB Enterprises, Inc.,
franchisees of Bruegger's Franchise Corporation, and Ken Wagnon, Dan Carney,
Jay Wagnon and Patrick Beatty, principals of the foregoing franchisees,
commenced an action on July 16, 1997 filed in the United States District Court,
for the District of Maryland, against Bruegger's Corporation, Bruegger's
Franchise Corporation, Quality Dining, Inc., Daniel B. Fitzpatrick, Michael J.
Dressell and Nordahl L. Brue, alleging that the plaintiffs purchased their
franchises based upon financial representations that have not materialized,
that they purchased preferred stock in Bruegger's Corporation based upon false
representations, that Bruegger's Corporation falsely represented its intentions
with respect to purchasing bakeries from the plaintiffs or providing financing
to the plaintiffs, and that the defendants violated implied covenants of good
faith and fair dealing.
On or about April 15, 1997, Texas Commerce Bank National Association ("Texas
Commerce") made a loan of $4,200,000 (the "Loan") to BFBC Ltd., a Florida
limited partnership ("BFBC"). At the time of the Loan BFBC was a franchisee
under franchise agreements with Bruegger's Franchise Corporation (the
"Franchisor"). The Company at that time was an affiliate of the Franchisor. In
connection with the Loan and as an accommodation of BFBC, the Company executed
to Texas Commerce a "Guaranty". By the terms of the Guaranty the Company
agreed that upon maturity of the Loan by default or otherwise that it would
either (1) pay the Loan obligations or (2) buy the Loan and all of the related
loan documents (the "Loan Documents") from Texas Commerce or its successors.
In addition several principals of BFBC (the "Principal Guarantors") guaranteed
repayment of the Loan by each executing a "Principal Guaranty". On November
10, 1998, Texas Commerce (1) declared that the Loan was in default, (2)
notified BFBC, the Principal Guarantors and the Company that all of the Loan
obligations were due and payable, and (3) demanded payment.
The Company elected to satisfy its obligations under the Guaranty by purchasing
the Loan from Texas Commerce. On November 24, 1998, the Company bought the
Loan for $4,294,000. Thereafter, the Company sold the Loan to its Texas
affiliate Grady's American Grill, L.P. ("Grady's"). On November 30, 1998
Grady's commenced an action seeking to recover the amount of the Loan from one
of the Principal Guarantors, Michael K. Reilly ("Reilly"). As part of this
action Grady's also seeks to enforce a Subordination Agreement that was one of
the Loan Documents against MKR Investments, L.P., a partnership ("MKR"). Reilly
is the general partner of MKR. This action is pending in the United States
District Court for the Southern District of Texas Houston Division as Case No.
H-98-4015. Reilly has denied liability and filed a counterclaim against Grady's
alleging that Grady's engaged in unfair trade practices, violated Florida's
"Rico" statute, engaged in a civil conspiracy and violated state and federal
securities laws in connection with the Principal Guaranty (the
"Counterclaims"). Reilly also filed a third party complaint against Quality
Dining, Inc., Grady's American Grill Restaurant Corporation, David M. Findlay,
Daniel Fitzpatrick, Bruegger's Corporation, Bruegger's Franchise Corporation,
Champlain Management Services, Inc., Nordahl Brue, Michael Dressell and Ed
Davis alleging that Reilly invested in BFBC based upon false representations,
that the third party defendants violated Florida and Illinois franchise
statutes, committed unfair trade practices, violated covenants of good faith
and fair dealing, violated the Florida "Rico" statute and violated state and
federal securities laws in connection with the Principal Guaranty. Based upon
the currently available information, the Company does not believe
QUALITY DINING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
August 1, 1999
(Unaudited)
that these matters will have a materially adverse effect on the Company's
financial position or results of operations. However, there can be no
assurance that the Company will be able to realize sufficient value from Reilly
to satisfy the amount of the Loan or that the Company will not incur any
liability as a result of the Counterclaims or third party complaint filed by
Reilly.
In each of the above cases, one or more present or former officers and
directors of the Company have been named as party defendants and the Company
has and/or is advancing defense costs on their behalf. Pursuant to the Share
Exchange Agreement by and among Quality Dining, Inc., Bruegger's Corporation,
Nordahl L. Brue and Michael J. Dressell, the Agreement and Plan of Merger by
and among Quality Dining, Inc., Bagel Disposition Corporation and Lethe, LLC,
and certain other related agreements entered into as part of the disposition of
the Company's bagel-related businesses, the Company is responsible for 50% of
the first $14 million of franchise related litigation expenses, inclusive of
attorney's fees, costs, expenses, settlements and judgments (collectively
"Franchise Damages"). Bruegger's Corporation and certain of its affiliates are
obligated to indemnify the Company from all other Franchise Damages. The
Company is obligated to pay the first $3 million of its share of Franchise
Damages in cash. Through August 1, 1999, the Company had paid approximately
$1.8 million in cash and assigned its $1.2 million note from BruWest to
Bruegger's Corporation which together have satisfied the Company's remaining
obligation to pay cash in respect of Franchise Damages. The remaining $4
million of the Company's share of Franchise Damages is payable by crediting
amounts owed to the Company pursuant to the $10 million junior subordinated
note issued to the Company by Bruegger's Corporation. Through August 1, 1999,
the outstanding balance due under the junior subordinated note has been reduced
by $600,000 in respect of Franchise Damages. Based upon the currently
available information, the Company does not believe that these cases
individually or in the aggregate will have a material adverse effect on the
Company's financial position and results of operations but there can be no
assurance thereof. Such assessment is based in part upon the Company's belief
that Bruegger's Corporation has and will continue to have the ability to
perform its indemnity obligations.
On or about September 13, 1999, Messrs. Brue and Dressell have asserted a claim
of breach of representations and warranties under the Share Exchange Agreement.
The Company does not expect the ultimate resolution of this dispute to have a
material adverse effect on the Company's financial position or results of
operations but there can be no assurance thereof.
James T. Bies filed a shareholder derivative action in the United States
District Court for the Southern District of Michigan on October 14, 1997. A
derivative action is an action on behalf of the Company in which any recovery
against the defendants would be payable to the Company. The complaint named as
defendants 12 individuals who are current or former directors or officers of
the Company. The complaint alleged that the individual defendants as directors
breached fiduciary duties to the Company by approving certain transactions in
1997 involving loans to Bagel Acquisition Corporation that allegedly benefited
Daniel B. Fitzpatrick, the Company's Chairman, President and Chief Executive
Officer. The plaintiff also alleged that individual defendants participated in
a "conspiracy to waste, dissipate, and improperly use funds, property and
assets" of the Company for the benefit of Bagel Acquisition Corporation and Mr.
Fitzpatrick. The plaintiff alleged that the Company and its shareholders had
been damaged in an amount in excess of $28,000,000. The relief sought also
included the appointment of a receiver, an accounting and attorney's fees. On
April 27, 1998, the Court dismissed the complaint without prejudice, for
failure to make a "demand" upon the Company's board of directors that the
Company institute the action. By letter dated May 12, 1998, Mr. Bies demanded
QUALITY DINING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
August 1, 1999
(Unaudited)
that the Company pursue these claims against the defendants. In accordance
with the Indiana Business Corporation Law ("IBCL"), the board of directors
appointed a special committee of three disinterested outside directors and one
other disinterested person to investigate the allegations. The three
disinterested outside directors are Messrs. Decio, Lewis and Murphy (named
defendants in the action) and the disinterested person is David T. Link, Dean
of the University of Notre Dame Law School. As required by the IBCL, the
special committee was charged with evaluating the claim and determining whether
it is in the best interests of the Company to pursue this matter. Subsequent
to the establishment of the special committee, Mr. Bies refiled his action on
July 30, 1998. As a result of its investigation of Mr. Bies' demand, the
special committee has determined that the claims identified by Mr. Bies are
without merit and therefore it would not be in the Company's best interests to
pursue them. As a result, on January 6, 1999, the special committee filed a
motion to dismiss or alternatively for summary judgment, which was denied on
April 20, 1999 essentially because the Court was unable to determine, on the
record before it, whether the special committee was disinterested. The Court
has denied the Company's subsequent request to schedule an evidentiary hearing
to assist in this determination. The Company does not believe this matter will
have a material adverse effect on the Company's financial position or results
of operations.
The Company and certain of its executive officers are defendants in a class
action lawsuit filed in the United States District Court for the Northern
District of Indiana. The complaint alleges, among other things, that the
defendants violated Section 10(b) and 20(a) of the Securities Exchange Act of
1934, as amended, and Rule 10b-5 thereunder by failing to disclose various
matters in connection with the Company's acquisition, development, financing
and disposition of its bagel-related businesses. The putative class period in
such actions is from June 7, 1996 to May 13, 1997 on which dates the price of
the Company's common stock closed at $34.25 and $6.56, respectively. The
plaintiffs are seeking, among other things, an award of unspecified
compensatory damages, interest, costs and attorney's fees. The Company has
filed a motion to dismiss the complaint which is presently pending before the
Court and it intends to vigorously defend against the allegations made in the
complaints. However, there can be no assurance that the ultimate outcome of
this or other actions (including other actions under federal or state
securities laws) arising out of the Company's acquisition, development,
financing and disposition of its bagel-related businesses will not have a
material adverse effect on the Company's financial position or results of
operations.
The Company is involved in various other legal proceedings incidental to the
conduct of its business. Management does not expect that any such proceedings
will have a material adverse effect on the Company's financial position or
results of operations.
QUALITY DINING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
August 1, 1999
(Unaudited)
Note 10: Restricted Stock Awards.
On June 1, 1999, the Company repurchased 298,340 options that had previously
been issued under its 1993 Stock Option and Incentive Plan, at strike prices
ranging from $13.60 to $34.50, for their fair value of $44,751, or $0.15 per
option. These options are not available to be reissued.
On June 1, 1999, the Company also implemented a Long Term Incentive
Compensation Plan (the "Long Term Plan") for seven of its executive officers and
certain other senior executives (the "Participants"). The Long Term Plan is
designed to incent and retain those individuals who are critical to achieving
the Company's long term business objectives. The Long Term Plan consists of
(a) options granted with an exercise price equal to the closing price of the
Company's stock on June 1, 1999, which vest over three years; (b) restricted
stock awards of 155,552 shares which vest on June 1, 2006, subject to
accelerated vesting in the event the price of the Company's common stock
achieves certain targets; and, for certain Participants, (c) a cash bonus
payable at the conclusion of fiscal year 2000. The Company also entered into
agreements with five of its executive officers and two other senior executives
pursuant to which the employees have agreed not to compete with the Company
for a period of time after the termination of their employment and are
entitled to receive certain payments in the event of a change of control of
the Company.
As a result of these grants, the Company recorded a capital contribution and
offsetting deferred charge of approximately $467,000 for unearned
compensation. The deferred charge is equal to the number of shares granted
multiplied by a share price of $3.00, which was the Company's closing share
price on the day of the grant. The deferred charge is classified in the
equity section of the Company's consolidated balance sheet as unearned
compensation and is being amortized on a straight-line basis over the vesting
period.
Item 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
The Company has a 52/53-week fiscal year ending on the last Sunday in October
of each year. The current fiscal year is 53 weeks long and ends October 31,
1999. The first quarter of the Company's current fiscal year consists of 16
weeks, the second and third quarters consist of 12 weeks and the fourth quarter
is 13 weeks in duration.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the percentages
which certain items of revenue and expense bear to total revenues.
Twelve Weeks Ended Forty Weeks Ended
August 1, August 2, August 1, August 2,
1999 1998 1999 1998
-------- -------- -------- --------
Total revenues 100.0% 100.0% 100.0% 100.0%
Operating expenses:
Restaurant operating expenses
Food and beverage 29.1 29.5 29.4 29.6
Payroll and benefits 29.2 28.8 29.0 28.6
Depreciation and amortization 4.8 4.7 4.9 5.0
Other operating expenses 24.9 24.4 24.3 24.0
----- ----- ----- -----
Total restaurant operating
expenses 88.0 87.4 87.6 87.2
General and administrative 6.7 6.7 6.8 6.7
Amortization of intangibles 0.5 0.5 0.5 0.5
Impairment of assets and
facility closing costs 4.7 - 1.4 -
----- ----- ----- -----
Total operating expenses 99.9 94.6 96.3 94.4
----- ----- ----- -----
Operating income 0.1 5.4 3.7 5.6
----- ----- ----- -----
Other income (expense):
Interest expense (4.2) (4.8) (4.6) (5.2)
Interest incom - .1 .1 .1
Other income (expense), net - .3 (.1) .1
----- ----- ----- -----
Total other expense, net (4.2) (4.4) (4.6) (5.0)
----- ----- ----- -----
Income (loss) before income taxes (4.1) 1.0 (0.9) 0.6
Income tax provision 0.4 0.6 0.3 0.4
----- ----- ----- -----
Net income (loss) (4.5)% 0.4% (1.2)% 0.2%
===== ===== ===== =====
Item 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (continued)
Revenues for the Company were $53,465,000 for the third quarter of fiscal 1999
versus $54,617,000 for the comparable period in fiscal 1998, a decrease of
$1,152,000. Restaurant sales for the first forty weeks of fiscal 1999 were
$175,233,000 versus $179,602,000 for the comparable period in fiscal 1998, a
decrease of $4,369,000.
The Company's Burger King restaurant sales increased $337,000 to $20,599,000
in the third quarter of fiscal 1999 when compared to restaurant sales of
$20,262,000 in the same period in fiscal 1998. The Company's Burger King
restaurants had average weekly sales of $24,324 in the third quarter of fiscal
1999 versus $24,728 in the same period in fiscal 1998. The decrease in average
weekly sales was offset by revenues of $614,000 from three units open in
fiscal 1999 that were not open or not open for the full quarter in fiscal
1998. The Company's Burger King restaurant sales increased $717,000 to
$61,993,000 for the first forty weeks of fiscal 1999 compared to $61,276,000
for the comparable period in fiscal 1998. Average weekly sales were $22,086 in
the first forty weeks of fiscal 1999 versus $22,816 in the same period in
fiscal 1998. The decline in average weekly sales for the first forty weeks of
fiscal 1999 resulted primarily from inclement weather during the first quarter
of fiscal 1999. The decrease in average weekly sales was offset by revenues of
$2,247,000 from four units open in fiscal 1999 that were not open or not open
for the full forty weeks in fiscal 1998.
Sales in the Company's Grady's American Grill restaurant division decreased
$1,386,000 to $16,167,000 in the third quarter of fiscal 1999 compared to
sales of $17,553,000 in the same period in fiscal 1998. The decrease was
partly attributable to the sale of one unit in fiscal 1998 and two units in
fiscal 1999. The absence of these units contributed approximately $675,000 to
the sales decrease. The Company's Grady's American Grill restaurants had
average weekly sales of $35,688 in the third quarter of fiscal 1999 versus
$36,569 in the same period in fiscal 1998. The Company's promotional activity
was not as expansive as it was in the third quarter of fiscal 1998, thereby
reducing promotional related sales. Sales in the Company's Grady's American
Grill restaurant division for the first forty weeks of fiscal 1999 decreased
$5,216,000 to $58,645,000 compared to $63,861,000 for the same period in
fiscal 1998. The absence of the three units which were sold contributed
approximately $2,115,000 to the sales decrease. Average weekly sales were
$38,608 in the first forty weeks of fiscal 1999 versus $39,913 in the same
period in fiscal 1998. The decrease resulted primarily from inclement weather
in several key markets during the first quarter of fiscal 1999 and reduced
promotional activity, thereby reducing promotional related sales.
The Company's Chili's Grill & Bar restaurant sales decreased $218,000 to
$13,026,000 in the third quarter of fiscal 1999 compared to $13,244,000 in the
same period in fiscal 1998. Average weekly sales were $38,767 in the third
quarter of fiscal 1999 versus $39,417 in the same period of fiscal 1998. The
Company's Chili's Grill & Bar restaurant sales for the first forty weeks of
fiscal 1999 decreased $401,000 to $42,593,000 compared to $42,994,000 for the
same period in fiscal 1998. Average weekly sales were $38,029 in the first
forty weeks of fiscal 1999 versus $38,388 in the same period in fiscal 1998.
Item 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (continued)
The Company's Italian Dining division restaurant sales increased $115,000 to
$3,673,000 in the third quarter of fiscal 1999 compared to $3,558,000 in the
same period in fiscal 1998. Average weekly sales were $38,270 in the third
quarter of fiscal 1999 versus $37,065 in the same period of fiscal 1998. The
Company's Italian Dining division restaurant sales for the first forty weeks
of fiscal 1999 increased $531,000 to $12,002,000 compared to $11,471,000 for
the same period in fiscal 1998. Average weekly sales were $37,506 in the first
forty weeks of fiscal 1999 versus $35,848 in the same period in fiscal 1998.
Total restaurant operating expenses, as a percentage of restaurant sales, were
88.0% for the third quarter of fiscal 1999 versus 87.4% in the third quarter
of fiscal 1998 and 87.6% in the first forty weeks of fiscal 1999 versus 87.2%
in the same period of fiscal 1998. The following factors influenced the
operating margins.
Food and beverage costs were 29.1% of total revenues in the third quarter of
fiscal 1999 compared to 29.5% of total revenues in the same period in fiscal
1998 and 29.4% in the first forty weeks of fiscal 1999 compared to 29.6% in
the same period of fiscal 1998. The decrease as a percentage of total revenue
was mainly due to increased efficiencies and favorable commodity prices that
resulted in decreased food costs at the Company's Burger King, Chili's and
Italian Dining restaurants.
Payroll and benefits were 29.2% of total revenues in the third quarter of
fiscal 1999 versus 28.8% in the same period of fiscal 1998 and 29.0% in the
first forty weeks of fiscal 1999 compared to 28.6% in the same period of
fiscal 1998. Payroll and benefits increased as a percentage of total revenues
in the Company's Burger King, Grady's American Grill and Chili's divisions.
Overall, the Company has increased hourly wages at each of its restaurant
concepts due to the high level of competition to attract qualified employees.
Depreciation and amortization, as a percentage of total revenues, remained
relatively consistent at 4.8% in the third quarter of fiscal 1999 when
compared to 4.7% in the third quarter of fiscal 1998 and 4.9% in the first
forty weeks of fiscal 1999 compared to 5.0% in the same period of fiscal 1998.
Other restaurant operating expenses include rent and utilities, royalties,
promotional expense, repairs and maintenance, property taxes and insurance.
Other restaurant operating expenses as a percentage of total revenues
increased in the third quarter of fiscal 1999 to 24.9% when compared to 24.4%
in third quarter of fiscal 1998 and increased to 24.3% in the first forty
weeks of fiscal 1999 compared to 24.0% in the same period of fiscal 1998. The
increase was primarily due to an increase in advertising expenses at the
Company's full service restaurant concepts.
General and administrative expenses decreased to $3,565,000 in the third
quarter of fiscal 1999 compared to $3,642,000 in the third quarter of fiscal
1998 and to $11,953,000 in the first forty weeks of fiscal 1999 compared to
$12,077,000 in the same period of fiscal 1998. As a percentage of total
restaurant sales, general and administrative expenses remained consistent at
6.7% in the third quarter of fiscal 1999 versus the third quarter of fiscal
1998 and increased to 6.8% in the first forty weeks of fiscal 1999 compared to
6.7% in the same period of fiscal 1998. The increase in the first forty weeks
was primarily due to lower than expected sales in the first quarter due to
inclement weather.
Item 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (continued)
The Company recorded non-cash charges totaling $2,501,000 during the third
quarter of fiscal 1999 consisting primarily of $650,000 for the disposal of
obsolete point of sale equipment in its full service dining restaurants that
the Company identified as a result of installing its new point of sale system,
$1,047,000 for the estimated costs associated with the anticipated closing of
two regional offices and three restaurant locations and $804,000 primarily for
a non-cash asset impairment write down for two under-performing restaurants.
This non-cash asset impairment charge resulted from the Company's determination
that an impairment write down should be considered for certain locations when
there is a sustained trend of negative operating performance as measured by
restaurant level cash flow. The non-cash facility closure charges include
amounts for the write off of fixed assets and other costs related to the
closing of these facilities. Each of these non-cash charges represents a
reduction of the carrying amount of the assets to their estimated fair market
values. The Company anticipates that the point of sale equipment disposal and
the facilities closures will occur prior to the end of fiscal 1999.
Amortization of intangibles, as a percentage of total revenues, remained
consistent at 0.5% for the third quarter of fiscal 1999 and the first forty
weeks of fiscal 1999, when compared to the same periods in fiscal 1998.
Total other expenses, as a percentage of revenues, decreased to 4.2% for the
third quarter of fiscal 1999 from 4.4% during the comparable period in fiscal
1998 and to 4.6% in the first forty weeks of fiscal 1999 compared to 5.0% in
the same period of fiscal 1998. The decrease for the quarter and the first
forty weeks was primarily due to a decrease in interest expense resulting from
decreased borrowings and lower interest rates.
The provision for income taxes includes federal and state income taxes using
the Company's estimated effective income tax rate for the respective fiscal
year. The Company had an income tax provision for the third quarter of fiscal
1999 of $219,000 compared to $344,000 for the same period of fiscal 1998 and
an income tax provision for the first forty weeks of fiscal 1999 of $570,000
compared to a net income tax provision of $803,000 in the same period of
fiscal 1998. The decrease in the income tax provision for the third quarter
and the first forty weeks of fiscal 1999 was mainly due to implementation of
state tax strategies to reduce state income tax expense.
For the third quarter of fiscal 1999, the Company reported net loss of
$2,355,000 compared to net income of $230,000 for the same period of fiscal
1998 and a net loss of $2,121,000 in the first forty weeks of fiscal 1999
compared to net income of $505,000 in the same period of fiscal 1998.
Item 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (continued)
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents were $67,000 at August 1, 1999, a
decrease of $3,284,000 from the $3,351,000 at October 25, 1998. Principal uses
of funds consisted of: (i) expenditures for property and equipment
($4,496,000), (ii) net reduction in long-term debt ($4,300,000) and (iii)
purchase of the BFBC note receivable ($4,294,000). Principal sources of funds
consisted of (i) those provided by operations ($7,823,000) and (ii) proceeds
from sales of property and equipment ($2,704,000).
The Company's primary cash uses in fiscal 1999 will be as follows: finance
capital expenditures in connection with the opening of new restaurants,
remodeling and maintenance expenditures of existing restaurants and point of
sale upgrades. The Company's capital expenditures for fiscal 1999 are
expected to be approximately $9,000,000. The Company currently plans to use
any remaining cash flow to reduce debt under the Company's revolving credit
agreement. During the first quarter of fiscal 1999 the Company purchased a
note for $4,294,350 from Texas Commerce in satisfaction of its obligations
under a loan guaranty. The purchase of the note was financed through
borrowings under the Company's revolving credit agreement. During fiscal 1999,
the Company has opened one Burger King restaurant and does not anticipate
opening any additional restaurants during fiscal 1999. The actual amount of
the Company's cash requirements for capital expenditures depends in part on
the number of new restaurants opened and the actual expense related to
remodeling and maintenance of existing units.
On August 3, 1999 the Company completed the refinancing of its existing debt
with a financing package totaling $125,066,000, consisting of a $76,000,000
revolving credit agreement and a $49,066,000 mortgage facility, as described
below. The revolving credit agreement was executed with Chase Bank of Texas, as
agent for a group of six banks, providing for borrowings of up to $76,000,000
with interest payable at the adjusted LIBOR rate plus a contractual spread. The
revolving credit agreement is collateralized by the stock of certain
subsidiaries of the Company, the $10 million junior subordinated note issued by
Bruegger's Corporation, certain interests in the Company's franchise agreements
with Brinker and Burger King Corporation and substantially all of the Company's
personal property not pledged in the mortgage financing. The revolving credit
agreement will mature on October 31, 2002, at which time all amounts
outstanding thereunder are due.
The revolving credit agreement contains, among other provisions, certain
restrictive covenants including maintenance of certain prescribed debt and
fixed charge coverage ratios, limitations on the incurrence of additional
indebtedness, limitations on consolidated capital expenditures, restrictions on
the payment of dividends (other than stock dividends) and limitations on the
purchase or redemption of shares of the Company's capital stock.
The $49,066,000 mortgage facility has 34 separate mortgage notes and the term
of each mortgage note is either 15 or 20 years. The notes have fixed rates of
interest of either 9.79% or 9.94%. The notes require equal monthly interest
and principal payments. The Company used the proceeds of the mortgage facility
to repay indebtedness under its existing revolving credit agreement.
Item 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (continued)
The mortgage notes are collateralized by a first mortgage/deed of trust and
security agreement on the real estate, improvements and equipment on 19 of the
Company's Chili's restaurants and 15 of the Company's Burger King restaurants.
The mortgage notes contain, among other provisions, certain restrictive
covenants including maintenance of a consolidated fixed charge coverage ratio
for the financed properties.
As a result of the August 3, 1999 refinancing, the Company has classified its
outstanding borrowings as of August 1, 1999 as long-term debt.
IMPACT OF YEAR 2000
The term "Year 2000" is a general term used to describe the various problems
that may result from the improper processing of dates and date-sensitive
calculations by computers and other machinery and equipment as the year 2000
is approached and thereafter. These problems generally arise from the fact
that most of the world's computer hardware and software has historically used
only two digits to identify the year in a date, often meaning that the
computer will fail to distinguish dates in the "2000's" from dates in the
"1900's."
The Company's State of Readiness. The Company has established a formal plan
("Year 2000 Plan") to (i) test its information technology systems to evaluate
Year 2000 compliance, (ii) assess the Year 2000 compliance of its information
technology vendors, (iii) assess its non-information technology systems that
utilize embedded technology such as micro-controllers and (iv) determine the
readiness of third parties such as government agencies, utility companies,
telecommunication companies, suppliers and other "non-technology" third party
vendors. The Company has completed the testing and assessment of its
information technology systems including non-information technology systems
that utilize embedded technology. The Company has determined that 50 of its
critical systems were Year 2000 compliant as of September 9, 1999, and
anticipates that the remaining sixteen critical systems will be Year 2000
compliant by October, 1999.
Independent of the Company's Year 2000 Plan, the Company had previously
determined it would replace its point of sale equipment in as many as 75 of
its full service dining restaurants. This determination was part of the
Company's ongoing efforts to enhance financial controls through a centralized,
computerized, accounting system to enhance the tracking of data to enable the
Company to better manage its operations. The Company is currently in the
process of replacing the point of sale equipment in its full service
restaurants and expects to complete this process by October, 1999. The Company
has determined that the replacement systems are Year 2000 compliant. The
Company expects the replacement of the point of sale equipment in its full
service restaurants to cost approximately $3 million. During the third
quarter of fiscal 1999, the Company recorded a non-cash charge of $650,000 in
connection with the disposition of certain of its obsolete point of sale
equipment that the Company identified as a result of installing its new point
of sale system. The Company has determined that the point of sale equipment in
its 70 Burger King restaurants is Year 2000 compliant.
Item 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (continued)
Costs to Address the Company's Year 2000 Issues. The Company expenses costs
associated with its Year 2000 Plan as the costs are incurred except for costs
that the Company would otherwise capitalize. The Company does not expect the
costs associated with its Year 2000 Plan to have a material adverse effect on
its financial position or results of operations. The Company is unable to
estimate the costs it may incur as a result of Year 2000 problems suffered by
third parties with which it deals. The Company has surveyed its critical
vendors, other than utilities and government agencies, and believes that
either each vendor was Year 2000 compliant by June, 1999 or, if not, suitable
alternative suppliers that are Year 2000 compliant will be available.
Risks Presented by Year 2000 Problems. To operate its businesses, the Company
relies upon government agencies, utility companies, telecommunications
companies, suppliers and other third party service providers over which it can
assert little control. The Company's ability to conduct its business is
dependent upon the ability of these third parties to avoid Year 2000 related
disruption. If they do not adequately address their Year 2000 issues, the
company's business may be materially affected which could result in a
materially adverse effect on the Company's results of operations and financial
condition. If the Company is not able to integrate replacement point of sale
systems at its full service restaurants, its ability to effectively operate
those restaurants could be substantially impaired. As a result of the
Company's ongoing assessment, the Company may identify additional areas of its
business that are at risk of Year 2000 disruption. The absence of any such
determination at this point represents only the current status of the
assessment phase of the Company's Year 2000 Plan and should not be construed
to mean that there are no other areas of the Company's business which are at
risk of a Year 2000 related disruption.
The Company's Contingency Plans. The Company's Year 2000 Plan calls for the
development of contingency plans for areas of its business that are
susceptible to a substantial risk of a Year 2000 related disruption where the
Company determines that such disruption could be mitigated through reasonable,
cost effective contingency plans. The Company has not yet developed detailed
contingency plans specific to Year 2000 events for any specific area of
business. Consistent with its Year 2000 Plan, the Company will develop
specific Year 2000 contingency plans for such areas of business as and if such
determinations are made
Recently Issued Accounting Standards
In June 1997, the Financial Accounting Standards Board issued SFAS No.
131,"Disclosures about Segments of an Enterprise and Related Information."
SFAS No. 131 establishes standards for the way public business enterprises
report information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports issued to shareholders. It also
establishes standards for related disclosures about products and services,
geographic areas, and major customers. This statement is effective for
financial statements for periods beginning after December 15, 1997. In
the initial year of application, comparative information for earlier years is
to be presented. This statement need not be applied to interim financial
statements in the initial year of its application, but comparative information
for interim periods in the initial year of application is to be reported in
financial statements for interim periods in the second year of application.
The Company will adopt SFAS No.131 for its fiscal 1999 Financial Statements.
Item 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (continued)
This report contains certain forward-looking statements, including statements
about the Company's development plans, that involve a number of risks and
uncertainties. Among the factors that could cause actual results to differ
materially are the following: the availability and cost of suitable locations
for new restaurants; the availability and cost of capital to the Company; the
ability of the Company to develop and operate its restaurants; the hiring,
training and retention of skilled corporate and restaurant management and
other restaurant personnel; the integration and assimilation of acquired
concepts; the overall success of the Company's franchisors; the ability to
obtain the necessary government approvals and third-party consents; the
ability of the Company to modify or redesign its computer systems to work
properly in the year 2000 and the cost thereof; and changes in governmental
regulations, including increases in the minimum wage.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Note 8 to the unaudited consolidated financial statements of the Company
included in Part I of this report is incorporated herein by reference.
Item 2. Changes in Securities
None
Items 3. Defaults upon Senior Securities
None
Item 4 Submission of Matters to Vote of Security Holders
None
Item 5. Other Information
On June 1, 1999, the Company repurchased 298,340 options that had previously
been issued under its 1993 Stock Option and Incentive Plan, at strike prices
ranging from $13.60 to $34.50, for their fair value of $44,751, or $0.15 per
option. These options are not available to be reissued.
On June 1, 1999, the Company also implemented a Long Term Incentive
Compensation Plan (the "Long Term Plan") for seven of its executive officers
and certain other senior executives (the "Participants"). The Long Term Plan
is designed to incent and retain those individuals who are critical to achieving
the Company's long term business objectives. The Long Term Plan consists of
(a) options granted with an exercise price equal to the closing price of the
Company's stock on June 1, 1999, which vest over three years; (b) restricted
stock awards of 155,552 shares which vest on June 1, 2006, subject to
accelerated vesting in the event the price of the Company's common stock
achieves certain targets; and, for certain Participants, (c) a cash bonus
payable at the conclusion of fiscal year 2000. The Company also entered into
agreements with five of its executive officers and two other senior executives
pursuant to which the employees have agreed not to compete with the Company
for a period of time after the termination of their employment and are
entitled to receive certain payments in the event of a change of control of
the Company.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
A list of exhibits required to be filed as part of this report is set
forth in the Index to Exhibits, which immediately precedes such exhibits,
and is incorporated herein by reference.
(b) Reports on Form 8-K
None
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, thereunto duly authorized.
Quality Dining, Inc.
(Registrant)
______________________
Date: September 13, 1999 By: /s/Martin Miranda
Vice President & Controller
(Principal accounting officer
and duly authorized officer)
INDEX TO EXHIBITS
Exhibit No. Description
- ----------- -----------------------------------------------------
4-A Form of Mortgage, Assignment of Rents, Fixture Filing
and Security Agreement
4-B Form of Lease
4-C Form of Promissory Note
4-D Intercreditor Agreement by and among Burger King
Corporation, the Company and Chase Bank of Texas,
National Association, NBD Bank, N.A. and NationsBank,
N.A. effective as of May 11, 1999
4-E Intercreditor Agreement by and among Captec Financial
Group, Inc., CNL Financial Services, Inc., Chase Bank
of Texas, National Association and the Company dated
August 3, 1999
4-F Collateral Assignment of Lessee's Interest in Leases
by and between Southwest Dining, Inc. and Chase Bank
of Texas, National Association dated July 26, 1999
4-G Collateral Assignment of Lessee's Interest in Leases
by and between Grayling Corporation and Chase Bank of
Texas, National Association dated July 26, 1999
4-H Collateral Assignment of Lessee's Interest in Leases
by and between Bravokilo, Inc. and Chase Bank of
Texas, National Association dated July 26, 1999
4-I Third Amended and Restated Revolving Credit Agreement
dated as of May 11, 1999 by and between Quality
Dining, Inc. and GAGHC, Inc., as Borrowers, Chase Bank
of Texas, National Association, as Administrative
Agent, NBD Bank, N.A., as Documentation Agent,
NationsBank, N.A. (South) as Co-Agent, and LaSalle
Bank, N.A., The Northern Trust Company, KeyBank
National Association (successor in interest to Society
National Bank), SunTrust Bank, Central Florida, N.A.
(collectively the "Banks")
4-J First Amendment to Third Amended and Restated Revolving
Credit Agreement dated as of July 26, 1999 by and
between Quality Dining, Inc., and GAGHC, Inc., as
Borrowers and the Banks
4-K Second Amendment to Third Amended and Restated
Revolving Credit Agreement dated as of September 9,
1999 by and between Quality Dining, Inc. and GAGHC,
Inc., Banks which are Party thereto and Chase Bank of
Texas, National Association.
INDEX TO EXHIBITS (continued)
Exhibit No. Description
- ----------- ------------------------------------------------
10-D Second Amendment to Development Agreement by and
between Southwest Dining, Inc. and Brinker
International, Inc. dated July 26, 1999
10-G Employment Agreement between the Company and John C.
Firth dated August 24, 1999.
10-Q Non Compete Agreement between the Company and James K.
Fitzpatrick dated June 1, 1999
10-R Non Compete Agreement between the Company and Gerald
O. Fitzpatrick dated June 1, 1999
10-S Non Compete Agreement between the Company and David M.
Findlay dated June 1, 1999
10-U Non Compete Agreement between the Company and Robert
C. Hudson dated June 1, 1999
10-AH Agreement for Purchase of Options between the Company
and Daniel B. Fitzpatrick dated June 1, 1999
10-AI Agreement for Purchase of Options between the Company
and John C. Firth dated June 1, 1999
10-AJ Agreement for Purchase of Options between the Company
and James K. Fitzpatrick dated June 1, 1999
10-AK Agreement for Purchase of Options between the Company
and Gerald O. Fitzpatrick dated June 1, 1999
10-AL Agreement for Purchase of Options between the Company
and David M. Findlay dated June 1, 1999
10-AM Agreement for Purchase of Options between the Company
and Robert C. Hudson dated June 1, 1999
10-AN Agreement for Purchase of Options between the Company
and Patrick J. Barry dated June 1, 1999
10-AO Agreement for Purchase of Options between the Company
and Marti'n Miranda dated June 1, 1999
10-AP Agreement for Restricted Shares Granted Under Quality
Dining, Inc. 1997 Stock Option and Incentive Plan
between the Company and Daniel B. Fitzpatrick dated
June 1, 1999
10-AQ Agreement for Restricted Shares Granted Under Quality
Dining, Inc. 1997 Stock Option and Incentive Plan
between the Company and John C. Firth dated June 1,
1999
INDEX TO EXHIBITS (continued)
Exhibit No. Description
- ---------- -----------------------------------------------------
10-AR Agreement for Restricted Shares Granted Under Quality
Dining, Inc. 1997 Stock Option and Incentive Plan
between the Company and James K. Fitzpatrick dated
June 1, 1999
10-AS Agreement for Restricted Shares Granted Under Quality
Dining, Inc. 1997 Stock Option and Incentive Plan
between the Company and Gerald O. Fitzpatrick dated
June 1, 1999
10-AT Agreement for Restricted Shares Granted Under Quality
Dining, Inc. 1997 Stock Option and Incentive Plan
between the Company and David M. Findlay dated June 1,
1999
10-AU Agreement for Restricted Shares Granted Under Quality
Dining, Inc. 1997 Stock Option and Incentive Plan
between the Company and Robert C. Hudson dated June 1,
1999
10-AV Agreement for Restricted Shares Granted Under Quality
Dining, Inc. 1997 Stock Option and Incentive Plan
between the Company and Patrick J. Barry dated June 1,
1999
10-AW Agreement for Restricted Shares Granted Under Quality
Dining, Inc. 1997 Stock Option and Incentive Plan
between the Company and Marti'n Miranda dated June 1,
1999
10-AX Consulting agreement between the Registrant and
William R. Schonsheck dated August 13, 1999
27 Financial Data Schedule
EXHIBIT-4A
Loan No. Loan_No
BORROWER: BORROWER, Borrower_Entity
BORROWER ADDRESS: Borrower_Street,
Borrower_City,
Borrower_State
Borrower_Zip
BORROWER FAX NO.: Borrower_Fax_
RESTAURANT NO.: FranchiseType Restaurant No. RestaurantNo
RESTAURANT ADDRESS: Premises_Street,
Premises_City,
Premises_State
Premises_Zip
LOAN AMOUNT: Loan_Amt
MORTGAGE, ASSIGNMENT OF RENTS, FIXTURE
FILING AND SECURITY AGREEMENT
THIS MORTGAGE, ASSIGNMENT OF RENTS,
FIXTURE FILING AND SECURITY AGREEMENT
("Mortgage") is made by the Borrower whose
name and address is set forth above
("Borrower"), for the benefit of LENDER,
Lender_Entity, whose address is
Lender_Street, Lender_City,
Lender_State Lender_Zip (together with
its successors, assigns and transferees,
"Lender"). This instrument is dated as of
the date the signatures hereto were
acknowledged or notarized but shall become
effective on the Closing Date set forth on
Schedule A attached hereto (the "Closing
Date").
PRELIMINARY STATEMENT
This Mortgage is made to secure (1)
performance by Borrower of the covenants
and obligations of Borrower under that
certain Promissory Note ("Note") in the
Loan Amount set forth above, made as of
the date of this Mortgage by Borrower to
Lender, together with any and all
extensions, renewals, modifications,
substitutions or replacements thereof; (2)
the performance by Borrower of the
covenants and obligations of Borrower
under this Mortgage; (3) the performance
by Borrower of the covenants and
obligations of Borrower under any other
promissory notes ("Other Notes") made as
of the date of this Mortgage by Borrower
to Lender, together with any and all
extensions, renewals, modifications,
substitutions or replacements thereof; (4)
the performance by Borrower of the
covenants and obligations of Borrower
under any other documents securing payment
of all amounts due under the Note and the
Other Notes, and any agreements or
amendments relating thereto or executed in
connection therewith (collectively,
together with the Note, the Other Notes
and this Mortgage, the "Loan Documents");
(5) all obligations of Borrower for sums
that may be advanced by Lender, whether or
not evidenced by the Note or the Other
Notes; and (6) such Trust Obligations and
Retained Obligations described in the
following two paragraphs. Such covenants
and obligations of Borrower are sometimes
collectively referred to herein as the
"Indebtedness." The original principal
amount of the loan evidenced by the Note
is the Loan Amount set forth above (the
"Loan Amount").
If the Note, this Mortgage and the Loan
Documents are assigned to a trust
sponsored by Lender or any of Lender's
affiliates to securitize its loan
receivables (the "Trust"), "Indebtedness"
shall also include the payment of all
other sums (together with interest and costs thereon)
concurrently or subsequently loaned to
Borrower by Lender or any of Lender's
affiliates (each an "Originator"), as
evidenced and/or secured by certain notes
and other documents of Borrower with
respect to such amounts and which notes
and other documents are assigned to the
Trust, together with any and all
extensions, renewals, modifications,
substitutions or replacements thereof; and
the performance of the covenants and
obligations of Borrower due or to become
due under such notes and other documents
assigned to the Trust, and the repayment
of all sums expended in connection with
performance of those covenants and
obligations (collectively, the "Trust
Obligations").
If the Note, this Mortgage and the Loan
Documents are not assigned to the Trust,
"Indebtedness" shall also include the
payment of all other sums (together with
interest thereon) concurrently or
subsequently loaned to Borrower by an
Originator, as evidenced and/or secured by
certain notes and other documents of
Borrower which are not assigned to the
Trust, together with any and all
extensions, renewals, modifications,
substitutions or replacements thereof; and
the performance of the covenants and
obligations of Borrower due or to become
due under such notes and other documents,
and the repayment of all sums expended in
connection with performance of those
covenants and obligations (collectively,
the "Retained Obligations").
1. GRANTING CLAUSE. To secure the
Indebtedness and as security for the
purposes stated elsewhere in this
Mortgage, Borrower mortgages, grants and
conveys to Lender, its successors and
assigns, with power of sale and right of
entry and possession, all of its present
and future estate, right, title and
interest in and to that certain real
property more particularly described in
Schedule B attached hereto (the "Real
Estate") and all rights to the Real Estate
which may be acquired by the Borrower at
any time, including all rights,
privileges, options, elections and other
benefits of every name and nature;
together with all present and future
easements and rights used in connection
therewith or as a means of access thereto;
together:
1.1. All right, title and interest of the
Borrower in, to, under or derived from all
buildings, structures, facilities and
other improvements of every kind and
description now or hereafter located on
the Real Estate, including all parking
areas, roads, driveways, walks, fences,
walls, drainage facilities and other site
improvements, all water, sanitary and
storm sewer, drainage, electricity, steam,
gas, telephone and other utility equipment
and facilities, all plumbing, lighting,
heating, ventilating, air-conditioning,
refrigerating, incinerating, compacting,
fire protection and sprinkler,
surveillance and security, public address
and communications equipment and systems,
all awnings, floor coverings, partitions,
elevators, escalators, motors, machinery,
pipes, fittings and other items of
equipment and personal property of every
kind and description, excluding inventory
of the Franchised Operation (as defined
herein) and proceeds thereof, leased
furniture, fixtures and equipment at the
Franchised Operation, any signage or other
proprietary tangible property at the
Franchised Operation, and furniture,
fixtures and equipment subsequently
acquired for use at the Franchised
Operation and subject to a purchase money
security interest in favor of a third
party not to exceed the value of $75,000
at any time (collectively, the "Excluded
Collateral"), now or hereafter located on
the Real Estate, as defined herein, or
attached to the improvements which by the
nature of their location thereon or
attachment thereto are real property under
applicable law; and including all
materials intended for the construction,
reconstruction, repair, replacement, alteration, addition or
improvement of or to such buildings,
equipment, fixtures, structures and
improvements, all of which materials shall
be deemed to be part of the Real Estate
immediately upon delivery thereof on the
Real Estate and to be part of the
improvements immediately upon their
incorporation therein (the foregoing other
than Excluded Collateral being
collectively the "Improvements");
1.2. All estate, right, title and interest
of the Borrower in, to, under or derived
from all machinery, equipment, furniture,
furnishings, vehicles, fixtures and any
accessions, parts, attachments,
accessories, tools, dies, additions,
substitutions, renewals, replacements and
appurtenances thereto and their related
rights thereof, and other customary
franchise restaurant equipment and other
tangible property of every kind and nature
whatsoever, other than the Excluded
Collateral, acquired, owned or held by the
Borrower, or in which the Borrower has or
shall have an interest, now or hereafter
located upon the Real Estate, or
appurtenant thereto, or usable exclusively
in connection with the present or future
operation and occupancy of the Real Estate
or the Improvements, including the
operation of the franchised restaurant
located on the Real Estate at the
Restaurant Address set forth above (the
"Franchised Operation") (hereinafter
collectively called the "Equipment");
1.3. All estate, right, title and interest
of the Borrower in, to, under or derived
from all tenements, hereditaments and
appurtenances now or hereafter relating to
the Real Estate; the streets, roads,
sidewalks and alleys abutting the Real
Estate; all air space and rights to use
air space above the Real Estate; all
development, operating or similar rights
appurtenant to the Real Estate (including,
without limitation, all rights arising
from reciprocal access agreements, joint
occupancy, use or development agreements,
and parking agreements); all rights of ingress and
egress now or hereafter appertaining to
the Real Estate; and all easements,
licenses and rights of way now or
hereafter appertaining to the Real Estate;
1.4. All estate, right, title and interest
of the Borrower in, to, under and derived
from all leases of or relating to the Real
Estate, the Franchised Operation, the
Improvements or the Equipment (together
with all amendments, supplements,
consolidations, replacements,
restatements, extensions, renewals and
other modifications thereof), if any, now
or hereafter in effect, whether or not of
record, including without limitation that
certain Lease described on Schedule C
attached hereto (the "Property Lease")
(collectively, the "Leases"); and the
right to bring actions and proceedings
under the Leases or for the enforcement
thereof and to do anything which the
Borrower or any lessor is or may become
entitled to do under the Leases;
1.5. All estate, right, title and interest
of the Borrower in, to, under or derived
from all contract rights, chattel paper,
instruments, general intangibles, computer
hardware, software and intellectual
property, accounts, guaranties and
warranties, letters of credit, documents
or any kind of negotiable instrument or
security as those terms are defined in the
Uniform Commercial Code of the state where
the Real Estate is located, or any other
writing which evidences a right to payment
of money and is of a type which is, in the
ordinary course of business, transferred
by delivery alone or by delivery with any
necessary endorsement or assignment, in
each case relating to the Franchised
Operation, the Improvements or the
Equipment or to the present or future
operation or occupancy of the Real Estate,
and all plans, specifications, maps,
surveys, studies, books of account,
records, files, insurance policies,
guarantees and warranties, all relating to
the Franchised Operation, the Improvements
or the Equipment or to the present or
future operation or occupancy of the Real
Estate, all architectural, engineering,
construction and management contracts, all
supply and service contracts for water,
sanitary and storm sewer, drainage,
electricity, steam, gas, telephone and
other utilities relating to the Real
Estate and all other agreements affecting
or relating to the use, enjoyment or
occupancy of the Real Estate, the
Franchised Operation or the Improvements,
excluding any rights of the Borrower or
its affiliates under franchise agreements
relating to the Franchised Operation
except to the extent such rights are
affected by the Consent to Collateral
Assignment dated September 11, 1998 with
Brinker International, Inc. and the
Intercreditor Agreement dated on or about
the date hereof with Burger King
Corporation and by that certain
Intercreditor Agreement of even date
herewith and any subsequent Intercreditor
Agreement with Chase Bank of Texas,
National Association, as Administrative
Agent, or any subsequent senior lender of the Borrower
or its affiliates (the "Excluded Franchise
Rights").
1.6. All estate, right, title and interest
of the Borrower in, to, under or derived
from all rents, royalties, issues,
profits, receipts, revenue, income,
earnings and other benefits now or
hereafter accruing with respect to all or
any portion of the Real Estate; sums now
or hereafter payable pursuant to the
Leases; all other sums now or hereafter
payable with respect to the use,
occupancy, management, operation or
control of the Real Estate; and all other
claims, rights and remedies now or
hereafter belonging or accruing with
respect to the Real Estate, including oil,
gas and mineral royalties (collectively,
"Rents"), refunds of taxes, assessments or
other charges levied or imposed upon the
Real Estate or of utility or tenant
deposits, all of which the Borrower hereby
irrevocably directs to be paid to the
Lender, subject to the license, if any,
granted to the Borrower herein, to be
held, applied and disbursed, as provided
in this Mortgage;
1.7. All estate, right, title and interest
of the Borrower in, to, under or derived
from all licenses, authorizations,
certificates, variances, consents,
approvals and other permits now or
hereafter pertaining to the Real Estate
and all estate, right, title and interest
of the Borrower in, to, under or derived
from all tradenames or business names
relating to the Real Estate, the
Franchised Operation or the Improvements
or the present or future operation or
occupancy of the Real Estate excluding,
however, from the grant under this Section
1.7 any franchise rights and any permits
which cannot be transferred or encumbered
by the Borrower without causing a default
thereunder or a termination thereof
including the Excluded Franchise Rights.
1.8. All estate, right, title and interest
of the Borrower in, to, under or derived
from all amounts deposited with the
Lender, including all insurance proceeds
and awards and including all notes,
certificates of deposit, securities and
other investments relating thereto and all
interest, dividends and other income
thereon, proceeds thereof and rights
relating thereto;
1.9. All estate, right, title and interest
of the Borrower in, to, under or derived
from all proceeds of any sale, rent,
lease, casualty, loss, transfer, taking by
condemnation (or any proceeding or
purchase in lieu thereof), financing,
refinancing or a conversion into cash or
liquidated claims, whether voluntary or
involuntary, of any of the Property (as
hereinafter defined), including all
insurance proceeds and awards and title
insurance proceeds under any title
insurance policy now or hereafter held by
the Borrower, and all rights, dividends
and other claims of any kind whatsoever
(including damage, secured, unsecured,
priority and bankruptcy claims) now or
hereafter relating to any of the Property,
including all stock rights, subscription
rights, dividends, stock dividends, stock
splits or liquidating dividends, and all
cash, accounts, chattel paper and general
intangibles arising from the sale, rent,
lease, casualty, loss or other disposition
of the Property, all of which the Borrower
hereby irrevocably directs be paid to the
Lender to the extent provided hereunder,
to be held, applied and disbursed as
provided in this Mortgage;
1.10. All estate, right, title and
interest of the Borrower as seller in, to
or under any agreement, contract,
understanding or arrangement pursuant to
which the Borrower has obtained the
agreement of any person to purchase any of
the Property or any interest therein and
all income, profits, benefits, avails,
advantages and claims against guarantors
under any thereof;
1.11. All estate, right, title and
interest of the Borrower in, to, under or
derived from any right to payment for
goods sold or leased or for services
rendered which is not evidenced by an
instrument or chattel paper, whether or
not it has been earned by performance,
related to the Real Estate, the Franchised
Operation or the Improvements or the
present or future operation and occupancy
of the Real Estate (collectively, "Accounts").
1.12. All estate, right, title and
interest of the Borrower in, to, under or
derived from the Real Estate hereafter
acquired by the Borrower, and all right,
title and interest of the Borrower in, to,
under or derived from all extensions,
improvements, betterment, renewal
substitutions and replacements of, and
additions and appurtenances to, any of the
Real Estate hereafter acquired by or
released to the Borrower or constructed or
located on, or attached to, the Real Estate; and
1.13. All substitutions, replacements, extensions, renewals,
additions and accessories for or to any of the foregoing.
1.14. All proceeds and products of any
and all of the items described in Section
1.1 through 1.13 inclusive (all such items
being sometimes collectively referred to
herein as the "Property);
2. ADDITIONAL SECURITY.
2.1. Security Interest.
This Mortgage, as to any Equipment,
Accounts, fixtures, instruments, general
intangibles and other personal property
included within the definition of Property
(collectively, "Personal Property"), shall
constitute a security agreement within the
meaning of the Uniform Commercial Code and
Borrower grants to Lender a security
interest in the Personal Property.
Borrower shall, upon request of Lender,
promptly furnish a list of Personal
Property owned by Borrower and subject to
this Mortgage and, upon request by Lender,
immediately execute, deliver and/or file
any amendments to this Mortgage, any
separate security agreement and any
financing statements to evidence and
perfect the security interest in such
Personal Property contemplated by this
Section. Lender or any of its employees
are each irrevocably appointed attorney-in-
fact and are authorized to execute,
deliver and/or file any of such amendments
to this Mortgage, any separate security
agreement and any financing statements.
2.2. Certain Remedies.
Upon the occurrence of any Event of
Default under this Mortgage, Lender shall
have all of the rights and remedies of a
secured party under the Uniform Commercial
Code or otherwise provided by law or by
this Mortgage including without limitation
the right to require Borrower to assemble
the Personal Property and make it
available to Lender at a place to be
designated by Lender which is reasonably
convenient to Lender, the right to collect
all accounts receivable, the right to take
possession of the Personal Property with
or without demand and with or without
process of law and the right to sell and
dispose of it and distribute the proceeds
according to law. Any requirement
regarding the giving of reasonable notice
shall be satisfied if Lender sends notice
to Borrower at least five (5) days prior
to the date of sale, disposition or other
event giving rise to the required notice.
The proceeds of any disposition of the
Personal Property may be applied by Lender
first to Lender's reasonable expenses in
connection with the disposition including
without limitation reasonable attorneys'
fees and legal expenses, and then to
payment of the Indebtedness.
2.3. Licenses and Permits.
As additional security for the
Indebtedness and to the extent permitted
by their terms, Borrower assigns to Lender
all of Borrower's rights and interest in
all licenses or permits affecting the
Property except the Excluded Franchise
Rights. This Mortgage shall not impose
upon Lender any obligations with respect
to any license or permit. Borrower shall
not cancel or amend, where such amendment
would adversely affect Borrower's ability
to operate the Franchised Operation, any
of the licenses or permits assigned (nor
permit any of them to terminate if they
are necessary or desirable for the
operation of the Property) without first
obtaining the written approval of Lender.
2.4. Effective as a Financing Statement.
This Mortgage shall be effective as a
financing statement filed as a fixture
filing with respect to all fixtures
included with the Property and is to be
filed for record in the real estate
records of each county where any part of
the Property (including said fixtures) is
situated. This Mortgage shall also be
effective as a financing statement
covering any other Property and may be
filed in any other appropriate filing or
recording office. The mailing address of
Borrower is the address of Borrower set
forth at the beginning of this Mortgage
and the address of Lender from which
information concerning the security
interests hereunder may be obtained is the
address of Lender set forth at the
beginning of this Mortgage. A carbon,
photographic or other reproduction of this
Mortgage or of any financing statement
relating to this Mortgage shall be
sufficient as a financing statement for
any of the purposes referred to in this
Section.
2.5 Assignment of Leases and Rents.
2.5.1 As additional security for the
payment of the Indebtedness and
performance of this Mortgage, Borrower
assigns to Lender all of Borrower's right,
title and interest in and to all Leases,
now or later existing, covering the
Property or any part of it (but without an
assumption by Lender of liabilities of
Borrower under any of these Leases by
virtue of this assignment), and Borrower
assigns to Lender the rents, issues and
profits of the Property.
2.5.2 At least annually, and more
frequently if requested by Lender, Borrower shall
provide Lender with a certified rent roll
and such other information regarding the
Leases as Lender may reasonably require.
2.5.3 If an Event of Default occurs under
this Mortgage, Lender may receive and
collect the rents, issues and profits
personally, or through a receiver, so long
as the Event of Default exists and during
the pendency of any foreclosure
proceedings and during any redemption
period. Borrower consents to the
appointment of a receiver.
2.5.4 Lender shall at no time have any
obligation whatever to attempt to collect
rent or other amounts from any tenant of
the Property. Further, Lender shall have
no obligation to enforce any other
obligations owed by tenants of the
Property. No action taken by Lender under
this Mortgage shall make Lender a "party
or mortgagee in possession."
2.5.5 Borrower shall not collect advance
rent under any Lease pertaining to the Property
in excess of one month (other than as a
security deposit) and Lender shall not be
bound by any rent prepayment made or
received in violation of this prohibition.
2.6 Substitution of Enhanced Properties.
The Borrower may offer to substitute an
enhanced property ("Enhanced Property")
for the Property hereunder and the Lender
shall release from the lien of this
Mortgage such Property upon the
satisfaction of all of the following
conditions:
2.6.1Borrower shall give Lender written
notice ninety (90) days in advance of the
date of any proposed substitution of an
Enhanced Property for the Property;
2.6.2 No monetary Event of Default has
occurred and is continuing under any of
the Loan Documents or will occur as a
result of the substitution of an Enhanced
Property for the Property;
2.6.3 The appraised value of the Enhanced
Property is equal to or greater than (a)
the original appraised value of the
Property as of the date hereof, as
evidenced by an appraisal of Deloitte &
Touche, LLP, and (b) the then current
appraised value of the Property as of the
date of Borrower's notice of the proposed
substitution, as evidenced by a then
current appraisal of Deloitte & Touche,
LLP (or its successors or another
accounting firm approved by Lender)
utilizing a valuation methodology
consistent with the Deloitte & Touche, LLP
appraisal as of the date hereof, and with
such values including in all respects the
value of cash flows and the personal and
real property related to each of the
Enhanced Property and the Property to be
released;
2.6.4 The unit level Fixed Charge Coverage
Ratio of the Enhanced Property, calculated
for the trailing 12 month period
immediately preceding Borrower's notice of
the proposed substitution is equal to or
greater than (a) the unit level Fixed
Charge Coverage Ratio of the Property,
calculated for the trailing four (4)
fiscal quarters immediately preceding the
date hereof, and (b) the unit level Fixed
Charge Coverage Ratio of the Property,
calculated for the trailing four (4)
fiscal quarters immediately preceding
Borrower's notice of the proposed
substitution, and (c) 1.3 to 1.0;
2.6.5 The Enhanced Property shall become
subject to all of the representations,
warranties, terms, conditions and
provisions of the Loan Documents as if
originally the Property hereunder, and the
Borrower shall execute and/or cause to be
executed and delivered to Lender all such
agreements, documents and instruments in
such form and substance as requested by
the Lender and its counsel in their
reasonable discretion, including without
limitation a lease for the Enhanced
Property in the form of the Property
Lease;
2.6.6 The Lender shall be granted a
first priority security interest in and
lien upon all personal and real property
(fee interest or leasehold interest, as
applicable), except the Excluded
Collateral and the Excluded Franchise
Rights, related to such Enhanced Property
as if the Property originally the subject
of this Mortgage;
2.6.7 The Borrower shall cause to be
delivered to Lender mortgage title
insurance (or leasehold mortgage title
insurance as the case may be) insuring
Lender a first priority fee mortgage lien
(or leasehold mortgage lien as the case
may be) against the Enhanced Property and
in such form and substance acceptable to
Lender and its counsel in their reasonable
discretion;
2.6.8 The Lender shall neither incur,
nor shall it be reasonably likely that the
Lender would incur the payment of any
incremental tax of any kind or nature
(income, profit or otherwise), nor shall
the Lender be reasonably likely to suffer
any incremental tax consequence of any
kind or nature (nor shall any person
claiming any payment in respect of the
Loan Documents, in whole or in part, as a
result of any securitization or transfer
of the Loan Documents be reasonably likely
to suffer any incremental tax consequence
of any kind or nature), arising from or
related in any manner to any substitution
hereunder;
2.6.9 Borrower shall furnish all
information as required by Lender in
connection with evaluating the Enhanced
Property including, without limitation,
financial information, title insurance
commitment, lien reports, appraisal
report, site inspection report, ALTA as-
built survey, environmental insurance
policy (or a satisfactory Phase I
environmental report if environmental
insurance is no longer available, as
determined by Lender in its sole
discretion), evidence of casualty and
liability insurance coverage and evidence
of the Permitted Use of the Enhanced
Property, all of which shall be subject to
the Lender's satisfactory review in its
reasonable discretion;
2.6.10 From the date of this Mortgage
through the date of Borrower's notice of
the proposed substitution, Borrower and
its affiliates shall not have substituted
more than five (5) Enhanced Properties in
the aggregate (specifically including the
Enhanced Property subject to Borrower's
notice of a proposed substitution) in
connection with the Loan Documents and all
other promissory notes, mortgages, and
other instruments and agreements of even
date herewith between Borrower and any of
its affiliates and Lender, its
affiliates, successors or assigns; and
2.6.11 The Borrower shall pay all fees,
costs and expenses of Lender (including
reasonable attorneys' fees) incident to
any of the foregoing matters or otherwise
related to the substitution and release of
the Property, including, without
limitation, document preparation and
drafting, title insurance, filing fees for
UCC statements and termination statements,
mortgage registry or other similar taxes,
and filing fees in respect of the release
or partial release of any lien under this
Mortgage.
3. COVENANTS AND WARRANTIES.
Borrower represents, warrants and covenants to
Lender as follows:
3.1. Authority.
Borrower has the power and authority to
execute, deliver and perform its
obligations under the Loan Documents.
Borrower is duly organized and in good
standing under the laws of the state of
its organization. Borrower is validly
existing and qualified to do business in
the state where the Real Estate is located
(the "Subject State"). The execution,
delivery and performance of the Loan
Documents by Borrower does not, and shall
not, violate or conflict with any
provision of the organizational or charter
documents of Borrower and has been duly
authorized by all necessary action of
Borrower.
3.2. Legal Obligation.
The Loan Documents are the legal, valid
and binding obligations of Borrower,
enforceable in accordance with their
terms. Borrower will pay and perform the
Indebtedness when due, whether by
maturity, acceleration or otherwise.
3.3 Consents, Approvals.
All consents, approvals and authorizations
of any governmental body, subdivision,
agency, board or authority in the Subject
State, if any, required on the part of
Borrower in connection with the execution
and delivery of the Loan Documents have
been obtained and are in full force and
effect.
3.4. No Conflict.
The execution, delivery and
performance of the Loan Documents does not
violate or conflict with any agreement,
court order or consent decree to which
Borrower is a party or by which Borrower
may be bound. There are no disputes,
litigation or other proceedings pending
against Borrower or the Property which
will have a material adverse effect on the
Borrower's ability to perform its
obligations under the Loan Documents.
3.5. Existing Defaults.
There are no circumstances, state of facts
or other matters which, with the passage
of time or the giving of notice, or both,
would constitute an Event of Default under
this Mortgage or the other Loan Documents.
3.6. Title to Property.
Except for the Excluded Collateral,
Borrower is the owner and is lawfully
seized and possessed of the Property.
Borrower has good right, full power and
authority to mortgage and grant a security
interest in the Property in accordance
with the terms of this Mortgage. Borrower
has and shall maintain good and marketable
title to the Real Estate free and clear of
any liens, encumbrances or security
interests excepting only those liens,
encumbrances or security interests, if
any, shown on a loan policy of title
insurance, if any, and approved in writing
by Lender. Notwithstanding the foregoing,
Borrower shall be entitled to enter into
such easements and other agreements with
respect to the Real Estate as
Borrower shall deem reasonably necessary
or appropriate in the operation of the
Franchised Operation subject to Lender's
consent, which shall not be unreasonably
withheld, delayed or conditioned.
Borrower has and shall maintain good and
marketable title to the Personal Property,
free and clear of any liens and
encumbrances, excepting only those
disclosed to and accepted by Lender in
writing. Borrower will defend the
Property against all claims and demands of
all persons any time claiming any interest
in the Property.
3.7. Intentionally Omitted.
3.8 Priority of Security Interest.
The execution and delivery of this
Mortgage creates a valid security interest
in the Personal Property, and upon the
filing of a UCC-1 financing statement with
the secretary of state of the Subject
State, Lender will have a first priority
perfected security interest in the
Personal Property, subject to no other
security interest, except as otherwise
approved by Lender in writing.
3.9. Financing Statements.
Except as disclosed to and accepted by
Lender in writing, no financing statement
covering all or any part of the Property
is on file in any public office. Unless
delivered to Lender or its designee on or
before the Closing Date, Borrower shall
cause partial releases of all financing
statements currently of record covering
all or part of the Property in favor of
Chase Bank of Texas, National Association,
as Agent, to be delivered to Lender or its
designee within thirty (30) days after the
date of this Mortgage. Borrower will
execute financing statements in form
acceptable to Lender and will pay the cost
of filing financing statements in
all public offices whenever filing is
deemed desirable by Lender.
3.10. Fixed Charge Coverage Ratio.
Borrower shall maintain a Fixed Charge
Coverage Ratio (as hereinafter defined) of
not less than the Composite FCCR set forth
on Schedule A attached hereto for
Borrower's business operations generally.
"Composite FCCR" for Borrower shall be
based upon the restaurant operations of
the tenant under the Property Lease on a
consolidated basis as to all Franchised
Operations included within the Loan
Documents ("Composite Properties") and
shall mean such tenant's Operating Cash
Flow divided by its Fixed Charges (each as
defined below). The Composite FCCR shall
be calculated by Borrower from time to
time and dates as determined by Lender,
and Borrower shall submit such information
as Lender may require to confirm and
approve Borrower's calculation of the
Composite FCCR.
3.10.1. "Fixed Charges" shall mean the
sum of the following items set forth on a
pro forma basis for the Composite
Properties for the applicable twelve (12)
month operating period:
(a) current portion of long-term debt
(defined as the current portion of long-
term debt due to mature during the next
twelve (12) month operating period, as
stated in the applicable financial
statement, plus, if not already included
therein, the current portion of principal
payments imputed on all capital leases),
plus
(b) interest expense (defined as the
interest expense as stated on the
applicable financial statement, plus, if
not already included therein, the interest
expense imputed on all capital leases),
plus
(c) the current portion of operating
leases (defined as the amount of rent due
under operating leases for the next twelve
(12) month operating period).
3.10.2. "Operating Cash Flow" shall mean
the sum or subtraction of the following
items for the Composite Properties for the
applicable prior twelve (12) month
operating period:
(a) net income (defined as the net income
stated on the applicable financial
statement), plus
(b) depreciation and amortization
(defined as the depreciation and
amortization expense as stated on the
applicable financial statement), plus
(c) interest expense (as defined above),
plus
(d) operating lease expense (defined as
the amount of rental expense paid under
operating leases, as stated on the
applicable financial statements), plus or
minus
(e) non-recurring items (defined as items
which, are extraordinary and generally not
reflected in any prior period or
reasonably anticipated to be incurred in
any period).
3.11. Maintenance of Property; Waste.
Borrower shall preserve and maintain the
Property in good repair, working order and
condition, excepting ordinary wear and
tear, and shall not commit or permit the
commission of waste against the Property.
Borrower will promptly inform Lender of
any loss or diminution in value of the
Property. Except as otherwise provided in
this Mortgage, Borrower shall make or
permit no modification, compromise or
substitution for the Property without the
prior consent of Lender.
3.12. Payment of Taxes; Discharge of Liens.
3.12.1. Borrower shall pay when due,
and before any interest, collection fees
or penalties accrue, all taxes,
assessments, encumbrances, liens,
mortgages, water or sewer charges and
other charges and impositions
(collectively, "Impositions") levied,
assessed or existing with respect to the
Property, or any part of it, and Borrower
shall deliver to Lender receipts showing
payment of the Impositions. If Borrower
fails to pay any of the Impositions,
Lender, at its option, may pay such
Impositions and the monies paid shall be a
lien upon the Property, added to the
amount secured by this Mortgage, and
payable immediately by Borrower to Lender
with interest at the higher of (i) the
interest rate, if any, charged by the
particular entity levying or assessing the
Impositions, or (ii) the highest rate
charged by Lender on any of the
Indebtedness (but in either case not to
exceed the maximum interest rate permitted
by law). Notwithstanding the foregoing,
Borrower shall have the right and ability
to contest any Impositions and no Event of
Default hereunder shall be deemed to have
occurred so long as Borrower is contesting
such Impositions in good faith and by
appropriate proceedings and has
effectively stayed enforcement of such
Impositions.
3.12.2. Following Borrower's failure to
pay any such Impositions on two (2) or
more occasions during the term of the
Note, at the option of Lender, Borrower
shall pay to Lender, in advance on the
first day of each month, a pro rata
portion (as determined by Lender) of all
Impositions levied, assessed or existing
on the Property. In the event that sufficient funds have
been deposited with Lender to cover the
amount of these Impositions when they
become due and payable, Lender shall pay
them. In the event that sufficient funds
have not been deposited to cover the
amount of these Impositions at least
thirty (30) days prior to the time when
they become due and payable, Borrower
shall immediately pay the amount of the
deficiency to Lender. Lender shall not be
required to keep a separate account or to
pay Borrower any interest on the funds
held by Lender for the payment of the
Impositions pursuant to this Section 3.10
or for the payment of insurance premiums
under Section 3.14 below, or on any other
funds deposited with Lender in connection
with this Mortgage. The funds on deposit
with Lender are further security for the
Indebtedness and if an Event of Default
occurs under this Mortgage, any funds
remaining on deposit with Lender may be
applied against the Indebtedness at any
time after the Event of Default occurs,
and without notice to Borrower.
3.13. Sale or Transfer.
3.13.1 Borrower shall not transfer,
sell, assign, or modify all or any
interest in the Property, or any part
thereof, or any substantial portion of
Borrower's other assets or property.
Notwithstanding the foregoing, the tenant
under the Property Lease may enter into a
collateral assignment or other agreement
regarding the Property Lease or such
tenant's interest thereunder with Chase
Bank of Texas, National Association, as
Administrative Agent; provided, that any
such collateral assignment or other
agreement (i) has been approved in writing
by Lender in its reasonable discretion,
(ii) is expressly subordinate to Lender
pursuant to and in accordance with the terms and
conditions of the Intercreditor Agreement of even
date herewith between Lender and Chase Bank of
Texas, National Association, as
Administrative Agent, and (iii) shall
not at any time be recorded, nor shall
a memorandum thereof at any time be recorded without
the prior written consent of Lender.
3.13.2 0.2 Sale or TransferBorrower
shall be, directly or indirectly, wholly
owned by Quality Dining, Inc., an
Indiana corporation ("Guarantor") until
the earlier of (i) the satisfaction of
this Mortgage, or (ii) consummation of a
Transfer Event in accordance with
Section 3.13.3 below.
3.13.3 Except as provided below,
Borrower shall not consummate a Transfer
Event without the prior written consent
of Lender (the "Transaction Consent").
As used herein, "Transfer Event" means
(i) the sale or transfer of all or
substantially all of the assets of
Borrower, (ii) a merger or consolidation
of Borrower into another corporation or
entity or (iii) the sale or transfer of
fifty percent (50%) or more of
Borrower's stock.
3.13.3.1 "Transfer Event" shall not
include any sale, transfer, merger,
consolidation or other event or
circumstance if, after consummation
thereof, Borrower is wholly owned,
directly or indirectly, by Guarantor.
3.13.3.2 The Transaction Consent shall
not be required if all of the following
conditions (the "Transfer Requirements")
are met: (i) the Property shall be used
only as it was used prior to such
Transfer Event; (ii) the combined net
worth of Borrower, the acquiring
corporation (or entity) or surviving
corporation (or entity) (as the case may
be) of such Transfer Event (the
"Transferee"), the Guarantor (unless the
Guarantor has been or will be released
from its Guaranty of the Property Lease
upon consummation of the Transfer Event
in accordance with Section 3.13.3.3
below) and any other substitute or
additional guarantors of the Property
Lease, if any, immediately after the
Transfer Event is not less than Fifty
Million Dollars ($50,000,000) determined
on a pro forma basis assuming
consummation of the Transfer Event;
(iii) the Transferee shall guarantee the
Property Lease and all other leases
between the tenant under the Property
Lease and Borrower; (iv) the Transfer
Event shall not result in a withdrawal,
downgrade, or qualification in the
rating of any securities issued in
connection with any securitization
involving the Note or the Loan Documents
as confirmed in writing by an
appropriate rating agency reasonably
acceptable to the Lender, (v) the
Transferee and Borrower shall be,
directly or indirectly, under common
ownership immediately upon consummation
of the Transfer Event,
(vi) Borrower shall have provided
written notice of the Transfer Event to
Lender not less than sixty (60) days
prior to the consummation of the
Transfer Event which notice shall be
accompanied by such documentation and
information reasonably necessary to
facilitate Lender's determination that
the Transfer Requirements have been
satisfied (and Borrower shall furnish
such supplemental information and
documentation reasonably requested by
Lender), and(vii) Borrower agrees to pay
for all reasonable costs and expenses
(including attorney's fees) in
connection with Lender's review of the
proposed Transfer Event (including the
cost, if any, of confirmation by the
rating agency).
3.13.3.3 If all the requirements of
Section 3.13.3.2 above are satisfied and
if the minimum net worth requirement
specified in clause (ii) thereof is
satisfied without reference to
Guarantor's net worth, then Guarantor
shall be released from its obligations
under the Guaranty with respect to the
Property Lease upon consummation of the
Transfer Event.
3.13.3.4 Borrower, Lender and Guarantor
agree to execute and deliver, without
additional consideration, any and all
documents, amendments, confirmations and
agreements reasonably necessary to
effectuate the intent of Section 3.13
above.
3.14. Insurance.
3.14.1. Borrower's Insurance.
From and after taking possession of the
Property, Borrower shall carry and
maintain, at its sole cost and expense,
the following types and amounts of
insurance:
Insurance Type Amount of Coverage Risk Coverage
- -------------- ------------------ -------------
Commercial $1,000,000 per bodily injury
General occurrence and (including
Liability $2,000,000 per site liquor
in the aggregate liability
coverage)
property damage and
contractual liability
Property Full replacement "all risk",
Damage value including
fire, earthquake,
sprinkler damage, with
inflation-guard,vandalism
and malicious mischief
endorsements
Business Not less than 6 loss of
Interruption installments of earnings by
Minimum Monthly Rent, at least the
if applicable, perils
and 6 loan payments of fire and
under the Note lightning,
extended coverage,
vandalism,
malicious
mischief and sprinkler
leakage
Worker's as required by law
compensation
Flood to the extent of damage caused
Insurance current coverage by flooding
3.14.2. Policy Form.
Borrower shall obtain all policies of
insurance required by Section 3.14.1
from insurance companies having an A.M.
Best rating of A- or better which are
qualified to do business in the
jurisdiction where the Property is
situated. All such policies shall be
issued in the names of Landlord and
Borrower, Lender as additional insured
and loss payee, and if requested by
Lender, any mortgagee or beneficiary of
Lender, as additional insureds. In
addition, all such policies providing
coverage for physical damage include
loss payee and mortgagee endorsement in
favor of Lender and Lender's mortgagee
or beneficiary, respectively and as
applicable. The Borrower shall cause
copies of such policies of insurance or
originally executed certificates thereof
to be delivered to Lender prior to
Borrower's execution of this Mortgage,
and not less than 30 days prior to any
renewal thereof. As often as any such
policy shall expire or terminate,
Borrower shall procure and maintain
renewal or additional policies with like
terms. None of such policies shall
contain any co-insurance requirements
and all such policies shall provide for
written notice to Lender and any
mortgagee or beneficiary of Lender not
less than 10 days prior to any
modification, cancellation, lapse, or
reduction in the amounts of insurance,
and shall further provide that any loss
otherwise payable thereunder shall be
payable notwithstanding any act or
negligence of Lender or Borrower which
might, absent such provision, result in
a forfeiture of all or part of the
payment of such loss. All general
liability, property damage, and other
casualty policies shall be written on an
occurrence basis as primary policies,
not contributing with or in excess of
coverage which Lender may carry.
3.14.3. Borrower's obligations to
carry the insurance provided for above
may be brought within the coverage of an
"umbrella" policy or policies of
insurance carried and maintained by
Borrower; provided, however, that such
policy or policies shall (i) have limits
of not less than $5,000,000, (ii) name
Lender and any mortgage or beneficiary
of Lender as additional insureds as
their interests may appear, and (iii)
provide that the coverage afforded
Lender will not be reduced or diminished
by reason of the use of such blanket
policies. Borrower agrees to permit
Lender at all reasonable times to
inspect any policies of insurance of
Borrower which Borrower has not
delivered to Lender.
3.14.4. Should Borrower fail to insure
or fail to pay the premiums on any
required insurance or fail to deliver
the policies or renewals as provided
above, Lender may have the insurance
issued or renewed (and pay the premiums
on it for the account of Borrower) in
amounts and with companies and at
premiums as Lender deems appropriate. If
Lender elects to have insurance issued
or renewed to insure Lender's interest,
Lender shall have no duty or obligation
of any kind to also insure Borrower's
interest or to notify Borrower of
Lender's actions. Any sums paid by
Lender for insurance, as provided above,
shall be a lien upon the Property, added to the amount
secured by this Mortgage, and payable
immediately by Borrower to Lender, as
the case may be, with interest on those
sums at the highest rate charged by
Lender on any of the Indebtedness (but
not to exceed the maximum interest rate
permitted by law).
3.14.5. In the event of loss or damage
to the Property equal to or in excess of
$100,000, the proceeds of all required
insurance shall be paid to Lender. In
the event of loss or damage to the
Property in an amount less than
$100,000, the proceeds of all required
insurance shall be paid to Borrower. No
loss or damage shall itself reduce the
Indebtedness. Lender or any of its
employees is each irrevocably appointed
attorney-in-fact for Borrower and is
authorized to adjust and compromise each
loss without the consent of Borrower, to
collect, receive and receipt for the
insurance proceeds in the name of Lender
and Borrower and to endorse Borrower's
name upon any check in payment of the
loss.
3.14.6. Borrower and Lender shall
apply such proceeds to the repair and
restoration of the Property subject to
the following conditions:
(a) there shall be no Event of Default
existing hereunder;
(b) plans for repair and restoration shall
be reviewed and approved by Lender, which
approval shall not be unreasonably withheld
or delayed;
(c) repair and restoration of the Property
to a viable, economic unit (as determined
by Lender) can practicably be completed
prior to the Due Date set forth in the
Note;
(d) Borrower shall have deposited with
Lender funds equal to the
positive difference, if any, between the
cost of repair, restoration and completion,
and the amount of the insurance
proceeds; and
(e) disbursements will be made by Lender
or, at Lender's option, a title insurance
company acceptable to Lender, pursuant to
procedures necessary or appropriate to keep
the Property free of mechanics' liens and
to ensure that funds are properly applied.
Notwithstanding the foregoing, in the event
that any loss or damage to the Property exceeds
fifty percent (50%) of the then
appraised value of the Property,
Borrower may elect to repair and restore
the Property as set forth above or to
prepay all amounts owing to Lender under
the Note, without prepayment premium.
Provided that no Event of Default
exists, if there are insurance proceeds
in the amount of Twenty-Five Thousand
Dollars ($25,000) or less remaining
after the repair and restoration of the
Property as required hereunder, such
proceeds shall be paid to Borrower.
Provided that no Event of Default
exists, if there are insurance proceeds
in excess of $25,000 but less than the
greater of (i) Fifty Thousand Dollars
($50,000), or (ii) ten percent (10%) of
the then remaining unpaid principal
balance of the Note, remaining after the
repair and restoration of the Property
as required hereunder, such proceeds
shall be applied toward payment of the
principal of the Indebtedness so that no
prepayment premium or other charges
shall be payable with respect to such
amounts; provided, that such application
of proceeds shall not excuse Borrower
from making the regular scheduled
installment payments nor shall such
application extend or reduce the amount
of any of these payments but rather
shall reduce the number of these
payments in reverse order of maturity.
Provided that no Event of Default
exists, if there are insurance proceeds
equal to or in excess of the greater of
(i) Fifty Thousand Dollars ($50,000), or
(ii) ten percent (10%) of the then
remaining unpaid principal balance of
the Note, remaining after the repair and
restoration of the Property as required
hereunder, such proceeds shall be
applied toward payment of the
Indebtedness so that no prepayment
premium or other charges shall be
payable with respect to such amounts and
each monthly installment thereafter
shall be reduced to an amount which will
amortize the then unpaid principal
balance of the Note at the nondefault
rate over the then remaining term of the
Note.
3.14.7. Notwithstanding Section 3.14.6
above, if a substantial portion (fifty
percent [50%] or more) of the Property
is damaged or destroyed during the last
twenty-four (24) months of the term of
the Note, and provided that no Event of
Default then exists hereunder, either
Borrower or Lender may elect not to
rebuild and to apply the insurance
proceeds toward payment of the
Indebtedness (or any portion thereof)
without premium, whether or not then due
and payable, in reverse order of
maturity. Application of proceeds by
Lender toward later maturing
installments of the Indebtedness shall
not excuse Borrower from making the
regularly scheduled installment payments
nor shall such application extend or
reduce the amount of any of these
payments. Any proceeds in excess of the
Indebtedness shall be promptly paid to
Borrower.
3.14.8. In the event of a foreclosure
of this Mortgage, or the giving of a
deed in lieu of foreclosure, the
purchaser or grantee of the Property
shall succeed to all of the rights of
Borrower under the insurance policies
including, without limit, any right to
unearned premiums and to receive the
proceeds.
3.14.9. Upon the occurrence of an
Event of Default hereunder, at the
option of Lender, Borrower shall pay to
Lender, in advance on the first day of
each month, a pro rata portion of the
annual premiums due (as estimated by
Lender) on the required insurance. In
the event that sufficient funds have
been deposited with Lender to cover the
amount of the insurance premiums when
the premiums become due and payable,
Lender shall pay the premiums. In the
event that sufficient funds have not
been deposited with Lender to pay the
insurance premiums at least thirty (30)
days prior to the time when they become
due and payable, Borrower shall
immediately pay the amount of the
deficiency to Lender.
3.15. Compliance With Law and Other Matters.
Borrower shall, in all material
respects, comply with all federal, state
and local laws, ordinances, rules,
regulations and restrictions relating to
the ownership, use, occupancy and
operation of the Property. Borrower
shall be solely responsible to apply for
and secure any building permit or
permission of any duly constituted
authority for the purpose of doing any
of the things which Borrower is required
or permitted to do under the provisions
of this Mortgage. Borrower shall comply
with, perform Borrower's obligations
under, and enforce the obligations of
all other parties to all building and
use restrictions, ground leases, leases,
reservation and/or purchase agreements,
condominium documents and/or other
instruments affecting or relating to the
use and/or occupancy of the Property.
Borrower has not received any written
notice of, and, to the knowledge of
Borrower, neither Borrower nor the
Property are in material violation of
any law, municipal ordinance or other
requirement of any governmental
authority. The Property is legally
occupied by Borrower, and all required
certificates of occupancy, building
permits, certificates of environmental
impact approval, all zoning, building,
housing, safety, fire and health
approvals and all permits and licenses
required by any governmental authority
and necessary to operate, occupy or use
the Property for the purposes permitted
under this Mortgage have been issued,
are unexpired, and, without cost or risk
to Lender, are hereby collaterally
assigned, to the extent assignable, to
Lender.
3.16. Alteration of Improvements.
3.16.1. Without the prior written
consent of Lender, Borrower shall not
remove any building, structure or other
improvement forming a material part of
the Property.
3.16.2. Borrower may from time to time
make alterations, replacements,
additions, changes and improvements
(collectively, "Alterations") in and to
the Property as Borrower may find
necessary or convenient for its purposes; provided,
however, that no such Alterations shall
decrease the value of the Property or
impair the structural integrity of any
building comprising a part of the
Property. All work with respect to any
Alteration shall be done in a good and
workmanlike manner by properly qualified
and licensed personnel, and such work
shall be diligently prosecuted to
completion.
3.16.3. Borrower shall pay the costs
of any Alterations done on the Property.
Borrower shall indemnify and defend
Lender from and against any liability,
loss, damage, costs, attorneys' fees and
any other expense incurred as a result
of claims of lien by any person
performing work or furnishing materials
or supplies for Borrower or any person
claiming under Borrower.
3.16.4. No Alterations shall be
undertaken until Borrower shall have
procured and paid for all required
permits and authorizations of all
governmental authorities having
jurisdiction. Any Alterations where the
applicable building codes require the
submission of architectural plans shall
be conducted under the supervision of a
licensed architect or engineer selected
by Borrower and reasonably satisfactory
to Lender and shall be made in
accordance with detailed plans and
specifications and cost estimates
prepared by such architect or engineer
and approved in writing in advance by
Lender, which approval shall not be
unreasonably withheld, delayed or
conditioned. Any Alterations involving
an estimated cost in excess of One
Hundred Thousand and 00/100 Dollars
($100,000) shall be made in accordance
with reasonable plans and specifications
and cost estimates prepared by Borrower
and approved in writing in advance by
Lender, which approval shall not be
unreasonably withheld, delayed or
conditioned. Any Alterations shall be
made promptly and in a good workmanlike
manner and in compliance with all
applicable permits and authorizations
and building, zoning and other laws and
in accordance with the orders, rules and
regulations of the Board of Fire
Insurance Underwriters and any other
body hereafter exercising similar
functions.
3.17. Obligation to Rebuild.
3.17.1.If any portion of the Property is
damaged or destroyed by fire or other
casualty, subject to Section 3.14 above,
Borrower shall, at its sole cost and
expense, forthwith repair, restore,
rebuild or replace the damaged or
destroyed improvements, fixtures or
equipment, and complete the same as soon
as reasonably possible, to the condition
they were in prior to such damage or
destruction, except for such changes in
design or materials as may then be
required by law or the franchisor of the
Franchised Operation, or are approved by
Lender in Lender's reasonable
discretion. Lender, in such event,
shall, to the extent the proceeds of the
insurance are made available to Lender,
reimburse Borrower for the costs of
making such repairs, restoration,
rebuilding and replacements on such
terms as Lender may reasonably require.
To the extent, if any, that the proceeds of
insurance made available to Borrower are
insufficient to pay the entire cost of
making such repairs, restoration,
rebuilding and replacements, Borrower
shall pay the amount by which such costs
exceed the insurance proceeds made
available to Borrower.
3.17.2.In the event that Borrower fails
to commence the repair or restoration of
the Property pursuant to this Section
3.17 within sixty (60) days after the
casualty, or if Borrower abandons or
fails to diligently pursue completion of
such repair or restoration, then Lender
shall be entitled to apply the insurance
proceeds first towards reimbursement of
all costs and expenses of Lender in
collecting the proceeds (including,
without limit, court costs and
reasonable attorneys' fees), and then
toward any payment of the Indebtedness
or any portion of it, whether or not
then due or payable.
3.18. Covenants Regarding Environmental Compliance.
3.18.1.Borrower shall, at its sole cost
and expense at all times comply in all
respects with the Environmental Laws (as
defined below) in its use and operation
of the Property.
3.18.2.Borrower shall not use the
Property for the purpose of storing Hazardous
Materials (as defined below) except in
full compliance with the Environmental
Laws and other applicable laws, and
shall not cause the release of any
Hazardous Material.
3.18.3.Borrower shall notify Lender
promptly and in reasonable detail in the event
that Borrower becomes aware of or
suspects (i) the presence of any
Hazardous Material on the Property
(other than any Permitted Hazardous
Materials, as defined below), or (ii) a
violation of the Environmental Laws on
the Property.
3.18.4.If Borrower uses or permits the
Property to be used so as to subject Borrower,
Lender or any occupant of the Property
to a claim of violation of the
Environmental Laws (unless contested in
good faith by appropriate proceedings),
Borrower shall, at its sole cost and
expense, immediately cease or cause
cessation of such use or operations and
shall remedy and fully cure any
conditions arising therefrom.
3.18.5.At its sole cost and expense,
Borrower shall (i) immediately pay, when due, the
cost of compliance with the
Environmental Laws within the Property,
and(ii) keep the Property free of any
liens imposed pursuant to the
Environmental Laws. Borrower shall, at
all times, use, handle and dispose of
any Permitted Hazardous Material in a
commercially reasonable manner and in
compliance with the Environmental Laws
and applicable industry standards.
Borrower shall cooperate with Lender in
any program between Lender and any
governmental entity for proper disposal
and/or recovery of any
Permitted Hazardous Material.
3.18.6. Borrower shall indemnify, save
and hold Lender harmless from and
against any claim, liability, loss,
damage or expense (including, without
limitation, reasonable attorneys' fees
and disbursements) arising out of any
violation of the covenants of Borrower
contained in this Section by Borrower,
or out of any violation of the
Environmental Laws by Borrower, its
owners, employees, agents, contractors,
customers, guests and invitees, which
indemnity obligation shall survive the
expiration or termination of this Mortgage.
3.18.7. In the event that Borrower
fails to comply with any of the
foregoing requirements of this Section,
after the expiration of the cure period
permitted under the Environmental Laws,
if any, Lender may, but shall not be
obligated to (i) elect that such failure
constitutes an Event of Default under
this Mortgage; and/or (ii) take any and
all actions, at Borrower's sole cost and
expense, that Lender deems necessary or
desirable to cure any such
noncompliance. Borrower shall reimburse
Lender for any costs incurred by Lender
in exercising its options under this
subsection within fifteen (15) days
after receipt of a bill therefor.
3.18.8. The provisions of this Section
shall survive the expiration or
termination of this Mortgage.
Capitalized terms used in this Section
and not otherwise defined herein shall
have the following meanings:
(a) "Hazardous Materials" shall mean
any of the following as defined by the
Environmental Laws: solid wastes;
medical or nuclear waste or materials;
toxic or hazardous substances; natural
gas, liquified natural gas or synthetic
fuel gas; petroleum products or
derivatives, wastes or contaminants
(including, without limitation,
polychlorinated biphenyls); paint
containing lead; urea-formaldehyde foam
insulation; asbestos (including, without
limitation, fibers and friable
asbestos); explosives, and discharges of
sewage or effluent.
(b) "Environmental Laws" shall mean all
requirements of environmental,
ecological, health, or industrial
hygiene laws or regulations or rules of
common law related to the Property,
including all requirements imposed by
any law, rule, order, or regulation of
any federal, state, or local executive,
legislative, judicial, regulatory, or
administrative agency, board, or
authority, which relate to (i) noise;
(ii) pollution or protection of the air,
surface water, ground water, or land;
(iii) solid, gaseous, or liquid waste
generation, treatment, storage,
disposal, or transportation; (iv)
exposure to Hazardous Materials; or (v)
regulation of the manufacture,
processing, distribution and commerce,
use, or storage of Hazardous Materials.
(c) "Permitted Hazardous Material"
shall mean any Hazardous Material which is necessary
and commercially reasonable for the
provision of any good or service related
to the current use of the Property.
3.19. Financial Condition; Reporting Requirements.
Guarantor has furnished to Lender its
most recent annual and quarterly
financial statements, which statements
completely and accurately present the
financial condition of Guarantor on the
dates thereof. There has been no
material adverse change in the business,
property or condition of Guarantor or
any of its affiliates since the date of
the most recent financial statements
furnished to Lender. Neither Borrower
nor Guarantor is insolvent within the
meaning of Section 548(a)(2)(B) of the
United States Bankruptcy Code or any
other federal or state law using or
defining such term, and will not be
rendered insolvent by the transactions
contemplated by this Mortgage.
Borrower shall at all times maintain
accurate and complete books and records
and copies of all building and use
restrictions, ground leases, leases,
reservation and/or purchase agreements,
contracts and/or other instruments with
respect to the Property. Lender may
inspect and make copies of those books
and records and any other data relating
to the Property at reasonable times.
Lender may inspect the Property at such
reasonable times as Lender shall
determine. Borrower shall deliver or
cause to be delivered to Lender the
following:
3.19.1. Management prepared and
certified quarterly financial statements
for Borrower, within sixty (60) days
after the end of each fiscal quarter of
Borrower;
3.19.2. If and to the extent not
consolidated in the Guarantor's
financial statements delivered pursuant
to Section 3.19.4 below, annual
financial statements for Borrower
prepared by an independent certified
public accountant within one hundred
twenty (120) days after the end of each
fiscal year of Borrower, which financial
statements shall be audited, reviewed or
compiled as Lender shall direct;
3.19.3. Management prepared and
certified annual financial statements
for each tenant under a lease of the
Composite Properties within one hundred
twenty (120) days after the end of each
fiscal year of Borrower, and profit and
loss statements from each such tenant
for each of the Composite Properties
within sixty (60) days after the end of
each fiscal year of Borrower; and
3.19.4. Annual consolidated financial
statements for Guarantor audited by an
independent certified public accountant
reasonably acceptable to Lender within
one hundred twenty (120) days after the
end of each fiscal year of Guarantor.
Such financial statements shall be true
and correct in all respects, shall be
prepared in accordance with
generally accepted accounting
principles, and shall fairly represent
the respective financial conditions of
the subjects thereof as of the
respective dates thereof. At the
request of Lender, Borrower shall
cooperate with Lender, at Lender's
expense, to request the consent of
Borrower's accountant(s) to the
inclusion of Borrower's most recent
financial statement in any regulatory
filing or report to be filed by Lender.
3.20. Indemnification.
Borrower shall appear in and defend any
suit, action or proceeding that might in
any way and in the reasonable judgment
of Lender affect the value of the
Property, the validity, enforceability
and priority of this Mortgage or the
rights and powers of Lender. Borrower
shall, at all times, indemnify, defend,
hold harmless and on demand, reimburse
Lender for any and all loss, damage,
expense or cost, including cost of
evidence of title and attorneys' fees,
arising out of or incurred in connection
with any such suit, action or
proceeding, and the sum of such
expenditures shall be secured by this
Mortgage and shall bear interest at the
highest rate accruing on the
Indebtedness, not to exceed the maximum
rate permitted by law, and shall be due
and payable on demand. Borrower shall
pay cost of suit, cost of evidence of
title and reasonable attorneys' fees in
any proceeding or suit, including
appellate proceedings, brought by Lender
to foreclose or otherwise enforce this
Mortgage. Borrower shall reimburse
Lender, upon demand, any costs incurred
in connection with the recording or
filing of this Mortgage, any financing
statements or memorandum of lease
including without limitation any
mortgage tax, transfer tax, recording
fees or filing fees.
3.21. Estoppel Certificates.
Borrower shall, within ten (10) days
after written request therefor from
Lender, furnish to Lender, or such other
persons or entities as Lender shall
designate, a duly acknowledged written
statement setting forth the amount of
the debt secured by this Mortgage, and
stating either that to the best of
Borrower's knowledge no setoffs or
defenses exist against such debt, or, if
such set-offs or defenses are alleged to
exist, the nature thereof, that to the
best of Borrower's knowledge no Event of
Default then exists, and no event has
occurred, which with notice or the
passage of time, or both, would
constitute an Event of Default.
3.22. Prohibition on Change of Name,Organization.
Except as otherwise expressly provided
in Section 3.13 of this Mortgage,
Borrower shall not assume a different
name, merge, consolidate, change or
reorganize its organizational structure
nor change the location of any of the
Property without, in each instance,
obtaining the prior written consent of
Lender thirty (30) days prior to any
such event. Borrower acknowledges and
agrees that it is a special purpose
entity formed specifically for the
purpose of owning the Composite
Properties and that its Articles of
Organization and other organizational documents
(collectively,"Organizational Documents") contain
certain special purpose and separateness
covenants required by Lender as a
condition to entering into the Loan
Documents. Borrower covenants and
agrees that it will not amend, modify,
restate or otherwise change its
Organizational Documents. During the
term of the Loan Documents, Borrower
shall comply with all terms, covenants
and conditions contained in its
Organizational Documents.
3.23. Right of Setoff.
Borrower hereby grants Lender the right,
exercisable at any time, after an Event
of Default, to set off or apply against
the Indebtedness any account or deposit
with Lender in which Borrower has an
interest or against any other amounts
which may be in the possession of Lender
and to the credit of Borrower.
3.24. Examination of Records and Property.
Borrower shall keep full and accurate
records of Borrower's business,
including, without limit, records
related to the Property, and such
records shall be open to inspection and
duplication by Lender at all reasonable
times. Lender may enter upon any
property owned by or in the possession
of Borrower to examine and inspect the
Property. Borrower shall promptly
provide Lender with any information
concerning the Property as Lender may
reasonably request at any time.
3.25. Reimbursement of Expenses.
Borrower shall reimburse Lender for all
reasonable costs and expenses, including
attorneys' fees, incurred by Lender in
enforcing the rights of Lender under
this Mortgage. All costs and expenses
shall be included in the Indebtedness
and shall be immediately due and payable
together with interest at the maximum
legal rate. Such costs and expenses
shall include, without limitation, costs
or expenses incurred by Lender in any
bankruptcy, reorganization, insolvency
or other similar proceeding.
3.26. Name; Address; Location of Property.
Borrower's name and address and the
location of the Property are accurately
set forth on the first page of this
Mortgage.
3.27. Property Lease.
Borrower has delivered to Lender a duly
executed true, correct and complete copy
of the Property Lease. Borrower
represents that the Property Lease is in
full force and effect and has not been
amended, supplemented or modified as of
the date hereof. Borrower covenants and
agrees that during the term of the Loan
Documents, (i) the Property Lease shall
not be amended, supplemented or modified
in any manner, (ii) Borrower shall not
accept a voluntary surrender from, or voluntary
termination by, the tenant under the
Property Lease, and (iii) Borrower shall
not sell, assign, transfer, hypothecate
or otherwise encumber its interest in
the Property Lease (except to Lender)
and shall not consent to the sale,
assignment, transfer, hypothecation or
encumbrance by tenant of its interest in
the Property Lease except as expressly
permitted in the Property Lease.
3.28. Use of Property.
Borrower shall not permit the Property
to be used for any purpose other than
the operation of a FranchiseType
restaurant.
4. APPLICATION OF CONDEMNATION AWARDS.
4.1. Condemnation Award.
Any eminent domain or condemnation
proceeds ("Proceeds") shall be paid to
Lender, and in the event that Borrower
determines that the Property can be
rebuilt or restored to a viable economic
unit, the Proceeds shall be applied
toward such restoration. In the event
Borrower determines that the Property
cannot be rebuilt or restored to a
viable economic unit, such Proceeds
shall be applied toward the payment of
all amounts owing to Lender under the
Note, without prepayment premium, and if
the Proceeds are insufficient to pay all
such amounts to Lender, Borrower shall
pay to Lender the difference between the
Proceeds and any remaining amounts owing
to Lender under the Note.
4.2. Condemnation Proceeding.
Subject to any Ground Lessor's rights
under a Ground Lease, Borrower shall, on
behalf of Borrower and Lender, defend
any condemnation proceeding and/or
negotiate with the condemning authority
to obtain a satisfactory payment for any
taking. Borrower shall notify Lender of
the status of any such condemnation
proceeding on a monthly basis and shall
provide Lender with copies of all
pleadings filed.
4.3 Restoration.
In the event the Property is to be
rebuilt or restored, restoration shall
proceed as in the manner set forth in
Section 3.14.6 (a), (b), (c), (d), and
(e) of this Mortgage.
4.4 Excess Proceeds.
If there are Proceeds remaining after
such rebuilding or restoration in excess
of an amount equal to the greater of (i)
Fifty Thousand Dollars ($50,000.00) or
(ii) ten percent (10%) of the then
outstanding principal balance of the
Note, then such excess proceeds shall be
applied toward the payment of the
Indebtedness so that no prepayment
premium or other charges shall be
payable with respect to such amounts,
and each monthly installment due under
the Note thereafter shall be reduced to
an amount which will amortize the then
unpaid principal balance on the Note at
the non-default rate over the then
remaining term of the Note. In the
event that such excess Proceeds are less
than described in the immediately
preceding sentence, such excess Proceeds
shall be paid to Borrower within ten
(10) days after the completion of the
rebuilding or restoration of the
Property.
5. EVENTS OF DEFAULT AND REMEDIES.
5.1. Events of Default.
Any of the following events shall, for
purposes of this Mortgage, constitute an
"Event of Default":
5.1.1. Any failure by Borrower to pay
any amount owing on or with respect to this
Mortgage, the Note or the other Loan
Documents when due, whether by maturity,
acceleration or otherwise, which failure
continues for five (5) business days.
5.1.2. Any failure by Borrower to
comply with any of the non-monetary terms, provisions,
warranties or covenants of this
Mortgage, the Note or the other Loan
Documents, which failure continues for
fifteen (15) days after the date of
written notice to Borrower from Lender
of such default; provided that if the
nature of Borrower's noncompliance is
such that more than fifteen (15) days
are reasonably required for its cure,
then Borrower shall not be deemed to be
in default if Borrower commences such
cure within such fifteen (15) day period
and thereafter diligently prosecutes
such cure to completion.
5.1.3. Any statement, representation
or information made or furnished by or on
behalf of Borrower to Lender in
connection herewith shall prove to be
materially false or misleading when made
or furnished.
5.1.4. Institution of remedial
proceedings or other exercise of rights and remedies by
the holder of any security interest or
other lien against the Property or any
portion thereof.
5.1.5. Insolvency of Borrower, or the
admission in writing of Borrower's inability to
pay debts as they mature, institution of
bankruptcy, reorganization, insolvency
or other similar proceedings by or
against Borrower, unless, in the case of
a petition filed against Borrower, the
same is dismissed within sixty (60) days
of the date of filing.
5.1.6. The issuance or filing of any
judgment, attachment, levy or garnishment against
Borrower or all or substantially all of
the assets of Borrower in excess of
$250,000 which is not covered by
insurance, the issuance or filing of any
judgment, attachment, levy or
garnishment against any guarantor or all
or substantially all of the assets of
any guarantor in excess of $500,000
which is not covered by insurance, or
the issuance or filing of any judgment,
attachment, levy or garnishment against
the Property in excess of $100,000 which
is not covered by insurance, unless any
such judgment, attachment, levy or
garnishment is dismissed or
enforcement is effectively stayed within
sixty (60) days or such longer period,
if any, permitted by the local rules of
the applicable jurisdiction for such
dismissal or stay.
5.1.7.If the Borrower occupies the Real
Estate pursuant to the Ground Lease, any
event or condition occurs or exists
which would entitle the Ground Lessor
under such Ground Lease immediately or
following the giving of notice or lapse
of any applicable grace period to
terminate such Ground Lease, which
default is not cured within any
applicable cure period set forth in such
Ground Lease.
5.1.8.If Borrower shall fail to provide
to Lender any agreement or instrument
appropriate or necessary to create or
maintain a perfected, first priority
security interest in the Property.
5.1.9.Any default by Borrower under any
promissory note, deed of trust,
mortgage, security agreement or other
instrument or agreement between Borrower
and Lender, or by Borrower in favor of
Lender.
5.1.10.Any Event of Default by the
tenant under the Property Lease.
5.1.11.Sale or other disposition by
Borrower of the Property or any of Borrower's other
assets unless such assets are replaced
by items of like kind and quality or are
no longer used or useful in the business
of the Franchised Operation.
5.1.12.Dissolution, merger,
consolidation, termination of existence,
insolvency, business failure or
assignment for the benefit of creditors
of or by Borrower.
5.1.13. Failure by Borrower to pay when
due any indebtedness (other than to
Lender) or in the observance or
performance of any term, covenant or
condition in any document evidencing,
securing or relating to such
indebtedness, which failure continues
beyond any applicable cure period.
5.2. Remedies Upon Event of Default.
Upon the occurrence of any Event of
Default, Lender shall have the following
rights:
5.2.1.Declare all or part of the Indebtedness immediately due and
payable.
5.2.2.Foreclose the interest of Borrower
in the Property by action pursuant to
applicable law. Commencement of such an
action shall be deemed a declaration of
acceleration pursuant to Section 5.2.1
above. Lender is authorized and
empowered to sell the Property and to
convey the same to the purchaser
thereof. In the event Lender invokes
such power of sale, Lender shall give
written notice to Borrower of the
occurrence of an Event of Default and of
Lender's election to cause the Property
to be sold. Lender shall record a
notice of sale in each
county in which any part of the Property
is located, cause the same to be
published in a newspaper of general
circulation in each such county in the
manner prescribed by applicable law, and
mail copies of the notice in the manner
prescribed by applicable law to Borrower
and to the other persons prescribed by
applicable law. After the time required
by applicable law and after publication
and posting of the notice of sale,
Lender, without demand on Borrower,
shall sell the Property at public
auction to the highest bidder for cash
at the time and place designated in the
notice of sale. Lender may direct the
sale of the Property to be in one parcel
or several parcels and in any order as
Lender may elect in their sole
discretion. Lender may postpone the
sale of the Property by public
announcement at the time and place of
any previously scheduled sale. Lender
or their respective designees may
purchase all or any portion of the
Property at any such sale. Lender shall
deliver to each purchaser at any sale of
the Property by Lender a deed conveying
that portion of the Property purchased
without any covenant or warranty,
expressed or implied. The recitals in
such deed shall be prima facie evidence
of the truth of the statements made
therein.
5.2.3. Collect and receive all rents,
profits and other amounts that are due
or shall subsequently become due under
the terms of any leases, land contract,
or other agreements by which Borrower is
leasing or selling the Property or any
interest in the Property. Lender may
also exercise any other rights or remedy
of Borrower under any such lease, land
contract or other agreement. However,
Lender shall have no obligation to make
any demand or inquiry as to the nature
or sufficiency of any payment received
or to present or file any claim or take
any other action to collect or enforce
the payment of any amounts to which
Lender may become entitled under this
Mortgage. Similarly, Lender shall not be
liable for any of Borrower's obligations
under any such lease, land contract or
other agreement.
5.2.4. Exercise all rights, remedies
and privileges afforded a "secured
party" under Article 9 of the Uniform
Commercial Code.
5.2.5. Borrower agrees, upon request
of Lender, to assemble the Personal
Property and make it available to Lender
at any place which is reasonably
convenient for Borrower and Lender.
Borrower grants Lender permission to
enter upon any premises owned or
occupied by Borrower for the purpose of
taking possession of the Personal
Property.
5.2.6. Lender shall have the right to
take possession of the Personal
Property, with or without demand, and
with or without process of law. Lender
shall have the right to sell and dispose
of the Personal Property and to
distribute the proceeds according to
law. In connection with the right of
Lender to take possession of the
Personal Property, Lender may take
possession of any other items of
property in or on the Real Estate at the
time of taking possession, and hold them for
Borrower without liability on the part
of Lender except for any damage to the
Real Estate caused by Lender in the
course of taking possession of the
Personal Property. If there is any
statutory requirement for notice, that
requirement shall be met if Lender shall
send notice to Borrower at least five
(5) days prior to the date of sale,
disposition or other event giving rise
to the required notice. Borrower shall
be liable for any deficiency remaining
after disposition of the Property.
5.2.7. Enter upon the Real Estate and
take other actions as Lender deems
appropriate to perform Borrower's
obligations under this Mortgage to
inspect, repair, protect or preserve the
Property, to investigate or test for the
presence of any Hazardous Materials
and/or to appraise the Property.
5.2.8. Pursue any other available
remedy under the UCC or at law or equity
to enforce the payment of the Indebtedness.
5.3. Remedies Generally..3. Remedies
Generally.
5.3.1. All remedies provided for in
Section 5.2 shall be available to the
extent not prohibited by law and Lender
shall have the unrestricted right to
exercise any summary proceeding
available at law or in equity in
connection therewith. Each remedy shall
be cumulative and additional to any
other remedy of Lender at law, in equity
or by statute. No delay or omission to exercise any
right or power accruing upon any default
or Event of Default shall impair any
such right or power or shall be
construed to be a waiver of, or
acquiescence in, any such default or
Event of Default.
5.3.2. Lender may waive any Event of
Default and may rescind any declaration
of maturity of payments on the
Indebtedness. In case of such waiver or
recision, Borrower and Lender shall be
restored to their respective former
positions and rights under this
Mortgage. Any waiver by Lender of any
default or Event of Default shall be in
writing and shall be limited to the
particular default waived and shall not
be deemed to waive any other default.
5.4. Application of Proceeds. Any
proceeds received by Lender from the
exercise of remedies pursuant to Section
5.2 of this Mortgage shall be applied as
follows:
(a) First, to pay all costs and
expenses incidental to the leasing,
foreclosure, sale or other disposition
of the Property. These costs and
expenses shall include, without limit,
any costs and expenses incurred by
Lender (including, without limit,
attorneys' fees and disbursements), and
any taxes and assessments or other liens
and encumbrances prior to the lien of
this Mortgage.
(b) Second, to all sums expended or
incurred by Lender directly or
indirectly in carrying out any term,
covenant or agreement under this
Mortgage or
any related document, together with
interest as provided in this Mortgage.
(c) Third, to the payment of the
Indebtedness. If the proceeds are
insufficient to fully pay the
Indebtedness, then application shall be
made first to late charges and interest
accrued and unpaid, then to any
applicable prepayment premiums, then to
unpaid fees and other charges and then
to the outstanding principal balance.
(d) Fourth, any surplus remaining shall
be paid to Borrower or to whomsoever may
be lawfully entitled.
5.5. Receivers.
Upon an Event of Default and
commencement of foreclosure proceedings
to enforce the rights of Lender under
this Mortgage, or upon the commission of
waste against the Property, Lender shall
be entitled to the appointment of a
receiver or receivers of the Property
and of the rents, issues and profits of
the Property.
5.6. Marshalling. In the event of
foreclosure of this Mortgage or the
enforcement by Lender of any other
rights and remedies under this Mortgage,
Borrower waives any right in respect to
marshalling of assets which secure the
Indebtedness or to require Lender to
pursue its remedies against any other
assets or any other party which may be
liable for any of the Indebtedness.
5.7. Further Actions.
Promptly upon the request of Lender,
Borrower shall execute, acknowledge and
deliver any and all further conveyances,
documents, mortgages, deeds of trust,
security agreements, financing
statements and assurances, and do or
cause to be done all further acts as
Lender may require to confirm and
protect the lien of this Mortgage or
otherwise to accomplish the purposes of
this Mortgage.
5.8. Fees, etc.
All costs, expenses and fees of any
nature for which Borrower is obligated
to reimburse or indemnify Lender are
part of the Indebtedness secured by this
Mortgage and are payable upon demand,
unless expressly provided otherwise,
with interest until repaid at the
highest rate charged on any of the
Indebtedness (but not to exceed the
maximum rate permitted by law).
5.9. Attorneys Fees.
Any reference in this Mortgage to
attorneys' fees shall refer to fees,
charges, costs and expenses of in-house
and outside attorneys and paralegals,
whether or not a suit or proceeding is
instituted, and whether incurred at the
trial court level, on appeal, in a
bankruptcy, administrative or probate
proceeding, in consultation with
counsel, or otherwise. All costs,
expenses and fees of any nature for
which Borrower is obligated to reimburse
or indemnify Lender are part of the
Indebtedness secured by this Mortgage
and are payable upon demand, unless
expressly provided otherwise, with
interest until repaid at the highest
rate charged on any of the Indebtedness
(but not to exceed the maximum rate
permitted by law).
6. MISCELLANEOUS.
6.1. Governing Law.
This Mortgage shall be construed in
accordance with the laws of the Subject
State.
6.2. Successors and Assigns.
This Mortgage shall be binding upon the
successors and assigns of Borrower
including, without limit, any debtor in
possession or trustee in bankruptcy for
Borrower, and the rights and privileges
of Lender under this Mortgage shall
inure to the benefit of its successors
and assigns. This shall not be deemed a
consent by Lender to a conveyance by
Borrower of all or any part of the
Property or of any ownership interest in
Borrower.
6.3. Notices.
Notice from one party to another
relating to this Mortgage shall be
deemed effective if made in writing
(including telecommunications) and
delivered to the recipient's address,
telex number or telecopier number set
forth in this Mortgage by any of the
following means: (i) hand delivery,
(ii) registered or certified mail,
postage prepaid, (iii) express mail or
other overnight courier service, or (iv)
telecopy, telex or other wire
transmission with request for assurance
of receipt in a manner typical with
respect to communications of that type.
Notice made in accordance with these
provisions shall be deemed delivered on
receipt if delivered by hand or wire
transmission, on the third business day
after mailing if mailed by registered or
certified mail, or on the next business
day after mailing or deposit with the
postal service or an overnight courier
service if delivered by express mail or
overnight courier.
6.4. Entire Agreement; Amendments.
This Mortgage and any agreement to which
it refers state all rights and
obligations of the parties and supersede
all other agreements (oral or written)
with respect to the lien granted by this
Mortgage. Any amendment of this Mortgage
shall be in writing and shall require
the signature of Borrower and Lender.
6.5. Partial Invalidity.
The invalidity or unenforceability of
any provision of this Mortgage shall not
affect the validity or enforceability of
the remaining provisions of this
Mortgage.
6.6. Inspections.
Any inspection, audit, appraisal or
examination by Lender or its agents of
the Property or of information or
documents pertaining to the Property is
for the sole purpose of protecting
Lender's interests under this Agreement
and is not for the benefit or protection
of Borrower or any third party.
6.7. Joint and Several Liability.
In the event that more than one party
executes this Mortgage, the obligations
of each party shall be joint and
several.
6.8. Automatic Reinstatement.
Notwithstanding any prior revocation,
termination, surrender or discharge of
this Mortgage, the effectiveness of this
Mortgage shall automatically continue or
be reinstated, as the case may be, in
the event that:
(a) Any payment received or credit
given by Lender in respect of the
Indebtedness is determined to be a
preference, impermissible setoff,
fraudulent conveyance, diversion of
trust funds, or otherwise required to be
returned to Borrower or any third party
under any applicable state or federal
law, including, without limit, laws
pertaining to bankruptcy or insolvency,
in which case this Mortgage shall be
enforceable as if any such payment or
credit had not been received or given,
whether or not Lender relied upon this
payment or credit or changed its
position as a consequence of it.
(b) In the event of continuation or
reinstatement of this Mortgage, Borrower
agrees upon demand by Lender to execute
and deliver to Lender those documents
which Lender determines are appropriate
to further evidence (in the public
records or otherwise) this continuation
or reinstatement, although the failure
of Borrower to do so shall not affect in
any way the reinstatement or
continuation. If Borrower does not
execute and deliver to Lender such
documents upon demand, Lender and each
officer of Lender is irrevocably
appointed (which appointment is coupled
with an interest) the true and lawful
attorney of Borrower (with full power of
substitution) to execute and deliver
such documents in the name and on behalf
of Borrower.
6.9. WAIVER OF JURY TRIAL.
EACH PARTY, AFTER CONSULTING (OR HAVING
HAD THE OPPORTUNITY TO CONSULT) WITH
COUNSEL OF THEIR CHOICE, KNOWINGLY AND
VOLUNTARILY, AND FOR THEIR MUTUAL
BENEFIT, WAIVES ANY RIGHT TO TRIAL BY
JURY IN THE EVENT OF LITIGATION
REGARDING THE PERFORMANCE OR ENFORCEMENT
OF, OR IN ANY WAY RELATED TO, THIS
MORTGAGE OR THE INDEBTEDNESS.
6.10. Assignment.
This Mortgage is freely assignable, in
whole or in part, by Lender with reasonable notice
to Borrower but without the necessity of
obtaining the consent of Borrower.
Lender shall be fully discharged from
all responsibility accruing hereunder
from and after the effective date of any
such assignment. Lender's assignee
shall, to the extent of the assignment,
be vested with all the powers and rights
of Lender hereunder (including those
granted under Section 4 hereof or
otherwise with respect to the Property),
and to the extent of such assignment the
assignee may fully enforce such rights
and powers, and all references to Lender
shall mean and refer to such assignee.
Lender shall retain all rights and
powers hereby given not so assigned,
transferred and/or delivered. Borrower
hereby waives all defenses which
Borrower may be entitled to assert
against Lender's assignee with respect
to liability accruing hereunder prior to
the effective date of any assignment of
Lender's interest herein. Borrower may
not, in whole or in part, directly or
indirectly, assign this Mortgage or its
rights hereunder or delegate its duties
hereunder without, in each instance, the
specific prior written consent of
Lender, which consent may be withheld or
delayed in Lender's sole discretion.
6.11. Securitization.
Borrower understands and agrees that
Lender may, from time to time, assign
its rights and powers under the Note,
this Mortgage and any other Loan
Documents, in whole or in part, in
connection with a securitization
program. Borrower agrees to enter into
an amendment to the Note, this Mortgage
and any other Loan Documents if such
amendments are required by a nationally
recognized rating agency in connection
with a securitization program sponsored
by Lender and in which the Note, this
Mortgage and any other Loan Documents
are to be included so long as such
amendment or amendmens do not adversely
affect Borrower's rights, privileges,
liabilities or obligations.
In the event this Mortgage, the Note,
and any other Loan Documents are
included as an asset of a securitization
by Lender, Borrower shall, within ten
(10) days after Lender's written request
therefor, deliver or cause to be
delivered opinions and certifications in
form and substance and delivered by
counsel reasonably acceptable to Lender
and the rating agency, as may be
reasonably required by Lender and/or
such rating agency in connection with
such securitization. Borrower shall not
be required to bear the cost of the
preparation and delivery of such
opinions, if any.
Borrower shall, in the event this
Mortgage, the Note, and any other Loan
Documents are included as an asset of a
securitization, (a) gather any
environmental information, if any, in
the possession of Borrower, not already
delivered to Lender and reasonably
required by the rating agency in
connection with such securitization, at
Lender's request, (b) meet at reasonable
times, on reasonable notice and at
Lender's expense, with representatives
of the rating agency to discuss the
business and operations of the Borrower, and (c)
cooperate at reasonable times, on
reasonable notice and at Lender's
expense, with the reasonable request of
the rating agency and Lender in
connection with all of the foregoing and
the preparation of any offering
documents with respect thereto.
Borrower shall, upon Lender's written
request therefor in connection with a
securitization in which this Mortgage,
the Note, and any other Loan Documents
are included as an asset promptly
deliver such financial statements and
related documentation prepared by an
independent certified public accountant
as may be necessary and shall fully
cooperate with the Lender in connection
with any assurances or other documents,
which are deemed to be necessary or
convenient by Lender, requested from
Borrower and in all cases consistent
with and not in addition to the
Borrower's express obligations set forth
in the Loan Documents. Borrower shall
not be required to bear the cost of
preparation of financial statements and
related documentation prepared by an
independent certified public accountant
in connection with a securitization
(unless Borrower is otherwise having
such financial statements and related
documents prepared).
For purposes of this Mortgage, the term
"securitization" means the sale, pledge,
grant of a security interest, collateral
assignment, transfer and delivery or
other encumbrance or disposition of all
or any portion of the Lender's rights
and powers in this Mortgage by the
Lender, from time to time, to one or
more of its affiliates or to other
persons, including the sale of this
Mortgage by the Lender to one or more
persons who will issue debt instruments
or equity certificates backed by such
Mortgage and the servicing of such
Mortgage by a person appointed as
servicer in connection therewith.
For purposes of this Mortgage, the term
"rating agency" means any nationally
recognized statistical rating agency;
provided, however, that at any time
during which this Mortgage is an asset
of a securitization, "rating agency"
shall mean the rating agency or rating
agencies that from time to time rate the
securities issued in connection with
such securitization..8. Securitization.
Borrower understands and agrees that
Lender may, from time to time, assign
its rights and powers under the Note,
this Mortgage and any other Loan
Documents, in whole or in part, in
connection with a securitization
program. Borrower agrees to enter into
an amendment to the Note, this Mortgage
and any other Loan Documents if such
amendments are required by a nationally
recognized rating agency in connection
with a securitization program sponsored
by Lender and in which the Note, this
Mortgage and any other Loan Documents
are to be included.
6.12. Counterparts.
This Mortgage may be executed in one or
more counterparts, each of which shall
constitute an original, and all of which
together shall constitute one and the
same instrument.
7. STATE LAW PROVISIONS.
7.1 Scope of Remedies.
Anything herein to the contrary
notwithstanding, upon the occurrence of
an Event of Default, Lender shall have
the right to foreclose this Mortgage in
the manner provided under the laws of
Indiana and to exercise all remedies
available under Indiana law. In the
event a foreclosure action is commenced,
as aforesaid, and a receiver is
appointed as to the Property, said
receiver shall possess all rights and
powers granted to Lender to the extent
said receiver may possess and exercise
said rights and powers under Indiana
law.
7.2 Indiana Responsible Property
Transfer Law. Borrower represents and
warrants that (a) either (1) none of the
Property is within the definition of the
term "property" as defined in Indiana
Code Section 13-11-2-174 and no person
is required as a result of the execution
and delivery of this Mortgage to furnish
to any other person the disclosure
documents described in and provided for
in the Indiana Responsible Property
Transfer Law (I.C. 13-25-3) or (2) all
required disclosure documents have been
timely delivered to all persons
specified in the Indiana Responsible
Property Transfer Law and, (b) except as
disclosed in any environmental audits
and reports delivered to Lender, the
Property does not, to the actual
knowledge of Borrower, contain any
environmental defect as defined in I.C.
1311-2-70.
7.3 Prepayment.
Borrower has specifically agreed to pay
to Lender the Prepayment Premium
specified in the Note in the event of,
and notwithstanding, the acceleration of
the Indebtedness prior to the stated Due
Date as the consequence of the
occurrence of an Event of Default,
including (without limitation but with
recognition of the negotiated nature
thereof) an Event of Default under
Section 5.1 of this Mortgage.
7.4 Future Advances.
Notwithstanding anything contained in
this Mortgage or the other Loan
Documents to the contrary, this Mortgage
shall secure: (i) one hundred and ten
percent (110%) of the face amount of the
Note, exclusive of any items described
in (ii) below, including any additional
advances made from time to time after
the date hereof pursuant to the Note and
other Loan Documents whether made as
part of the Indebtedness secured hereby,
made at the option of Lender, made after
a reduction to a zero (0) or other
balance, or made otherwise, (ii) all
other amounts payable by Borrower, or
advanced by Lender for the account, or
on behalf, of Borrower or the Property,
pursuant to the Loan Documents,
including amounts advanced with respect
to the property for the payment of taxes, assessments,
insurance premiums and other costs and
impositions incurred for the protection
of the Property to the same extent as if
the future obligations and advances were
made on the date of execution of this
Mortgage; and (iii) future modifications,
extensions, and renewals of any Indebtedness
secured by this Mortgage. Pursuant to I.C. 32-8-11-9,
the lien of this Mortgage with respect
to any future advances, modifications,
extensions, and renewals referred to
herein and made from time to time shall
have the same priority to which this
Mortgage otherwise would be entitled as
of the date this Mortgage is executed
and recorded without regard to the fact
that any such future advance,
modification, extension, or renewals may
occur after this Mortgage is executed.
7.5 After Acquired Property.
If, after the date of this Mortgage,
Borrower acquires any property located
on and used in connection with the
Property and that by the terms of the
Loan Documents is required or intended
to be encumbered by this Mortgage, such
property shall become subject to the
lien and security interest of this
Mortgage immediately upon its
acquisition by Borrower and without any
further mortgage, conveyance, assignment
or transfer. Nevertheless, upon
Lender's request at any time Borrower
shall execute, acknowledge and deliver
any additional instruments and
assurances of title and will do or cause
to be done anything further that is
reasonably necessary for carrying out
the intent of this Mortgage.
7.6 Maturity Date.
The maturity date of the Note is Maturity_Date.
7.7 No Limitation on Remedies.
Each of the remedies set forth herein,
including without limitation the
remedies involving a power of sale on
the part of Borrower and the right of
Lender to exercise self-help in
connection with the enforcement of the
terms of this Mortgage, shall be
exercisable if, and to the extent,
permitted by the laws of the State of
Indiana in force at the time of the
exercise of such remedies
without regard to the enforceability of
such remedies at the time of the
execution and delivery of this Mortgage.
7.8 Valuation and Appraisement.
All payments due under the Loan
Documents shall be made without relief
from valuation and appraisement laws."
[signature page follows]
IN WITNESS WHEREOF, Borrower and Lender have executed this Mortgage,
Assignment of Rents, Fixture Filing and Security Agreement.
WITNESSES: BORROWER,
Borrower_Entity
By:INDEPENDENT_MEMBER,
Independent_Member_Entity
Its:Managing Member
----------------------------
JOHN C. FIRTH Executive Vice
President and Secretary
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
Before me, a Notary Public in and for said County and State, personally
appeared JOHN C. FIRTH the Executive Vice President and Secretary of
Independent_Member, Independent_Member_Entity, the Managing Member of
Borrower, Borrower_Entity, who acknowledged execution of the foregoing
Mortgage, Assignment of Rents, Fixture Filing and Security Agreement for
and on behalf of said limited liability company and stated that the
representations therein contained are true.
Witness my hand and Notarial Seal this _____ day of July,1999.
-----------------------
Notary Public Residing in
------------------------County
(SEAL)
-------------------------
(printed signature)
Commission Expires: January 31, 2000
WITNESSES: LENDER,
Lender_Entity
ROBERT V. SCHRADER Vice
President, Operations
STATE OF MINNESOTA )
) ss:
COUNTY OF HENNEPIN )
Before me, a Notary Public in and for said County and State, personally
appeared ROBERT V. SCHRADER, Vice President, Operations of Lender,
Lender_Entity, who acknowledged execution of the foregoing Agreement for
and on behalf of said entity and stated that the representations therein
contained are true.
Witness my hand and Notarial Seal this________________day of July, 1999.
-------------------------
Notary Public
Residing in
(SEAL) ____________________County
My Commission Expires: January 31, 2000
_______________________
Printed Name
This instrument was prepared by and
when recorded return to:
Randy B. Evans, Esq.
KRASS MONROE, P.A.
1100 Southpoint Office Center 1650 West
82nd Street Bloomington, MN 55431-1447
(612) 885-5999
SCHEDULE A TO MORTGAGE
(certain defined terms)
Closing Date: Closing_Date
Composite FCCR: 1.3 to 1.0
SCHEDULE B TO MORTGAGE
(legal description of real property)
SCHEDULE C TO MORTGAGE
Lease dated Closing_Date, by and between Borrower, Borrower_Entity,
as landlord, and Opsub, Opsub_Entity, as tenant, relating to
the Franchised Operation located at Premises_Street, Premises_City,
Premises_State Premises_Zip.
EXHIBIT 4-B
LEASE
- ------
In consideration of the rents and covenants set forth below,
Landlord (as hereinafter defined) hereby leases to Tenant
(as hereinafter defined), and Tenant hereby leases from
Landlord, the Property (as hereinafter defined), upon the
following terms and conditions:
ARTICLE 11
FUNDAMENTAL LEASE PROVISIONS
1.1 Definitions. The provisions in this Article shall be
referred to in this Lease as the "Fundamental Lease
Provisions". Unless otherwise defined herein, capitalized
terms used in this Lease shall have the meanings listed
in the Fundamental Lease Provisions.
Commencement Date: Closing_Date
Landlord: Borrower
4220 Edison Lakes Parkway Mishawaka,
Indiana 46545
FAX: (219) 243-4377
Tenant Opsub
4220 Edison
Lakes Parkway
Mishawaka,
Indiana 46545
FAX: (219) 243-4377
Tenant's EID No.: Opsub_Tax_ID
Guarantor: Quality Dining, Inc., an Indiana corporation
Property: That certain real property, together with all improvements
and equipment located thereon, commonly known as the
FranchiseType located at Premises_Street , Premises_City,
Premises_State Premises_Zip , and more particularly
described in Exhibit A attached hereto
Term Term, commencing on the Commencement Date
Minimum Monthly
Rent: $__________________, subject to proration and
adjustment as provided in Article 2
Lender: Lender
Franchisor: Fran_chisor
Franchise
Agreement: The Franchise Agreement
between Fran_chisor and
Tenant with respect to the Property
Permitted Use: A FranchiseType restaurant
1.2 Intent of Parties. Landlord
and Tenant acknowledge and agree
that this Lease is being
executed and delivered
contemporaneously with the
execution and delivery by Landlord
of the Mortgage (as defined in the
Note, as defined below), granting
to Lender a first priority lien
on the Landlord's fee or
leasehold interest in the Property, which
Mortgage secures Landlord's obligations
under that certain Promissory Note
of even date herewith in the
original principal amount of
Loan_Amt ("Note"). Tenant
further agrees that as a condition
to Lender agreeing to make a
loan and other financial accommodations
and extensions of credit to Landlord,
and to induce Lender to enter into said
financing arrangements, Lender is
relying upon Tenant's execution of
this Lease and performance
of all terms and conditions
herein. Tenant acknowledges
receipt of a fully executed copy
of the Mortgage.
ARTICLE 22
TERM AND RENT
2.1 Term2.1 Term.
The Term of this Lease shall be as
set forth in the Fundamental Lease
Provisions and shall be
hereinafter referred to as the
"Lease Term."
2.2 Minimum Monthly Rent2.2 Minimum Monthly Rent.
For the use and occupancy of the
Property, Tenant shall pay
Landlord the Minimum Monthly
Rent, in advance, commencing on
the Commencement Date and
continuing on the first day of
each calendar month thereafter
during the Lease Term, without
any offset or deduction. Should the
Lease Term commence on a day other
than the first day of a calendar
month, then the rental for such
first fractional month
shall be computed on a daily basis for
the period from the Commencement Date
to the end of such calendar month
at an amount equal to 1/30th of
the Minimum Monthly Rent for each
day. Should the Lease Term end on
a day other than the last day of a
calendar month, then the rental for
such fractional month
shall be computed on a daily basis
at an amount equal to 1/30th of
the Minimum Monthly Rent for each
day. Tenant shall pay Landlord
the Minimum Monthly Rent in lawful
money of the United States at
the address for Landlord
set forth in the Fundamental
Lease Provisions, or to such other
persons or at such other places as
Landlord may designate in writing
to Tenant.
2.3 Impositions2.3 Impositions.
In addition to the Minimum Monthly
Rent, Tenant shall pay to the
parties respectively entitled
thereto all impositions, insurance
premiums, Taxes (as defined in
Article 4), operating charges,
maintenance charges, construction
costs, accounting and legal fees,
and any other charges, costs and
expenses which arise or may be
contemplated under any
provision of this Lease during
the Lease Term (collectively, the
"Impositions"). Tenant shall
furnish to Landlord, promptly
after payment of any Taxes or
insurance premiums, and, with
respect to any other Impositions,
promptly upon request of Landlord,
official receipts or other
satisfactory proof evidencing payment of such
Impositions. Upon Tenant's failure to pay
such Impositions on two (2) or
more occasions during the Lease
Term, Landlord shall have the
option to require Tenant to
deposit with Landlord (i) funds
sufficient for the
payment of the current Impositions
required to be paid by Tenant
hereunder, and (b) onetwelfth of
the current annual or
annualized Impositions, as the
case may be (or those of the
preceding years if the current
amounts thereof have not been
fixed), in advance and on the
same day upon which the Minimum
Monthly Rent is due.
2.4 Late Charge2.4 Late Charge.
If any installment of the Monthly
Minimum Rent, any Imposition or
any other payment provided for
under this Lease which is payable
by Tenant is not received by
Landlord by the date when due,
Tenant shall immediately pay
Landlord as a late charge an amount
equal to the lesser of (y) 5% of
the amount of such payment or (z)
the maximum amount of late
charges permitted by law (the "Late
Charge"). Landlord and Tenant agree
that the Late Charge represents a
fair and reasonable estimate of the
costs that Landlord will incur by
reason of any such late payment
by Tenant. Acceptance of the
Late Charge by Landlord shall not
constitute a waiver of Tenant's
default with respect to the
overdue amount, nor prevent
Landlord from exercising any
other rights and remedies
available to Landlord under this
Lease on account of such overdue
amount, unless such Late Charge is
accompanied by the amount of such
overdue payment.
2.5 Net Lease2.5 Net Lease.
This Lease is what is commonly
called a "triple net lease," it being
understood that Landlord shall
receive the Minimum Monthly Rent
free and clear of any and all
Taxes, other Impositions, liens,
charges, or expenses of
any nature whatsoever incurred
in connection with the ownership
and operation of the Property.
ARTICLE 33
USE OF THE PROPERTY
3.1 Use3.1 Use.
Tenant shall use the Property
solely for the Permitted Use. Tenant may
not use the Property for any other
purpose without obtaining the
prior written consent of
Landlord, which consent shall not
be unreasonably withheld.
3.2 Condition of Property3.2 Condition of Premises.
Tenant accepts the Property in
its "as is" condition. Tenant acknowledges
that Landlord makes no warranty of
any kind with respect to the
Property.
3.3 Compliance With Law3.3 Compliance With Law.
3.3.1 Tenant shall, at
Tenant's sole expense, comply in
all material respects with all
applicable laws, ordinances,
orders, rules and regulations of
any governmental authorities and
with any directive of any public
officer which shall impose any
violation, order or duty upon
Landlord or Tenant with respect to
the Property or the use or
occupation thereof or signage
thereon, including, without
limitation, any governmental law or
statute, rule, regulation,
ordinance, code, policy or rule of
common law now or hereafter in
effect relating to
the environment, health or safety.
3.3.2 Tenant shall not use or
permit the Property to be used
in any manner which will result in
waste or the creation of a
nuisance, and Tenant shall maintain
the Property free of any
objectionable noises, odors, or
disturbances.
3.4 Environmental Compliance3.4 Environmental Compliance.
3.4.1 Tenant shall, at its sole
cost and expense at all times
during the Lease Term, comply in
all respects with the Environmental
Laws (as defined below) in its use
and operation of the Property.
3.4.2 Tenant shall not use the
Property for the purpose of storing
Hazardous Materials (as defined below)
except in full compliance with the
Environmental Laws and other
applicable laws, and shall not
cause the release of any Hazardous
Material.
3.4.3 Tenant shall notify
Landlord promptly and in reasonable
detail in the event that Tenant
becomes aware of or suspects (i)
the presence of any Hazardous
Material on the Property (other
than any Permitted Hazardous
Materials, as defined below), or
(ii) a violation of the
Environmental Laws on the Property.
3.4.4 If Tenant uses or permits the
Property to be used so as to
subject Tenant, Landlord or any
occupant of the Property to a
claim of violation of the Environmental
Laws (unless contested in good
faith by appropriate proceedings),
Tenant shall, at its sole cost and
expense, immediately cease or
cause cessation of such use or
operations and shall remedy and
fully cure any conditions arising
therefrom.
3.4.5 At its sole cost and
expense, Tenant shall (i)
immediately pay, when due, the cost
of compliance with the
Environmental Laws within the
Property, and (ii) keep the
Property free of any liens imposed
pursuant to the Environmental Laws.
Tenant shall, at all times, use,
handle and dispose of any Permitted
Hazardous Material in a
commercially reasonable manner and
in compliance with the
Environmental Laws and applicable
industry standards. Tenant shall
cooperate with Landlord in any
program between Landlord and any
governmental entity for proper
disposal and/or recovery of any
Permitted Hazardous Material.
3.4.6 Tenant shall indemnify,
save and hold Landlord harmless
from and against any claim,
liability, loss, damage or
expense (including, without
limitation, reasonable attorneys'
fees and disbursements) arising out
of any violation of the
covenants of Tenant contained in
this Section by Tenant, or out of
any violation of the Environmental
Laws by Tenant, its owners,
employees, agents, contractors,
customers, guests and invitees,
which indemnity obligation shall
survive the expiration or
termination of this Lease.
3.4.7 In the event that Tenant
fails to comply with any of the
foregoing requirements of this
Section, after the expiration of
the cure period permitted under the
Environmental Laws, if any,
Landlord may, but shall not be
obligated to (i) elect that such
failure constitutes a default under
this Lease; and/or (ii) take any
and all actions, at Tenant's sole
cost and expense, that Landlord
deems necessary or desirable to
cure any such noncompliance.
Tenant shall reimburse Landlord for any costs
incurred by Landlord in exercising
its options under this subsection
within 5 days after receipt of a
bill therefor.
3.4.8 The provisions of this
Section shall survive the
expiration or termination of the
Lease Term. Capitalized terms used in this
Section and not otherwise defined
herein shall have the following
meanings:
"Hazardous Materials" means any of
the following as defined by the
Environmental Laws: solid wastes;
medical or nuclear waste or
materials; toxic or hazardous
substances; natural gas, liquified
natural gas or synthetic fuel
gas; petroleum products or
derivatives, wastes or
contaminants (including, without limitation,
polychlorinated biphenyls); paint
containing lead; ureaformaldehyde
foam insulation; asbestos
(including, without limitation,
fibers and friable asbestos);
explosives, and discharges of
sewage or effluent.
"Environmental Laws" means all
requirements of environmental,
ecological, health, or industrial
hygiene laws or regulations or
rules of common law related to
the Property, including all
requirements imposed by any law,
rule, order, or regulation of any
federal, state, or local
executive, legislative,
judicial, regulatory, or
administrative agency, board, or
authority, which relate to (i)
noise; (ii) pollution or protection
of the air, surface water, ground
water, or land; (iii) solid,
gaseous, or liquid waste
generation, treatment, storage,
disposal, or transportation; (iv)
exposure to Hazardous Materials; or
(v) regulation of the manufacture,
processing, distribution and
commerce, use, or storage of
Hazardous Materials.
"Permitted Hazardous Material"
means any Hazardous Material which
is necessary and commercially
reasonable for the provision of
any good or service related to
the Permitted Use.
3.5 Permits and Licenses3.5 Permits and Licenses.
Tenant shall be solely responsible to
apply for and secure any building permit or
permission of any duly constituted
authority for the purpose of
doing any of the things which
Tenant is required or permitted to
do under the provisions of this
Lease.
3.6 Franchise Agreement3.6
Franchise Agreement. Tenant is a
franchisee in good standing with
Franchisor and is not in default
under the Franchise Agreement
relating to the Property. Tenant
shall keep the Franchise Agreement
relating to the Permitted Use in full
force and effect. Tenant shall promptly
provide Landlord with a copy of (i)
any notice of termination of the
Franchise Agreement, or (ii) any
notice of the existence of any
breach which, with notice or the
passage of time or both, would
entitle Franchisor to terminate
the Franchise Agreement. Tenant
shall not pledge or encumber any
asset (tangible or intangible),
other than the Excluded Collateral
(as defined in the Mortgage),
located at the Property; provided,
however, this provision shall not
prohibit Tenant from collaterally
assigning its interest in this
Lease (subject to paragraph 10.1
hereof) or in the Franchise
Agreement to Chase Bank of Texas,
National Association, as
Administrative Agent or another
senior lender or from entering
into intercreditor agreements from
time to time with any such
senior lender substantially in the
form of the Consent to
Collateral Assignment dated
September 11, 1998 with Brinker
International, Inc. or the
Intercreditor Agreement dated on
or about the date hereof with
Burger King Corporation, all of
which Tenant is permitted to do
provided that such senior lender
shall simultaneously enter into an
intercreditor agreement with
Lender in substantially the same
form as the Intercreditor
Agreement of even date herewith
by and among the Lender, Chase
Bank of Texas, National
Association, as Administrative
Agent, and certain other parties
("Chase Agreement").
3.7 Liquor License. Tenant shall
keep any license, permit or
similar approval ("Permits")
relating to the sale of liquor,
beer or wine on the Property in
connection with the Permitted Use
in full force and effect. Tenant
shall promptly provide Landlord
with a copy of (i) any notice of
termination of any Permit, or (ii)
any notice of the existence of any
breach which, with notice or the
passage of time or both, would
entitle any applicable governing
body to terminate or suspend any
such Permit or to restrict
Tenant's ability to sell liquor,
beer or wine on the Property.
Tenant shall not pledge or encumber
its rights under the Permits.
3.8 Liens and Encumbrances.
Except as otherwise expressly
permitted herein, Tenant shall not
pledge or encumber any asset
(tangible or intangible)
located at the Property.
Notwithstanding the foregoing,
this section shall not be
construed to prohibit Tenant from
granting a security interest in
inventory located at the Property
nor from (i) replacing any of the
existing furniture, fixtures and
equipment ("FF&E") with FF&E that
is leased nor from granting a
purchase money security interest
to finance the acquisition of such
replacement FF&E, or (ii) from
continuing to maintain any
presently existing FF&E located
at the Property which is leased.
ARTICLE 44
TAXES AND UTILITIES
4.1 Payment of Taxes4.1 Payment of Taxes.
Tenant shall pay the Taxes
(as defined in the following
Section) applicable to the Property
during the Lease Term. Landlord
shall provide Tenant with copies
of any tax bills applicable to the
Property promptly after receipt of
such bills. All such payments
shall be made at least 10 days
prior to the delinquency date of
such payment. Tenant shall
promptly furnish Landlord with
satisfactory evidence that such
Taxes have been paid. If any such
Taxes paid by Tenant shall cover
any period of time prior to or
after the expiration of the Lease
Term, Landlord shall reimburse
Tenant to the extent required. If
Tenant shall fail to pay any such
Taxes, Landlord shall have the
right (but not the obligation) to
pay the same, in which case Tenant
shall repay such amount plus any
penalties and interest resulting
therefrom to Landlord within 5
days after receipt of a bill
therefor.
4.2 Definition of "Taxes"4.2 Definition of "Taxes".
As used herein, the term "Taxes" shall include:
4.2.1 any form of real estate tax
or assessment, ad valorem tax or
gross receipts tax, imposed by
any authority having the direct
or indirect power to tax, including
any city, county, state, or
federal government, or any school,
agricultural, sanitary, fire,
street, drainage, or other
improvement district thereof, on,
against or with respect to the
Property, this Lease, any legal or
equitable interest of Landlord or
any superior landlord in the
Property or in the real property of
which the Property are a part,
Landlord's right to rent or other
income therefrom, and Landlord's
business of leasing the Property;
4.2.2 any tax, fee, levy,
assessment, penalty, interest or
other charge (i) in substitution
of, partially or totally, any
tax, fee, levy, assessment, or
charge hereinabove included within
this definition of Taxes, or (ii)
any tax or increase in any tax
which is imposed as a result of a
transfer, either partial or total,
of Landlord's interest in the
Property to Tenant, or (iii) which is
imposed by reason of this
transaction, any modifications or
changes hereto, or any transfers
hereof; and
4.2.3 all inspection fees,
taxes, bonds, permits,
certificates, assessments and
sales, use, property or other taxes,
fees or tolls of any nature
whatsoever (together with any
related interest or penalties) now
or hereafter imposed against
Landlord or Tenant by any
federal, state, county or local
governmental authority upon or
with respect to the Property or
the use thereof or upon the
possession, leasing, use, operation
or other disposition thereof or
upon the rents, receipts or
earnings arising therefrom or upon
or with respect to this Lease; and
4.2.4 all taxes assessed
against and levied upon trade
fixtures, furnishings, equipment,
and all other personal property
of Tenant contained in the Property
or elsewhere, which Tenant shall
cause to be separately assessed and
billed directly to Tenant.
Tenant shall pay when due or reimburse
and indemnify and hold
Landlord harmless from and
against any Taxes. Notwithstanding the
foregoing, the term "Taxes" shall not include any
general income taxes, inheritance
taxes, and estate taxes imposed
upon Landlord.
4.3 Tenant's Right to Contest Taxes4.3 Tenant's Right to Contest Taxes.
4.3.1 Tenant shall have the
right, at its sole cost and
expense, to contest the amount or
validity, in whole or in part, of any
Taxes by appropriate proceedings
diligently conducted in good faith,
but no such contest shall be
carried on or maintained by
Tenant after the time limit for the
payment of any Taxes unless Tenant
shall (i) pay the amount involved
under protest; (ii) procure and
maintain a stay of all proceedings
to enforce any collection of any
Taxes, together with all penalties,
interest, costs and expenses, by a
deposit of a sufficient sum of
money, or by such undertaking, as
may be required or permitted by law
to accomplish such stay; or (iii)
deposit with Landlord, as security
for the performance by Tenant
of its obligations hereunder with
respect to such Taxes, 150% of
such contested amount or such
other reasonable security as may be
demanded by Landlord to insure
payment of such contested Taxes
and all penalties, interest, costs
and expenses which may accrue
during the period of the contest.
Upon the termination of any such
proceedings, Tenant shall pay the
amount of such Taxes or part
thereof, as finally determined in
such proceedings, together with any
costs, fees (including all
reasonable attorneys' fees and
expenses), penalties or other
liabilities in connection
therewith; provided, however, that
if Tenant has deposited cash or
cash equivalents with Landlord as
security under clause (iii) above,
then, so long as no default
exists under this Lease,
Landlord shall arrange to pay
such Taxes (or part thereof) together
with the applicable costs, fees and
liabilities as described above
out of such cash or cash
equivalents and return any unused
balance, if any, to Tenant.
Otherwise, Landlord shall return
to Tenant all amounts, if any,
held by or on behalf of Landlord
which were deposited by Tenant in
accordance with such clause (iii).
4.3.2 Tenant shall have the
right, at its sole cost and
expense, to seek a reduction in the
valuation of the Property as
assessed for tax purposes and to
prosecute any action or
proceeding in connection therewith.
Provided Tenant is not in
default hereunder, Tenant shall be
authorized to retain any tax
refund of any tax paid by Tenant.
4.3.3 Landlord agrees that whenever Landlord's cooperation is
required in any proceeding brought by Tenant to contest any tax,
Landlord will reasonably cooperate therein, provided same shall not
entail any cost, liability or expense to Landlord.
Tenant shall pay, indemnify and save Landlord harmless of and
from, any and all liabilities, losses, judgments, decrees, costs
and expenses (including all reasonable attorneys' fees and
expenses) in connection with any such contest and shall, promptly
after the final settlement, fully pay and discharge the amounts
which shall be levied, assessed, charged or imposed or be
determined to be payable therein or in connection therewith,
and Tenant shall perform and observe all acts and obligations,
the performance of which shall be ordered or decreed as a
result thereof. No such contest shall subject Landlord to the
risk of any civil liability or the risk of any criminal
liability, and Tenant shall give such reasonable indemnity
or security to Landlord as may reasonably be demanded by
Landlord to insure compliance with the foregoing provisions of
this Section.
4.4 Payment of Utilities4.4 Payment of Utilities. Tenant
shall pay to the utility companies or other parties entitled to
payment the cost of all water, heat, air conditioning, gas,
electricity, telephone, and other utilities and services provided
to or for the Property, including, without limitation, connection
fees and taxes thereon. In the case of any utilities or services
which are not separately metered and billed directly to Tenant,
but are metered jointly with other property, Tenant shall pay to
the parties entitled thereto, a pro rata share based on Tenant's
usage of such utilities and services.
4.5 Interruption in Utility Service4.5 Interruption in
Utility Service. Landlord shall not be liable in damages or
otherwise for any failure or interruption of any utility or other
service being furnished to the Property, and no such failure or
interruption shall entitle Tenant to any abatement of, set off or reduction
in the amounts payable to Landlord hereunder or otherwise
entitle Tenant to terminate this Lease.
ARTICLE 55
INSURANCE AND INDEMNIFICATION
5.1 Tenant's Insurance5.1 Tenant's Insurance. From and
after taking possession of the Property, Tenant shall carry and
maintain, at its sole cost and expense, the following types and
amounts of insurance:
Insurance Type Amount ofCoverage Risks Covered
- -------------- ----------------- -----------
Commercial General Liability $1,000,000 per bodily injury,
occurrence and property damage and
$2,000,000 in the contractual liability
aggregate
Property Damage full replacement "all risk", including
value sprinkler damage
Business not less than 6 loss of earnings by at
Interruption installments of least the perils of
Minimum Monthly Rent fire and lightning,
extended coverage,
vandalism, malicious
mischief and sprinkler
leakage
Worker's as required by law
compensation
Flood Insurance to the extent of damage caused by
current coverage flooding
5.2 Policy Form5.2 Policy Form.
5.2.1 Tenant shall obtain all
policies of insurance required by
Section 5.1 from insurance
companies having an A.M. Best
rating of A- or better which are
qualified to do business in the
jurisdiction where the Property
are situated. All such policies
shall be issued in the names of
Landlord and Tenant, and shall
name Lender as additional insured.
In addition, all such policies
providing coverage for physical
damage include loss payee and
mortgagee endorsement in favor of
Landlord and Lender, respectively
and as applicable. The Tenant
shall cause copies of such
policies of insurance or
originally executed certificates
thereof to be delivered to Landlord
prior to Landlord's execution of
this Lease, and not less than 30
days prior to any renewal
thereof. Landlord shall cause
copies of all such policies of
insurance or originally executed
certificates thereof, together
with any and all renewals thereof,
to be delivered to Lender no less
than 10 days prior to the effective
date thereof. As often as any such
policy shall expire or terminate,
Tenant shall procure and maintain
renewal or additional policies with
like terms. None of such
policies shall contain any co-insurance
requirements and all such policies
shall provide for written notice
to Landlord and Lender, not less
than 10 days prior to any
modification, cancellation, lapse,
or reduction in the amounts of
insurance, and shall further
provide that any loss otherwise
payable thereunder shall be payable
notwithstanding any act or
negligence of Landlord or
Tenant which might, absent such
provision, result in a forfeiture
of all or part of the payment of
such loss. All general liability,
property damage, and other casualty
policies shall be written on an
occurrence basis as primary
policies, not contributing with or
in excess of coverage which
Landlord may carry.
5.2.2 Tenant's obligations to
carry the insurance provided for
above may be brought within the
coverage of an "umbrella" policy
or policies of insurance carried
and maintained by Tenant;
provided, however, that such policy
or policies shall (i) have limits
of not less than $5,000,000, (ii)
name Landlord and Lender as
additional insureds as their
interests may appear, and (iii)
provide that the coverage afforded
Landlord will not be reduced or
diminished by reason of the use
of such blanket policies.
Tenant agrees to permit Landlord and Lender at
all reasonable times to inspect any
policies of insurance of Tenant
which Tenant has not delivered to Landlord.
5.3 Subrogation Waiver5.3 Subrogation Waiver.
Landlord (for itself and its insurer) hereby
waives any rights, including rights
of subrogation, and Tenant (for
itself and its insurer) hereby
waives any rights, including rights
of subrogation, each may have
against the other on account of any
loss or damage occasioned to
Landlord or Tenant, as the case may
be, to their respective property,
the Property or its contents that
are caused by or result from
risks insured against under any
insurance policies carried by the
parties hereto and in force at the
time of any such damage. The
foregoing waivers of subrogation
shall be operative only so long as
available in the jurisdiction where
the Property are located and so
long as no policy of insurance is
invalidated thereby.
5.4 Payment of Insurance5.4 Payment of Insurance.
In the event that Tenant shall fail to obtain
the insurance policies required
hereunder or to pay the premiums
due for the insurance policies
required hereby, Landlord shall
have the right, but not the
obligation, to pay the same in
which case Tenant shall repay such
amount plus any penalties or
additional amounts resulting
therefrom to Landlord within 5 days after
receipt of a bill therefor.
5.5 Insurance Use Restrictions5.5 Insurance Use
Restrictions. Tenant shall not
carry any stock or goods or do
anything in, on, or about the
Property which will substantially
increase the insurance rates upon
the building of which the
Property are a part.
5.6 Indemnification 5.6 Indemnification.
Tenant shall indemnify Landlord for, defend
Landlord against, and save
Landlord harmless from, any
liability, loss, cost, injury,
damage or other expense or risk
whatsoever that may occur or be
claimed by or with respect to any
person(s) or property on or about
the Property and resulting directly
or indirectly from:
(a)the use, misuse, occupancy,
possession or disuse of the
Property by Tenant or other persons
claiming through or under Tenant,
or their respective agents,
employees, licensees, invitees,
guests or other such persons;
(b) the condition of the Property;
(c) any work or thing done in
respect of construction of, in or
to the Property or any part of the
improvements now or hereafter
constructed on the Property
(other than work by Landlord);
(d) any use, possession,
occupation, operation, maintenance
or management of the Property or
any part hereof;
(e)any failure to, or to properly,
use, possess, occupy, operate,
maintain or manage the Property or
any part thereof;
(f) the condition, including
environmental conditions, of the
Property or any part thereof;
(g) any negligence on the part of
Tenant or any of its agents,
contractors, servants, employees,
licensees or invitees;
(h) any accident, injury or damage
to any person or property
occurring in, on or about the
Property or any part thereof
including any sidewalk adjacent
thereto; or
(i)any failure on the part of
Tenant to perform or comply with
any of the covenants, agreements,
terms or conditions contained in
this Lease on its part to be
performed or complied with.
ARTICLE 66
MAINTENANCE AND REPAIRS
6.1 Tenant's Obligations6.1 Tenant's Obligations.
Tenant shall, at its sole cost and
expense, maintain in good repair,
order, and serviceable condition
the Property and every part
thereof, including, without
limitation, all structural
elements of; all plumbing,
ventilation, heating, air
conditioning, and electrical
systems and equipment in, on, or
exclusively serving, the Property;
and all windows, doors,
storefronts, plate glass, interior
walls, and ceilings which are part
of the Property. Tenant
shall not make any claim or
demand upon or bring any action
against Landlord for any loss,
cost, injury, damage or other
expense caused by any failure or
defect, structural or
nonstructural, of the Property or
any part thereof.
6.2 Landlord's Obligations6.2 Landlord's Obligations.
Landlord shall have no obligation to repair
and maintain the Property, nor
any improvements or equipment
thereon, whether interior or
exterior, structural or
nonstructural, ordinary or
extraordinary. Tenant expressly
waives the benefit of any
statute or law now or hereafter in
effect which would otherwise
afford Tenant the right to
terminate this Lease because of
Landlord's failure to keep the
Property in good order, condition,
and repair, or the right to repair
and offset the cost related
thereto against rent.
6.3 Landlord's Rights6.3 Landlord's Rights.
If Tenant refuses or neglects to make repairs
or maintain the Property, or any
part thereof, in a manner
reasonably satisfactory to
Landlord, without prejudice to any
other remedy Landlord may have
hereunder, upon giving Tenant 10
days prior written notice,
Landlord shall have the right to
enter the Property and perform
such maintenance or make such
repairs on behalf of and for the
account of Tenant. In the event
Landlord so elects, Tenant shall
pay the cost of such repairs,
maintenance, or replacements within
5 days following receipt of a
bill therefor. Tenant agrees to
permit Landlord or its agent to
enter the Property, upon
reasonable notice by Landlord,
during normal business hours for
the purpose of inspecting the
Property.
ARTICLE 77
ALTERATIONS
7.1 Consent to Alterations7.1 Consent to Alterations.
Tenant may, at its sole cost and
expense, make alterations,
replacements, additions, changes,
and improvements (collectively
referred to in this Article as
"Alterations") to the Property as
it may find necessary or convenient for
its purposes; provided, that if the
cost of such Alterations
is in excess of $100,000 (i) Tenant
shall be required to obtain the
prior written consent of Landlord,
which consent shall not be
unreasonably withheld, delayed or
conditioned, and (ii) such
Alterations shall be made in
accordance with reasonable plans
and specifications and cost
estimates prepared by Tenant and
approved in writing in advance by
Landlord, which approval shall not
be unreasonably withheld, delayed
or conditioned. In addition, if
the applicable building codes
require the submission of
architectural plans, Tenant shall
provide Landlord copies of all
architectural plans and specifications relating
to any such Alteration.
7.2 Removal of Alterations7.2 Removal of Alterations.
All Alterations, except for trade
dress or items containing
trademarks or other proprietary
marks, made on the Property shall
become the property of Landlord at
the expiration or termination of
the Lease Term and shall be
surrendered with the Property.
7.3 Alterations Required by Law7.3 Alterations Required by Law.
Tenant shall, at its sole cost and
expense, make any Alteration,
structural or otherwise, to or on
the Property, or any part
thereof, which may be necessary or
required by reason of any law,
rule, regulation, or order
promulgated by competent
government authority.
7.4 General Conditions
Relating to Alterations7.4 General
Conditions Relating to Alterations.
Any Alteration shall be subject to
the following conditions:
7.4.1 No Alteration shall be
undertaken until Tenant shall have
procured and paid for all required
permits and authorizations of all
municipal departments and
governmental subdivisions having
jurisdiction.
7.4.2 Any Alteration involving
an estimated cost of more than
$100,000 or where the applicable
building codes require the
submission of architectural plans
shall be conducted under the
supervision of a licensed architect
or engineer selected by Tenant
and satisfactory to Landlord, and
shall be made in accordance with detailed
plans and specifications and
cost estimates prepared by such
architect or engineer and approved
in writing in advance by Landlord.
7.4.3 Any Alteration shall be
made promptly and in a good
workmanlike manner, by properly
qualified and licensed personnel,
and in compliance with all
applicable permits and
authorizations and building and
zoning laws and all laws, and in
accordance with the orders, rules
and regulations of the Board of
Fire Insurance Underwriters and
any other body hereafter exercising similar
functions having or asserting
jurisdiction over the Property.
7.4.4 No Alteration shall tie-
in or connect the Property or
any improvements thereon with any
property outside the Property
without the prior written consent
of Landlord, which consent shall
not be unreasonably withheld.
7.4.5 No Alteration shall
reduce the value of the Property
or impair the structural
integrity of any building
comprising a part of the Property.
7.5 Liens7.5 Liens.
In connection with Alterations,
Tenant shall do all things
necessary to prevent the filing of
any liens or encumbrances against the
Property, or any part thereof, or
upon any interest of Landlord or
any mortgagee or beneficiary under
a deed of trust or any ground or
underlying lessor in any portion
of the Property. Notwithstanding
the foregoing, Tenant shall have
the right and ability to contest
any such lien and no Event of
Default hereunder shall be deemed
to have occurred so long as
Tenant is contesting such lien in
good faith and by appropriate
proceedings and has effectively
stayed enforcement of such lien.
ARTICLE 88
CASUALTY
8.1 Casualty8.1 Casualty.
Subject to the terms of any underlying
ground lease, as modified or
affected by any landlord consent
and waiver obtained with respect to
the Property, Tenant acknowledges
and agree that upon payment of
any casualty insurance proceeds
relating to the Property, the
proceeds shall be applied as
provided in the Mortgage, and the
Lease shall remain in full force
and effect.
ARTICLE 99
EMINENT DOMAIN
9.1 Condemnation9.1 Condemnation.
Subject to the terms
of any underlying ground lease,
as modified or affected by any
landlord consent and waiver
obtained with respect to the
Property, Tenant acknowledges and
agrees that upon payment of any
condemnation proceeds relating to
the Property, the proceeds shall
be applied as provided in the
Mortgage, and the Lease shall
remain in full force and effect.
ARTICLE 1010
ASSIGNMENT
10.1 No Assignment10.1 No Assignment.
Tenant shall not assign this Lease or Tenant's
interest in and to the Property.
Any attempted assignment shall be
void, and shall constitute a
default by Tenant under this
Lease. For purposes of this
Article, the terms "assign" and
"assignment" shall include any
act attempting to, or document
purporting to, assign, transfer,
sublet, enter into license or
concession agreements for, change
ownership of, mortgage or
hypothecate this Lease or
Tenant's interest in and to the
Property or any part thereof.
Notwithstanding the foregoing,
Tenant may enter into a collateral
assignment or other agreement
regarding this Lease or Tenant's
interest hereunder with Chase
Bank of Texas, National Association, as Agent;
provided, that any such
collateral assignment or other
agreement (i) has been approved in
writing by Lender in
its reasonable discretion, (ii) is
expressly subordinate to Lender pursuant to
and in accordance with the terms
and conditions of the Chase
Agreement, and (iii) shall not
at any time be recorded, nor
shall a memorandum thereof at any
time be recorded, so long as the
Note has not been paid in full,
without the prior written consent
of Lender.
10.2 Sale or Transfer10.2 Sale or Transfer.
Tenant and Landlord shall be, directly
or indirectly, wholly owned by Guarantor until
the earlier of (i) the expiration
of this Lease, or (ii)
consummation of a Transfer Event
in accordance with Section 10.3
below.
10.3 Transfer Event.
Except as provided below, Tenant shall not
consummate a Transfer Event without
the prior written consent of
Landlord and Lender (the
"Transaction Consent"). As used
herein, "Transfer Event" means (i)
the sale or transfer of all or
substantially all of the assets of
Tenant, (ii) a merger or
consolidation of Tenant into
another corporation or entity or
(iii) the sale or transfer of
fifty percent (50%) or more of
Tenant's stock.
10.3.1. "Transfer Event" shall
not include any sale, transfer, merger,
consolidation or other event or circumstance
if, after consummation thereof,
Tenant and Landlord are wholly
owned, directly or indirectly,
by Guarantor.
10.3.2. The Transaction Consent
shall not be required if all of the
following conditions (the
"Transfer Requirements") are met:
(i) the Property shall be used only
as it was used prior to such
Transfer Event; (ii) the combined
net worth of Tenant, the acquiring
corporation (or entity) or
surviving corporation (or entity)
(as the case may be) of such
Transfer Event (the "Transferee"),
the Guarantor (unless the Guarantor
has been or will be released from
its Guaranty of this Lease upon
consummation of the Transfer Event
in accordance with Section 10.3.3 below) and any
other substitute or additional guarantors of this
Lease, if any, immediately after
the Transfer Event is not less
than Fifty Million Dollars
($50,000,000) determined on a pro
forma basis assuming consummation
of the Transfer Event; (iii) the
Transferee shall guarantee this
Lease and all other leases
between Tenant and Landlord; (iv)
the Transfer Event shall not
result in a withdrawal,
downgrade, or qualification in
the rating of any securities
issued in connection with any
securitization involving the Note
or the Loan Documents (as defined
in the Mortgage) as confirmed in
writing by an appropriate
rating agency reasonably
acceptable to the Lender, (v) the Transferee and
Landlord shall be, directly or
indirectly, under common ownership
immediately upon consummation of
the Transfer Event,(vi) Tenant
shall have provided written
notice of the Transfer Event to
Landlord and Lender not less than
sixty (60) days prior to the
consummation of the Transfer Event
which notice shall be accompanied
by such documentation and
information reasonably necessary to
facilitate Landlord and Lender's
determination that the Transfer
Requirements have been satisfied
(and Tenant shall furnish such
supplemental informationand
documentation reasonably requested
by Landlord and Lender), and (vii)
Tenant agrees to pay for all
reasonable costs and expenses
(including attorney's fees) in
connection with Landlord and
Lender's review of the proposed
Transfer Event (including the
cost, if any, of confirmation by
the rating agency).
10.3.3 If all the requirements
of Section 10.3.2 above are
satisfied and if the minimum net
worth requirement specified in
clause (ii) thereof is satisfied
without reference to Guarantor's net worth,
then Guarantor shall be released
from its obligations under the
Guaranty with respect to this
Lease upon consummation of the
Transfer Event.
10.4 Further Assurances.
Landlord, Tenant, Lender and
Guarantor agree to execute and
deliver, without additional
consideration, any and all
documents, amendments,
confirmations and agreements
reasonably necessary to effectuate
the intent of Section 10.3 above.
ARTICLE 1111
DEFAULT; REMEDIES
11.1 Default11.1 Default.
The occurrence of any one or more of
the following events shall
constitute an Event of Default by
Tenant under this Lease:
11.1.1 The failure of Tenant to
operate the Property with the
Permitted Use; provided,
that the foregoing does not apply
to a period of time not to exceed
the lesser of (i) six (6) months,
and (ii) any shorter time permitted
by the terms of any underlying
lease agreement, during which the
Property may be closed due to
fire or other casualty, or
condemnation, so long as all other
terms of this Lease are satisfied.
11.1.2 The failure by Tenant to
make any payment of Minimum
Monthly Rent, Impositions or any
other payment required to be made
by Tenant hereunder, where such
failure shall continue (i) for a
period of 15 days at any time when
Landlord and Tenant are affiliated
entities, or (ii) for a period of
five (5) days after written notice
at any time when Landlord and
Tenant are not affiliated entities.
11.1.3 Except as otherwise
provided in this Lease, the
failure by Tenant to observe or
perform any of the nonmonetary
covenants, conditions, or
provisions of this Lease to be
observed or performed by
Tenant, where such failure shall
continue for a period of 30 days
after written notice thereof from
Landlord to Tenant; provided,
however, that if the nature of
Tenant's noncompliance is such
that more than 30 days are
reasonably required for its cure,
then Tenant shall not be deemed to
be in default if Tenant commences
such cure within said 30-day period
and thereafter diligently
prosecutes such cure to completion and the final
determination thereof.
11.1.4 The admission by Tenant or any Guarantor of its
inability to pay debts as they mature.
11.1.5 Institution by or
against Tenant or any Guarantor
of any bankruptcy, insolvency,
reorganization, receivership or other similar
proceeding involving the creditors
of Tenant or any Guarantor, which,
if instituted against Tenant or
any Guarantor is not dismissed
within 60 days after the commencement thereof;
11.1.6 The issuance or filing
of any judgment, attachment,
levy, or garnishment against
Tenant or all or substantially
all of the assets of Tenant in
excess of $250,000 which is not
covered by insurance, the issuance
or filing of any judgment,
attachment, levy, or garnishment
against any guarantor or all
or substantially all of the assets
of any guarantor in excess of
$500,000 which is not covered by
insurance, or the issuance or
filing of any judgment,
attachment, levy, or garnishment
against the Property in excess of
$100,000 which is not covered
by insurance, unless any such
judgment, attachment, levy or
garnishment is dismissed or
enforcement is effectively stayed
within sixty (60) days or such longer
period, if any, permitted by the
local rules of the applicable
jurisdiction for such dismissal or
stay.
11.1.7 Dissolution,
termination of existence,
insolvency, business failure or
assignment for the benefit of
creditors of or by Tenant or any
Guarantor.
11.1.8 Any statement,
representation or information made
or furnished by or on behalf of
Tenant or any Guarantor to
Landlord in connection with or to
induce Landlord to enter into this
Lease shall prove to be materially
false or misleading when made or
furnished.
11.1.9 The default, breach or
insolvency of any Guarantor beyond
any applicable notice and/or grace
period under the instrument
evidencing its guaranty.
11.1.10 The occurrence of any Event of Default under the
Mortgage.
11.2 Remedies11.2 Remedies.
Upon the occurrence of an Event
of Default by Tenant pursuant to
the foregoing Section or otherwise
under this Lease, Landlord may at
any time thereafter, with or
without notice or demand and
without limiting Landlord in the
exercise of any right or remedy
which Landlord may have by reason
of such Event of Default:
11.2.1 Terminate Tenant's right
to possession of the Property by
any lawful means, in which case
this Lease and the term hereof
shall terminate and Tenant
shall immediately surrender
possession of the Property to
Landlord.
11.2.2 Landlord shall be
entitled to recover from Tenant
all damages incurred by Landlord
by reason of Tenant's default.
Tenant acknowledges that this Lease
and the terms and conditions
contained herein were a material
inducement and condition to
Lender making the loan and
other financial accommodations and
extensions of credit to Landlord
pursuant to the Note and the
Mortgage and Landlord shall be
subject to acceleration of the
Note and to the payment of a
Prepayment Premium (as defined in the Note)
upon, among other things, the occurrence of
an Event of Default under this
Lease during the first ten (10)
years of the Lease Term. Tenant
further agrees that damages
incurred by Landlord for purposes
of this Section 11.2.1 shall
include, without limitation, all
obligations of Landlord to Lender
under the Note and Mortgage, including
but not limited to the Prepayment Premium.
11.2.3 Landlord shall be
entitled to recover from Tenant an amount
equal to the positive difference
between:
(a) the sum of (without
duplication) (x) the present value
of all future payments of Minimum
Monthly Rent due or to become due
under this Lease discounted at the
non-default Stated Rate accruing
under the Note, plus (y) all
payments of Minimum Monthly Rent
then past due under this Lease,
together with all other amounts (if
any) then due and owing under this
Lease, plus (z) the Prepayment
Premium (if any) then due under the
Note; and
(b) the sum of (without
duplication) (i) the present value
of the then fair market rental
value of the Property discounted
at the non-default Stated Rate
accruing under the Note, plus (ii)
in the event that Lender has
acquired Landlord's interest in
the Property, the then fair
market value of the Property.
11.2.4 Maintain Tenant's right
to possession of the Property by
any lawful means, in which case
this Lease and the term hereof
shall continue in effect whether or
not Tenant shall have vacated or
abandoned the Property. In such
event Landlord shall be entitled
to enforce all of Landlord's
rights and remedies under the
Lease, including the right to
recover the rent as it becomes due
hereunder.
11.2.5 Pursue any other remedy now
or hereafter available to Landlord
under the laws or judicial
decisions of the jurisdiction where
the Property are located.
11.3 Cumulative Remedies11.3
Cumulative Remedies. No remedy or
election hereunder shall be deemed
exclusive but shall, wherever
possible but without duplication,
be cumulative with all other
remedies provided in this Section
or otherwise available at law or in
equity.
ARTICLE 1212
REPRESENTATIONS AND WARRANTIES;
FINANCIAL REPORTING
12.1 Representations and Warranties12.1 Representations and Warranties.
To induce Landlord to enter into this Lease, Tenant
represents and warrants to Landlord
as follows:
12.1.1 This Lease is an enforceable
obligation of Tenant.
12.1.2 Tenant is not a foreign
corporation, foreign partnership,
foreign trust or foreign estate (as
such terms are defined in the
Internal Revenue Code of 1986, as
amended) and the regulations
promulgated thereunder).
12.1.3 The financial statements of
Tenant and any Guarantor provided
to Landlord delivered to Landlord
are true and correct in all
material respects, have been
prepared in accordance with
generally accepted accounting
principles, and fairly present
the respective financial
conditions of the subjects
thereof as of the respective
dates thereof. No materially
adverse change has occurred in
the financial conditions reflected therein since
the respective dates thereof.
12.1.4 There are no actions, suits
or proceedings pending, or to
the best of Tenant's knowledge,
threatened, against or affecting
it or the Property or any Guarantor
which, if adversely determined,
would materially impair the ability
of Tenant or Guarantor to
satisfy their obligations under
or relating to this Lease.
12.1.5 Tenant is not in default
under any obligation for the
payment of borrowed money, for the
deferred purchase price of
property or for the payment of any
rent under any lease agreement,
which, either individually or in
the aggregate, would adversely
affect the financial condition of
Tenant, or the ability of Tenant
to perform its obligations
hereunder, or comply with the terms
of this Lease.
12.1.6 Tenant has all required
certificates of occupancy, building
permits, certificates of
environmental impact approval, all
zoning, building, safety, fire and
health approvals and all permits
and licenses required by any
governmental authority and
necessary or advisable to operate,
occupy or use the Property for
the Permitted Use, all of which are
unexpired and to the extent
assignable, are hereby collaterally
assigned to Landlord.
12.2 Financial Statements12.2
Financial Statements. Tenant has
furnished certain financial
statements to Lender, which
statements completely and
accurately present the financial condition
of Tenant on the dates thereof.
There has been no material
adverse change in business,
property or condition of Tenant
since the date of such financial
statements. Tenant is not
insolvent within the meaning of
Section 548(a)(2)(B) of the
United States Bankruptcy Code or
any other federal or state law
using or defining such term, and
will not be rendered insolvent by
the transactions contemplated by
this Lease. Tenant hereby
covenants and agrees to deliver
to Landlord within the time
periods stated its financial
statements and other financial
information necessary to enable
Landlord to comply with all
financial reporting obligations
set forth in the Mortgage.
Without limiting the foregoing,
Tenant acknowledges that pursuant
to the Mortgage, Landlord is
required to maintain a minimum
Fixed Charge Coverage Ratio (as
defined in the Mortgage), and
Tenant agrees to provide Landlord
with all information necessary to
enable Landlord to calculate and
report its Fixed Charge Coverage
Ratio.
ARTICLE 13
OPTION TO PURCHASE
Intentionally Omitted.
ARTICLE 1414
BANKRUPTCY OR INSOLVENCY
14.1 Liquidation14.1 Liquidation.
In the event that Tenant shall become a debtor
under Chapter 7 of the Bankruptcy
Reform Act of 1978, as amended
(the "Bankruptcy Code"), and
Tenant's trustee or Tenant shall
elect to assume this Lease for the
purpose of assigning the same or
otherwise, such election and
assignment may be made only if the
provisions of this Section are
satisfied. If Tenant or Tenant's
trustee shall fail to assume this
Lease within 60 days after the
entry of an order for relief, this
Lease shall be deemed to have been
rejected. Immediately thereupon,
Landlord shall be entitled to
possession of the Property without further
obligation to Tenant or Tenant's
trustee and this Lease, upon the
election of Landlord, shall
terminate, but Landlord's right to
be compensated for damages shall
survive, whether or not this Lease
shall be terminated.
14.2 Reorganization14.2 Reorganization.
In the event that a voluntary petition for
reorganization is filed by Tenant,
or an involuntary petition is filed
against Tenant under Chapter 11 of
the Bankruptcy Code, or in the
event of the entry of an order for
relief under Chapter 7 in a case
which is then transferred to
Chapter 11, Tenant's trustee or
Tenant, as debtor-in-possession,
must elect to assume this Lease
within 60 days from the date of
the filing of the petition under
Chapter 11 or the transfer
thereto, or Tenant's trustee or the
debtor-in-possession shall be
deemed to have rejected this
Lease. Immediately thereupon,
Landlord shall be entitled to
possession of the Property without
further obligation to Tenant or
Tenant's trustee, and this Lease,
upon the election of Landlord,
shall terminate. Landlord's right
to be compensated for damages,
shall survive, whether or not this
Lease shall be terminated.
14.3 Conditions to Assumption14.3 Conditions to Assumption.
No election by Tenant's trustee or
the debtor-in-possession to assume
this Lease, whether under Chapter 7
or Chapter 11, shall be effective
unless each of the following conditions
has been satisfied:
14.3.1 Tenant's trustee or the
debtor-inpossession has cured all
defaults under this Lease, or has
provided Landlord with evidence
satisfactory to Landlord that it
will cure all defaults capable of
being cured by the payment of money
within 10 days from the date of
such assumption and that it will
cure all other defaults under
this Lease which are capable of
being cured by the performance of
any act within 30 days after the
date of such assumption.
14.3.2 Tenant's trustee or the
debtor-inpossession has
compensated, or has provided
Landlord with evidence
satisfactory to Landlord that,
within 10 days from the date of such
assumption, it will compensate
Landlord for any actual
pecuniary loss incurred by Landlord
arising from the default of
Tenant, Tenant's trustee, or
the debtor-in-possession as
indicated in any statement of
actual pecuniary loss sent by
Landlord to Tenant's trustee or the
debtorin-possession.
14.3.3 Such assumption will
not breach or cause a default
under any provision of any
other lease, mortgage, financing
agreement or other agreement by
which Landlord is bound, relating
to the Property.
14.3.4 Tenant's trustee or the
debtor-inpossession shall (i)
provide Landlord with "Assurance",
as defined below, of the future
performance of each of the
obligations under this Lease of
Tenant, Tenant's trustee or the
debtor-in-possession, and (ii) in
addition to any other security
deposits held by Landlord,
deposit with Landlord, as
security for the timely payment
of Minimum Monthly Rent and for the
performance of all other
obligations of Tenant under this
Lease, an amount equal to 3 monthly
installments of Minimum Monthly
Rent (in the amount then
payable), and (iii) pay in advance
to Landlord on the date each
installment of Minimum Monthly Rent
is due and payable, onetwelfth of
Tenant's annual obligations for
Impositions to be made by Tenant
pursuant to this Lease. The
obligations imposed upon Tenant's
trustee or the debtor-in-
possession by this subsection shall
continue with respect to Tenant or any
assignee of this Lease, after the
conclusion of proceedings under
the Bankruptcy Code.
For purposes of the foregoing
subsection, the term "Assurance" shall mean
no less than:
(1) Tenant's trustee or the
debtor-inpossession has and will
continue to have sufficient
unencumbered assets after the
payment of all secured
obligations and administrative
expenses to assure Landlord that
sufficient funds will be available
to fulfill the obligations of Tenant under this
Lease; and
(2) To secure to Landlord the
obligations of Tenant, Tenant's
trustee or the debtor-inpossession
and to assure the ability of
Tenant, Tenant's trustee or the
debtorinpossession to cure the
defaults under this Lease,
monetary and/or nonmonetary,
there shall have been (A)
sufficient cash deposited with
Landlord, or (B) the bankruptcy
court shall have entered an order
segregating sufficient cash
payable to Landlord, and/or (C)
Tenant's trustee or
the debtor-in-possession shall have
granted to Landlord a valid and
perfected first lien and security
interest and/or mortgage in
property of Tenant, Tenant's
trustee or the debtor-in-
possession, acceptable as to value
and kind to Landlord.
14.4 Conditions to Assignment14.4 Conditions to Assignment.
If Tenant's trustee or the debtor-in-
possession has assumed this Lease
pursuant to the terms and
provisions of this Section for the
purpose of assigning (or elects to
assign) this Lease, this Lease
may be so assigned only if the
proposed assignee has provided adequate
assurance of future performance of
all of the terms, covenants and
conditions of this Lease to be
performed by Tenant. As used in
this subsection "adequate assurance
of future performance" shall mean
at least that clauses (2)(B) and
(2)(C) of the above definition of
"Assurance", and each of the
following conditions, has been
satisfied:
14.4.1 the proposed assignee has
furnished Landlord with a current
financial statement audited by a
certified public accountant
determined in accordance with
generally accepted accounting
principles consistently applied
indicating a credit rating, net
worth and working capital in
amounts which Landlord reasonably
determines to be sufficient to
assure the future performance of
such assignee of Tenant's
obligations under this Lease, but
in no event indicating a net worth
less than the net worth of Tenant
and any guarantors of this Lease,
on the date of execution hereof;
14.4.2 such assignment will not
breach or cause a default under
any provision of any other lease, mortgage,
financing agreement or other
agreement by which Landlord is
bound, relating to the Property;
and
14.4.3 the proposed assignment
will not release or impair any
guaranty of all or any portion of
this Lease.
14.5 Reasonable Charges14.5
Reasonable Charges. When,
pursuant to the Bankruptcy Code,
Tenant's trustee or the debtorin
possession shall be obligated to
pay reasonable use and occupancy
charges for the use of the
Property, such charges shall not
be less than the Minimum Monthly
Rent and all additional amounts
payable by Tenant under this Lease
and shall be paid at the times
and when due as though such
charges were Minimum Monthly Rent
and such additional payments.
ARTICLE 1515
GENERAL PROVISIONS
15.1 Quiet Enjoyment15.1 Quiet
Enjoyment. Subject to the terms
and conditions of this Lease,
Tenant shall have the quiet and
peaceful possession of the
Property.
15.2 Definition of Rent15.2 Definition of Rent.
All monetary obligations of Tenant to Landlord
under the terms of this Lease,
including, without limitation, the
Taxes, insurance premiums and other
Impositions payable hereunder shall
be deemed to be "rent".
15.3 Subordination15.3 Subordination.
This Lease shall be subordinate to any superior lease,
mortgage, deed of trust, or any
other hypothecation or security now
existing or hereafter placed upon
the Property and to any and all
advances made on the security
thereof and to all renewals,
modifications, consolidations,
replacements, and extensions
thereof and Tenant hereby
agrees, upon request by Landlord,
to execute and deliver to Landlord
and its lender(s) a subordination,
non-disturbance and attornment
agreement in a commercially
reasonable form prescribed
by such lender(s) with respect to
any such superior lease, mortgage,
deed of trust, hypothecation, or
security. Landlord and Tenant
further agree that: (i) in the
event of the occurrence of an Event
of Default under this Lease, Lender
shall have the right to terminate
this Lease; (ii) neither Landlord
nor Tenant shall cause or
permit any recordation in any
public records of this Lease or any
memorandum of lease related
thereto; (iii) neither Landlord nor
Tenant shall enter into or be
entitled to any nondisturbance
agreement from Lender with respect
to this Lease; and (iv) upon the
occurrence of an Event of Default
under this Lease, Tenant upon
request of Lender, and at
Lender's expense, shall take
commercially reasonable efforts to
cause the restaurant located at
the Property to be operated
pursuant to the terms of this
Lease, unless this Lease is
terminated by Lender pursuant to
clause (i) of this Paragraph.
15.4 Surrender of Property15.4 Surrender of Premises.
Except for changes resulting from eminent
domain proceedings, at the
expiration or sooner termination of
the Lease Term, Tenant shall
surrender the Property in the
same condition as the Property
were in upon delivery of possession
thereto under this Lease,
reasonable wear and tear excepted,
and shall surrender all keys for
the Property to Landlord at the
place then fixed for the payment of
rent and shall inform Landlord of
all combinations on locks, safes
and vaults, if any, in the
Property. Tenant shall at such
time remove all of Tenant's
moveable equipment, machinery,
trade fixtures and other personal
property, as well as any
alterations or improvements, if
requested to do so by Landlord,
and shall repair any damage to the
Property caused thereby, and any
or all of such property not so
removed shall, at Landlord's
option, and to the extent permitted
by applicable law, become the
exclusive property of Landlord or
be disposed of by Landlord, at
Tenant's sole cost and expense,
without further notice to or
demand upon Tenant. In the event
Tenant shall fail to pay the cost
of any such repair, Landlord may do
so and Tenant shall reimburse
Landlord for the amount thereof
within 5 days after receipt of a
bill therefor. If Tenant shall so
surrender the Property, Tenant
shall indemnify Landlord against
loss or liability resulting from
the delay by Tenant in so
surrendering the Property
including, without limitation, any
claims made by any
succeeding occupant founded on
such delay. Tenant's obligation to
observe or perform this covenant
shall survive the expiration or
other termination of the Lease
Term.
15.5 Estoppel Certificates15.5 Estoppel Certificates.
Each party (each a "Responding Party") shall
at any time upon not less than 10
days' prior written notice from the
other party (each a "Requesting
Party") execute, acknowledge, and
deliver to the Requesting Party a
statement in a form prescribed by
Landlord certifying and
acknowledging the following: (i)
that this Lease represents the
entire agreement between Landlord
and Tenant, and is unmodified and
in full force and effect (or, if
modified, stating the nature of
such modification and certifying
that this Lease, as so modified,
is in full force and effect) and
the date to which the Minimum
Monthly Rent and other charges are
paid in advance, if any; and (ii)
that there are not, to the
Responding Party's knowledge, any
uncured defaults on the part of
the Requesting Party, or specifying
such defaults if any are claimed.
Any such statement may be
conclusively relied upon by any
prospective purchaser or
encumbrancer of the Property or of
the business of the Requesting
Party.
15.6 Severability15.6 Severability.
The invalidity of any provision of
this Lease as determined by a court
of competent jurisdiction shall in
no way affect the validity of any
other provision hereof.
15.7 Entire Agreement15.7
Entire Agreement. This Lease
constitutes the entire agreement
between Landlord and Tenant and
supersedes all prior agreements
between them with respect to the
Property, whether written or oral.
15.8 Notices15.8 Notices.
Any notice required or permitted
to be given hereunder shall be in
writing and may be given by
facsimile, personal delivery,
certified mail, return receipt
requested or by nationally
recognized overnight courier
service delivered to Tenant or to Landlord,
as the case may be, at the FAX
numbers or addresses for each set
forth in the Fundamental Lease
Provisions. Either party may by
notice to the other specify a
different FAX number or address
for notice purposes. A copy of
all notices required or permitted
to be given to Landlord hereunder
shall be concurrently transmitted
to such party or parties at such
addresses as Landlord may from time
to time hereafter designate by
notice to Tenant.
15.9 Waivers15.9 Waivers.
No waiver by Landlord of any
provision hereof shall be deemed a
waiver of any other provision
hereof or of any subsequent default
by Tenant of the same of any other
provision. Landlord's consent to,
or approval of, any act shall not
be deemed to render unnecessary
the obtaining of Landlord's
consent to or approval of any
subsequent act by Tenant. The
acceptance of rent hereunder by
Landlord shall not be a waiver
of any preceding default by Tenant
hereunder, other than the failure
of Tenant to pay the particular
rent so accepted, regardless of
Landlord's knowledge of such
preceding default at the time of
acceptance of such rent.
15.10 Intentionally Omitted 15.10 Intentionally Omitted.
15.11 Holding Over15.11 Holding Over.
If Tenant remains in possession of the
Property or any part thereof after the
expiration or termination of the Lease Term,
such occupancy shall be a tenancy
from monthto-month upon all the
provisions of this Lease
pertaining to the obligations of
Tenant and Tenant shall thereby
waive its rights of notice to quit.
The monthly rent due during such
hold-over period shall be equal to
150% of the Minimum Monthly Rent
then in effect, and Tenant shall
continue to be obligated to pay all
Impositions and other amounts
required to be paid by the terms of
this Lease.
15.12 Choice of Law15.12 Choice of Law.
The laws of the jurisdiction in which the Property
are located shall govern the validity, performance, and
enforcement of this Lease.
15.13 Attorneys' Fees15.13 Attorneys' Fees.
Should either party institute any action or
proceeding to enforce any
provision hereof or for a
declaration of such party's rights
or obligations hereunder, the
prevailing party shall be entitled
to receive from the losing party
such amounts as the court may adjudge to be
reasonable attorneys' fees and
expenses for services rendered to
the party prevailing in any such
action or proceeding, and such
fees shall be deemed to have
accrued upon the commencement of
such action or proceeding and
shall be enforceable whether or
not such action or proceeding is prosecuted to
judgment.
15.14 Waiver of Jury Trial15.14 Waiver of Jury Trial.
LANDLORD AND TENANT EACH HEREBY WAIVE ALL
RIGHT TO A TRIAL BY JURY IN ANY CLAIM, ACTION,
PROCEEDING OR COUNTERCLAIM BY
EITHER LANDLORD OR TENANT
AGAINST THE OTHER ON ANY
MATTERS ARISING OUT OF OR IN ANY
WAY CONNECTED WITH THIS LEASE,
THE RELATIONSHIP OF LANDLORD AND
TENANT AND/OR TENANT'S USE OR
OCCUPANCY OF THE PROPERTY.
15.15 Liability of Landlord15.15 Liability of Landlord.
In the event of any sale or other
transfer of Landlord's interest in
the Property, Landlord shall be
relieved of all liabilities and
obligations of Landlord hereunder
arising after the date of such
transfer. Notwithstanding
anything contained herein to the
contrary, Landlord shall have no
personal liability in respect of
any of the terms, covenants,
conditions or provisions of this
Lease, and in the event of a
breach or default by Landlord of
any of its obligations under this
Lease, Tenant and any persons
claiming by, through or under
Tenant shall look solely to the
equity of the Landlord in the
Property for the satisfaction of
Tenant's and/or such persons'
remedies and claims for damages.
15.16 No Merger15.16 No Merger.
There shall be no merger of this
Lease, or the leasehold estate
created by this Lease, with any
other estate or interest in the
Property, or any part thereof, by
reason of the fact that the same
person, firm, corporation or other
entity may acquire or own or hold,
directly or indirectly, (i) this
Lease or the leasehold estate
created by this Lease, or any
interest in this Lease or in
any such leasehold estate, and
(ii) any such other estate or
interest in the Property or any
part thereof; and no such merger
shall occur unless and until all
persons, corporations,
firms and other entities having
an interest (including a security
interest) in (1) this Lease or the
leasehold estate created by this
Lease; and (2) any such other
estate or interest in the Property,
or any part thereof, shall join in
a written instrument effecting
such merger and shall duly record
the same.
15.17 Interpretation15.17 Interpretation.
The captions by which the
Articles and Sections of this Lease
are identified are for convenience
only and shall have no effect
upon the interpretation of this
Lease. Whenever the context so
requires, singular numbers shall
include the plural, the plural
shall refer to the singular, the
neuter gender shall include the
masculine and feminine genders, and
the terms "Landlord" and "Tenant"
and "person" shall include
corporations, limited liability
companies, partnerships,
associations, other legal
entities, and individuals.
15.18 Relationship of the Parties15.18 Relationship of the Parties.
Nothing in this Lease shall create
a partnership, joint venture,
employment relationship, borrower
and lender relationship, or any
other relationship between
Landlord and Tenant, other than
the relationship of landlord and
tenant.
15.19 Successors15.19 Successors.
This Lease shall be binding upon and
inure to the benefit of the parties
hereto and their respective
personal and legal representatives,
heirs, successors, and assigns.
15.20 Modifications15.20 Modifications.
This Lease may not be altered,
amended, changed, waived,
terminated, or modified in any
manner except by a written
instrument executed by Landlord and
Tenant.
15.21 Brokerage Fees15.21 Brokerage Fees.
Landlord and Tenant each represent
and warrant that they have not
employed a broker in connection
with the execution of this Lease.
Landlord and Tenant shall each
indemnify and hold the other
harmless from and against any
claim or claims for brokerage
or other commissions arising
from such party having employed a
broker contrary to its
representation in this Section.
15.22 Waiver of Redemption15.22 Waiver of Redemption.
To the extent permitted by law, Tenant
hereby waives any and all rights
of redemption with respect to this
Lease. Tenant hereby waives any
rights it may have to any notice to
cure or vacate or to quit
provided by any current or future
law; provided that the foregoing
shall not be deemed to waive any
notice expressly provided in this
Lease.
15.23 Not Binding Until Executed15.23 Not Binding Until Executed.
This Lease does not constitute an "offer" and is
not binding until fully executed and delivered
by Landlord.
15.24 Counterparts15.24 Counterparts.
This Lease may be executed in one
or more counterparts, each of which
shall be an original, and all of
which together shall constitute one
and the same instrument.
IN WITNESS WHEREOF, Landlord and
Tenant have executed this Lease as
of the date first set forth above.
LANDLORD: TENANT:
BORROWER, OPSUB,
Borrower_Entity Opsub_Entity
By: INDEPENDENT_MEMBER,
Independent_Member_Entity
Its: Managing Member
- ---------------------------- -----------------------
JOHN C. FIRTH JOHN C.FIRTH
Executive Vice President and Executive Vice
Secretary President
EXHIBIT AA
DESCRIPTION OF PROPERTY
[LEGAL DESCRIPTION]
LEASE
BETWEEN
BORROWER
AND
OPSUB
TABLE OF CONTENTS
PAGE
ARTICLE 1 FUNDAMENTAL LEASE PROVISIONS 1
1.1 Definitions 1
1.2 Intent of Parties 1
ARTICLE 2 TERM AND RENT 2
2.1 Term 2
2.2 Minimum Monthly Rent 2
2.3 Impositions 2
2.4 Late Charge 2
2.5 Net Lease 2
ARTICLE 3 USE OF THE PROPERTY 2
3.1 Use 2
3.2 Condition of Property 2
3.3 Compliance With Law 2
3.4 Environmental Compliance 3
3.5 Permits and Licenses 4
3.6 Franchise Agreement 4
3.7 Liquor License 4
3.8 Liens and Encumbrances 4
ARTICLE 4 TAXES AND UTILITIES 5
4.1 Payment of Taxes 5
4.2 Definition of "Taxes" 5
4.3 Tenant's Right to Contest Taxes 5
4.4 Payment of Utilities 6
4.5Interruption in Utility Service 6
ARTICLE 5 INSURANCE AND INDEMNIFICATION 6
5.1 Tenant's Insurance 6
5.2 Policy Form 7
5.3 Subrogation Waiver 7
5.4 Payment of Insurance 7
5.5 Insurance Use Restrictions 7
5.6 Indemnification 7
ARTICLE 6 MAINTENANCE AND REPAIRS 8
6.1 Tenant's Obligations 8
6.2 Landlord's Obligations 8
6.3 Landlord's Rights 8
ARTICLE 7 ALTERATIONS 9
7.1 Consent to Alterations 9
7.2 Removal of Alterations 9
7.3 Alterations Required by Law 9
7.4 General Conditions Relating to Alterations 9
7.5 Liens 9
ARTICLE 8 CASUALTY 10
8.1 Casualty 10
ARTICLE 9 EMINENT DOMAIN 10
9.1 Condemnation 10
ARTICLE 10 ASSIGNMENT 10
10.1 No Assignment 10
10.2 Sale or Transfer 10
10.3 Transfer Event 10
10.4 Further Assurance 11
ARTICLE 11 DEFAULT; REMEDIES 11
11.1 Default 11
11.2 Remedies 12
11.3 Cumulative Remedies 12
ARTICLE 12 REPRESENTATIONS AND
WARRANTIES; FINANCIAL REPORTING 13
12.1 Representations and Warranties 13
12.2 Financial Statements 13
ARTICLE 13 OPTION TO PURCHASE [Intentionally Omitted] 13
ARTICLE 14 BANKRUPTCY OR INSOLVENCY 14
14.1 Liquidation 14
14.2 Reorganization 14
14.3 Conditions to Assumption 14
14.4 Conditions to Assignment 15
14.5 Reasonable Charges 15
ARTICLE 15 GENERAL PROVISIONS 15
15.1 Quiet Enjoyment 15
15.2 Definition of Rent 15
15.3 Subordination 15
15.4 Surrender of Property 16
15.5 Estoppel Certificates 16
15.6 Severability 16
15.7 Entire Agreement 16
15.8 Notices 16
15.9 Waivers 16
15.10 Recording [Intentionally Omitted] 16
15.11 Holding Over 17
15.12 Choice of Law 17
15.13 Attorneys' Fees 17
15.14 Waiver of Jury Trial 17
15.15 Liability of Landlord 17
15.16 No Merger 17
15.17 Interpretation 17
15.18 Relationship of the Parties 17
15.19 Successors 17
15.20 Modifications 17
15.21 Brokerage Fees 18
15.22 Waiver of Redemption 18
15.23 Not Binding Until Executed 18
15.24 Counterparts 18
EXHIBIT A DESCRIPTION OF PROPERTY A-1
EXHIBIT 4-C
PROMISSORY NOTE
Loan No.: Loan_No
Borrower: BORROWER, Borrower_Entity
Restaurant No.: FranchiseType Restaurant No.RestaurantNo
Restaurant Address: Premises_Street
Premises_City,
Premises_State
Premises_Zip
Loan Type: Loan_Type
Loan Amount: Loan_Amt
Closing Date: Closing_Date
First Full
Payment Date: First_Payment_Date
Stated Rate: Interest_Rate
Monthly Payment
Amount: Monthly_Payment
Due Date: Maturity_Date
Prepayment
Provision: Yield Maintenance Amount
first ten (10) Years
Amortization Term
Period:
1. PROMISE TO PAY. For
value received, the Borrower whose
name is set forth above (the
"Borrower") promises to pay to the
order of LENDER, Lender_Entity
(together with its successors,
assigns and transferees, "Lender"),
a principal sum equal to the Loan
Amount set forth above, together
with interest on the unpaid balance
from time to time outstanding, as
follows:
Interest from and after the
Closing Date through the last day
of the month in which the Closing
Date occurs shall be due and
payable in advance on the Closing
Date. Notwithstanding the
foregoing, in the event the
Closing Date occurred on the
first day of a month, no interest
will be due and payable in advance
on the Closing Date.
Notwithstanding anything to the
contrary contained herein, at no
time shall the interest payable
under this Note be greater than
the maximum rate permitted by
applicable law ("Legal Rate"). If
any obligation under this Note
shall result in Lender receiving
an amount deemed to be interest
under applicable law in excess of
the Legal Rate, then the amount
which would be excessive interest
shall be applied to the
reduction of the principal
balance of this Note and not to
payment of interest. If such
excessive interest exceeds the
unpaid principal balance of this
Note, the excess shall be
refunded to Borrower.
Installments of principal and
interest in the amount of the
Monthly Payment Amount set forth
above shall be due and payable
on the first day of each month
(each a "Payment Date") commencing:
(i) in the event the Closing Date
occurred on the first day of
a month, on the first day of the
first month following the Closing
Date, and (ii) in all other cases,
on the first day of the second
month following the Closing Date
("First Full Payment Date") through
and including the Due Date, when
the outstanding principal balance,
plus accrued interest, and any
other sum payable hereunder, is
due and payable (unless the
indebtedness evidenced by this
Note is accelerated, in which
case, the Due Date is the date
of acceleration). The amortization
period for this Note, for purposes of
calculating the monthly
installments of principal and
interest, is the Amortization
Period set forth above.
All payments under this Note shall
be made in lawful money of the
United States of America in
immediately available funds at
Lender's principal office at
Lender_Street, Lender_City,
Lender_State Lender_Zip, at
such other address as Lender may
designate in writing, or by
electronic funds
withdrawal made by Lender upon
written authorization therefor
from Borrower, which
authorization shall not be
revocable by Borrower without the
prior written consent of Lender.
Payments will be applied first to
accrued interest and other fees
and charges due hereunder and then
to principal.
2. INTEREST RATE. The outstanding principal
balance of this Note shall bear interest at
a fixed rate (the "Stated Rate") equal to
Rate_Spread basis points
(Rate_Spread_Percent%) over the
yield, set as of 10:00 a.m. Ann
Arbor, Michigan time, on the Set
Date (defined below), on United
States Treasury obligations having
a fixed maturity of ten (10)
years, as such yield is
determined by the Lender on the
Set Date from Page PX1 (U.S.
Currents, W.Is. Actives) of the
Bloomberg, L.P. reporting
service, or if such rate is not
available from the Bloomberg, L.P.
reporting service, then the
appropriate interest rate as
provided by the Dow Jones Telerate
Service. The "Set Date" shall be such date
as the Borrower and the Lender
shall agree in a completed
writing (the "Rate Lock Letter"),
which shall reference this Note
and which date shall not be later
than two business days prior to the Closing Date as
set forth therein. This Note
shall bear interest at the
Stated Rate until the Due Date or
the occurrence of an Event of
Default (as hereinafter defined)
(whether by acceleration or
otherwise), and thereafter at a
rate which is three percent (3%)
above the Stated Rate (the "Default
Rate"). Interest will be computed
on the basis of a year
consisting of twelve (12) months of
thirty (30) days each. In no
event, however, shall the interest
rate exceed the maximum rate
allowed by law.
3. PREPAYMENT. If no Event of Default
(as hereinafter defined) then
exists, Borrower shall have the
right to prepay all, but not a
portion of, the principal balance
of this Note together with
accrued interest thereon on any
Payment Date; provided, however,
that Borrower shall provide no
less than thirty (30) days prior
written notice to Lender of
Borrower's intention to prepay
(the "Prepayment Notice"). Once
given, the Prepayment Notice may
not be withdrawn, and the failure
to prepay in accordance with the
Prepayment Notice shall constitute
an Event of Default.
Borrower acknowledges and agrees
that Lender is making the loan
evidenced by this Note in
consideration of the receipt by
Lender of all interest and other benefits
intended to be conferred by this
Note, and if payments of principal are
made to Lender prior to the
regularly scheduled due date of
such payments, for whatever
reason (whether voluntarily or
involuntarily), Lender will not
receive all such interest and other
benefits and may incur additional
costs. For these reasons, and
to induce Lender to make the loan, Borrower
expressly waives any right to prepay
this Note except as specifically
provided herein or in the Security
Instruments (as defined below).
Lender shall not be required to
accept any tender of prepayment of
the principal balance of this Note
at any time during the first
ten (10) "loan years" when the
"Reinvestment Rate" (as
hereinafter defined) is lower than
the Stated Rate unless Lender
also receives from Borrower a sum
of money (the "Prepayment
Premium") which shall be equal
to the positive difference between
the present value (computed at
the Reinvestment Rate) of the stream of
monthly payments of principal and
interest under this Note from the
date of the prepayment through
the tenth (10th) anniversary of
the First Full Payment Date at
the Stated Rate (without
duplication of either the
Default Rate or the late charge set
forth in Section 4 below) and the
outstanding principal balance of
this Note as of the date of the
prepayment (the "Differential").
In the event the Differential
is less than zero, the Prepayment
Premium shall be deemed to be
zero. For purposes of this Note, the
"Reinvestment Rate" is an
interest rate equal to the then
current yield on United States
Treasury obligations having a
weighted average life to maturity
closest in time but prior to the
Due Date of this Note, as
reported in The Wall Street Journal
(or any comparable successor
publication) on the fifth (5th)
business day preceding the
prepayment date. The first "loan
year" shall commence on the First
Full Payment Date, and subsequent
loan years shall commence on the
anniversaries of the First Full
Payment Date.
In addition to the Prepayment
Premium, if any, every tender of
prepayment of the principal balance
of this Note shall be accompanied
by a payment equal to all accrued
but unpaid interest and other
charges to the date of prepayment
(the "Other Charges").
If the outstanding principal
balance of this Note is accelerated
by reason of an Event of Default
such acceleration shall be
deemed to be a prepayment and
Borrower shall pay to Lender, in
addition to all sums due as
a result of the acceleration,
any applicable Prepayment
Premium and Other
Charges. In the event that
this Note is prepaid from
casualty insurance proceeds or
condemnation awards (as provided
in the Security Instruments,
defined below), no Prepayment
Premium or Other Charges shall
be due and payable with respect
to such prepayment, and each
monthly installment thereafter
shall be reduced to an amount
which will amortize the then
unpaid principal balance of this
Note at the Stated Rate over the
then remaining term of this Note.
Prepayments made as part of the
Monthly Payment Amount will be
applied to installments in their
inverse order of maturity. Until
this Note is paid in full, except
as set forth in the immediately
preceding paragraph, no prepayment
shall reduce the dollar amount of
monthly installments required to
be paid under this Note.
4.LATE PAYMENT CHARGE.
In the event that any payment
under this Note is not received
by Lender within fifteen (15)
days of the date when due, a late
charge equal to the lesser of
(y) five percent (5%) of the
amount of such payment or (z) the
maximum amount of late charge
permitted by law shall be due and
payable. Borrower agrees that the
late charge is a reasonable
estimate of the administrative
costs which Lender will incur in
processing the delinquency.
Lender's acceptance of a late
payment and/or of the late
payment charge will not waive
any default under this Note or
affect the acceleration of this
Note (if this Note has been
accelerated). Notwithstanding
the foregoing, Lender's
acceptance of all past due
principal, interest and late
charges shall constitute a
waiver of any monetary Event
of Default under this Note
existing prior to Lender's receipt of such
payments.
5. COLLATERAL. This Note
and the other obligations of Borrower to Lender
are secured by one or more
mortgages, security agreements
and/or financing statements dated
as of the Closing Date executed
by Borrower for the benefit of
Lender, including but not
limited to that certain Mortgage,
Assignment of rents, Fixture
Filing and Security Agreement of
even date herewith from Borrower
to Lender (the "Mortgage")
(collectively the "Security
Instruments"; together with any
other documents securing payment
under this Note, and any
agreements relating hereto or
executed in connection herewith,
the "Loan Documents"). All
property securing the
Indebtedness (as defined in
the Security Instruments) is
referred to as the "Collateral".
6. DEFAULT. Any event or
condition constituting an "Event of
Default" under the Security
Instruments shall be an "Event of
Default" hereunder. Upon an
occurrence of an Event of Default,
Lender shall have the option to
declare all or part of the
Indebtedness (including this Note)
immediately due and payable.
Lender shall have all of the rights
and remedies provided at law or
equity or by agreement including
without limitation the right to
sell or liquidate all or any part
of the Collateral under the
Security Instruments or otherwise
and to collect any Prepayment
Premium. The remedies of Lender
are cumulative and not
exclusive.
7. LIABILITY OF SIGNATORIES.
Borrower, and all guarantors and
endorsers, and any other party
liable for the Indebtedness
evidenced by this Note: (i)
severally waive presentment,
demand, protest, notice of
dishonor, notice of non-payment and
notice of acceleration of this
Note; and (ii) agree that no
extension or postponement of the time for
payment, or waiver, or indulgence
or forbearance granted to Borrower
(without limit as to number or
period) or any modification of this
Note, or any substitution, or
exchange or release of all or part
of the Collateral, or addition of
any party to this Note, or
release or discharge of, or
suspension of any rights and
remedies against any party liable
on this Note, shall reduce or
affect the obligation of any
other party liable for the payment
of this Note.
8. NON-WAIVER. No delay by Lender
in the exercise of any right or
remedy shall operate as a waiver.
No single or partial exercise by
Lender of any right or remedy
shall preclude any future
exercise of such right or remedy or
the exercise of any other right
or remedy. No waiver or indulgence by Lender
of any default or Event of
Default shall be effective unless
in writing and signed by Lender,
nor shall a waiver on one
occasion be construed as a bar
to any right or remedy, or waiver
of any default or Event of Default
on any future occasion.
9. REIMBURSEMENT OF EXPENSES. Borrower shall
reimburse Lender for all costs
and expenses, including attorneys'
fees, incurred by Lender in
enforcing the rights of Lender
under this Note or the other Loan
Documents. Such costs and expenses
shall include without limitation
costs or expenses incurred by
Lender in any bankruptcy,
reorganization, insolvency or other
similar proceeding. Any reference
in this Note to attorneys' fees
shall mean reasonable fees,
charges, costs and expenses of
outside counsel and paralegals, whether
or not a suit or proceeding is instituted, and
whether incurred at the trial court
level, on appeal, in a bankruptcy,
administrative or probate
proceeding, in consultation with
counsel, or otherwise.
10. WAIVER OF JURY TRIAL. EACH PARTY,
AFTER CONSULTING (OR HAVING HAD
THE OPPORTUNITY TO CONSULT) WITH
COUNSEL OF THEIR CHOICE,
KNOWINGLY AND VOLUNTARILY, AND FOR
THEIR MUTUAL BENEFIT, WAIVES ANY
RIGHT TO TRIAL BY JURY IN THE
EVENT OF LITIGATION REGARDING
THE PERFORMANCE OR ENFORCEMENT
OF, OR IN ANY WAY RELATED TO,
THIS NOTE OR THE INDEBTEDNESS.
11. ASSIGNMENT. This Note is freely
assignable, in whole or in part,
by Lender without notice to or
consent of Borrower. Lender shall
be fully discharged from all
responsibility accruing hereunder
from and after the effective
date of any such assignment.
Lender's assignee shall, to
the extent of the assignment,
be vested with all the powers and
rights of Lender hereunder, and
to the extent of such assignment
the assignee may fully enforce
such rights and powers, and all
references to Lender shall mean
and refer to such assignee. Lender
shall retain all rights and
powers hereby given not so
assigned, transferred and/or
delivered. Borrower hereby
waives all defenses which
Borrower may be entitled to assert against
Lender's assignee with respect to liability
accruing hereunder prior to the
effective date of any assignment
of Lender's interest herein.
Borrower may not, in whole or in
part, directly or indirectly,
assign this Note or its rights
hereunder or delegate its duties
hereunder without, in each
instance, the specific prior
written consent of Lender, which
consent may be withheld or
delayed in Lender's sole
discretion.
12. SECURITIZATION. Borrower
understands and agrees that Lender
may, from time to time, assign its
rights and powers under this
Note, the Security Instruments,
and any other Loan Documents,
in whole or in part, in
connection with a securitization.
Borrower agrees to enter into an
amendment to this Note, the
Security Instruments and any other
Loan Documents if such amendments
are required by a nationally
recognized rating agency in
connection with a securitization
sponsored by Lender and in which
this Note, the Security Instruments
and the other Loan Documents are
to be included so long as such
amendment or amendments do not
adversely affect Borrower's rights,
privileges, liabilities or
obligations.
In the event this Note, the
Security Instruments, and any
other Loan Documents are
included as an asset of a
securitization by Lender, Borrower
shall, within ten (10) days
after Lender's written request
therefor, deliver or cause to be
delivered opinions and
certifications in form and
substance and delivered by
counsel reasonably acceptable to
Lender and the rating agency,
as may be reasonably required by
Lender and/or such rating agency
in connection with such
securitization. Borrower shall
not be required to bear the
cost of the preparation and
delivery of such opinions, if any.
Borrower shall, in the event this
Note, the Security Instruments,
and any other Loan Documents are
included as an asset of a
securitization, (a) gather any
environmental information, if any,
in the possession of Borrower, not
already delivered to Lender and
reasonably required by the rating
agency in connection with such
securitization, at Lender's
request, (b) meet at reasonable
times, on reasonable notice and at
Lender's expense, with
representatives of the rating
agency to discuss the business and
operations of the Borrower, and (c)
cooperate at reasonable times, on
reasonable notice and at Lender's
expense, with the reasonable
request of the rating agency and
Lender in connection with all of
the foregoing and the preparation
of any offering documents with
respect thereto.
Borrower shall, upon
Lender's written request therefor
in connection with a securitization in
which this Note, the Security Instruments,
and any other Loan Documents are
included as an asset promptly
deliver such financial statements
and related documentation prepared
by an independent certified public
accountant as may be necessary and
shall fully cooperate with the
Lender in connection with any
assurances or other documents,
which are deemed to be
necessary or convenient by
Lender, requested
from Borrower and in all cases
consistent with and not in
addition to the Borrower's
express obligations set forth
elsewhere in the Loan Documents.
Borrower shall not be required to
bear the cost of preparation of
financial statements and related
documentation prepared by an
independent certified public
accountant in connection with a
securitization (unless Borrower is
otherwise having such financial
statements and related documents
prepared).
For purposes of this Note, the
term "securitization" means the
sale, pledge, grant of a security
interest, collateral assignment,
transfer and delivery or other
encumbrance or disposition of all
or any portion of the Lender's
rights and powers in this Note by
the Lender, from time to time, to
one or more of its affiliates or
to other persons, including the
sale of this Note by the Lender
to one or more persons who will
issue debt instruments or equity
certificates backed by such Note
and the servicing of such Note by
a person appointed as servicer in
connection therewith.
For purposes of this Note, the
term "rating agency" means any
nationally recognized statistical
rating agency; provided, however,
that at any time during which this
Note is an asset of a
securitization, "rating agency"
shall mean the rating agency or
rating agencies that from time to
time rate the securities issued
in connection with such
securitization.
13.SEVERABILITY. If any provision
(or any part of any provision) contained
in this Note shall for any reason
be held or deemed to be invalid,
illegal or unenforceable in any
respect, such invalidity,
illegality or unenforceability
shall not affect any other
provision (or remaining part of the
affected provision) of this Note,
and this Note shall be construed
as if such invalid, illegal or
unenforceable provision (or part
thereof) had never been contained
herein and the remaining provision
of this Note shall remain in full
force and effect.
14.MISCELLANEOUS. The terms and
provisions of this Note shall be
governed by and construed in
accordance with the laws of the
State in which the restaurant
whose address is set forth above
is located. Lender and Borrower
agree that any dispute which may
arise between them with regard to
this Note shall be resolved by litigation in state
or federal court. Litigation may
be initiated by Lender or its
assignee or Borrower or its
assignee, at their discretion, in
the State of the principal place
of business of Lender or its
assignee, the State of the
principal place of business of
Borrower, or the State where the
Collateral is located.
BORROWER AND LENDER HEREBY
KNOWINGLY AND IRREVOCABLY WAIVE
ANY OBJECTIONS ON THE GROUNDS OF
IMPROPER JURISDICTION OR VENUE TO
AN ACTION INITIATED AS SET FORTH
ABOVE AND AGREES THAT EFFECTIVE
SERVICE OF PROCESS MAY BE MADE
UPON BORROWER BY MAIL IF AND TO
THE EXTENT PERMITTED BY THE
LOCAL RULES OF SUCH JURISDICTION. The terms and
provisions of this Note may only be changed
in writing, executed by Borrower
and Lender.
[Signature Page Follows]
IN WITNESS WHEREOF, the Borrower has executed this
Promissory Note as of the Closing Date.
BORROWER,
Borrower_Entity
By: INDEPENDENT_MEMBER,
Independent_Member_Entity
Its: Managing Member
_________________________
JOHN C. FIRTH
Executive Vice President and Secretary
EXHIBIT 4-D
INTERCREDITOR AGREEMENT
TABLE OF CONTENTS
1.REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE FRANCHISEE AND GUARANTORS
2.REPRESENTATIONS, WARRANTIES AND COVENANTS OF BKC
3.REPRESENTATIONS, WARRANTIES AND COVENANTS OF LENDER
4. DEFAULT UNDER THE LOAN AGREEMENTS
4.1 Notice to BKC of Default
4.2 Notice to BKC of Intent to Foreclose
5. REMEDIES UNDER LOAN DOCUMENTS
5.1 Limits on Security Interest and Collateral Assignment
(a) Security Interest
(b) Collateral Assignment
5.2 Review Meeting
5.3 Pre-Conditions to Exercise of Remedies
(a) Control and Dominion
(b) Right of First Refusal; Right of Approval
(c) Payment of Amounts Past Due to BKC
(d) Payment of Other Amounts Due to BKC
5.4 Management of Restaurants
(a) BKC Management
(b) Continued Operation by Franchisees or Another BKC Licensee
(c) Election
5.5 Disposition of Restaurants
(a)Sale Within Twelve Months
(b) Terms of Sale; Bundling of Collateral
(c) BKC Approval of Buyer
(d) Consent of New BKL Landlord
(e) No Other Sale
(f) Termination of Affected Franchise Agreements
(g) Lender's Rights
6. BKL LEASES
6.1 Assignment
7. DEFAULT UNDER FRANCHISE AGREEMENTS AND BKL LEASES
7.1 Notice to Lender of Default
7.2 Lender's Opportunity to Cure Monetary Default
7.3 Lender's Opportunity to Cure Non-Monetary Default
7.4 BKC Right to Close
8. ASSIGNMENT
9. BREACH OF CONTRACT; EQUITABLE REMEDIES
10. TERM OF AGREEMENT
11. CONSENT AND ACKNOWLEDGMENT OF COMMERCIALLY REASONABLE TERMS
11.1 Acknowledgments
11.2 Consent to Terms of Sale
12. GENERAL RELEASE
13. RIGHTOF AUDIT
14. CAPTION HEADINGS
15. NOTICES
16. CHOICE OF LAW; JURISDICTION AND VENUE
17. NO AMENDMENTS
17.1 This Agreement
17.2 Franchise Agreements
18. INTEGRATION
19. BINDING EFFECT
20. TITLES
21. SEVERABILITY
22. CONSTRUCTION OF AGREEMENT
INTERCREDITOR AGREEMENT
INTERCREDITOR AGREEMENT
("Agreement") dated as
of the ________ day of
July, 1999, and effective
as of May 11, 1999, by
and among BURGER KING
CORPORATION ("BKC"), the
individual, individuals,
entity and/or entities
set forth on Schedule A
hereto (individually, a
"Franchisee" and collectively, the
"Franchisees"), and the
individual, individuals,
entity and/or entities
set forth on Schedule B
hereto ("Guarantor"), and
CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION, as
Administrative Agent for
the Banks, as defined in the Third
Amended and Restated
Revolving Credit Agreement, NBD BANK, N.A.,
as Documentation Agent for
the Banks, and NATIONSBANK, N.A. (SOUTH)
in its capacity as Co
Agent for the Banks, and
the Banks (collectively, the "Lender").
WHEREAS, certain Burger King(R) restaurants
identified by BKC store number and address on
Schedule C hereto (individually, a
"Restaurant" and collectively, the
"Restaurants") are operated by the
Franchisees pursuant to franchise agreements
(individually, a "Franchise Agreement" and
collectively, the "Franchise Agreements")
issued by BKC;
WHEREAS, certain of the Restaurants are located
on real property (individually, a "BKL
Property" and collectively, the "BKL
Properties") currently leased to the Franchisees
pursuant to certain lease/sublease agreements
with BKC, as lessor (individually, a "BKL
Lease" and collectively, the "BKL Leases");
WHEREAS, the Guarantor is the owner of all of
the outstanding equity interests in the
Franchisee (the "Equity Interests");
WHEREAS, the Guarantor has guaranteed payment and
performance of all of the Franchisees' debts and
obligations to BKC pursuant to certain
agreements of guaranty (the "Guaranties") as
detailed on Schedule C hereto;
WHEREAS, the Guarantor has contemporaneously
herewith entered into a loan agreement and
certain related documents (collectively, the "Loan
Documents"), including one or more promissory
notes payable to the Lender in the original
principal amount of __________________________
______ ($__________).
WHEREAS, the Franchisees and Guarantor have
requested that BKC consent to, among other
things, a security interest in the
Franchise Agreements, all as provided in the Loan
Documents; and
WHEREAS, BKC has agreed to consent to this request
subject to and in consideration of the
covenants, terms and conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the
mutual covenants and conditions contained
herein, the parties hereto agree as follows:
1. REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE FRANCHISEE AND GUARANTOR.
1.1 Each Franchisee and Guarantor represents
and warrants that (i) each of the Franchise
Agreements and BKL Leases are in full force and
effect; (ii) to the best of their knowledge, there
are no material defaults by BKC under any of the
Franchise Agreements or BKL Leases and no event
has occurred which, with the passage of time or
the giving of notice, would constitute a
material default by BKC under any of the
Franchise Agreements or BKL Leases; (iii) they
will continue to perform all obligations
under those agreements; and (iv) the obligations
of the Guarantor under the Guaranties are unaffected
by this Agreement.
1.2 Except as
expressly provided herein, each
Franchisee represents and
warrants to BKC that it
shall continue to comply
with the terms and
conditions of the
Franchise Agreements, BKL
Leases, and any other
agreement with BKC,
including the limitation
that it shall not sell,
assign, pledge, encumber,
or otherwise transfer any
interest in such
agreements.
1.3 Each Guarantor
represents and warrants
that it shall not sell,
assign, pledge, encumber
or otherwise transfer any
legal or beneficial interest in its
Equity Interests in the
Franchisees in violation
of the terms of the
Franchise Agreements or
any other agreement with BKC.
1.4 In the event that
Guarantor is an entity
(an "Entity") whose equity
is wholly or partially
owned by another
Guarantor (an "Owner"),
each such Owner hereby
agrees and reaffirms that
he shall not sell, assign,
pledge, encumber or
otherwise transfer any
legal or beneficial
interest in the Entity in
violation of the terms of the
Franchise Agreements or
any other agreement
with BKC.
1.5 Franchisees and
Guarantor each acknowledge and agree
that this Agreement and
the consent contained
herein shall not apply
to the Equity Interests
or BKL Leases.
Franchisees and Guarantor
each warrant and
represent to BKC that no
interest of the Guarantor
in the Equity Interests
or BKL Leases shall
be collateralized, pledged
or otherwise subjected to
the terms and conditions
of the Loan Documents.
2. REPRESENTATIONS, WARRANTIES AND
COVENANTS OF BKC BKC hereby represents
and warrants as follows:
2.1 That the guaranteed
minimum annual rent as defined in the BKL Leases
are paid in full as oF July 1, 1999, with the
exception of the outstanding amounts
reflected on the attached Schedule D.
2.2 That the royalty and advertising charges
as defined under the Franchise Agreements are
paid in full as of June 30, 1999.
2.3 Within the thirty (30) days prior to the
date of this Agreement, BKC has not sent
Franchisees a written notice of default under
the Franchise Agreements or BKL Leases.
2.4 BKC makes no warranties or
representations except as
expressly set forth above.
Without limiting the foregoing, BKC has
made no investigation as to any defaults or
breaches of the Franchise Agreements or BKL Leases
nor inspection of any of the Restaurants except as
expressly set forth above.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF LENDER.
Lender hereby represents and warrants as follows:
3.1 Lender's rights under the Loan
Documents to realize on the collateral described in
Section 5 of this Agreement shall be and
are hereby expressly made, subject to the
covenants, conditions and restrictions contained in
this Agreement.
3.2 Except as expressly provided herein, Lender
has and will acquire no right, title, security
interest, pledge or other right in, to or
against any BKL Lease, any BKL Property, or the
Equity Interests by virtue of the Loan Documents,
this Agreement, or any other agreement.
4. DEFAULT UNDER THE LOAN DOCUMENTS
4.1 Notice to BKC of Default.
In the event Lender delivers a notice of default or
demand for payment under any of the Loan Documents,
Lender shall also give simultaneous written
notice of such default or demand to BKC (a "Loan
Default Notice"). The Loan Default Notice shall
specify the exact default(s) and any
applicable grace period. In the event that such
default(s) are cured within any applicable
grace period, Lender shall also deliver written notice to
BKC that the default(s) are cured.
4.2 Notice to BKC of Intent to Foreclose.
In the event Franchisees fail to timely and properly
cure the default(s) set forth in the Loan Default
Notice, Lender shall deliver fourteen (14) days
prior written notice to BKC and the Franchisees as
a condition precedent to the exercise of its
rights and remedies under the Loan Documents and
this Agreement (the "Foreclosure Notice").
5. REMEDIES UNDER LOAN DOCUMENTS.
The Lender's rights and
remedies under the Loan
Documents shall be limited
in the following manner.
5.1 Limits on Security Interest and Collateral Assignment.
(a) Security Interest.
Notwithstanding anything
in the Loan Documents to
the contrary, the parties
to this Agreement agree
that: (i) no security
interest granted to the
Lender shall apply to
the Equity Interests, and
(ii) any security
interest in the
Franchise Agreements shall
be limited to a security
interest in the proceeds
of a private sale of the
Franchisees' rights under
the Franchise Agreements
pursuant to the terms and
conditions of Section 9-
504 of the Uniform
Commercial Code as in
effect from time to time
in the State in which
the individual Restaurant
is located (the "UCC"),
and the Lender shall have
no right to conduct a
public sale or retain
the Franchisees' rights
under any Franchise
Agreement in satisfaction of the loan
as contemplated by Section
9-505 of the UCC.
(b) Collateral Assignment.
Notwithstanding anything
in the Loan Documents to
the contrary, the parties
to this Agreement agree
that the Franchisees'
tenancy rights under any
BKL Lease may not be
collaterally assigned to
the Lender.
5.2 Review Meeting.
Upon receipt by BKC of a
Foreclosure Notice, Lender
and BKC shall exercise
their best efforts to
meet within fourteen (14)
days at a mutually
agreed site, for the
purpose of reviewing
the Restaurants and the
desirability of the
application of this
Agreement to each such
Restaurant (the "Review
Meeting"). At the time of
the Review Meeting, upon
the mutual agreement of
BKC and Lender, any
Restaurant may be
excluded from the
provisions of this
Agreement and, thereafter,
the Lender shall
immediately release its
security interest in the
Franchise Agreement for
each such Restaurant.
Thereafter, BKC shall be
free to exercise its
rights and remedies under
the Franchise Agreement
and BKL Lease, if any, for each such
Restaurant as provided therein
and the Lender shall be free to
exercise its rights against any
remaining collateral at the
relevant Restaurant site without
reference to this Agreement. All
Restaurants which shall continue to
be subject to the provisions of
this Agreement after the Review
Meeting shall be referred to
hereinafter individually as an
"Affected Restaurant" and
collectively as the "Affected
Restaurants." The Franchise Agreements relating
to such Affected Restaurants shall
be referred to hereinafter
individually as an "Affected
Franchise Agreement" and
collectively as the "Affected
Franchise Agreements." The BKL
Leases relating to such Affected
Restaurants shall be referred to
hereinafter individually as an
"Affected BKL Lease" and
collectively as the "Affected BKL
Leases." If the Review Meeting does
not take place, then all of the
Restaurants shall be deemed
Affected Restaurants.
5.3 Pre-Conditions to Exercise of
Remedies. The exercise by the
Lender of its right to force an
assignment or sale of the
Franchisees' rights and
obligations under the Affected Franchise Agreements
shall be subject to the following
terms and conditions precedent:
(a) Control and Dominion. The
Lender must take possession of
and acquire control and
dominion over substantially all of
the tangible real and personal
property of the Franchisees
delivered as collateral under the
Loan Documents, whether by
exercise of the Lender's rights
under the Loan Documents or by
agreement with the Franchisees.
(b) Right of First Refusal;
Right of Approval. Any transfer
of the Affected Franchise
Agreements must be made subject
to and in accordance with BKC's
rights under the Affected Franchise
Agreements, including, but not
limited to, (i) BKC's right of
first refusal to purchase any or
all of the Affected Restaurants and
the real property and furniture,
fixtures and equipment associated
therewith and located therein, and
(ii) BKC's right to approve the
sale, transfer and proposed
transferee of the Affected
Franchise Agreements and Affected
Restaurants.
(c) Payment of Amounts Past Due
to BKC. Lender's timely payment
to BKC pursuant to Section 7.2 hereof
of all sums past due and owing to BKC
under each of the Affected Franchise
Agreements and any Affected BKL
Lease covering the premises of any
Affected Restaurants, as well as
those past due sums related to
products or supplies sold by BKC for use in
the Affected Restaurants, including
without limitation, any pre and
post-petition amounts due from any
Franchisee who is the subject of
a proceeding under the United
States Bankruptcy Code or any
similar law affecting the rights
of creditors generally.
(d) Payment of Other Amounts Due
to BKC. Lender's timely payment to
BKC when due of (i) all sums which
become due to BKC under the
Affected Franchise Agreements and
Affected BKL Leases in connection
with operation of the Affected
Restaurants during the term of this
Agreement, and (ii) all sums
which become due to BKC in
connection with products or
supplies sold by BKC during the
term of this Agreement for use in
the Affected Restaurants. Without limiting the
foregoing, it is expressly
understood that Lender must pay
all post-petition amounts due from
a Franchisee which is the subject
of a proceeding under the United
States Bankruptcy Code, or any
similar law affecting the rights
of creditors generally, when due
under the terms of the
Affected Franchise Agreement or
Affected BKL Lease, without
reference to any right of such
Franchisee to defer such payment pending
assumption of those agreements or
for any other reason.
5.4 Management of Restaurants.
After receipt by BKC of a Foreclosure Notice and the
satisfaction by the Lender of the requirements of
Section 5.3(a) above (the "Realization
Date"), the Affected Restaurants
shall be managed and operated in
the following manner:
(a) BKC Management. BKC shall
have the initial right, but not
the obligation, to assume the
operation of some or all of
the Affected Restaurants under
a management agreement (a
"Management Agreement") in form
and content reasonably acceptable to
counsel for BKC and Lender for a
period of time up to (i) the date on
which any such Affected Restaurant
is sold by Lender to a third party
or to BKC pursuant to this Agreement,
(ii) the expiration date of the Affected Franchise
Agreements and Affected BKL
Leases, or (iii) expiration of the Sale
Period (as defined below),
whichever is earlier (the
"Management Period"). In return for
operating the Affected Restaurants,
the Management Agreement shall
include, at a minimum and in
addition to such other terms as
BKC may require pursuant to the
preceding sentence, all of the
following:
(1) A management fee in an amount
equal to a percentage of monthly
Gross Sales (as defined in the
Franchise Agreements) generated at
each Affected Restaurant operated by
BKC, which percentage figure shall
be the greater of ten percent (10%)
or the then current percentage rate
charged for comparable management
services in a similar factual
situation, if any (factors
to be considered in determining
the applicable percentage rate to be
charged are the number, location
and size of the Restaurants
to be operated by BKC);
(2) The option of expending two
and one-half percent (2.5%) of
monthly Gross Sales generated at
each such Restaurant for local
marketing, in addition to the
four percent (4%) advertising
contribution to be paid under the
Affected Franchise Agreement for
each Affected Restaurant;
(3) The option of expending, out of
the Gross Sales for each Affected
Restaurant, up to $25,000.00 per
year for (i) repairs and
maintenance and/or (ii)
alterations necessary to conform the
Affected Restaurant to the
then current image for Burger
Kingr restaurants; and
(4) The right to replace or add
additional signs and/or equipment
to each Affected Restaurant as it
becomes necessary to conform with
menu or operational changes
required by BKC to be implemented
at such time. The cost for any such replacement
or additional equipment will be paid
out of the Gross Sales generated
at all of the Affected Restaurants.
(b) Continued Operation By Franchisees or Another BKC Licensee.
In the event that BKC elects not to manage
the Affected Restaurants as provided above, BKC
shall, in its sole discretion,
either: (a) approve Franchisees to
continue to operate any or
all of the Affected Restaurants
during the Management Period or (b)
approve one or more multi-unit
BKC licensees reasonably
acceptable to BKC and Lender to
supervise the operation of any or
all of the Affected Restaurants during
such period, pursuant to a management agreement
reasonably acceptable to such
licensee, BKC and Lender. BKC will,
as a courtesy only, assist the
Lender in identifying any such BKC
licensees, but shall owe no legal
obligation or duty to the Lender
in this regard and shall have no
liability to the Lender for any
failure to so assist the
Lender. If Franchisee and/or an
approved BKC licensee(s), if any,
are approved to operate
the Affected Restaurants during
such period, such Restaurants
shall be operated pursuant to the terms
of the corresponding Affected
Franchise Agreements.
(c) Election. BKC shall exercise
its option to operate the Affected
Restaurants pursuant to Section
5.4(a) above or designate the
Franchisee or another entity to
operate the Affected
Restaurants pursuant to Section
5.4(b) above, by delivering
written notice thereof to the
Lender within fourteen (14)
days following the Realization Date
(the "Management Election Notice").
If BKC does not deliver a
Management Election Notice, BKC
shall be deemed to have elected to have
the Franchisees continue to operate
the Affected Restaurants pursuant
to Section 5.4(b).
5.5 Disposition of Restaurants.
Any sale, transfer or assignment of
the Affected Franchise Agreements
or Affected BKL Leases by the
Lender shall be subject to the
provisions of Section 5.3 and the
following conditions. (a) Sale Within
Twelve Months. At any time after its
receipt of the Foreclosure Notice, BKC
may deliver written notice (the "Notice to
Sell") to the Lender dictating that
the Lender shall have twelve (12)
months from receipt of the Notice
to Sell to sell and transfer by
private sale one or more of the
Affected Restaurants and Affected
Franchise Agreements, together with
all of the real and personal
property associated therewith,
pursuant to the terms of this
Agreement and the Affected
Franchise Agreement. Provided,
however, that if Lender is
utilizing its best efforts to lift
or remove any stay or
judicial or statutory impediment
imposed on the sale of an
Affected Restaurant, the twelve (12)
month period shall not commence, or
if it has commenced it shall be
tolled, during any period when
Lender is prevented from selling
such Affected Restaurant or Affected
Agreement by reason of the filing
by Franchisees of a petition for
relief under the United States
Bankruptcy Code or by reason of any
federal, state or local law or any
other order of a court of
competent jurisdiction
preventing the sale of any such
Restaurant. This twelve (12) month
period, together with any extension
(as provided above), is herein
referred to as the "Sale Period."
(b) Terms of Sale; Bundling ofCollateral.
During the Sale Period, the Lender shall "bundle"
the real property interest (whether a fee
or leasehold) and the personal
property used in connection with
the operation of each Affected
Restaurant, together with the
Affected Franchise Agreement, in
order to require that any proposed
asset sale by Lender of such
Affected Restaurant include the
Affected Franchise Agreements and
real property interest, furniture,
fixtures, equipment and other
personalty necessary to maintain
the operational integrity of each
Affected Restaurant. While each
Affected Restaurant must be sold
in this manner, the Lender is free
to sell each Affected Restaurant
separately or in groups, subject
only to its obligation (as limited
by the provisions of Section 11
below) to act in a commercially
reasonable manner.
(c) BKC Approval of Buyer.
Any purchaser(s) must be acceptable to
BKC and satisfy BKC's then current standards for
receiving approval to acquire an
interest in a Burger Kingr
restaurant. Lender, Franchisee,
and Guarantor acknowledge, agree,
and understand that (i) the
requirements defining acceptable
purchasers and for approving
prospective BKC franchisees or the
requests for existing franchisees
to develop, operate or acquire an
interest in additional Burger Kingr
restaurants are subject to change by
BKC, in its sole discretion, and
(ii) any disapproval by BKC due to
the failure of any prospective
purchaser or franchisee to meet
such requirements shall be deemed
a reasonable action by BKC unless BKC has
applied its criteria in a bad faith
effort to harm the financial
interests of the Lender. BKC agrees
to cooperate with Lender in the
latter's efforts to find an
acceptable purchaser(s) for the
Affected Restaurants, but has no
obligation to locate buyer(s).
Lender agrees to sell or assign the
Affected Restaurants and Affected
Franchise Agreements by private sale
only, and not by public sale or
auction.
(d) Consent of New BKL Landlord.
In the event that BKC sells,
transfers, assigns, mortgages, or
pledges its interest in a BKL
Property or BKL Lease to a third
party (a "New Landlord") as
provided in Section 6.1(c) below,
Lender shall, in addition to
satisfying all of the other
conditions set forth in this Section
5.5, obtain the prior written
consent (a "Landlord Consent") of
the New Landlord before transferring
the Franchisees' rights under an
Affected Franchise Agreement to a
third party.
(e) No Other Sale.
Any transfer, sale, conveyance or
assignment made in violation of the
terms of Section 5.5 above shall
constitute a material breach of
this Agreement by Lender and BKC
shall be entitled to any and all
remedies permitted by law or
equity, including injunctive
reliefto enjoin any
such unauthorized sale, transfer,
conveyance or assignment.
(f) Termination of Affected Franchise Agreements and BKL Leases.
(i) Subject to the provisions of
Sections 6.1(c) and 7 of this
Agreement, BKC agrees to not
terminate any of the Affected
Franchise Agreements or Affected
BKL Leases during the Sale
Period if Lender complies with
the terms and conditions of
this Agreement and each and every one of the
Affected Franchise Agreements and Affected
BKL Leases, including, but not limited to, operational
standards and all payment obligations for
royalties, advertising and rent.
(ii) In the event the Affected
Restaurants and related Affected
Franchise Agreements and Affected
BKL Leases are not sold and
transferred within the Sale Period
applicable to each of them, BKC
shall have the subsequent right to
terminate the unsold and
untransferred Affected Franchise
Agreements and Affected BKL Leases
upon delivery of thirty (30) days
prior written notice to Lender and
the Franchisees. (iii)In the event
that the Lender or the Franchisees fail to
meet any other condition or
obligation under this Agreement
or any of the Affected Franchise
Agreements or Affected BKL Leases,
including without limitation the
obligation to pay when due all
amounts payable under the Affected
Franchise Agreements and Affected
BKL Leases as a group for the full
term of this Agreement, BKC shall have the
subsequent right to terminate any
then unsold and untransferred
Affected Franchise Agreement and
Affected BKL Lease upon delivery
of thirty (30) days prior written
notice to Lender and the Franchisees.
(iv) Upon termination of any or all
of the Affected Franchise
Agreements or Affected BKL Leases,
(x) Lender's security interest in
the relevant Affected Franchise Agreement
shall automatically terminate and
be of no further force and
effect, (y) Lender shall execute
and file relevant termination
statements as required by law or
requested by the Franchisees or BKC,
and (z) Lender shall comply with
all post termination covenant
contained in such Franchise
Agreements and BKL Leases,
including, but not limited to,
making at its own expense such
removals or changes in signs and
the Restaurant buildings and
premises as BKC shall request
so as to effectively distinguish
the Restaurant buildings and premises
from their former appearance and
from any other Burger Kingr
restaurant. It is expressly
understood, however, that nothing in
this Agreement shall obligate the
Lender to compensate BKC for
amounts due to BKC which have
not yet accrued at the time of
termination. (g) Lender's Rights.
Upon termination of the Lender's
security interest in any of the
Franchise Agreements, whether
pursuant to the provisions of
Sections 5.2 or 5.5(f)
hereof, or otherwise, the Lender
shall be free to exercise its
rights against its remaining
collateral relating to the
corresponding Restaurant pursuant to
the terms of the Loan Documents
and without reference to this
Agreement.
6. BKL LEASES
6.1 Assignment. For so long as
BKC remains the owner or lessee of
the BKL Property subject to any BKL
Lease, BKC agrees as follows:
(a) In the event that the
Lender (i) acquires control and
dominion over the tangible personal
property used in connection with the
operation of the Restaurant which is subject to
the BKL Lease, (ii) such Restaurant
is designated as an Affected
Restaurant, (iii) all obligations
due under the BKL Lease are paid and
performed in full when due, and
(iv) the Lender meets all of its
obligations under Section 5.3
hereof, then BKC agrees that the
manager appointed pursuant to the
terms of Section 5.4 shall have
the right to occupy the BKL Property on the same
terms and conditions as the
Franchisees, and that BKC shall not
terminate the BKL Lease until
expiration of the relevant Sale
Period.
(b) In the event that
(i) all of the conditions set forth
in Section 6.1(a) are met
and (ii) BKC approves an
assignment of the Affected
Franchise Agreement relating to
the Affected Restaurant operated on
the BKL Property, then BKC shall
also consent to the assignment of
the Affected BKL Lease to the same
assignee.
(c) Notwithstanding anything in
this Agreement to the contrary,
it is expressly understood that
BKC remains free to sell any BKL
Property and assign its
rights under any BKL Lease at any
time, and the terms of this
Agreement and this Section 6
shall not apply to, restrict, or
obligate any such buyer or assignee.
7.DEFAULT UNDER FRANCHISE AGREEMENTS AND BKL LEASES
7.1 Notice to Lender of Default.
In the event BKC delivers a notice of
default under any of the Franchise
Agreements or BKL Leases (a
"Contract Default Notice") , BKC
shall simultaneously deliver a
copy of the Contract Default
Notice to Lender. In the event the
default(s) set forth in the Contract
Default Notice are subject to an
applicable grace period, BKC shall
also deliver notice in writing
to Lender that such default(s)
have or have not been cured within
such cure period (the "Cure Notice").
7.2 Lender's Opportunity to Cure Monetary Default.
(a) In the event Franchisees fail
to cure a monetary default under any
Franchise Agreement or BKL Lease
(a "Payment Default") within any
applicable grace period, BKC agrees
that Lender shall have the right to
cure the Payment Default within
five (5) calendar days
after Lender receives its copy
of the Cure Notice. In the event Lender
elects not to cure any such Payment Default, then
BKC may immediately terminate the
related Franchise Agreement and BKL
Lease, if any, without further
notice or opportunity to cure and
pursue any and all remedies
permitted thereunder and by law.
(b) Notwithstanding the foregoing,
if (i) Lender should exercise the
right to cure Payment Defaults three
(3) consecutive calendar months, or
to cure Payment Defaults in an
aggregate of six (6) calendar
months, and (ii) Lender fails to
contemporaneously after such last default
contemplated above deliver a
Foreclosure Notice and file and
diligently pursue an action to
foreclose on assets pledged to it
under the Loan Documents, then
BKC may terminate the related
Franchise Agreement and BKL Lease,
if any.
7.3 Lender's Opportunity To Cure NonMonetary Default.
(a) In the event Franchisees fail
to cure a non monetary default under
any Franchise Agreement or BKL Lease
(a "Non-Monetary Default") within
any applicable cure period, Lender
shall have thirty (30) days after
receipt of the Cure Notice to
deliver a Foreclosure Notice.
This thirty (30) day period is
hereinafter be referred to as the
"Election Period."
(b) In the event of the occurrence
of a non curable, Non-Monetary
Default, the Election Period shall
commence on Lender's receipt of the
Contract Default Notice.
(c) Franchisees, Guarantor, and
Lender agree that during the
Election Period BKC shall have the
right, but not the obligation,
in its sole discretion, to: (i) take such
necessary actions to abate and cure
the Non-Monetary Default(s) under
the Franchise Agreements which
actions shall include, but not
be limited to, temporarily closing any of the
Restaurants affected by such
default(s) due to health reasons
or other emergencies (as provided
in Section 7.4 below herein);
removing from such Restaurants
those products, signs, equipment
or other materials which are not
approved by BKC; and taking such
other actions which BKC deems necessary in
order to mitigate damage to BKC
and its trademarks and/or (ii)
supervise the operation of such
Restaurants pursuant to a
temporary Management Agreement which
shall include the terms set forth
in Section 5.4(a) herein.
Franchisees, Guarantor, and Lender
acknowledge and agree that monetary
damages will be inadequate to remedy
the damage caused to BKC in the
event a material Non Monetary
Default under any of the
Franchise Agreements remains
uncured. Accordingly,
BKC shall be entitled to injunctive
relief, including, but not limited
to, a temporary restraining order,
issued by a court of competent
jurisdiction in order to enforce
its rights specified in this
Section 7.3(c).
(d) In the event Lender fails to
notify BKC of its election within
the Election Period pursuant to
said Section 7.3(a) or
fails to diligently pursue its
remedies against the relevant
Affected Franchise Agreement or
Affected BKL Lease, then BKC may
immediately terminate the relevant
Franchise Agreement and BKL Lease
affected by the defaults without
further notice or opportunity to
cure and pursue any and all
remedies permitted thereunder and
by law without further notice to Lender.
7.4 BKC Right to Close.
Notwithstanding the foregoing
provisions of Section 7.3, BKC
shall have the right to immediately
close, without prior notice or any
opportunity to cure, any of the
Restaurants which BKC deems, in its
sole discretion, necessary due to
reasons of public health and safety
or due to an emergency.
8. ASSIGNMENT
8.1 Franchisees may not assign
or transfer its interest in this
Agreement without the written
consent of the other parties
hereto. BKC or Lender may assign
their respective interests herein
without the consent of any party
hereto.
9. BREACH OF CONTRACT; EQUITABLE REMEDIES
9.1 In the event any party shall
breach the terms of this
Agreement, any other party hereto
may declare a breach and pursue
any remedy available at law or in
equity. It is expressly understood and agreed
that monetary damages may be
inadequate to remedy a material
breach of this Agreement and that
injunctive relief may be granted
by a court of competent
jurisdiction. Further, in light of
the nature of this Agreement and
the potential need for BKC to take
prompt action to abate a dangerous condition
and/or mitigate the damage to its
trademarks and service marks, in the
event of default by any of the
parties hereunder or by Franchisees
under the Franchise Agreements, if a
court orders BKC to post a bond as
a condition to the entry of an
order for injunctive relief, the
parties jointly and severally agree
that such bond shall be in
a nominal amount of money not to
exceed FIVE THOUSAND AND NO/100
DOLLARS ($5,000.00).
10. TERM OF AGREEMENT
10.1 This Agreement shall commence
on the date first written above and
shall continue until payment in
full of all obligations under the
Loan Documents or until the
expiration or earlier termination of
all of the Franchise Agreements
and BKL Leases, whichever is
earlier, at which time this
Agreement shall expire and become of
no further force and effect.
10.2 Upon or within a reasonable
time after such expiration or termination
the parties agree to sign any
reasonable documents requested by
any party in order to confirm such
expiration or termination.
11. CONSENT AND ACKNOWLEDGMENT
11.1 Acknowledgments.
Franchisees and Guarantor
acknowledge and understand the
provisions of this Agreement and
the procedures set forth herein
relating to the requirements that,
in the event of an exercise by the
Lender of its rights and remedies
under the Loan Documents and this
Agreement, such exercise shall be
subject to the terms of Section 5
hereof.
11.2 Consent To Terms of Sale. In
consideration of BKC and Lender
executing this Agreement, each
Franchisee and Guarantor, for
themselves and any person or entity
claiming by, through or under them,
represent, covenant and agree as
follows:
(a) This Agreement and the Loan
Documents are not entered into with any
actual intent to hinder, delay or
defraud any of their creditors; that
Franchisees and Guarantor do not
intend to incur debts beyond
their ability to pay in
connection with the Loan
Documents; and that Franchisees
and Guarantor do not have assets
unreasonably small in relation to
their businesses as a result of
the Loan Documents or this
Agreement.
(b) This Agreement and the
procedures set forth in
Section 5 with respect to a
sale and transfer of the Affected
Restaurants, the Affected Franchise Agreements, the
Affected BKL Leases, and the real
and personal property associated
therewith, constitute a
commercially reasonable procedure
for disposing of the
Lender's collateral, there being no
nationally recognized market
therefor, and it being acknowledged
that it is designed to generate a
fair and reasonable equivalent
value.
(c) Franchisees and Guarantor shall
not seek to challenge or enjoin the
consummation of any sale of an
Affected Restaurant, Affected
Franchise Agreement or real or
personal property associated
therewith on the grounds that the
procedures set forth in Section 5 are not
commercially reasonable, and agree
that their only remedy shall be to
challenge and seek monetary damages
from the Lender for any unreasonable
decision by the Lender in
determining whether to sell the
Restaurants as a group or individually.
12.GENERAL RELEASE
12.1 In consideration of BKC
executing this Agreement and in
consideration of BKC consenting to
the grant to Lender of the
security interest in the
Franchise Agreements and
the right to transfer the BKL
Leases subject to the terms of this
Agreement, each Franchisee and
Guarantor for himself/herself
and his/her respective heirs,
successors, assigns, personal
representatives, affiliates,
subsidiaries and parent company
(the "Releasing Parties") hereby
release and forever discharge BKC
and its respective successors,
assigns, affiliates, parent
company, directors, officers, employees,
agents and representatives (the
"Released Parties") as to any and
all claims, damages, liabilities
and causes of action whatsoever,
whether known or unknown, which the
Releasing Parties have now or may
have in the future by reason of
any matter, cause of thing
whatsoever arising out of or
relating to the Franchise
Agreements, BKL Leases, or any
other agreement between BKC and any
of the Releasing Parties, the
relationship and/or course of
dealing between the Releasing
Parties and the Released Parties,
and any other matters which existed
prior to the date of this
Agreement.
13. RIGHT OF AUDIT
13.1 Each Franchisee agrees
that BKC or its representatives,
at BKC expense, shall at all
reasonable times, have the right to
examine or audit the books,
records, federal or state tax
returns, accounts of, and any
other information or records
necessary to trace or
account for loan funds hereunder, as
well as to verify the accuracy of the
representations made by each
Franchisee hereunder. In the event
an audit discloses a violation of
the terms and conditions of this
Agreement, Franchisees shall be
liable for all costs and expenses
associated with the audit
including, but not limited to, the
costs of accounting fees, travel,
lodging and wages reasonably
incurred including wages paid
to BKC employees. Franchisees and
Lender mutually consent to the
release to BKC of all information
relating to loan funding,
disbursements or withdrawals under
the Loan Documents.
14. CAPTION HEADINGS
14.1 The caption headings are used
in this Agreement only as a matter
of convenience and for reference
and do not define, limit or
describe the scope of this
Agreement nor the intent of any provision
contained herein.
15.NOTICES
15.1 All notices required or
permitted hereunder shall be in
writing and shall be deemed properly
delivered when received if sent by
(i) U.S. Mail return receipt
requested, (ii) nationally
recognized overnight courier
service, or (iii) telex or telecopy
and if sent to the following
addresses:
If to BKC:
Burger King Corporation
17777 Old Cutler Road Miami, FL
33157 ATTENTION: General Counsel,
Senior Vice President
If to Franchisees and/or Guarantor:
Bravokilo, Inc. and Quality Dining,Inc.
4220 Edison Lakes Parkway Mishawaka,
Indiana 46545
ATTENTION: Daniel B.Fitzpatrick,
Managing Owner
If to Lender:
Chase Bank of Texas, National
Association
712 Main Street
Houston, Texas 77002-8059
ATTENTION:
Manager, Franchise Systems Finance
or to such persons
or places as BKC, Franchisees,
Guarantor, or Lender may direct by
written notice to all of the
other parties hereto. Notices or
other communications hereunder shall
be deemed delivered and received on
the date of actual delivery.
16. CHOICE OF LAW;
JURISDICTION AND VENUE 16.1 This
Agreement shall be governed by and
construed in accordance with the
laws of the State of Florida. The parties
hereto acknowledge and agree that
the United States District Court
for the Southern District of
Florida, or if such court lacks
jurisdiction, the 11th Judicial
Court (or its successor) in and
for MiamiDade County, Florida,
shall be the venue and exclusive
proper forum in which to
adjudicate any case or
controversy arising, either
directly or indirectly, under or
in connection with this Agreement or
related documentation and the
parties further agree that, in the
event of litigation arising out of
or in connection with this
Agreement in these courts, they
will not contest or challenge the
jurisdiction or venue of these
courts.
17. AMENDMENTS
17.1 This Agreement. Except as
expressly provided herein, nothing
in this Agreement shall be construed
to modify or amend any of the terms
and conditions of the Franchise
Agreements or BKL Leases and the
Franchise Agreements and BKL Leases
shall be controlling in the event
of any ambiguity between this
Agreement and the Franchise
Agreements or BKL Leases.
17.2 Franchise Agreements. BKC
and the Franchisees shall not
materially amend or terminate by
mutual agreement any of the
Franchise Agreements without the
prior consent of the Lender, which
consent shall not be unreasonably
withheld.
18. INTEGRATION
18.1 This Agreement and the
other documents being executed and
delivered pursuant hereto
incorporate all prior discussions
and negotiations among the parties
and constitute the full and
entire agreement and understanding
between the parties hereto with
respect to the subject matter
hereof. No amendment hereto shall
be effective unless it is in writing
and signed by all of the parties
hereto.
19. BINDING EFFECT
19.1 Except as otherwise expressly
provided herein, the provisions of
this Agreement shall inure to the
benefit of, and be binding upon,
the parties hereto and their
respective heirs, successors, assigns,
executors, personal representatives
and administrators. 20. TITLES
20.1 The titles of the provisions of
this Agreement are for convenience or
reference only and are not to be
considered in construing this Agreement.
21. SEVERABILITY
21.1 If one or more of the
provisions contained in this
Agreement or in any document
contemplated hereby, or any
application thereof, shall be
invalid, illegal or unenforceable,
in any respect under the laws of
any jurisdiction, the validity,
legality and enforceability
of the remaining provisions
contained herein and therein, and any application
thereof, shall not in any way be affected or
impaired thereby or under the laws
of any other jurisdiction.
22. CONSTRUCTION OF AGREEMENT
22.1 This Agreement has been
prepared after negotiations between
the parties hereto, and if any
ambiguity is contained herein then
in resolving such ambiguity no
weight shall be given in favor of
or against either party solely on account of
its drafting this Agreement.
[THIS SPACE INTENTIONALLY LEFT
BLANK]
IN WITNESS WHEREOF, the parties
have executed this Agreement on the
date of first written above:
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, as Administrative Agent
for the Banks
By:__________________________
Its:_________________________
Attest:______________________
Its:_________________________
NBD, BANK, N.A., as Documentation
Agent for the Banks
By:__________________________________
Its:________________________________
Attest:_____________________________
Its:________________________________
NATIONSBANK, N.A. (SOUTH),
Co-Agent for the Banks
By:_________________________________
Its:________________________________
Attest:_____________________________
Its:________________________________
LENDER
BURGER KING CORPORATION
By:_________________________________
Assistant Secretary
BKC BRAVOKILO, INC.
By:_________________________________
Print
Name:_______________________________
Title:______________________________
Attest:_____________________________
Print
Name:_______________________________
Title:______________________________
FRANCHISEE
WITNESSES: QUALITY DINING, INC.
By:
____________________________________
Print Name:
Title:
___________________________________
Attest:_____________________________
Print Name:
_____________________________
Title:
___________________________________
GUARANTOR
SCHEDULE A TO INTERCREDITOR AGREEMENT
FRANCHISEE:
Bravokilo, Inc., an Indiana corporation
SCHEDULE B TO INTERCREDITOR AGREEMENT
GUARANTOR:
Quality Dining, Inc.
SCHEDULE C TO INTERCREDITOR AGREEMENT
List of Franchisee's Restaurants
Date of Date of Date of
BK Rest Address Franchise Lease(if Guaranty
# Agreeement any) (if any)
____ _______________ ___________ _______ ________
300 1436 Apple Avenue 2/28/94 N/A 2/28/94
Muskegon, MI 49442
328 2035 M-139 2/28/94 N/A 2/28/94
Benton Harbor, MI 49022
458 3436 Henry Street 2/28/94 N/A 2/28/94
North Shores, MI 49444
467 3956 South Franklin 3/31/99 N/A 3/31/99
Michigan City, IN 46360
509 32704 Grand River 8/28/95 N/A 8/28/95
Avenue Farmington, MI
48024
519 823 East Michigan 8/28/95 5/31/79 8/28/95
Avenue
Ypsilanti, MI 48198
527 20905 Ecorse Road 8/28/95 8/29/80 8/28/95
Taylor, MI 48180
637 28333 Ford Road 8/28/95 11/05/82 8/28/95
Garden City, MI 48135
764 25538 South Woodward 8/28/95 9/26/92 8/28/95
Avenue
Royal Oak, MI 48067
810 9525 Telegraph Road 2/28/94 N/A 2/28/94
Taylor, MI 48180
889 2170 Rawsonville Road 8/28/95 4/14/99 8/28/95
Belleville, MI 48111
988 8489 West Grand River 2/28/94 N/A 2/28/94
Avenue
Brighton, MI 48116
1606 2051 Washington Avenue 2/28/94 N/A 2/28/94
St. Joseph, MI 49085
2624 18737 West Road 2/28/94 N/A 2/28/94
Woodhaven, MI 48183
2689 27517 Telegraph Road 2/28/94 10/22/82 2/28/94
Flat Rock, MI 48134
3172 1945 Pipestone Road 2/28/94 N/A 2/28/94
Benton Harbor, MI 49022
3260 14808 Michigan Avenue 8/28/95 11/27/81 8/28/95
Dearborn, MI 48126
3722 121 West La Salle 2/28/94 N/A 2/28/94
Avenue
South Bend, IN 46601
4102 2775 E. Highland Road 2/28/94 N/A 2/28/94
Highland, MI 48356
4124 2021 North Michigan 2/28/94 N/A 2/28/94
Street
Plymouth, IN 46563
4216 530 West McKinley 2/28/94 N/A 2/28/94
Avenue
Mishawaka, IN 46545
4276 1709 Elkhart Road 2/28/94 N/A 2/28/94
Goshen, IN 46526
4435 1012 W. State Road 2 2/28/94 N/A 2/28/94
West
La Porte, IN 46350-8057
4505 5809 Grape Road 2/28/94 N/A 2/28/94
Mishawaka, IN 46545
4814 11550 Belleville Road 8/28/95 N/A 8/28/95
Belleville, MI 48111
5118 10382 Highland Road 2/28/94 N/A 2/28/94
Hartland, MI 48029
5188 928 Terrace Street 2/28/94 N/A 2/28/94
Muskegon, MI 49443
5193 4626 Red Arrow Highway 2/28/94 N/A 2/28/94
Stevensville, MI 49127
5250 232 East Pettit Avenue 2/28/94 N/A 2/28/94
Ft. Wayne, IN 46806
5298 2801 East Lincolnway 2/28/94 N/A 2/28/94
East
Mishawaka, IN 46544
5323 7616 Lincolnway East 2/28/94 N/A 2/28/94
Fort Wayne, IN 46803
5397 2920 Frontage Road 2/28/94 N/A 2/28/94
Warsaw, IN 46580
5398 52803 U.S. 33 North 2/28/94 N/A 2/28/94
South Bend, IN 46637
5413 1918 North Jefferson 2/28/94 N/A 2/28/94
Street
Huntington, IN 46750
5603 2184 East Grand River 2/28/94 N/A 2/28/94
Road
Howell, MI 48843
5753 3710 East State Street 2/28/94 N/A 2/28/94
Ft. Wayne, IN 46805
5790 6402 West Jefferson 2/28/94 N/A 2/28/94
Street
Ft. Wayne, IN 46804
5987 752 Lagrange 2/28/94 N/A 2/28/94
South Haven, MI 49090
5988 1255 West Main Street 2/28/94 N/A 2/28/94
Fremont, MI 49412
6389 499 North Main Street 2/28/94 N/A 2/28/94
Columbia City, IN 46725
6485 1804 N. Wayne Street 2/28/94 N/A 2/28/94
Angola, IN 46703
6509 39601 Grand River 2/28/94 9/18/92 2/28/94
Novi, MI 48375
6574 4852 Western Avenue 2/28/94 N/A 2/28/94
South Bend, IN 46619
6622 1113 Ireland Road 2/28/94 N/A 2/28/94
South Bend, IN 46614
6843 3123 Holton-Whitehall 2/28/94 N/A 2/28/94
Road
Whitehall, MI 49461
7014 657 North Main Street 2/28/94 N/A 2/28/94
Bluffton, IN 46714
7055 2171 South Bend Avenue 2/28/94 N/A 2/28/94
South Bend, IN 46637
7060 618 Fairview Boulevard 2/28/94 N/A 2/28/94
Kendallville, IN 46755
7113 903 Spruce Street 2/28/94 N/A 2/28/94
Dowagiac, MI 49047
7433 1911 Lincoln Way East 2/28/94 N/A 2/28/94
Goshen, IN 46526
8203 6225 Lima Road 6/08/94 N/A 6/08/94
Ft. Wayne, IN 46818
8448 3403 Portage Avenue 5/26/94 N/A 5/26/94
South Bend, IN 46628
8664 1205 East Market Street 10/04/94 N/A 10/04/94
Naponee, IN 46550
8665 1436 West Plymouth 10/17/94 N/A 10/17/94
Street
Bremen, IN 46506
9012 1105 West 7th Street 5/10/95 N/A 5/10/95
Auburn, IN 46706
9028 8180 Mason Street 5/14/95 N/A 5/14/95
Newaygo, MI 49337
9157 334 North 13th Street 8/01/95 N/A 8/01/95
Decatur, IN 46733
9349 2037 U.S. 31 9/30/95 N/A 9/30/95
Plymouth, IN 46563
9352 111 S. St. Joseph 8/25/95 N/A 8/25/95
Street
South Bend, IN 46601
9461 3733 North M-140 12/05/95 N/A 12/05/95
Watervliet, MI 49098
9506 12757 State Road 23 11/27/95 N/A 11/27/95
Granger, IN 46530
9640 2190 Holton Road 2/12/96 N/A 2/12/96
North Muskegon, MI
49445
9713 1610 North Meridian 4/18/96 N/A 4/18/96
Portland, IN 47371
10436 324 East Jefferson 1/24/97 N/A 1/24/97
Street
Fort Wayne, IN 46802
10440 608 West Talmer 12/04/96 N/A 12/04/96
North Judson, IN 46366
10568 Market Centre Shopping 2/20/97 N/A 2/20/97
Center
Goshen, IN 46526
11248 151 South Zeeb Road 6/25/98 N/A 6/25/98
Ann Arbor, MI 48103
11347 5822 Telegraph Road 12/30/97 N/A 12/30/97
Taylor, MI 48180
11365 413 East Dupont Road 5/21/98 N/A 5/21/98
Ft. Wayne, IN 46845
11739 5202 East 1200 North 8/10/98 N/A 8/10/98
Syracuse, IN 46567
12551 806 South Heaton Street 6/15/99 N/A 6/15/99
Knox, IN 46534
SCHEDULE D TO INTERCREDITOR AGREEMENT
Statement of Account dated July 22,1999
EXHIBIT 4-E
INTERCREDITOR AGREEMENT
- ------------------------
This Intercreditor Agreement ("Agreement") is made and
entered into as of the 3rd day of August, 1999, by and among
CAPTEC FINANCIAL GROUP, INC. ("Captec"), and CNL FINANCIAL
SERVICES, INC. ("CNL") (Captec and CNL are sometimes
hereinafter referred to collectively as the "Mortgage
Lenders"), CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
("Agent") for itself and as agent for the Banks which are
parties to the Credit Agreement (as hereinafter defined)
(the Agent and the Banks are sometimes hereinafter referred
to collectively as the "Bank Lenders"), QUALITY DINING, INC.
("QDI"), BRAVOKILO, INC. ("Bravokilo"), SOUTHWEST DINING,
INC. ("Southwest") and GRAYLING CORPORATION ("Grayling")
(Bravokilo, Southwest and Grayling are sometimes hereinafter
referred to individually as an "Operating Company" and
collectively as the "Operating Companies"), and BKCAP, LLC,
BKCN, LLC, SWCAP, LLC, SWCN, LLC, GRAYCAP, LLC and GRAYCN,
LLC (all such entities sometimes hereinafter referred to
individually as a "Borrower" and collectively as the
"Borrowers").
RECITALS
- --------
WHEREAS, contemporaneously herewith, the Mortgage Lenders
have made loans in the aggregate principal amount of Forty-
Nine Million Sixty-Six Thousand and 00/100 Dollars
($49,066,000.00) (the "Mortgage Loans") to the Borrowers;
and
WHEREAS, the Mortgage Loans are evidenced by certain
promissory notes, mortgages, guarantees, negative pledge
agreements, and other collateral security instruments,
agreements and documents (all such promissory notes,
mortgages, guarantees, negative pledge agreements and other
collateral security instruments, agreements and documents
together with the Leases (as hereinafter defined) are
hereinafter referred to as the "Mortgage Loan Documents");
and
WHEREAS, pursuant to the Mortgage Loan Documents, the
Mortgage Lenders have a first priority security interest in
and lien on all of the Borrowers' rights, title and
interests in and to all real property (whether constituting
a fee interest or a leasehold interest) and personal
property of the restaurants described on Exhibit A attached
hereto (the "Subject Restaurants"); and
WHEREAS, pursuant to certain lease agreements by and among
the Borrowers, as landlord, and the Operating Companies, as
tenant (the "Leases"), the Borrowers are leasing to the
Operating Companies all real property and personal property
of the Subject Restaurants owned by the Borrowers, and the
Operating Companies, pursuant to such Leases, franchise
agreements with the Franchisors (as hereinafter defined),
and other permits, licenses and agreements, are operating
the Subject Restaurants; and
WHEREAS, the Bank Lenders have extended certain commitments
for revolving credit advances to QDI and GAGHC, INC.
("GAGHC") in an aggregate amount not to exceed Seventy-Six
Million and 00/100 Dollars ($76,000,000.00) (the "Bank
Loans") pursuant to that certain Third Amended and Restated
Revolving Credit Agreement dated as of May 11, 1999, by and
between QDI and GAGHC, as borrowers, the Banks which are
party thereto, the Agent, NBD Bank, N.A., as Documentation
Agent, and Nationsbank, N.A. (South), as Co-Agent (as it may
be amended or modified, the "Credit Agreement"); and
WHEREAS, the Bank Loans are and may hereafter be evidenced
by certain promissory notes and secured by certain
guarantees, collateral security instruments, agreements and
documents, including without limitation the Security
Documents (as defined in the Credit Agreement) (the Credit
Agreement and all such promissory notes, guarantees,
collateral security instruments, agreements and documents
are hereinafter referred to as the "Bank Loan Documents");
and
WHEREAS, pursuant to the Bank Loan Documents, the Bank
Lenders and their agents have a first priority security
interest in and lien on all Inventory (as defined in the
Bank Loan Documents) of the Subject Restaurants; and
WHEREAS, the Agent, QDI, Southwest and Grayling are parties
to that certain Consent to Collateral Assignment, dated as
of September 11, 1998 (the "Brinker Agreement") with Brinker
International, Inc. ("Brinker"); and
WHEREAS, the Agent, QDI and Bravokilo anticipate
entering into an agreement in substantially the same form as
the Brinker Agreement (the "BKC Agreement"), with Burger
King Corporation ("BKC") (the Brinker Agreement and the BKC
Agreement are sometimes hereinafter referred to collectively
as the "Franchisor Agreements", and Brinker and BKC are
sometimes hereinafter referred to collectively as the
"Franchisors"); and
WHEREAS, it is a condition precedent to the Mortgage
Lenders' willingness and obligation to make the Mortgage
Loans pursuant to the Mortgage Loan Documents that the
Agent, QDI and the Operating Companies enter into this
Agreement with the Mortgage Lenders; and
WHEREAS, in order to induce the Mortgage Lenders to make the
Mortgage Loans pursuant to the Mortgage Loan Documents, the
Agent, QDI and the Operating Companies have agreed to enter
into this Agreement with the Mortgage Lenders.
AGREEMENTS
- ----------
NOW, THEREFORE, in consideration of the foregoing, the
mutual agreements herein contained
and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties
hereto hereby agree as follows:
1. Partial Release of Security Interests. The Agent
hereby releases for itself and on behalf of the Banks any
and all security interests, liens or other encumbrances they
currently have in or on the Equipment and Fixtures and all
proceeds thereof (as such terms are defined in the Bank Loan
Documents) located at the Subject Restaurants, which
released Equipment and Fixtures and proceeds thereof will
then be pledged, in addition to certain other real property
and personal property of the Subject Restaurants, to secure
the Mortgage Loans.
2. Release of Grayling Stock. The Bank Lenders and their
agents hereby release any and all security interests, liens
or encumbrances they have in or on the capital stock of
Grayling.
3. Subordination and Right to Cure.
a. Subordination.
Notwithstanding anything contained in the Mortgage Loan
Documents, the Bank Loan Documents or the Franchisor
Agreements, or any other liens, claims, encumbrances or
rights arising by agreement or by operation of law or
otherwise, the Agent for itself and on behalf of the Banks
hereby subordinates in accordance with the terms hereof all
liens, claims, encumbrances and rights now existing or
hereafter arising in or on any of the Leases, the franchise
agreements for the Subject Restaurants (the "Franchise
Agreements") or any proceeds from the sale, assignment or
transfer of any such Leases or Franchise Agreements
("Proceeds"), whether such liens, claims, encumbrances or
rights arise out of the Bank Loan Documents or the
Franchisor Agreements or otherwise, to all claims of the
Mortgage Lenders to receive payments from amounts derived
through the operation of the Subject Restaurants pursuant to
the Franchise Agreements and the Leases in accordance with
the obligations of the Operating Companies to the Borrowers
under the Leases and the obligations of the Borrowers to the
Mortgage Lenders under the Mortgage Loan Documents.
b. Right to Cure.
Without limiting the subordination set forth in paragraph
3(a) above, the Bank Lenders shall have the right and
opportunity to cure Events of Default under the Leases
(hereinafter referred to individually as a "Lease Default"
and collectively as "Lease Defaults"), and to retain certain
Proceeds in the event that all of the following conditions
have been satisfied:
(1) The Bank Lenders have, within thirty (30)
days after receipt of written notice from one or both of the
Mortgage Lenders of the occurrence of one or more Lease
Defaults under one or more of the Leases of any Borrower,
cured all such Lease Defaults relating to (i) the payment of
all amounts when due under such Leases (including without
limitation Minimum Monthly Rent, Impositions and Late
Charges, as such terms are defined in the Leases), and (ii)
the performance of all obligations of the tenants under such
Leases other than any such obligations arising as a
result of any Event of Default described in
subsections 11.1.4 through 11.1.10 of such Leases, to the
reasonable satisfaction of the Mortgage Lenders (such Leases
hereinafter referred to as the "Cured Leases"); and
(2) The Bank Lenders have continued to make all such
payments and perform all such obligations set forth in
paragraph 3(b)(1) above with respect to the Cured Leases as
and when due; and
(3) The Bank Lenders have exercised their rights pursuant
to the Franchisor Agreements to cause a sale, assignment or
transfer of the applicable franchisee's rights under the
Franchise Agreements or tenant's rights under the Cured
Leases; provided, that any such sale, assignment or transfer
is expressly conditioned upon and subject to:
(a) Satisfaction by the Bank Lenders of all of
the terms and conditions of the Franchisor Agreements in
connection with such sale, assignment or transfer; and
(b) Prior written approval by the Mortgage
Lenders of any such sale, assignment or transfer, including
without limitation any transfer or assignment of the
applicable Leases, as provided in paragraph 3(f) below; and
(4) The Proceeds from such sale, assignment or transfer are
sufficient to and are paid to the Mortgage Lenders to cure
all Lease Defaults and pay all sums due to the Franchisors
under the Franchise Agreements or otherwise, in which case
the Bank Lenders shall be entitled to receive any remaining
net Proceeds from such sale, assignment or transfer.
In the event that all of the foregoing conditions have been
satisfied, the Mortgage Lenders shall not pursue any
remedies under the Mortgage Loan Documents or the Leases
with respect to any Subject Restaurant subject to a Cured
Lease.
c. Failure to Cure.
In the event that the Bank Lenders do not satisfy all of the
conditions set forth in paragraph 3(b) above within the time
periods specified therein and in paragraph 3(e) below:
(1) the Mortgage Lenders may proceed to accelerate all
obligations and exercise all rights and remedies under the
Mortgage Loan Documents and
the Leases, including without limitation all of the Mortgage
Lenders rights and remedies pursuant to Paragraph 15.3 of
the Leases, as provided therein; and
(2) all rights of the Bank Lenders under the Bank Loan
Documents and the Franchisor Agreements to cause a sale,
assignment or transfer of the applicable franchisee's rights
under the Franchise Agreements for the Subject Restaurants
or the tenant's rights under the Leases, are and shall be
expressly subordinated to all rights and remedies of the
Mortgage Lenders under the Mortgage Loan Documents and the
Leases; and
(3) in connection with any sale, assignment or transfer of
any or all of the Subject Restaurants by the Mortgage
Lenders, the Agent hereby agrees, at the expense of the
Mortgage Lenders, to take reasonable steps to cooperate in
good faith with the Mortgage Lenders in connection with such
sale, assignment or transfer; and
(4) the Mortgage Lenders shall be entitled to receive all
Proceeds arising from any sale, assignment or transfer of
any or all of the Subject Restaurants, including but not
limited to all proceeds from the sale, assignment or
transfer of the applicable Franchise Agreements or Leases,
to the extent necessary to satisfy in full all obligations
of the Borrowers, the Operating Companies and QDI to the
Mortgage Lenders under the Mortgage Loan Documents; and
(5) the Bank Lenders shall be entitled to receive any
remaining net Proceeds from such sale, assignment or
transfer after satisfaction in full of all obligations to
the Mortgage Lenders as provided in paragraph 3(c)(4) above.
d. Notice Obligations.
The Agent hereby agrees to provide written
notice to the Mortgage Lenders, contemporaneously with any
notices given to QDI or the Operating Companies, of any
default or event of default under the Bank Loan Documents.
The Mortgage Lenders hereby agree to provide written notice
to the Bank Lenders, contemporaneously with any notices
given to the Borrowers, the Operating Companies or QDI, of
any Lease Default. The Mortgage Lenders agree not to
terminate any Lease until not less than thirty (30) days
after receipt by the Bank Lenders of written notice from the
Mortgage Lenders of the occurrence of one or more Events of
Default under such Lease and specifying the nature of such
Events of Default.
e. Sale, Assignment or Transfer Period.
In the event that the Bank Lenders cure all Lease Defaults
as provided in paragraph 3(b) above, the Bank Lenders'
rights to cause a sale, assignment or transfer of the
applicable Leases and Franchise Agreements, pursuant to and
in accordance with the terms and conditions set forth in
paragraph 3(b) above, shall continue for a period of twelve (12) months;
provided, that so long as no default or Event of Default is
continuing under any of the Mortgage Loan Documents, no
default or event of default is continuing under the
Franchise Agreements, and the Bank Lenders have delivered to
the Mortgage Lenders a signed purchase agreement with
respect to such proposed sale, assignment or transfer, such
period may continue for an additional sixty (60) days. As
part of any such sale, assignment or transfer, the
transferee of the tenant's rights under any applicable Lease
must assume and agree to be bound by all of the terms and
conditions of such Lease, including without limitation the
provisions of paragraph 11.1.10 thereof providing that the
occurrence of any Event of Default under the applicable
Mortgage (as defined therein) shall constitute an Event of
Default under such Lease.
f. Approval by Mortgage Lenders.
In the event of any sale, assignment or transfer of the
franchisee's rights under the Franchise Agreement for any of
the Subject Restaurants and the tenant's rights under the
applicable Leases as provided in this Agreement, all
terms and conditions of such sale, assignment or transfer
are subject to the prior written approval of the Mortgage
Lenders, which approval will not be unreasonably withheld or
delayed.
4. Bankruptcy, Dissolution, Etc.
-------------------------------
a. Mortgage Lender Authority.
At any meeting of creditors of QDI or any of the Operating
Companies or in the event of any case or proceeding,
voluntary or involuntary, for the distribution, division or
application of all or part of the assets of QDI or any of
the Operating Companies or the proceeds thereof, whether
such case or proceeding be for the liquidation, dissolution
or winding up of QDI or any of the Operating Companies or
its business, a receivership, insolvency or bankruptcy case
or proceeding, an assignment for the benefit of creditors or
a proceeding by or against QDI or any of the Operating
Companies for relief under the federal Bankruptcy Code or
any other bankruptcy, reorganization or insolvency law or
any other law relating to the relief of debtors,
readjustment of indebtedness, reorganization, arrangement,
composition or extension or marshalling of assets or
otherwise ("Proceedings") the Mortgage Lenders are hereby
irrevocably authorized at any such meeting or in any such
proceeding to receive or collect any cash or other assets of
QDI or any of the Operating Companies with respect to the
Subject Restaurants distributed, divided or applied by way
of dividend or payment, or any securities issued on account
of any Bank Loans with respect to the Subject Restaurants,
and apply such cash to or to hold such other assets or
securities as collateral for the Mortgage Loans
until all of the Mortgage Loans shall have been paid in full
in cash, rendering to the Bank Lenders any surplus to which
the Bank Lenders are then entitled.
b. Permitted Receipts.
Notwithstanding the foregoing provisions of paragraph 4(a),
the Bank Lenders shall be entitled to receive and retain any
securities of QDI or any of the Operating Companies or any
other corporation or other entity provided for by a
plan of reorganization or readjustment with respect to the
Subject Restaurants (i) the payment of which securities is
subordinate, at least to the extent provided in this
Agreement with respect to Bank Loans, to the payment of all
Mortgage Loans under any such plan of reorganization or
readjustment and (ii) all other terms of which are
acceptable to the Mortgage Lenders in their discretion.
c. Voting Restrictions.
At any such meeting of creditors or in the event of any such
case or proceeding, the Bank Lenders shall retain the right
to vote and otherwise act with respect to the Bank Loans
(including, without limitation, the right to vote to accept
or reject any plan of partial or complete liquidation,
reorganization, arrangement, composition or extension),
provided that the Bank Lenders shall not vote with respect
to any such plan or take any other action in any way so as
to contest the Bank Lenders' obligations and agreements set
forth in this Agreement.
d. Distributions in Dissolution.
Upon any distribution of the assets of QDI or any of the
Operating Companies in connection with any dissolution,
winding up, liquidation or reorganization of QDI or any of
the Operating Companies (whether in Proceedings or upon an
assignment for the benefit of creditors or any other
marshalling of the assets and liabilities of QDI or any of
the Operating Companies or otherwise), any proceeds of the
Subject Restaurants shall first be applied to payment in
full of all Mortgage Loans before Bank Lenders shall be
entitled to receive any payment in respect of the Bank
Loans. Upon any such dissolution, winding up, liquidation
or reorganization, any payment or distribution of proceeds
of the Subject Restaurants of any kind or character, whether
in cash, property or securities, to which Bank Lenders would
be entitled in respect of the Bank Loans with respect to the
Subject Restaurants except for the provisions of this
Agreement shall be made by the liquidating trustee or agent
or other persons making such payment or distribution
(whether a trustee in the bankruptcy, a receiver or
liquidating trustee or otherwise) (a "Paying Party"), or if
received by Bank Lenders, by Bank Lenders directly to
Mortgage Lenders, to the extent necessary to pay in full the
Mortgage Loans. The Bank Lenders hereby authorize and direct each
Paying Party to pay over to Mortgage Lenders upon demand by
Mortgage Lenders, all such payments or distributions without
the necessity of any inquiry as to the status or balance of
the Mortgage Loans, and without further notice to or consent
of Bank Lenders.
e. Subrogation.
Upon full and final payment of the Mortgage Loans and all
other amounts payable to the Mortgage Lenders under the
Mortgage Loan Documents, the Bank Lenders shall be
subrogated to any rights of the Mortgage Lenders under the
Mortgage Loan Documents to the extent of any payments with
respect to the Bank Loans paid to and retained by the
Mortgage Lenders.
5. Freedom of Dealings.
The Bank Lenders agree, with respect to the Mortgage Loans
and any and all collateral therefor or guaranties thereof,
that the Mortgage Lenders may, or may agree with QDI,
Operating Companies or Borrowers, at any time and from time
to time, except for any increase in the amount of the
Mortgage Loans or the taking of additional collateral
security or guaranties therefor, to (i) change the manner,
place or terms of payment or extend the time of payment of,
or renew or alter, the Mortgage Loans or the security
therefor, or otherwise amend in any manner the Mortgage Loan
Documents; (ii) exercise or refrain from exercising any
rights against QDI, Operating Companies or Borrowers; (iii)
apply any sums by whomsoever paid or however realized to the
Mortgage Loans; (iv) sell, exchange, release, surrender,
realize upon or otherwise deal with in any manner and in any
order any property whatsoever and by whomsoever at any time
pledged or mortgaged to secure, or howsoever securing, any
Mortgage Loans; (v) release anyone liable in any manner for
the payment or collection of any Mortgage Loans; and (vi)
settle or compromise all or any part of the Mortgage Loans,
otherwise modify the terms of any of the Mortgage Loans, and
the Mortgage Lenders may grant extensions of the time of
payment or performance to and make compromises, including
releases of collateral or guaranties, and settlements with
QDI, Operating Companies or Borrowers and all other persons,
in each case without the notice to, or consent of the Bank
Lenders or QDI, Operating Companies or Borrowers and without
impairing or releasing the agreements of the Bank Lenders or
QDI, Operating Companies or Borrowers contained in this
Agreement with respect to the Mortgage Loan Documents as so
amended or modified; provided, however, that nothing
contained in this paragraph 5 shall constitute a waiver of
the right of QDI, Operating Companies or Borrowers to agree
or consent to a settlement or compromise of a claim which
the Mortgage Lenders may have against QDI, Operating
Companies or Borrowers. Notwithstanding the foregoing, the
Mortgage Lenders may advance funds
to or on behalf of the Borrowers or the Operating Companies
in accordance with the Mortgage Loan Documents and the
Leases to the extent necessary to prevent or cure any
defaults by the Borrowers or the Operating Companies
thereunder, including without limitation for the payment of
taxes, insurance premiums, the preservation or protection of
property or the title thereto.
6. Modification or Sale of the Bank Loans.
The Bank Lenders will not, at any time while this Agreement
is in effect, without the prior written consent of the
Mortgage Lenders (which consent may be withheld or granted
in Mortgage Lenders' sole discretion) encumber their rights
under the Franchise Agreements or make any claim to the
Franchise Agreements or Proceeds except as set forth in this
Agreement. Any sale, transfer, pledge, assignment,
hypothecation or other disposition of any or all of the Bank
Loan Documents by the Bank Lenders shall be subject to the
provisions of this Agreement and any such transferee shall
be entitled to all of the rights and shall be bound by all
of the obligations of the Bank Lenders hereunder. Any sale,
transfer, pledge, assignment, hypothecation or other
disposition of any or all of the Mortgage Loan Documents by
the Mortgage Lenders shall be subject to the provisions of
this Agreement and any such transferee shall be entitled to
all of the rights and shall be bound by all of the
obligations of the Mortgage Lenders hereunder.
7. Obligations to Bank Lenders.
Nothing contained in this Agreement shall impair, as between
QDI, GAGHC or any of the Operating Companies and the Bank
Lenders, the obligation of QDI, GAGHC or such Operating
Companies to pay to the Bank Lenders all amounts payable in
respect of the Bank Loans and when the same shall become due
and payable in accordance with the terms thereof, or prevent
the Bank Lenders (except as expressly otherwise provided in
paragraph 3) from exercising all rights, powers and remedies
otherwise permitted by the Bank Loan Documents and by
applicable law upon a default of the Bank Loans or under any
of the Bank Loan Documents, all, however, subject to the
rights of the Mortgage Lenders in respect of the Subject
Restaurants as set forth in this Agreement. Bank Lenders
further agree and acknowledge that (i) Borrowers have no
obligation or liability to the Bank Lenders; and (ii) Bank
Lenders have no lien, encumbrance or claim on or against the
assets or property of the Borrowers under the Bank Loan
Documents or otherwise.
8. Termination of Subordination.
This Agreement shall continue in full force and effect, and
the obligations and agreements of the Bank Lenders hereunder
shall continue to be fully operative, until all of the Bank
Loans or all of the Mortgage Loans shall have been paid and
satisfied in full in cash and such full payment and
satisfaction shall be final and not avoidable.
9. Further Assurances.
The Bank Lenders and their agents hereby agree, promptly
upon the request of the Mortgage Lenders, to execute,
acknowledge and deliver any and all further documents,
releases, agreements and assurances and do or cause to be
done all further acts as may be necessary to confirm and
effectuate the terms of paragraphs 1 and 2 of this
Agreement. In addition, in the event that the Bank Lenders
at any time receive any Proceeds to which the Mortgage
Lenders are entitled pursuant to this Agreement, the Bank
Lenders shall hold all such Proceeds in trust for the
benefit of and shall promptly deliver such Proceeds to the
Mortgage Lenders.
10. Scope of Agreement.
The terms of this Agreement relate solely to the Subject
Restaurants and do not apply to any other restaurants or
other real or personal property owned, directly or
indirectly, by QDI, the Operating Companies or any
subsidiaries thereof.
11. Waiver.
The Mortgage Lenders may, in their sole and absolute
discretion, waive any provisions of this Agreement
benefiting the Mortgage Lenders; provided, however, that
such waiver shall be effective only if in writing and signed
by the Mortgage Lenders and shall be limited to the specific
provision or provisions expressly so waived.
12. Binding Effect.
This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and the Bank Lenders and their
respective successors, assigns and transferees. The Agent
hereby represents that it is duly authorized in its capacity
as Administrative Agent under the Credit Agreement to
execute this Agreement on behalf of the Bank Lenders for the
benefit of the Mortgage Lenders and their respective
successors, assigns and transferees.
13. Notices.
All notices and other communications which are required or
may be given pursuant to the terms of this Agreement shall
be in writing and shall be sufficient and effective in all
respects if given in writing and delivered personally, or
mailed by registered or certified mail, postage prepaid, or
delivered by facsimile transmission, or delivered by a
recognized overnight courier service, as follows:
If to the Mortgage Lenders:
Captec Financial Group, Inc.
24 Frank LloydWright Drive
Lobby L, 4th Floor
P.O. Box 544
Ann Arbor, MI 48106
Attention: Robert V. Schrader Vice President, Operations
Facsimile: (734) 994-1376
and
CNL Financial
Services. Inc.
400 East South
Street, Suite 500
Orlando, FL 32801
Attention: John Farren Vice President of Transaction Management
Facsimile: (407) 425-9876
If to the Bank
Lenders:
Chase Bank of Texas, National
Association, as Agent
712 Main Street, 4 CBBN 59
Houston, TX 77002-8059
Attention: Michael J. Costello Vice President
Facsimile: (713) 216-6710
If to QDI or the Operating Companies:
Quality Dining, Inc.
4220 Edison Lakes Parkway
Mishawaka, IN 46545
Attention: John C. Firth
Executive Vice President
Facsimile: (219) 243-4377
14. Governing Law.
This Agreement shall be governed by
and interpreted in accordance with the
laws of the State of Indiana.
15. Assignment.
Subject to the provisions of paragraph
6 above, this Agreement and the rights
and obligations of the Mortgage
Lenders may be assigned by Mortgage
Lenders in whole or in part without
notice to or consent of Bank Lenders,
QDI, Operating Companies or Borrowers.
16. Amendment.
This Agreement may be modified or
amended only by a writing and signed
by all of the parties hereto.
17. Entire Agreement.
This Agreement embodies the entire
agreement and understanding between
the parties with respect to the
subject matters hereof and supersedes
all prior agreements, contracts and
understandings related to such subject
matter.
18. Miscellaneous.
No course of dealing between the
parties, no usage of trade and no
parole or extrinsic evidence of
any nature shall be used to supplement
or modify any of the terms or
provisions of this Agreement. If any
provision of this Agreement is held to
be illegal, invalid or unenforceable
under present or future laws, the
legality, validity and enforceability
of the remaining provisions of this
Agreement shall not be affected
thereby, and this Agreement shall be
liberally construed so as to carry out
the intent of the parties to it.
19. Counterparts.
This Agreement may be executed in
several counterparts and by each party
on a separate counterpart, each of
which when so executed and delivered
shall be an original, and all of which
together shall constitute one
instrument.
(SIGNATURE PAGES FOLLOWS)
IN WITNESS WHEREOF, the undersigned parties have caused this
Agreement to be duly executed and delivered as of the date first written
above.
CAPTEC FINANCIAL GROUP, INC.
By:_______________
Name:_____________
Title:____________
CNL FINANCIAL SERVICES, INC.
By:___________________________
JOHN L. FARREN
Vice President of Transaction Management
CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION, AS AGENT
By:______________________
Name:____________________
Title:__________________
QUALITY DINING, INC.
By:__________________
JOHN C. FIRTH
Executive Vice President
and Secretary
BRAVOKILO, INC.
By:___________________
JOHN C. FIRTH
Executive Vice President
and Secretary
SOUTHWEST DINING, INC.
By:___________________
JOHN C. FIRTH
ExecutiveVice President
and Secretary
GRAYLING CORPORATION
By:__________________
JOHN C. FIRTH
ExecutiveVice President
and Secretary
SWCAP, LLC
By:____________________
JOHN C. FIRTH
Executive Vice President
and Secretary
SWCN, LLC
By:_____________________
JOHN C. FIRTH
Executive Vice President
and Secretary
GRAYCAP, LLC
By:____________________
JOHN C. FIRTH
Executive Vice President
and Secretary
GRAYCN, LLC
By:____________________
JOHN C. FIRTH
Executive Vice President
and Secretary
BKCAP, LLC
By:_____________________
JOHN C. FIRTH
Executive Vice President
and Secretary
BKCN, LLC
By:_______________________
JOHN C. FIRTH
Executive Vice President
and Secretary
EXHIBIT 4-F
COLLATERAL ASSIGNMENT OF LESSEE'S INTEREST IN LEASES
THIS COLLATERAL ASSIGNMENT OF LESSEE'S INTEREST IN LEASES
(the "Assignment") is made as of July 26, 1999, by SOUTHWEST
DINING, INC., an Indiana corporation ("Lessee") to CHASE
BANK OF TEXAS, NATIONAL ASSOCIATION, a national banking
association, as Administrative Agent under the hereinafter
defined Credit Agreement (the "Agent"). Capitalized terms
used herein and not defined herein shall have the meanings
assigned thereto in the Credit Agreement.
W I T N E S S E T H:
WHEREAS, Lessee is the tenant under certain Leases
identified on Exhibit A (as amended or modified and
including all extensions, renewals or replacements thereof,
the "Leases") between Lessee and (the "Lessor") covering the
premises identified in Exhibit A hereto (the "Premises");
WHEREAS, Quality Dining, Inc. and GAGHC, Inc. (the
"Borrowers") have entered into that certain Third Amended
and Restated Revolving Credit Agreement dated as of May 11,
1999, as amended by a First Amendment to Third Amended and
Restated Revolving Credit Agreement dated as of July 26,
1999 (said agreement as so amended and as it may be amended,
supplemented, restated or otherwise modified from time to
time in accordance with the terms thereof, the "Credit
Agreement") among the Borrowers, the Banks which are party
thereto and the Agent, pursuant to which the Banks have
agreed to make available to the Borrowers revolving credit
loans and letters of credit in accordance with the terms
thereof;
WHEREAS, it is a condition to the agreement of the Banks'
obligation to make loans under the Credit Agreement that the
Obligations are secured by the collateral as described and
as provided herein;
NOW, THEREFORE, the Lessee, for and in consideration of
these presents and the mutual agreements herein contained
and for other good and valuable consideration, the receipt
whereof is hereby acknowledged, and to secure payment and
performance of the Obligations, does hereby collaterally,
assign and transfer unto and grant a security interest in
favor of the Agent in all of Lessee's right, title and
interest, as lessee, in and to the Leases, including any and
all extensions, renewals and replacements thereof (the
"Collateral").
To protect and further the security of this Assignment, the
Lessee agrees as follows:
1. Leasehold Estate. Lessee hereby represents and
covenants:
(a) that the Leases are in full force and effect and
unmodified;
(b) that all rents (including additional rents and other
charges) reserved in the Leases have been paid to the extent
they were payable prior to the date hereof;
(c) that there is no uncured default under the Leases or in
the performance of any of the terms, covenants, conditions
or warranties thereof on the part of the Lessee to be
observed and performed. Further, no state of facts exist
under the Leases which, with the lapse of time or giving of
notice or both, would constitute a default thereunder.
This Assignment is a collateral assignment, made to secure
the Obligations and is effective immediately.
Notwithstanding anything contained herein to the contrary,
the Agent shall not be responsible or obligated to the
Lessor for any obligation, agreement or liability of the
Lessee under the Leases, unless and until Lessor elects to
assume the Leases pursuant to Section 6 hereof and delivers
to Lessor written notice of such assumption. Notwithstanding
this Assignment, the Lessee shall be and remain obligated to
the Lessor to perform all of the Lessee's obligations and
agreements under the Leases, and the Lessor shall be and
remain obligated to the Lessee to perform all of the
Lessor's obligations and agreements under the Leases.
2. Payment of Lease Expenses. The Lessee shall pay or
cause to be paid all rents, additional rents, taxes,
assessments, water rates, sewer rents, and other charges and
impositions payable by the Lessee under the Leases for which
provision has not been made hereinbefore, when and as often
as the same shall become due and payable. Lessee will in
every case deliver, or cause to be delivered, a proper
receipt for any such item so paid and will, upon request by
Agent, within ten (10) days after the time when such payment
shall be due and payable, deliver to the Agent, a copy of
the receipts for any such payments.
3. Lessee's Representations and Covenants with Respect to
Leases.
(a) Lessee is the sole owner of the entire lessee's
interest in the Lease, and has not executed and shall not
execute any other assignment of the Leases and has not
conveyed and will not convey to another or encumber any
interest it has under the Leases or in the Premises and has
not and shall not perform any acts or execute any other
instruments that might prevent Agent from fully exercising
its rights under any of the terms, covenants and conditions
of this Assignment. Lessee further agrees to defend the
leasehold estate created under the Leases for the entire
remainder of the term set forth therein, against all and
every person or persons lawfully claiming, or who may claim
the same or any part thereof, subject to the payment of the
rents in the Leases reserved and subject to the performance
and observance of all of the terms, covenants, conditions
and warranties thereof.
(b) The Leases are valid and enforceable in accordance with
their terms and have not been altered, modified, amended or
terminated and none of the terms and conditions thereof has
been waived in any manner whatsoever except in each case as
disclosed in writing to Agent.
(c) The Lessee shall at all times promptly and faithfully
keep and perform, or cause to be kept and performed, all the
covenants and conditions contained in the Leases by the
Lessee under the Leases to be kept and performed and in all
respects conform to and comply with the terms and conditions
of the Leases, and the Lessee further covenants that it
shall not do or permit anything which will impair or tend to
impair the security of the Banks and the Agent under the
Loan Documents or will be grounds for declaring a forfeiture
of the Leases, and upon any such failure aforesaid, Lessee
shall be subject to all of the rights and remedies granted
Agent under the Loan Documents.
(d) The Leases are in full force and effect. The Lessee
shall not modify, extend or in any way alter the terms of
the Leases or cancel or surrender the Leases, or waive,
execute, condone or in any way release or discharge the
Lessor of or from the obligations, covenants, conditions and
agreements by the Lessor to be done and performed; and the
Lessee does expressly release, relinquish and surrender unto
the Agent all of its rights, power and authority to cancel,
surrender, amend, modify or alter in any way the terms and
provisions of the Leases and any attempt on the part of the
Lessee to exercise any such right without the written
approval and consent of the Agent thereto being first had
and obtained shall constitute a default under the terms
hereof and under the Loan Documents.
(e) Lessee shall be deemed in default if the Lessee fails
to give the Agent immediate notice of any default under the
Leases (or any of them) or of the receipt by it of any
notice of default from the Lessor thereunder, or if the
Lessee fails to furnish to the Agent immediately any and all
information which it may request concerning the performance
by the Lessee of the covenants of the Leases, or if the
Lessee fails to permit the Agent or its representative at
all reasonable times to make investigation or examination
concerning the performance by the Lessee of the covenants of
the Leases, or if the Lessee fails to permit the Agent or
its representative at all reasonable times to make
investigation or examination concerning such performance.
The Lessee shall deliver to the Agent an original executed
copy of the Leases, an estoppel certificate from the Lessor
of the Leases within ten (10) days of request by Agent and
in such form and content as shall be reasonably satisfactory
to Agent, as well as any and all documentary evidence
received by it showing compliance by the Lessee with the
provisions of the Leases.
(f) In the event of any failure by Lessee to perform any
covenant on the part of Lessee to be observed and performed
under the Leases, the performance by Agent of behalf of
Lessee of such covenant shall not remove or waive, as
between Lessee and Agent, the corresponding default under
the terms hereof and any amount so advanced by Agent or any
costs incurred in connection therewith, with interest
thereon at an interest rate per annum equal to the Base Rate
plus 2.0%, shall constitute additional indebtedness and be
immediately due and payable.
4. Merger. So long as any of the Obligations shall remain
unpaid, unless the Agent shall otherwise in writing consent,
the fee title and the leasehold estate created under each of
the Leases shall not merge but shall always be kept separate
and distinct, notwithstanding the union of said estates
either in the Lessor or in the Lessee, as lessee, or in a
third party, by purchase or otherwise; and the Lessee
covenants and agrees that if it shall acquire the fee title,
or any other estate, title or interest in the Premises
covered by said Leases, the Leases shall be considered as
assigned or conveyed to the Agent and the lien hereof spread
to cover such estate with the same force and effect as
though specifically herein assigned or conveyed and spread.
The provisions of this paragraph shall not apply if the
Agent or any Bank acquires the fee of the Premises unless
Agent shall so elect.
5. Further Assurances and Assignments. The Lessee agrees
to execute and deliver, immediately upon the request of
Agent, all such further assurances and assignments
concerning the Leases or the Premises as Agent shall from
time to time require.
6. Exercise of Remedies. In the event of an Event of
Default, Agent may, at its option, do any of the following:
(i) cause the Leases (or any of them) to be sold at private
or public sale to the highest bidder for cash in accordance
with the provisions of the Uniform Commercial Code or other
applicable law; (ii) assume the Leases (or any of them),
designate a third party to assume the Leases (or any of
them) or assign the Leases (or any of them) to a third
party; (iii) assume the Leases (or any of them) or sublease
the Leases (or any of them) or the Premises or any part
thereof to a third party; and (iv) exercise any other right
or remedy the Agent may have by contract, at law, or in
equity. Upon demand of Agent, the Lessee agrees to surrender
to Agent and Agent (or its designee) shall be entitled to
take actual possession of the Premises or any part thereof
personally, or by its agents or attorneys. Agent is hereby
vested with full power to use all measures, legal and
equitable, deemed by it necessary or proper to enforce this
Assignment, including the right of
Agent (or its designee) with or without force or notice and
with or without process of law, to enter upon and take and
maintain possession of all or any part of the Premises,
together with all personal property, fixtures, documents,
books, records, papers and accounts of the Lessee or the
then owner of the Premises relating thereto, and may exclude
the Lessee, its agents, or servants, wholly therefrom and
may as attorney-in-fact of the Lessee, or in its own name
and under the powers herein granted, hold, operate, manage
and control the Premises and conduct the business, if any,
thereof either personally or by its agents. Lessee hereby
grants full power and authority to Agent to exercise all
rights, privileges and powers herein granted at any and all
times hereinafter, without notice to Lessee. Agent shall be
under no obligation to exercise or prosecute any of the
rights or claims assigned to in hereunder or to perform or
carry out any of the obligations of the lessee/tenant under
the Leases and does not assume any of the liabilities in
connection with or arising or growing out of the covenants
and agreements of Lessee in the Leases.
7. Indemnity. Agent shall not at any time (regardless of
any exercise by Agent, or right of Agent to exercise, any
powers herein conferred) be obligated to perform or
discharge, nor does it hereby undertake to perform or
discharge, any obligation, duty or liability under the
Leases and the Lessee shall and does hereby agree to
indemnify and hold Agent harmless from any and all
liability, loss or damage which Agent may or might incur
under or by reason of (a) the Leases, (b) the assignment
thereof, (c) any action taken by Agent or its agents
hereunder, unless constituting willful misconduct or gross
negligence, or (d) claims and demands which may be asserted
against it by reason of any alleged obligations or
undertakings on its part (or to cause the Lessee) to perform
or discharge any of the terms, covenants or agreements
contained in the Leases.
8. Power of Attorney. The Lessee does hereby appoint
irrevocably the Agent its true and lawful attorney in its
name and stead and hereby authorizes Agent, with or without
taking possession of the Premises, to take any and all
actions under the Leases, on behalf of Lessee, as it may
deem necessary. The power of attorney conferred upon Agent
pursuant to this Assignment is a power coupled with an
interest and cannot be revoked, modified or altered without
the written consent of Agent. Notwithstanding the
foregoing, the Agent agrees not to exercise any power
granted pursuant to this Section 8 except upon a default
hereunder or an Event of Default under the Credit Agreement.
9. Occurrence of Default. Agent shall not exercise any of
the rights and powers conferred upon it herein until and
unless there shall occur a default hereunder or an Event of
Default as defined in the Credit Agreement. Notwithstanding
the foregoing, Agent shall be under no obligation to
exercise its rights hereunder.
10. Election of Remedies. The provisions set forth in this
Assignment shall be deemed a special remedy given to Agent,
and shall not be deemed exclusive of any of the remedies
granted in the Credit Agreement, all of which remedies shall
be enforceable concurrently or successively. No exercise by
Agent of any of its rights hereunder shall cure, waive or
affect any default hereunder or any Default or Event of
Default under the Credit Agreement. No inaction or partial
exercise of rights by Agent shall be construed as a waiver
of any of its rights and remedies, and no waiver by Agent of
any such rights and remedies shall be construed as a waiver
by Agent of any of its other rights and remedies.
11. Notices. Any notice which any party hereto may desire
or may be required to give to any other party hereto shall
be given as set forth in the Credit Agreement.
12. Governing Law; Interpretation. This Assignment shall
be governed by the laws of the State of Indiana. Wherever
possible each provision of this Assignment shall be
interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this
Assignment shall be prohibited by or invalid under such law,
such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of
this Assignment. Time is of the essence of this Assignment.
This Assignment shall be binding on the successors and
assigns of the parties hereto, however, Lessee may not
assign its rights and obligations hereunder without the
prior written consent of Agent.
13. Miscellaneous.
(a) Agent may take or release other security for the
Obligations, may release any party primarily or secondarily
liable for any of the Obligations, may grant extensions,
renewals or indulgences with respect to such Obligations and
may apply any other security therefor held by it to the
satisfaction of such Obligations without prejudice to any of
its rights hereunder.
(b) Waiver of or acquiescence by Agent in any default by
the Lessee, or failure of the Agent to insist upon strict
performance by the Lessee of any warranties or agreements in
this Assignment, shall not constitute a waiver of any
subsequent or other default or failure, whether similar or
dissimilar.
(c) The rights and remedies of Agent under this Assignment
are cumulative and are not in lieu of, but are in addition
to any other rights or remedies which Agent shall have under
the Loan Documents or any other documents executed in
connection therewith, or at law or in equity.
(d) If any term of this Assignment, or the application
thereof to any person or circumstance, shall, to any extent,
be invalid or unenforceable, the remainder of this
Assignment, or the application of such term to persons or
circumstances other than those as to which it is invalid or
unenforceable, shall not be affected thereby, and each term
of this Assignment shall be valid and enforceable to the
fullest extent permitted by law.
(e) The terms "Agent" and "Debtor" shall be construed to
include the successors and assigns of each party. The
genders and numbers used in this assignment are used as
reference terms only and shall apply with the same effect
whether the parties are of the masculine or feminine gender
or corporate or other form, and the singular shall likewise
include the plural.
(f) This Assignment may not be amended, modified or changed
nor shall any waiver of any provision hereof be effective,
except by an instrument in writing signed by the party
against whom enforcement of any waiver, amendment, change,
modification or discharge is sought.
(g) The rights and remedies of Agent under this Assignment
are subordinate to Captec Financial Group, Inc. ("Captec")
and CNL Financial Services, Inc. ("CNL") pursuant to and in
accordance with the terms and conditions of that certain
Intercreditor Agreement dated August 3, 1999 (the
"Intercreditor Agreement") by and among Captec, CNL, Agent,
Lessee and certain affiliates of Lessee.
(h) So long as the Intercreditor Agreement is in effect,
neither Lessee nor Agent shall cause or permit any
recordation in any public records of this Assignment or any
memorandum thereof, without the prior written consent of
Captec and CNL.
IN WITNESS WHEREOF, the undersigned has caused this
agreement to
be executed as of the day and year first above written.
SOUTHWEST DINING, INC.
By:________________________________
Its:________________________________
STATE OF ______________ )
) ss:
COUNTY OF _______________ )
BE IT REMEMBERED, that on this _______ day of
____________, 1999, before me, the subscriber, an officer
duly authorized to take acknowledgments for use in the State
of ________, personally appeared ________________________,
who, I am satisfied is the person who executed the within
Instrument as the __________________ of
_____________________, the corporation named therein, and I
having first made known to [him] [her] the contents thereof,
[he] [she] did thereupon acknowledge that the said
Instrument made by the said corporation and delivered by
[him] [her] as such officer, is the voluntary act and deed
of said corporation, made by virtue of authority from its
Board of Directors, for the uses and purposes therein
expressed.
____________________________________
EXHIBIT 4-G
COLLATERAL ASSIGNMENT OF LESSEE'S INTEREST IN LEASES
THIS COLLATERAL ASSIGNMENT OF LESSEE'S INTEREST IN LEASES
(the "Assignment") is made as of July 26, 1999, by GRAYLING CORPORATION
, a Delaware corporation ("Lessee") to CHASE
BANK OF TEXAS, NATIONAL ASSOCIATION, a national banking
association, as Administrative Agent under the hereinafter
defined Credit Agreement (the "Agent"). Capitalized terms
used herein and not defined herein shall have the meanings
assigned thereto in the Credit Agreement.
W I T N E S S E T H:
WHEREAS, Lessee is the tenant under certain Leases
identified on Exhibit A (as amended or modified and
including all extensions, renewals or replacements thereof,
the "Leases") between Lessee and (the "Lessor") covering the
premises identified in Exhibit A hereto (the "Premises");
WHEREAS, Quality Dining, Inc. and GAGHC, Inc. (the
"Borrowers") have entered into that certain Third Amended
and Restated Revolving Credit Agreement dated as of May 11,
1999, as amended by a First Amendment to Third Amended and
Restated Revolving Credit Agreement dated as of July 26,
1999 (said agreement as so amended and as it may be amended,
supplemented, restated or otherwise modified from time to
time in accordance with the terms thereof, the "Credit
Agreement") among the Borrowers, the Banks which are party
thereto and the Agent, pursuant to which the Banks have
agreed to make available to the Borrowers revolving credit
loans and letters of credit in accordance with the terms
thereof;
WHEREAS, it is a condition to the agreement of the Banks'
obligation to make loans under the Credit Agreement that the
Obligations are secured by the collateral as described and
as provided herein;
NOW, THEREFORE, the Lessee, for and in consideration of
these presents and the mutual agreements herein contained
and for other good and valuable consideration, the receipt
whereof is hereby acknowledged, and to secure payment and
performance of the Obligations, does hereby collaterally,
assign and transfer unto and grant a security interest in
favor of the Agent in all of Lessee's right, title and
interest, as lessee, in and to the Leases, including any and
all extensions, renewals and replacements thereof (the
"Collateral").
To protect and further the security of this Assignment, the
Lessee agrees as follows:
1. Leasehold Estate. Lessee hereby represents and
covenants:
(a) that the Leases are in full force and effect and
unmodified;
(b) that all rents (including additional rents and other
charges) reserved in the Leases have been paid to the extent
they were payable prior to the date hereof;
(c) that there is no uncured default under the Leases or in
the performance of any of the terms, covenants, conditions or
warranties thereof on the part of the Lessee to be observed
and performed. Further, no state of facts exist under the
Leases which, with the lapse of time or giving of notice or
both, would constitute a default thereunder.
This Assignment is a collateral assignment, made to secure
the Obligations and is effective immediately.
Notwithstanding anything contained herein to the contrary,
the Agent shall not be responsible or obligated to the
Lessor for any obligation, agreement or liability of the
Lessee under the Leases, unless and until Lessor elects to
assume the Leases pursuant to Section 6 hereof and delivers
to Lessor written notice of such assumption. Notwithstanding
this Assignment, the Lessee shall be and remain obligated to
the Lessor to perform all of the Lessee's obligations and
agreements under the Leases, and the Lessor shall be and
remain obligated to the Lessee to perform all of the
Lessor's obligations and agreements under the Leases.
2. Payment of Lease Expenses. The Lessee shall pay or
cause to be paid all rents, additional rents, taxes,
assessments, water rates, sewer rents, and other charges and
impositions payable by the Lessee under the Leases for which
provision has not been made hereinbefore, when and as often
as the same shall become due and payable. Lessee will in
every case deliver, or cause to be delivered, a proper
receipt for any such item so paid and will, upon request by
Agent, within ten (10) days after the time when such payment
shall be due and payable, deliver to the Agent, a copy of
the receipts for any such payments.
3. Lessee's Representations and Covenants with Respect to
Leases.
(a) Lessee is the sole owner of the entire lessee's
interest in the Lease, and has not executed and shall not
execute any other assignment of the Leases and has not
conveyed and will not convey to another or encumber any
interest it has under the Leases or in the Premises and has
not and shall not perform any acts or execute any other
instruments that might prevent Agent from fully exercising
its rights under any of the terms, covenants and conditions
of this Assignment. Lessee further agrees to defend the
leasehold estate created under the Leases for the entire
remainder of the term set forth therein, against all and
every person or persons lawfully claiming, or who may claim
the same or any part thereof, subject to the payment of the
rents in the Leases reserved and subject to the performance
and observance of all of the terms, covenants, conditions
and warranties thereof.
(b) The Leases are valid and enforceable in accordance with
their terms and have not been altered, modified, amended or
terminated and none of the terms and conditions thereof has
been waived in any manner whatsoever except in each case as
disclosed in writing to Agent.
(c) The Lessee shall at all times promptly and faithfully
keep and perform, or cause to be kept and performed, all the
covenants and conditions contained in the Leases by the
Lessee under the Leases to be kept and performed and in all
respects conform to and comply with the terms and conditions
of the Leases, and the Lessee further covenants that it
shall not do or permit anything which will impair or tend to
impair the security of the Banks and the Agent under the
Loan Documents or will be grounds for declaring a forfeiture
of the Leases, and upon any such failure aforesaid, Lessee
shall be subject to all of the rights and remedies granted
Agent under the Loan Documents.
(d) The Leases are in full force and effect. The Lessee
shall not modify, extend or in any way alter the terms of
the Leases or cancel or surrender the Leases, or waive,
execute, condone or in any way release or discharge the
Lessor of or from the obligations, covenants, conditions and
agreements by the Lessor to be done and performed; and the
Lessee does expressly release, relinquish and surrender unto
the Agent all of its rights, power and authority to cancel,
surrender, amend, modify or alter in any way the terms and
provisions of the Leases and any attempt on the part of the
Lessee to exercise any such right without the written
approval and consent of the Agent thereto being first had
and obtained shall constitute a default under the terms
hereof and under the Loan Documents.
(e) Lessee shall be deemed in default if the Lessee fails
to give the Agent immediate notice of any default under the
Leases (or any of them) or of the receipt by it of any
notice of default from the Lessor thereunder, or if the
Lessee fails to furnish to the Agent immediately any and all
information which it may request concerning the performance
by the Lessee of the covenants of the Leases, or if the
Lessee fails to permit the Agent or its representative at
all reasonable times to make investigation or examination
concerning the performance by the Lessee of the covenants of
the Leases, or if the Lessee fails to permit the Agent or
its representative at all reasonable times to make
investigation or examination concerning such performance.
The Lessee shall deliver to the Agent an original executed
copy of the Leases, an estoppel certificate from the Lessor
of the Leases within ten (10) days of request by Agent and
in such form and content as shall be reasonably satisfactory
to Agent, as well as any and all documentary evidence
received by it showing compliance by the Lessee with the
provisions of the Leases.
(f) In the event of any failure by Lessee to perform any
covenant on the part of Lessee to be observed and performed
under the Leases, the performance by Agent of behalf of
Lessee of such covenant shall not remove or waive, as
between Lessee and Agent, the corresponding default under
the terms hereof and any amount so advanced by Agent or any
costs incurred in connection therewith, with interest
thereon at an interest rate per annum equal to the Base Rate
plus 2.0%, shall constitute additional indebtedness and be
immediately due and payable.
4. Merger. So long as any of the Obligations shall remain
unpaid, unless the Agent shall otherwise in writing consent,
the fee title and the leasehold estate created under each of
the Leases shall not merge but shall always be kept separate
and distinct, notwithstanding the union of said estates
either in the Lessor or in the Lessee, as lessee, or in a
third party, by purchase or otherwise; and the Lessee
covenants and agrees that if it shall acquire the fee title,
or any other estate, title or interest in the Premises
covered by said Leases, the Leases shall be considered as
assigned or conveyed to the Agent and the lien hereof spread
to cover such estate with the same force and effect as
though specifically herein assigned or conveyed and spread.
The provisions of this paragraph shall not apply if the
Agent or any Bank acquires the fee of the Premises unless
Agent shall so elect.
5. Further Assurances and Assignments. The Lessee agrees
to execute and deliver, immediately upon the request of
Agent, all such further assurances and assignments
concerning the Leases or the Premises as Agent shall from
time to time require.
6. Exercise of Remedies. In the event of an Event of
Default, Agent may, at its option, do any of the following:
(i) cause the Leases (or any of them) to be sold at private or public sale
to the highest bidder for cash in accordance with the
provisions of the Uniform Commercial Code or other
applicable law; (ii) assume the Leases (or any of them),
designate a third party to assume the Leases (or any of
them) or assign the Leases (or any of them) to a third
party; (iii) assume the Leases (or any of them) or sublease
the Leases (or any of them) or the Premises or any part
thereof to a third party; and (iv) exercise any other right
or remedy the Agent may have by contract, at law, or in
equity. Upon demand of Agent, the Lessee agrees to surrender
to Agent and Agent (or its designee) shall be entitled to
take actual possession of the Premises or any part thereof
personally, or by its agents or attorneys. Agent is hereby
vested with full power to use all measures, legal and
equitable, deemed by it necessary or proper to enforce this
Assignment, including the right of Agent (or its designee)
with or without force or notice and with or without process
of law, to enter upon and take and maintain possession of
all or any part of the Premises, together with all personal
property, fixtures, documents, books, records, papers and
accounts of the Lessee or the then owner of the Premises
relating thereto, and may exclude the Lessee, its agents, or
servants, wholly therefrom and may as attorney-in-fact of
the Lessee, or in its own name and under the powers herein
granted, hold, operate, manage and control the Premises and
conduct the business, if any, thereof either personally or
by its agents. Lessee hereby grants full power and authority
to Agent to exercise all rights, privileges and powers
herein granted at any and all times hereinafter, without
notice to Lessee. Agent shall be under no obligation to
exercise or prosecute any of the rights or claims assigned
to in hereunder or to perform or carry out any of the
obligations of the lessee/tenant under the Leases and does
not assume any of the liabilities in connection with or
arising or growing out of the covenants and agreements of
Lessee in the Leases.
7. Indemnity. Agent shall not at any time (regardless of
any exercise by Agent, or right of Agent to exercise, any
powers herein conferred) be obligated to perform or
discharge, nor does it hereby undertake to perform or
discharge, any obligation, duty or liability under the
Leases and the Lessee shall and does hereby agree to
indemnify and hold Agent harmless from any and all
liability, loss or damage which Agent may or might incur
under or by reason of (a) the Leases, (b) the assignment
thereof, (c) any action taken by Agent or its agents
hereunder, unless constituting willful misconduct or gross
negligence, or (d) claims and demands which may be asserted
against it by reason of any alleged obligations or
undertakings on its part (or to cause the Lessee) to perform
or discharge any of the terms, covenants or agreements
contained in the Leases.
8. Power of Attorney. The Lessee does hereby appoint
irrevocably the Agent its true and lawful attorney in its
name and stead and hereby authorizes Agent, with or without
taking possession of the Premises, to take any and all
actions under the Leases, on behalf of Lessee, as it may
deem necessary. The power of attorney conferred upon Agent
pursuant to this Assignment is a power coupled with an
interest and cannot be revoked, modified or altered without
the written consent of Agent. Notwithstanding the
foregoing, the Agent agrees not to exercise any power
granted pursuant to this Section 8 except upon a default
hereunder or an Event of Default under the Credit Agreement.
9. Occurrence of Default. Agent shall not exercise any of
the rights and powers conferred upon it herein until and
unless there shall occur a default hereunder or an Event of
Default as defined in the Credit Agreement. Notwithstanding
the foregoing, Agent shall be under no obligation to exercise its rights
hereunder.
10. Election of Remedies. The provisions set forth in this
Assignment shall be deemed a special remedy given to Agent,
and shall not be deemed exclusive of any of the remedies
granted in the Credit Agreement, all of which remedies shall
be enforceable concurrently or successively. No exercise by
Agent of any of its rights hereunder shall cure, waive or
affect any default hereunder or any Default or Event of
Default under the Credit Agreement. No inaction or partial
exercise of rights by Agent shall be construed as a waiver
of any of its rights and remedies, and no waiver by Agent of
any such rights and remedies shall be construed as a waiver
by Agent of any of its other rights and remedies.
11. Notices. Any notice which any party hereto may desire
or may be required to give to any other party hereto shall
be given as set forth in the Credit Agreement.
12. Governing Law; Interpretation. This Assignment shall
be governed by the laws of the State of Indiana. Wherever
possible each provision of this Assignment shall be
interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this
Assignment shall be prohibited by or invalid under such law,
such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of
this Assignment. Time is of the essence of this Assignment.
This Assignment shall be binding on the successors and
assigns of the parties hereto, however, Lessee may not
assign its rights and obligations hereunder without the
prior written consent of Agent.
13. Miscellaneous.
(a) Agent may take or release other security for the
Obligations, may release any party primarily or secondarily
liable for any of the Obligations, may grant extensions,
renewals or indulgences with respect to such Obligations and
may apply any other security therefor held by it to the
satisfaction of such Obligations without prejudice to any of
its rights hereunder.
(b) Waiver of or acquiescence by Agent in any default by
the Lessee, or failure of the Agent to insist upon strict
performance by the Lessee of any warranties or agreements in
this Assignment, shall not constitute a waiver of any
subsequent or other default or failure, whether similar or
dissimilar.
(c) The rights and remedies of Agent under this Assignment
are cumulative and are not in lieu of, but are in addition
to any other rights or remedies which Agent shall have under
the Loan Documents or any other documents executed in
connection therewith, or at law or in equity.
(d) If any term of this Assignment, or the application
thereof to any person or circumstance, shall, to any extent,
be invalid or unenforceable, the remainder of this
Assignment, or the application of such term to persons or
circumstances other than those as to which it is invalid or
unenforceable, shall not be affected thereby, and each term
of this Assignment shall be valid and enforceable to the
fullest extent permitted by law.
(e) The terms "Agent" and "Debtor" shall be construed to
include the successors and assigns of each party. The
genders and numbers used in this assignment are used as
reference terms only and shall apply with the same effect
whether the parties are of the masculine or feminine gender
or corporate or other form, and
the singular shall likewise include the plural.
(f) This Assignment may not be amended, modified or changed
nor shall any waiver of any provision hereof be effective,
except by an instrument in writing signed by the party
against whom enforcement of any waiver, amendment, change,
modification or discharge is sought.
(g) The rights and remedies of Agent under this Assignment
are subordinate to Captec Financial Group, Inc. ("Captec")
and CNL Financial Services, Inc. ("CNL") pursuant to and in
accordance with the terms and conditions of that certain
Intercreditor Agreement dated August 3, 1999 (the
"Intercreditor Agreement") by and among Captec, CNL, Agent,
Lessee and certain affiliates of Lessee.
(h) So long as the Intercreditor Agreement is in effect,
neither Lessee nor Agent shall cause or permit any
recordation in any public records of this Assignment or any
memorandum thereof, without the prior written consent of
Captec and CNL.
IN WITNESS WHEREOF, the undersigned has caused this
agreement to be executed as of the day and year first above written.
GRAYLING CORPORATION
By:________________________________
Its:________________________________
STATE OF ______________ )
) ss:
COUNTY OF _______________ )
BE IT REMEMBERED, that on this _______ day of
____________, 1999, before me, the subscriber, an officer
duly authorized to take acknowledgments for use in the State
of ________, personally appeared ________________________,
who, I am satisfied is the person who executed the within
Instrument as the __________________ of
_____________________, the corporation named therein, and I
having first made known to [him] [her] the contents thereof,
[he] [she] did thereupon acknowledge that the said
Instrument made by the said corporation and delivered by
[him] [her] as such officer, is the voluntary act and deed
of said corporation, made by virtue of authority from its
Board of Directors, for the uses and purposes therein
expressed.
EXHIBIT 4-H
COLLATERAL ASSIGNMENT OF LESSEE'S INTEREST IN LEASES
THIS COLLATERAL ASSIGNMENT OF LESSEE'S INTEREST IN LEASES
(the "Assignment") is made as of July 26, 1999, by
BRAVOKILO, INC., an Indiana corporation ("Lessee") to CHASE
BANK OF TEXAS, NATIONAL ASSOCIATION, a national banking
association, as Administrative Agent under the hereinafter
defined Credit Agreement (the "Agent"). Capitalized terms
used herein and not defined herein shall have the meanings
assigned thereto in the Credit Agreement.
W I T N E S S E T H:
WHEREAS, Lessee is the tenant under certain Leases
identified on Exhibit A (as amended or modified and
including all extensions, renewals or replacements thereof,
the "Leases") between Lessee and (the "Lessor") covering the
premises identified in Exhibit A hereto (the "Premises");
WHEREAS, Quality Dining, Inc. and GAGHC, Inc. (the
"Borrowers") have entered into that certain Third Amended
and Restated Revolving Credit Agreement dated as of May 11,
1999, as amended by a First Amendment to Third Amended and
Restated Revolving Credit Agreement dated as of July 26,
1999 (said agreement as so amended and as it may be amended,
supplemented, restated or otherwise modified from time to
time in accordance with the terms thereof, the "Credit
Agreement") among the Borrowers, the Banks which are party
thereto and the Agent, pursuant to which the Banks have
agreed to make available to the Borrowers revolving credit
loans and letters of credit in accordance with the terms
thereof;
WHEREAS, it is a condition to the agreement of the Banks'
obligation to make loans under the Credit Agreement that the
Obligations are secured by the collateral as described and
as provided herein;
NOW, THEREFORE, the Lessee, for and in consideration of
these presents and the mutual agreements herein contained
and for other good and valuable consideration, the receipt
whereof is hereby acknowledged, and to secure payment and
performance of the Obligations, does hereby collaterally,
assign and transfer unto and grant a security interest in
favor of the Agent in all of Lessee's right, title and
interest, as lessee, in and to the Leases, including any and
all extensions, renewals and replacements thereof (the
"Collateral").
To protect and further the security of this Assignment, the
Lessee agrees as follows:
1. Leasehold Estate. Lessee hereby represents and
covenants:
(a) that the Leases are in full force and effect and
unmodified;
(b) that all rents (including additional rents and other
charges) reserved in the Leases have been paid to the extent
they were payable prior to the date hereof;
(c) that there is no uncured default under the Leases or in
the performance of any of the terms, covenants, conditions
or warranties thereof on the part of the Lessee to be observed
and performed. Further, no state of facts exist under the
Leases which, with the lapse of time or giving of notice or
both, would constitute a default thereunder.
This Assignment is a collateral assignment, made to secure
the Obligations and is effective immediately.
Notwithstanding anything contained herein to the contrary,
the Agent shall not be responsible or obligated to the
Lessor for any obligation, agreement or liability of the
Lessee under the Leases, unless and until Lessor elects to
assume the Leases pursuant to Section 6 hereof and delivers
to Lessor written notice of such assumption. Notwithstanding
this Assignment, the Lessee shall be and remain obligated to
the Lessor to perform all of the Lessee's obligations and
agreements under the Leases, and the Lessor shall be and
remain obligated to the Lessee to perform all of the
Lessor's obligations and agreements under the Leases.
2. Payment of Lease Expenses. The Lessee shall pay or
cause to be paid all rents, additional rents, taxes,
assessments, water rates, sewer rents, and other charges and
impositions payable by the Lessee under the Leases for which
provision has not been made hereinbefore, when and as often
as the same shall become due and payable. Lessee will in
every case deliver, or cause to be delivered, a proper
receipt for any such item so paid and will, upon request by
Agent, within ten (10) days after the time when such payment
shall be due and payable, deliver to the Agent, a copy of
the receipts for any such payments.
3. Lessee's Representations and Covenants with Respect to
Leases.
(a) Lessee is the sole owner of the entire lessee's
interest in the Lease, and has not executed and shall not
execute any other assignment of the Leases and has not
conveyed and will not convey to another or encumber any
interest it has under the Leases or in the Premises and has
not and shall not perform any acts or execute any other
instruments that might prevent Agent from fully exercising
its rights under any of the terms, covenants and conditions
of this Assignment. Lessee further agrees to defend the
leasehold estate created under the Leases for the entire
remainder of the term set forth therein, against all and
every person or persons lawfully claiming, or who may claim
the same or any part thereof, subject to the payment of the
rents in the Leases reserved and subject to the performance
and observance of all of the terms, covenants, conditions
and warranties thereof.
(b) The Leases are valid and enforceable in accordance with
their terms and have not been altered, modified, amended or
terminated and none of the terms and conditions thereof has
been waived in any manner whatsoever except in each case as
disclosed in writing to Agent.
(c) The Lessee shall at all times promptly and faithfully
keep and perform, or cause to be kept and performed, all the
covenants and conditions contained in the Leases by the
Lessee under the Leases to be kept and performed and in all
respects conform to and comply with the terms and conditions
of the Leases, and the Lessee further covenants that it
shall not do or permit anything which will impair or tend to
impair the security of the Banks and the Agent under the
Loan Documents or will be grounds for declaring a forfeiture
of the Leases, and upon any such failure aforesaid, Lessee
shall be subject to all of the rights and remedies granted
Agent under the Loan Documents.
(d) The Leases are in full force and effect. The Lessee
shall not modify, extend or in any way alter the terms of
the Leases or
cancel or surrender the Leases, or waive, execute, condone
or in any way release or discharge the Lessor of or from the
obligations, covenants, conditions and agreements by the
Lessor to be done and performed; and the Lessee does
expressly release, relinquish and surrender unto the Agent
all of its rights, power and authority to cancel, surrender,
amend, modify or alter in any way the terms and provisions
of the Leases and any attempt on the part of the Lessee to
exercise any such right without the written approval and
consent of the Agent thereto being first had and obtained
shall constitute a default under the terms hereof and under
the Loan Documents.
(e) Lessee shall be deemed in default if the Lessee fails
to give the Agent immediate notice of any default under the
Leases (or any of them) or of the receipt by it of any
notice of default from the Lessor thereunder, or if the
Lessee fails to furnish to the Agent immediately any and all
information which it may request concerning the performance
by the Lessee of the covenants of the Leases, or if the
Lessee fails to permit the Agent or its representative at
all reasonable times to make investigation or examination
concerning the performance by the Lessee of the covenants of
the Leases, or if the Lessee fails to permit the Agent or
its representative at all reasonable times to make
investigation or examination concerning such performance.
The Lessee shall deliver to the Agent an original executed
copy of the Leases, an estoppel certificate from the Lessor
of the Leases within ten (10) days of request by Agent and
in such form and content as shall be reasonably satisfactory
to Agent, as well as any and all documentary evidence
received by it showing compliance by the Lessee with the
provisions of the Leases.
(f) In the event of any failure by Lessee to perform any
covenant on the part of Lessee to be observed and performed
under the Leases, the performance by Agent of behalf of
Lessee of such covenant shall not remove or waive, as
between Lessee and Agent, the corresponding default under
the terms hereof and any amount so advanced by Agent or any
costs incurred in connection therewith, with interest
thereon at an interest rate per annum equal to the Base Rate
plus 2.0%, shall constitute additional indebtedness and be
immediately due and payable.
4. Merger. So long as any of the Obligations shall remain
unpaid, unless the Agent shall otherwise in writing consent,
the fee title and the leasehold estate created under each of
the Leases shall not merge but shall always be kept separate
and distinct, notwithstanding the union of said estates
either in the Lessor or in the Lessee, as lessee, or in a
third party, by purchase or otherwise; and the Lessee
covenants and agrees that if it shall acquire the fee title,
or any other estate, title or interest in the Premises
covered by said Leases, the Leases shall be considered as
assigned or conveyed to the Agent and the lien hereof spread
to cover such estate with the same force and effect as
though specifically herein assigned or conveyed and spread.
The provisions of this paragraph shall not apply if the
Agent or any Bank acquires the fee of the Premises unless
Agent shall so elect.
5. Further Assurances and Assignments. The Lessee agrees
to execute and deliver, immediately upon the request of
Agent, all such further assurances and assignments
concerning the Leases or the Premises as Agent shall from
time to time require.
6. Exercise of Remedies. In the event of an Event of
Default, Agent may, at its option, do any of the following:
(i) cause the Leases (or any of them) to be sold at private
or public sale to the highest bidder for cash in accordance
with the provisions of
the Uniform Commercial Code or other applicable law; (ii)
assume the Leases (or any of them), designate a third party
to assume the Leases (or any of them) or assign the Leases
(or any of them) to a third party; (iii) assume the Leases
(or any of them) or sublease the Leases (or any of them) or
the Premises or any part thereof to a third party; and (iv)
exercise any other right or remedy the Agent may have by
contract, at law, or in equity. Upon demand of Agent, the
Lessee agrees to surrender to Agent and Agent (or its
designee) shall be entitled to take actual possession of the
Premises or any part thereof personally, or by its agents or
attorneys. Agent is hereby vested with full power to use
all measures, legal and equitable, deemed by it necessary or
proper to enforce this Assignment, including the right of
Agent (or its designee) with or without force or notice and
with or without process of law, to enter upon and take and
maintain possession of all or any part of the Premises,
together with all personal property, fixtures, documents,
books, records, papers and accounts of the Lessee or the
then owner of the Premises relating thereto, and may exclude
the Lessee, its agents, or servants, wholly therefrom and
may as attorney-in-fact of the Lessee, or in its own name
and under the powers herein granted, hold, operate, manage
and control the Premises and conduct the business, if any,
thereof either personally or by its agents. Lessee hereby
grants full power and authority to Agent to exercise all
rights, privileges and powers herein granted at any and all
times hereinafter, without notice to Lessee. Agent shall be
under no obligation to exercise or prosecute any of the
rights or claims assigned to in hereunder or to perform or
carry out any of the obligations of the lessee/tenant under
the Leases and does not assume any of the liabilities in
connection with or arising or growing out of the covenants
and agreements of Lessee in the Leases.
7. Indemnity. Agent shall not at any time (regardless of
any exercise by Agent, or right of Agent to exercise, any
powers herein conferred) be obligated to perform or
discharge, nor does it hereby undertake to perform or
discharge, any obligation, duty or liability under the
Leases and the Lessee shall and does hereby agree to
indemnify and hold Agent harmless from any and all
liability, loss or damage which Agent may or might incur
under or by reason of (a) the Leases, (b) the assignment
thereof, (c) any action taken by Agent or its agents
hereunder, unless constituting willful misconduct or gross
negligence, or (d) claims and demands which may be asserted
against it by reason of any alleged obligations or
undertakings on its part (or to cause the Lessee) to perform
or discharge any of the terms, covenants or agreements
contained in the Leases.
8. Power of Attorney. The Lessee does hereby appoint
irrevocably the Agent its true and lawful attorney in its
name and stead and hereby authorizes Agent, with or without
taking possession of the Premises, to take any and all
actions under the Leases, on behalf of Lessee, as it may
deem necessary. The power of attorney conferred upon Agent
pursuant to this Assignment is a power coupled with an
interest and cannot be revoked, modified or altered without
the written consent of Agent. Notwithstanding the
foregoing, the Agent agrees not to exercise any power
granted pursuant to this Section 8 except upon a default
hereunder or an Event of Default under the Credit Agreement.
9. Occurrence of Default. Agent shall not exercise any of
the rights and powers conferred upon it herein until and
unless there shall occur a default hereunder or an Event of
Default as defined in the Credit Agreement. Notwithstanding
the foregoing, Agent shall be under no obligation to
exercise its rights hereunder.
10. Election of Remedies. The provisions set forth in this
Assignment shall be deemed a special remedy given to Agent,
and shall not be deemed exclusive of any of the remedies
granted in the Credit Agreement, all of which remedies shall
be enforceable concurrently or successively. No exercise by
Agent of any of its rights hereunder shall cure, waive or
affect any default hereunder or any Default or Event of
Default under the Credit Agreement. No inaction or partial
exercise of rights by Agent shall be construed as a waiver
of any of its rights and remedies, and no waiver by Agent of
any such rights and remedies shall be construed as a waiver
by Agent of any of its other rights and remedies.
11. Notices. Any notice which any party hereto may desire
or may be required to give to any other party hereto shall
be given as set forth in the Credit Agreement.
12. Governing Law; Interpretation. This Assignment shall
be governed by the laws of the State of Indiana. Wherever
possible each provision of this Assignment shall be
interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this
Assignment shall be prohibited by or invalid under such law,
such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of
this Assignment. Time is of the essence of this Assignment.
This Assignment shall be binding on the successors and
assigns of the parties hereto, however, Lessee may not
assign its rights and obligations hereunder without the
prior written consent of Agent.
13. Miscellaneous.
(a) Agent may take or release other security for the
Obligations, may release any party primarily or secondarily
liable for any of the Obligations, may grant extensions,
renewals or indulgences with respect to such Obligations and
may apply any other security therefor held by it to the
satisfaction of such Obligations without prejudice to any of
its rights hereunder.
(b) Waiver of or acquiescence by Agent in any default by
the Lessee, or failure of the Agent to insist upon strict
performance by the Lessee of any warranties or agreements in
this Assignment, shall not constitute a waiver of any
subsequent or other default or failure, whether similar or
dissimilar.
(c) The rights and remedies of Agent under this Assignment
are cumulative and are not in lieu of, but are in addition
to any other rights or remedies which Agent shall have under
the Loan Documents or any other documents executed in
connection therewith, or at law or in equity.
(d) If any term of this Assignment, or the application
thereof to any person or circumstance, shall, to any extent,
be invalid or unenforceable, the remainder of this
Assignment, or the application of such term to persons or
circumstances other than those as to which it is invalid or
unenforceable, shall not be affected thereby, and each term
of this Assignment shall be valid and enforceable to the
fullest extent permitted by law.
(e) The terms "Agent" and "Debtor" shall be construed to
include the successors and assigns of each party. The
genders and numbers used in this assignment are used as
reference terms only and shall apply with the same effect
whether the parties are of the masculine or feminine gender
or corporate or other form, and the singular shall likewise
include the plural.
(f) This Assignment may not be amended, modified or changed
nor shall any waiver of any provision hereof be effective,
except by an instrument in writing signed by the party
against whom enforcement of any waiver, amendment, change,
modification or discharge is sought.
(g) The rights and remedies of Agent under this Assignment
are subordinate to Captec Financial Group, Inc. ("Captec")
and CNL Financial Services, Inc. ("CNL") pursuant to and in
accordance with the terms and conditions of that certain
Intercreditor Agreement dated August 3, 1999 (the
"Intercreditor Agreement") by and among Captec, CNL, Agent,
Lessee and certain affiliates of Lessee.
(h) So long as the Intercreditor Agreement is in effect,
neither Lessee nor Agent shall cause or permit any
recordation in any public records of this Assignment or any
memorandum thereof, without the prior written consent of
Captec and CNL.
IN WITNESS WHEREOF, the undersigned has caused this
agreement to be executed as of the day and year first above written.
BRAVOKILO, INC.
By:________________________________
Its:________________________________
STATE OF ______________ )
) ss:
COUNTY OF _______________ )
BE IT REMEMBERED, that on this _______ day of
____________, 1999, before me, the subscriber, an officer
duly authorized to take acknowledgments for use in the State
of ________, personally appeared ________________________,
who, I am satisfied is the person who executed the within
Instrument as the __________________ of
_____________________, the corporation named therein, and I
having first made known to [him] [her] the contents thereof,
[he] [she] did thereupon acknowledge that the said
Instrument made by the said corporation and delivered by
[him] [her] as such officer, is the voluntary act and deed
of said corporation, made by virtue of authority from its
Board of Directors, for the uses and purposes therein
expressed.
EXHIBIT 4-I
THIRD AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
DATED AS OF MAY 11, 1999
BY AND BETWEEN
QUALITY DINING, INC.
AND
GAGHC, INC.,
as Borrowers,
AND
THE BANKS WHICH ARE PARTY HERETO AND
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
(f/k/a Texas Commerce Bank National Association),
as Administrative Agent
AND
NBD BANK, N.A.,
as Documentation Agent
AND
NATIONSBANK, N.A.,
as Co-Agent
ARTICLE I. DEFINITIONS 1
ARTICLE II. THE ADVANCES 14
2.1. Advances. 14
2.2. Election by Borrower 18
2.3. Increased Costs; Capital Adequacy 19
2.4. Liquidation Fee 21
2.5. Basis for Determining LIBOR Rate
Inadequate or Unfair 21
2.6. Payments 22
2.7. Setoff; etc 22
2.8. Sharing 23
2.9. Commitment Fee 23
2.10.Amendment Fees 24
2.11.Lending Branch 24
2.12.Letters of Credit 24
2.13. Application of Payments and
Collections 26
2.14. Extension of Termination Date 28
ARTICLE III. CONDITIONS PRECEDENT 28
3.1. Conditions Precedent to
Effectiveness 28
3.2. Conditions Precedent
to All Advances 30
ARTICLE IV. REPRESENTATIONS AND
WARRANTIES 31
4.1. Organization; etc 31
4.2. Due Authorization 31
4.3. Subsidiaries 32
4.4. Validity of the Agreement; etc. 32
4.5. Financial Statements 32
4.6. Litigation; etc 33
4.7. Compliance with Law 33
4.8. ERISA Compliance 33
4.9. Title to Assets 33
4.10.Indebtedness 34
4.11.Use of Proceeds 34
4.12.Margin Stock 34
4.13.Investment Company Act 34
4.14.Unregistered Securities 34
4.15.Public Utility Holding
Company Act 34
4.16.Accuracy of Information 34
4.17.Tax Returns; Audits 34
4.18.Environmental and Safety
Regulations 35
4.19.Forecasts 35
4.20.Solvency 36
4.21.No Default 36
4.22.Subsidiary Guarantors 36
4.23.Year 2000 Compliance 36
ARTICLE V. CERTAIN AFFIRMATIVE COVENANTS 37
5.1. Financial Information; etc 37
5.2.Maintenance of Corporate Existence;etc 38
5.3. Payment of Taxes; etc 39
5.4. Compliance with Laws 39
5.5. Books and Records; etc 39
5.6. Insurance 39
5.7. Conduct of Business 40
5.8. Maintain Business 40
5.9. ERISA 40
5.10.Changes to GAAP 40
5.11.Use of Proceeds 41
5.12.Subsidiary Guaranty 41
5.13.Security Documents 42
5.14.Year 2000 Compliance 43
5.15.Survival of Warranties
and Representations 43
ARTICLE VI. CERTAIN FINANCIAL COVENANTS
AND NEGATIVE COVENANTS 43
6.1. Fixed Charge Coverage Ratio 43
6.2. Ratio of Funded Debt to Pro Forma
Consolidated Cash Flow 44
6.3. Limitations on Indebtedness 44
6.4. Liens 45
6.5. Dividends, Stock Purchases and
Restricted Payments 46
6.6. Sales of Assets 47
6.7. Mergers and Consolidations 47
6.8. Preferred Stock of Subsidiaries 47
6.9. Disposition of Securities of
a Subsidiary 48
6.10.Investments 48
6.11.Transactions with
Affiliates 48
6.12. Capital Expenditures 49
6.13. Acquisitions 49
6.14. SPE 49
6.15. Rate Hedging Obligations 49
6.16. Franchise Agreements 49
ARTICLE VII. EVENTS OF DEFAULT 50
7.1. Events of Default 50
7.2. Action If Event of Default 51
7.3. Remedies 52
ARTICLE VIII. THE AGENT 52
8.1. Appointment and Authorization 52
8.2. Power 52
8.3. Employment of Counsel; etc 53
8.4. Reliance 53
8.5. General Immunity 53
8.6. Credit Analysis 54
8.7. Agent and Affiliates 54
8.8. Indemnification 55
8.9. Successor Administrative Agent 55
8.10. Agents' Fees 56
8.11. Collateral Matters 56
ARTICLE IX. AMENDMENT AND RESTATEMENT 56
9.1. Amendment and Restatement of Existing
Credit Agreement 56
9.2. Master Assignment 56
9.3. Replacement Notes 58
9.4. Security Documents 59
9.5. Release of Subject Assets 59
ARTICLE X. MISCELLANEOUS 59
10.1.Waivers, Amendments; etc 59
10.2.Payment Dates 60
10.3.Notices 60
10.4.Costs and Expenses 60
10.5.Indemnification 60
10.6.Severability 61
10.7.Cross-References 61
10.8.Headings 61
10.9.Governing Law 61
10.10.Successors and Assigns 61
10.11.Execution in Counterparts 63
10.12.Joint and Several Liability 63
10.13.Financial Information 63
10.14.Consent to Jurisdiction 63
10.15.Waiver of Jury Trial 64
SCHEDULE I - Commitments
ANNEX I-List of Jurisdictions in which the Borrower is Qualified to Do Business
ANNEX II-List of Subsidiaries; Jurisdiction of Incorporation and Stock Ownership
ANNEX III-Indebtedness;Liens
ANNEX IV-Investments
ANNEX V-Description ofReal Property
EXHIBIT A - Form of Note
EXHIBIT B - Notice of Borrowing
EXHIBIT C - Legal Opinion of Counsel
EXHIBIT D - Form of Assignment Agreement
THIRD AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
This Third Amended and Restated
Revolving Credit Agreement dated as of May 11,
1999 by and between Quality Dining, Inc., an
Indiana corporation, and GAGHC, Inc., a Delaware
corporation, as Borrowers, the banks now or
hereafter parties hereto (the "Banks"), Chase Bank
of Texas, National Association, in its capacity as
Administrative Agent for the Banks (in its
capacity as such, and together with any successor
administrative agent hereunder, the
"Administrative Agent"), NBD Bank, N.A. in its
capacity as Documentation Agent for the Banks (in
such capacity, the "Documentation Agent") and
NATIONSBANK, N.A. in its capacity as Co-Agent for
the Banks (in such capacity, the "CoAgent").
WHEREAS, the Borrowers have requested and the
Banks have agreed to amend the Existing Credit
Agreement (as defined below);
WHEREAS, the Borrowers, the Banks and the Agents
have agreed to enter into this Agreement in order
to amend and restate the Existing Credit
Agreement; and
WHEREAS, it is the intention of the
parties to this Agreement that this Agreement not
constitute a novation of the obligations under the
Existing Credit Agreement and that, from and after
the Effective Date, the Existing Credit Agreement
shall be amended and restated hereby and all
references herein to "hereunder," "hereof," or
words of like import and all references in any
other Loan Document to the "Credit Agreement" or
words of like import shall mean and be a reference
to the Existing Credit Agreement as amended and
restated hereby.
NOW, THEREFORE, in consideration of the terms and
conditions contained herein, and of any loans or
extensions of credit heretofore, now or hereafter
made to or for the benefit of the Borrowers by the
Banks and the Agents, the parties hereto agree as
follows:
ARTICLE I.
DEFINITIONS
The following terms when used in
this Agreement shall, except where the context
otherwise requires, have the following meanings
(such definitions to be equally applicable to the
singular and plural forms thereof):
"Acquisition" means any transaction, or any
series of related transactions, consummated on or
after September 11, 1998, by which either of the
Borrowers and/or their respective Subsidiaries
(other than SPE) (i) acquires any going business
or all or substantially all of the assets of any
firm, corporation or division thereof, whether
through purchase of assets, merger or otherwise or
(ii) directly or indirectly acquires (in one
transaction or as the most recent transaction in a
series of transactions) voting power for the
election of directors (other than securities
having such power only by reason of the happening
of a contingency) or a majority (by percentage of
voting power)of the outstanding partnership
interests of a partnership (any such target
business, assets, corporation, partnership or the
like herein referred to as a "Target").
"Acquisition Closing Date" means
the date of the consummation of any Acquisition of
any Target under the terms of this Agreement.
"Adjusted LIBOR Rate" shall mean a rate per annum
determined pursuant to the following
formula:
LIBOR Rate
--------------------------------------
Adjusted LIBOR Rate = 1 - Reserve Requirement
"Advance" shall mean an Advance as described in Section 2.1(a).
"Affiliate" shall include, with respect to
any Person, any Person which directly or
indirectly controls, is controlled by, or is under
common control with such party and in addition, in
the case of the Borrower and each Subsidiary, each
officer, director, stockholder, joint venture and
partner of the Borrower and each Subsidiary.
For purposes of this definition, a Person shall be
deemed to control another Person if the
controlling Person owns directly or indirectly
five percent (5%) or more of the shares of stock
of the controlled Person or possesses, directly or
indirectly, thepower to direct or cause the
direction of the management and policies of the
controlled Person, whether through ownership of
stock, by contract or otherwise.
"Agent" shall mean each of the Administrative
Agent, the Documentation Agent and the Co-Agent,
and "Agents" shall mean the Administrative Agent,
the Documentation Agent and the Co-Agent
collectively.
"Agreement" shall mean this Third Amended and
Restated Revolving Credit Agreement as
originally executed and as amended, modified or
supplemented from time to time.
"Banks" shall mean the Banks referenced in
the preamble hereto or any assignee or successor
thereto.
"Base Rate" shall mean, for any day, a
fluctuating rate of interest per annum equal to
the higher of (i) the Prime Rate for such day, and
(ii) the Federal Funds Rate plus 0.50%.
"Base Rate Loan" shall mean, as of any date,
an Advance designated as a "Base Rate Loan"
pursuant to Section 2.2.
"Board of Directors" shall mean the Board of
Directors of QDI, GAGHC or any Subsidiary
Guarantor, as applicable.
"Borrower" shall mean each of QDI and GAGHC; and
"Borrowers" shall mean QDI and GAGHC together.
"Business Day" shall mean any day on which
commercial banks are not authorized or required to
close in Houston, Texas and if such day relates to
an event, a transaction or a notice in respect of
a LIBOR Base Loan, a day which is also a day on
which dealings in U.S. Dollar deposits are carried
out in the London interbank market.
"Capital Expenditure" shall mean any
expenditure by a Borrower or any Subsidiary in
respect of the purchase or other acquisition of
assets which, in conformity with GAAP, are
included in the property, plant, equipment, or
other fixed asset accounts reflected in the
consolidated balance sheet of QDI.
"Capital Lease" shall mean a lease of (or
other agreement conveying the right to use) real
and/or personal property, which obligation is, or
in accordance with GAAP (including Statement of
Financial Accounting Standards No. 13 of the
Financial Accounting Standards Board) is required
to be, classified and accounted for as a capital
lease on a balance sheet of such Person.
"Capital Lease Obligations" shall mean, with
respect to any Person, any obligation of such
Person to pay rent or other amounts under a
Capital Lease and for purposes of this Agreement
the amount of each Capital Lease Obligation shall
be the capitalized amount thereof determined in
accordance with GAAP.
"CBT" shall mean Chase Bank of Texas, National
Association, in its individual capacity.
"Change of Control" shall mean the ownership,
through purchase or otherwise (including
the agreement to act in concert without anything
more), by any Person or group of Persons (other
than one or more of Daniel B. Fitzpatrick, the
spouse, children or grandchildren or the heirs of
Daniel B. Fitzpatrick or any trusts created for
their benefit) acting in concert, directly or
indirectly, in one or more transactions, of (i)
beneficial ownership or control of securities
representing more than 30% of the combined voting
power of QDI's Voting Stock or (ii) substantially
all of the assets of QDI.
"Code" shall mean the Internal Revenue Code of
1986, as amended from time to time.
"Commitment" shall mean, for each Bank for
any period, the amount appearing opposite such
Bank's name under the heading "Commitments" in
Schedule I, as such amount may be reduced pursuant
to Section 2.1(b) or temporarily adjusted pursuant
to Section 2.1(d) and as said Schedule I may be
amended from time to time pursuant to Section
10.1; provided, however, that the aggregate
Commitments of all Banks shall not exceed
$80,000,000. "Consolidated Capital Expenditures"
shall mean, for any fiscal period, the sum of all
Capital Expenditures made by the Borrowers and
their consolidated Subsidiaries during such
period.
"Consolidated Cash Flow" of any person shall
mean, for any period for which the amount thereof
is to be determined, Consolidated Net Income of
such Person for such period, plus (to the extent
deducted in determining Consolidated Net Income
and without duplication to adjustments to net
income of such Person (determined in accordance
with GAAP) made in the determination of
Consolidated Net Income) (i) provisions for any
Federal, state or local taxes during such period,
(ii) interest expense of such Person during such
period and (iii) depreciation and amortization of
such Person during such period, and (iv) other non-
cash income or expenses of such Person during such
period.
"Consolidated Net Income" shall mean, for any
period for which the amount thereof is to be
determined, the net income (or net losses) of QDI
and its Subsidiaries on a consolidated basis as
determined in accordance with GAAP after
deducting, to the extent included in computing
said net income and without duplication, (i) the
income (or deficit) of any Person (other than a
Subsidiary) in which QDI or any of its Subsidiaries
has any ownership interest, except to the extent that any such
income has been actually received by QDI or such
Subsidiary in the form of cash dividends or similar cash
distributions, (ii) any income (or deficit) of any other Person
accrued prior to the date it becomes a Subsidiary
of QDI or merges into or consolidates with QDI or
another of its Subsidiaries, (iii) the gain or
loss (net of any tax effect) resulting from the
sale, exchange or disposal of any capital assets,
(iv) any gains or losses, or other income (net of
any tax effect in respect thereof) which is
nonrecurring or otherwise properly classified as
extraordinary in accordance with GAAP, (v)
income resulting from any reappraisal,
reevaluation or writeup of any assets, (vi) any
portion of the net income of the Subsidiaries
which for any reason is not available for
distribution, and (vii) the proceeds of any life
insurance policy on the life of any officer,
director or employee of QDI or any of its
Subsidiaries.
"Default" shall mean any event which if continued
uncured would, with notice or lapse of
time or both, constitute an Event of Default.
"Earnings Available for Fixed Charges" shall
mean, for any period for which the amount thereof
is to be determined, the sum of (without
duplication): (i) the Consolidated Cash Flow of
QDI and its Subsidiaries for such period, and (ii)
the rents and other payments (exclusive of
property taxes, property and liability insurance
premiums and maintenance costs) made by QDI and
its Subsidiaries during such period under
Operating Leases.
"Effective Date" shall mean the later of May 11,
1999 and the date on which the conditions
set forth in Article III are satisfied.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended,
and any successor statute of similar import,
together with the regulations thereunder and
under the Code, in each case as in effect from
time to time. References to sections of ERISA
shall be construed to also refer to any successor
sections.
"ERISA Affiliate" shall mean any
corporation, trade or business that is, along
with QDI or any of its Subsidiaries, a member of a controlled
group of corporations or a controlled group of
trades or businesses, as described in Sections
414(b) and 414(c), respectively, of the Code or
Section 4001 of ERISA.
"Event of Default" shall mean any Event of
Default described in Article VII.
"Existing Credit Agreement" shall mean the
Second Amended and Restated Revolving Credit
Agreement dated as of September 11, 1998 by and
between, QDI, GAGHC, the Banks which are a party
thereto (the "Existing Banks") and CBT, as Agent,
and NBD Bank, N.A., as Documentation Agent.
"Existing Notes" shall mean the promissory
notes issued by the Borrowers in favor of the
Existing Banks evidencing the Loans outstanding
under the Existing Credit Agreement.
"Federal Funds Rate" means a fluctuating
interest rate per annum equal for each day to the
weighted average of the
rates on overnight Federal funds transactions
with members of the Federal Reserve System
arranged by Federal funds brokers, as published
for such day (or, if such day is
not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New
York, or, if such rate is not so published for
any day which is a Business Day, the average of
the quotations for such day on such transactions
received by the Administrative Agent from three
Federal funds brokers of recognized standing
selected by it.
"Fixed Charges" shall mean, for any period for
which the amount thereof is to be determined, the sum
of the following (without duplication): (i)
Interest Expense of QDI and its Subsidiaries for
such period, plus (ii) all rents and other
payments (exclusive of property taxes, property
and liability insurance premiums and maintenance
costs) which are made by QDI and its Subsidiaries
during such period under Operating Leases in
respect of which QDI or any of its Subsidiaries
is obligated as a lessee or user or as a
guarantor of the obligations of a lessee or user,
plus (iii) Capital Lease Obligations paid or
required to be paid by QDI or any of its
Subsidiaries during such period, plus (iv) the
Principal Requirement for such period.
"Franchise" in respect of any Person shall mean
all rights of such Person as a franchisee pursuant to
a Franchise Agreement relating to one or more of
the businesses conducted by such
Person or an Affiliate of such Person.
"Franchise Agreement" in respect of any
Person shall mean each of the franchise
agreements to which such Person is a party as
franchisee, as any of the same may from time to
time be amended, modified, supplemented or
restated.
"Funded Debt" of any Person shall mean all
Indebtedness owed or guaranteed by such
Person which by its terms matures more than one
year from the date of creation or which is
renewable at the option of the obligor for more
than one year from such date whether or not
theretofore renewed.
"GAAP" shall mean generally accepted accounting principles consistently
applied and maintained throughout the term of
this Agreement except for such changes as are in
accordance with the generally accepted accounting
principles in effect at the time of such change
and shall be concurred in by the certified public
accountants certifying the financial statement of
QDI and its Subsidiaries. Whenever any
accounting term is used herein which is not
otherwise defined, it shall be interpreted in
accordance with GAAP.
"GAGHC" shall mean GAGHC, Inc., a Delaware
corporation, and its successors and assigns, and
any surviving, resulting or transferee
corporation.
"Guarantee(s)" shall mean all guarantees,
sales with recourse, endorsements (other than for
collection or deposit in the ordinary course of
business) and other obligations (contingent or
otherwise) by any Person to pay, purchase,
repurchase or otherwise acquire or become liable
upon or in respect of any Indebtedness of any
other Person, and, without limiting the
generality of the foregoing, all obligations
(contingent or otherwise) by any Person to
purchase products, supplies or other property or
services for any Person under agreements
requiring payment therefor regardless of the non-
delivery or non-furnishing thereof, or to make
investments in any other Person, or to maintain
the capital, working capital, solvency or general
financial conditions of any other Person, or to
indemnify any other Person against and hold him
harmless from damages, losses and liabilities, all under
circumstances intended to enable such other Person or Persons
to discharge any Indebtedness or to comply with
agreements relating to such Indebtedness or
otherwise to assure or protect creditors against
loss in respect of such Indebtedness. The amount
of any Guarantee shall be deemed to be the amount
of the Indebtedness of, or damages, losses or
liabilities of, the other Person or Persons in
connection with which the Guarantee is made or to
which it is related unless the obligations under
the Guarantee are limited to a determinable
amount, in which case the amount of such
Guarantee shall be deemed to be such determinable
amount.
"Indebtedness" of any Person shall mean and
include, as of any date as of which the
amount thereof is to be determined, (i) all
obligations of such Person for borrowed money or
which has been incurred in connection with the
acquisition of Property; (ii) all Guarantees of
such Person; (iii) all indebtedness, liabilities
and other obligations secured by any Lien on or
in respect of Property of such Person, whether or
not liability has been assumed by such Person for
the payment of such obligations; (iv) all
indebtedness, liabilities and other obligations
of such Person arising under any conditional sale
or other title retention agreement, whether or
not the rights and remedies of the seller or
lender under such agreement in the event of
default are limited to repossession or sale of
such property; (v) all obligations of such Person
as an account party in respect of letters of
credit and bankers acceptances; (vi) all net
obligations of such Person in respect of Rate
Hedging Obligations and (vii) Capital Lease
Obligations of such Person.
"Indebtedness Ratio" shall mean, as of any
date of determination thereof, the ratio of (i)
Funded Debt of QDI and its Subsidiaries as of
such date, excluding, however, for purposes of
this calculation, any obligations in respect of
letters of credit (to the extent undrawn)
securing insurance and workers' compensation
programs of QDI and its Subsidiaries, to (ii) the
Pro Forma Consolidated Cash Flow of QDI and its
Subsidiaries for the twelvemonth period ending on
such date.
"Interest Expense" shall mean, for any
period for which the amount thereof is to be
determined, the consolidated interest expense of
QDI and its Subsidiaries, including all interest
on Indebtedness (including imputed interest
related to Capitalized Leases), all amortization
of debt discount and expense and Rate Hedging
Obligations of the Borrowers and their
Subsidiaries, to the extent required to be
reflected on the income statement of QDI and its
Subsidiaries on a consolidated basis in
accordance with GAAP.
"Interest Period" shall mean, with respect
to any LIBOR Base Loan, the period designated
by a Borrower for the computation of interest
commencing on the date the relevant Advance is
made and ending on the date which is one (1), two
(2), three (3) or six (6) months thereafter. For
purposes of determining an Interest Period, a
month means a period starting on one day in a
calendar month and ending on a numerically
corresponding date in the next calendar month,
provided, however, that if there is no
numerically corresponding day in the month in
which an Interest Period is to end or if an
Interest Period begins on the last day of a
calendar month, such Interest Period shall end on
the last Business Day of such calendar month and
provided further that no Interest Period may
extend beyond the Termination Date.
"Investment" shall mean any purchase of
capital stock, obligations or other securities of
any Person, any contribution of capital to any
Person, any loan, advance or extension of credit
to any Person or other investment or acquisition
of any interest in any Person.
"Junior Subordinated Note" shall mean the junior
subordinated note dated October 20,
1997 in the original principal amount of
$10,000,000 issued by Bruegger's Corporation to
QDI, and thereafter assigned by QDI to Southwest
Dining, Inc., as it may be amended, modified,
restated or replaced from time to time.
"LIBOR Base Loan" shall mean, for any
Interest Period, an Advance designated as a
LIBOR Base Loan pursuant to Section 2.2.
"LIBOR Rate" shall mean for each Interest Period
the rate of interest per annum as
determined by the Administrative Agent (rounded
upward, if necessary, to the nearest whole
multiple of one-sixteenth of one percent (1/16th
of 1%)) at which deposits of United States
Dollars in immediately available and freely
transferable funds are offered at 11:00 A.M.
London time two (2) Business Days prior to the commencement
of such Interest Period to the Administrative
Agent or its agent in the London interbank market
for a term comparable to such Interest Period and
in an amount comparable to the principal amount
of the LIBOR Base Loan to be outstanding during
such Interest Period.
"Lien" shall mean: (a) any interest in
Property (whether real, personal or mixed and
whether tangible or intangible) which secures the
payment of indebtedness or an obligation owed to,
or a claim by, a Person other than the owner of
such Property, whether such interest is based on
the common law, statute or contract, including,
without limitation, any such interest arising
from a mortgage, charge, pledge, security
agreement, conditional sale, Capital Lease or
trust receipt, or arising from a lease,
consignment or bailment given for security
purposes, and (b) any exception to or defect in
the title to or ownership interest in such
Property, including, without limitation,
reservations, rights of entry, possibilities of
reverter, encroachments, easements, rights of
way, restrictive covenants, leases and licenses. For
purposes of this Agreement, a Borrower or any
Subsidiary shall be deemed to be the owner of any
Property which it has acquired or holds subject
to a conditional sale agreement, Capital Lease or
other arrangement pursuant to which title to the
Property has been retained by or vested in some
other person for security purposes.
"Loan" shall mean, individually or
collectively, as the case may be, a Base Rate
Loan or a LIBOR Base Loan.
"Loan Document" shall mean, individually or
collectively, as the case may be, this
Agreement, the Notes, the Subsidiary Guaranty,
the Reaffirmation of Subsidiary Guaranty and
each Security Document, each as originally
executed and as amended, modified or supplemented
from time to time.
"Material Adverse Occurrence" shall mean
any occurrence of whatsoever nature (including,
without limitation, any adverse determination in
any litigation, arbitration or governmental
investigation or proceeding) which could
materially adversely affect the business,
properties, operations or condition, financial or
otherwise, of QDI and its Subsidiaries or could
materially impair the ability of QDI or its
Subsidiaries to perform its obligations under the
Loan Documents.
"Monthly Payment Date" shall mean the first
Business Day of each calendar month, commencing
on the first of such dates to occur after the
Effective Date.
"Mortgage Transaction" shall mean one or
more transactions (a) pursuant to which (i) QDI
and/or a Subsidiary thereof sells for fair
consideration all or a portion of the Subject
Assets to a SPE, (ii) QDI and/or its Subsidiaries
lease from such SPE the Subject Assets which were
sold to such SPE, as contemplated by clause (i)
above, and (iii) none of QDI and its Subsidiaries
(other than such SPE) have entered into any
Guarantee in respect of any of the obligations of
such SPE and (b) in respect of which the
aggregate annual rentals and other payments
(exclusive of property taxes, property and
liability insurance premiums and maintenance
costs) shall not exceed the annual mortgage
payments payable by the SPEs to unaffiliated
third parties.
"Net Proceeds" shall mean, with respect to
any sale of assets, the proceeds of such sale net
of (i) direct out-of-pocket costs and expenses of
such sale, (ii) federal and state income taxes,
sales taxes, transfer taxes or similar taxes
imposed on the seller on account of such sale,
and (iii) amounts, if any, required to be paid
with respect to Indebtedness secured by any Lien
on such assets which is senior in priority to the
Lien of the Administrative Agent, if any, on such
assets.
"Northern" shall mean The Northern Trust Company,
in its individual capacity.
"Note(s)" shall mean, individually or
collectively, as the case may be, each of the
promissory notes, substantially in the form of
Exhibit A attached hereto, made by the Borrowers
payable to the order of each of the Banks to
evidence the Advances made by such Bank, and such
other promissory notes accepted by the Banks in
exchange for or in substitution of any such
Notes.
"Note Pledge Agreement" shall mean the Note
Pledge Agreement dated as of October 22,
1997 by and between Southwest Dining, Inc. and
the Administrative Agent for the benefit of the
Banks, as it may be amended, modified, restated
or replaced from time to time.
"Notice of Borrowing" shall mean the notice
in the form of Exhibit B attached hereto to be
delivered to the Administrative Agent pursuant to
Section 2.1(d).
"Obligations" shall mean (i) all loans
(including the Loans), Advances, debts,
liabilities, obligations, covenants and duties
owing by the Borrowers or the Subsidiary
Guarantors to the Administrative Agent, the Banks
or any Bank of any kind or nature, present or
future, arising under this Agreement or any other
Loan Document, whether evidenced by any note,
guaranty or other instrument, whether for the
payment of money or in kind, whether arising by
reason of any extension of credit, issuing,
guaranteeing or confirming of a letter of credit,
guaranty, indemnification or in any other manner,
whether direct or indirect (including those
acquired by assignment or purchase), absolute or
contingent, due or to become due, and however
acquired and (ii) all Rate Hedging Obligations
owing at any time or from time to time by the
Borrowers or the Subsidiary Guarantors, or any of
them, to the Banks or any Bank. The term
includes, without limitation, all principal,
interest, fees, charges, expenses, reasonable
attorneys' fees, and any other sum chargeable to
the Borrowers or the Subsidiary Guarantors under
this Agreement on any other Loan Document or in
connection with any Rate Hedging Obligation.
"Operating Lease" shall mean a lease
(excluding Capital Leases) of Property to which
QDI or any of its Subsidiaries is a party as
lessee having an unexpired term (including any
periods of renewal or extension which may be
exercised at the option of the lessor or lessee)
in excess of one year.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation and any entity succeeding
to any or all of its functions under ERISA.
"Percentage" shall mean, with respect to
each Bank, the percentage derived from dividing
such Bank's Commitment by the sum of the
aggregate Commitments for all Banks; provided
that after the termination of the Commitments,
"Percentage" shall mean, with respect to each
Bank, the percentage derived by dividing the
principal amount outstanding of such Bank's Note
by the aggregate principal amount outstanding of
all Notes.
"Permitted Disposition" shall mean (i) any
sale by a Borrower or any Subsidiary of inventory
in the ordinary course of its business and on
usual and customary terms, (ii) any sale of a
past due receivable for collection only in the
ordinary course of business, (iii) any sale of
assets of a Subsidiary to QDI or a Subsidiary
Guarantor, (iv) any sale of equipment no longer
used or useful in the business of a Borrower or
any Subsidiary and (v) any sale or lease by a
Borrower or any Subsidiary of any other assets
(including without limitation the capital stock
of any Subsidiary), provided that no sale or
financing of assets by the Borrower or a
Subsidiary described in clause (v) above shall be
a Permitted Disposition unless the Net Proceeds
of such sale or financing are applied within
twelve months (x) to prepay Funded Debt of the
Borrowers and/or (y) to acquire replacement
assets having equal or greater value.
"Permitted Investment" shall mean any of
the following Investments made by QDI or any of
its Subsidiaries in any Person: (i) obligations,
with a maturity of less than two years from the
date of acquisition thereof, issued by or
unconditionally guaranteed by the United States
of America or an agency or instrumentality
thereof backed by the full faith and credit of
the United States of America; (ii) direct
obligations of any state of the United States,
any subdivision or agency thereof or any
municipality therein which are rated by Standard
& Poor's Corporation ("S&P") or Moody's Investors Service, Inc.
("Moody's") in one of the top two rating
classifications and maturing within two years of
the date of acquisition thereof; (iii)
certificates of deposit or banker's acceptances,
maturing within two years of the date of
acquisition thereof, issued by commercial banks
organized under the laws of the United States or
any state thereof, having capital, surplus and
undivided profits aggregating not less than $100
million and whose unsecured long-term debt is
rated in one of the top two rating
classifications by S&P or Moody's; (iv)
commercial paper of any corporation organized
under the laws of the United States or any state
thereof, rated in one of the top two rating
classifications by S&P or Moody's and with a
maturity of less than 270 days from the date of
acquisition thereof; (v) Investments of QDI in
and to any Wholly-Owned Subsidiary of QDI (other
than any SPE) and Investments of any Wholly-Owned
Subsidiary of QDI in and to QDI or any Wholly-
Owned Subsidiary of QDI (other than SPE),
including any Investments in a corporation which
after giving effect thereto will become a Wholly-
Owned Subsidiary; (vi) Investments existing as of
the date of this Agreement, as disclosed on Annex
IV; (vii) Investment of not in excess of
$1,000,000 in a joint venture for the
construction and ownership of an office building;
(viii) the Junior Subordinated Note; and (ix)
Investment in SPEs in an aggregate amount not to
exceed $40,000,000.
"Person" shall mean any natural person,
corporation, firm, joint venture, partnership,
limited liability company, association, trust or
other entity or organization, whether acting in
an individual, fiduciary or other capacity, or
any government or political subdivision thereof
or any agency, department or instrumentality
thereof.
"Plan" shall mean each employee benefit plan or
other class of benefits covered by Title IV
of ERISA, in either case whether now in existence
or hereafter instituted, of QDI, any of its
Subsidiaries or any ERISA Affiliate.
"Pledge Agreement" shall mean the Pledge
Agreement, dated as of October 31, 1997, entered
into by certain of QDI's Subsidiaries in favor of
the Administrative Agent for the benefit of the
Banks, as it may be amended, modified, restated
or replaced from time to time.
"Pledgor" shall mean each of the Borrowers
and their respective Subsidiaries and Affiliates
which is a party to the Pledge Agreement, the
Note Pledge Agreement, the Security Agreement or
any other Security Document at any time or from
time to time.
"Preferred Stock" shall mean any class of
capital stock of a Person with respect to which
mandatory payments are required or with respect
to which a payment (of interest, dividends or
return of capital) has a preference or priority
over the making of a similar payment on any other
class of capital stock of such Person.
"Prime Rate" shall mean the rate announced
by CBT from time to time as its prime rate,
changing as and when such prime rate changes; CBT
may lend to its customers at rates that are at,
above or below the Prime Rate.
"Principal Requirements" shall mean, for
any period for which the amount thereof is to be
determined, all payments of principal made or
required to be made by QDI and its Subsidiaries
during such period on Indebtedness for borrowed
money (other than Capital Leases).
"Pro Forma Consolidated Cash Flow" shall
mean, for any period for which the amount thereof
is to be determined, Consolidated Cash Flow of
QDI and its Subsidiaries during such period;
provided that (i) in respect of any Acquisition
consummated during such period the Consolidated
Cash Flow thereof shall be calculated on a pro
forma basis as if such Acquisition had occurred
on the first day of such period, and (ii) in
respect of any Property developed during such
period, the Consolidated Cash Flow of such
Property shall be the Consolidated Cash Flow of
such Property for the portion of such period that
such Property has been in operation annualized
for such period.
"Property" shall mean any interest in any
kind of property or asset, whether real, personal
or mixed, or tangible or intangible.
"QDI" shall mean Quality Dining, Inc., an Indiana
corporation, and its successors and assigns, and
any surviving, resulting or transferee
corporation.
"Rate Hedging Obligations" shall mean any and all
obligations of such Person, whether absolute or
contingent and howsoever and whensoever created,
arising, evidenced or acquired (including all
renewals, extensions and modifications thereof
and substitutions therefor), under (i) any and
all agreements, devices or arrangements designed
to protect at least one of the parties thereto
from the fluctuations of interest rates
applicable to such party's assets or liabilities,
including but not limited to interest rate swaps,
basis swaps, interest rate floors, interest rate
collars, interest rate caps, forward rate
agreements or other similar rate protection
transactions, or any combination of or option
with respect to any of the foregoing, and (ii)
any and all cancellations, buy backs, reversals,
terminations or assignments of any of the
foregoing.
"Real Property" shall mean all real property or
interests therein wherever situated now,
heretofore or hereafter owned, leased or utilized
by QDI or any of its Subsidiaries.
"Regulation D" shall mean Regulation D of
the Board of Governors of the Federal Reserve
System as from time to time in effect and any
successor to all or a portion thereof
establishing margin requirements.
"Regulation U" shall mean Regulation U of
the Board of Governors of the Federal Reserve
System as from time to time in effect and any
successor to all or a portion thereof
establishing margin requirements.
"Regulatory Change" shall mean any
change after the date hereof in any (or the
adoption after the date hereof of any new):
(a) Federal or state law or foreign law applying
to a class of financial institutions (including
an Agent or one or more of the Banks); or
(b) regulation, interpretation, directive or
request (whether or not having the force of law) applying
to a class of financial institutions (including
an Agent or one or more of the Banks) of any court or
governmental authority charged with the interpretation or
administration of any law referred to in clause
(a) of this definition or of any fiscal, monetary
or other authority having jurisdiction over an
Agent or any Bank.
"Required Banks" shall mean Banks (excluding
Banks whose failure to fund an advance
have not been cured) whose Percentage, in the
aggregate, equals or exceeds 51%.
"Reserve Requirement" shall mean, for any
Interest Period for any LIBOR Base Loan, the sum
(expressed as a decimal) of (a) the average
maximum rate at which reserves (including any
marginal, supplemental or emergency reserves) are
required to be maintained during such Interest
Period under Regulation D by member banks of the
Federal Reserve System against "Eurocurrency
liabilities" and (b) any other reserves required
to be maintained by such member banks by reason
of any Regulatory Change against (i) any category
of liabilities which includes deposits by
reference to which the LIBOR Rate is to be
determined or (ii) any category of extensions of
credit or other assets which includes a LIBOR
Base Loan.
"Restricted Payments Basket" as of any date
shall mean, for the period from October 26, 1998
through such date of determination, (a) the sum
of (i) the Consolidated Cash Flow of QDI and its
Subsidiaries for such period and (ii) the Net
Proceeds of any sale of assets received by the
Borrowers and/or their Subsidiaries during such
period, less (b) the sum of (i) the aggregate
amount of Capital Expenditures during such
period, (ii) the aggregate Principal Requirements
during such period, (iii) the aggregate Capital
Lease Obligations during such period, (iv) the
aggregate Interest Expense during such period,
(v) the aggregate amount of taxes (federal, state
and local) paid or payable by the Borrowers and
their Subsidiaries during such period and (vi)
the aggregate amount of Net Proceeds of any sale
of assets required to be applied to the
prepayment of the Loans pursuant to Section 2.1(h)(ii) of this
Agreement.
"Security Agreement" shall mean the Pledge
and Security Agreement dated as of September 11,
1998, entered into by the Borrowers and certain
of their respective Subsidiaries in favor of the
Administrative Agent for the benefit of the
Banks, as it may be amended, modified, restated
or replaced from time to time.
"Security Document" shall mean the Pledge
Agreement, the Note Pledge Agreement, the
Security Agreement and each other mortgage,
assignment, pledge or security agreement or
document executed from time to time by any person
in favor of the Administrative Agent for the
benefit of the Banks, to secure all or any portion of
the Obligations, as said agreements or documents may be amended,
modified, restated or replaced from time to time.
"SPE" shall mean one or more Delaware
corporations, each of which is being established
as a single purpose entity for the purpose of
engaging in a Mortgage Transaction, and its
successors and assigns, and any surviving,
resulting or transferee corporation.
"Subject Assets" shall mean the parcels of real
property identified in Annex V hereto and
the equipment (including fixtures) located on
such parcels of real property, to the extent such
real property and equipment are sold as part of a
Mortgage Transaction.
"Subsidiary" of any Person shall mean (i)
any corporation of which more than 50% of the
outstanding shares of capital stock of any class
or classes having ordinary voting power for the
election of directors (irrespective of whether or
not at the time stock of any class or classes of
such corporation shall have or might have voting
power by reason of the happening of any
contingency) is now or hereafter owned directly
or indirectly by such Person, by such Person and
one or more of its Subsidiaries, or by one or
more of such Person's other Subsidiaries, and
(ii) any partnership, association, limited
liability company, joint venture or other entity
in which such Person, directly or indirectly
through Subsidiaries, is either a general partner
or has a 50% or more equity interest at the time.
"Subsidiary Guaranty" shall mean the
Subsidiary Guaranty dated December 21, 1995
entered into by each of the Subsidiary
Guarantors, in favor of Northern, as agent for
the benefit of the Banks, as reaffirmed as of the
Effective Date by each such Subsidiary Guarantor
in favor of the Administrative Agent hereunder
for the benefit of the Banks. Notwithstanding the
foregoing, for so long as any Indebtedness
described in subsection (e) of Section 6.3
remains outstanding, each of the SPEs shall for
all purposes of this Agreement be deemed not to
be a "Subsidiary Guarantor".
"Subsidiary Guarantor" shall mean each of
Bravokilo, Inc., Southwest Dining, Inc., Full
Service Dining, Inc., Grayling Corporation,
GAGLC, Inc., Grady's American Grill Restaurant
Corporation, Grady's Inc. and Grady's American
Grill, LP and each other Person which shall
hereafter be or become a WhollyOwned Subsidiary
of QDI and shall become a party to the Subsidiary
Guaranty.
"Termination Date" shall mean the date which
is the earlier of (a) October 31, 2002, or such
later date as may be established pursuant to
Section 2.14, or (b) the date upon which the
obligation of the Banks to make Advances is
terminated pursuant to Section 2.1(c).
"Unfunded Obligations" shall mean at any
time the obligations of the Borrowers to CBT in
respect of undrawn amounts of Letters of Credit.
Each Unfunded Obligation will be deemed to be in
an amount equal to the undrawn amount of the
relevant Letter of Credit.
"Unused Portion" shall mean, as of any date,
the excess of the aggregate Commitments on such
date over the sum of the aggregate outstanding
principal amount of the Advances and the
aggregate stated amount of the outstanding
Letters of Credit on such date.
"Voting Stock" shall mean stock or similar
interests of any class or classes (however
designated), the holders of which are generally
and ordinarily, in the absence of contingencies,
entitled to vote for the election of the
directors (or Persons performing similar
functions) of a corporation or other business
entity.
"Wholly-Owned Subsidiary" shall mean a
Subsidiary in which all voting shares (except for
directors' qualifying shares, if any) are owned
by QDI and/or one or more Wholly Owned
Subsidiaries of QDI.
Other terms defined herein shall have the
meanings ascribed to them herein.
ARTICLE II.
THE ADVANCES
2.1. Advances.
(a) Commitments. Each Bank severally agrees,
subject to the terms and conditions hereinafter
set forth, to make an advance (each an "Advance")
to the Borrowers from time to time on any
Business Day during the period from the date
hereof and ending on the Termination Date;
provided, however, that no Bank shall be required
to make any Advance if, after giving effect to
such Advance, the aggregate outstanding principal
amount of all Advances made by such Bank would
exceed such Bank's Commitment. Each borrowing
under this Section 2.1(a) shall consist of
Advances made on the same day by the Banks
ratably in accordance with their respective
Commitments. Within the limits set forth above,
the Borrowers may borrow, prepay and reborrow
pursuant to this Section 2.1(a). Each Advance
shall be in an aggregate minimum amount of
$500,000.00.
(b) Reduction of Commitments.
(i) The Borrowers, or either of them, at any
time on at least three (3) Business Days' prior
written notice to the Administrative Agent (which
shall promptly notify each Bank),may reduce the
Commitments pro rata among the Banks permanently
in a minimum aggregate amount of $100,000.00;
provided, however, that the Borrowers may not
reduce any such Commitments below an amount equal
to the sum of the principal amount then
outstanding on the Notes plus the aggregate amount of the Letters of
Credit issued and outstanding.
(ii) The aggregate Commitments of the Banks shall
be automatically and permanently reduced pursuant
to Section 2.1(h)(ii) hereof.
(c) Termination. The obligation of the Banks to
make Advances shall terminate:
(i) Upon written notice by the Borrowers to the
Administrative Agent (which shall promptly notify
each Bank) at any time when no amount is
outstanding on the Notes and no Letters of Credit
are outstanding hereunder;
(ii) Immediately and without further action upon
the occurrence of an Event of
Default described in clauses (f) and (g) of
Section 7.1; or
(iii) Immediately when any Event of Default
(other than of the nature specified in clauses
(f) and (g) of Section 7.1) shall have occurred
and be continuing and either: (A) the Required
Banks shall have demanded payment of the Notes or
(B) the Required Banks shall soelect by giving
written notice to the Borrowers for purposes of
this clause. (d) Manner of Borrowing. Either Borrower may
request an Advance by delivering to the
Administrative Agent in respect of each requested
Advance a written Notice of Borrowing (which may
be transmitted by telecopier) or by oral notice
to the Administrative Agent confirmed by a
written Notice of Borrowing (which may be
transmitted by telecopier), indicating thereon
the amount of the Advance requested, by not later
than 10:00 a.m. (Houston, Texas time) on the
Business Day preceding the Business Day on which
an Advance is to be made; provided, however, if
such Advance is to be made as a LIBOR Base Loan,
such Borrower shall give such Notice of Borrowing
to the Administrative Agent by not later than
10:00 a.m. (Houston, Texas time) on the third
Business Day preceding the Business Day on which
an Advance is to be made. Any such Notice of
Borrowing given by a Borrower shall be
irrevocable. Upon receipt of such Notice of
Borrowing, the Administrative Agent shall
promptly notify each Bank thereof. By not later
than 2:00 p.m. (Houston, Texas time) on the
requested Business Day of an Advance, each Bank
shall make available to the Administrative Agent,
at its address referred to in Section 10.3, in
immediately available funds, the amount of such
Bank's Advance. After (and subject to) the
Administrative Agent's receipt of such funds and
upon satisfaction of the applicable conditions
set forth in Article III, the Administrative
Agent shall make such Advance available to the
requesting Borrower by transferring the amount
thereof in immediately available funds for credit
to an account (other than a payroll account)
maintained by such Borrower at the Administrative
Agent, or otherwise as directed by such Borrower.
If the Administrative Agent shall receive less
than all the amounts payable by the Banks in
accordance with this Section 2.1, the
Administrative Agent shall make available to the
requesting Borrower such amount as it shall
actually have received. Unless the Administrative
Agent shall have been notified by any Bank prior
to the date of an Advance that such Bank does not
intend to make available to the Bank its portion
of such Advance, the Administrative Agent may
assume that each Bank has made such amount
available to the Administrative Agent on the date
of such Advance and the Administrative Agent may,
in reliance upon such assumption, make available
to the requesting Borrower a corresponding
amount. If and to the extent any Bank shall not
have made available its Advance to the
Administrative Agent on the date of any Advance,
the Administrative Agent shall notify such Bank
and CBT of such Bank's failure and, if such Bank
fails to make its Advance, CBT may in its sole
discretion make an Advance (the "OverAdvance") to
repay the Administrative Agent
forthwith on demand a corresponding amount and
the Bank which failed to make its Advance agrees
to repay CBT forthwith on demand a corresponding
amount together with interest thereon, for each
day from the date such amount is made available
to the Borrowers until the date such amount is
repaid to CBT at the interest rate applicable
during such period to the Advances and the
principal amount repaid by such Bank shall
constitute such Bank's Advance for purposes of
this Agreement. In the event any Bank fails to
make available its Advance to the Administrative
Agent on the date of any Advance and CBT elects
not to make an OverAdvance, such Bank and the
Borrowers severally agree to repay to the
Administrative Agent forthwith upon demand such
corresponding amount together with interest
thereon for each day from the date such amount is
made available by the Administrative Agent to the
date such amount is repaid to the Administrative
Agent at the rate applicable to such Advance. If
CBT makes any Over-Advance, CBT's and such other
Bank's relevant Commitments shall be temporarily
increased and decreased, respectively, by the
amount of the Over-Advance and any payments
allocable to such other Bank shall be paid to CBT
until the principal of and interest on the Over-
Advance shall be paid in full. The failure of any
Bank to make any Advance to be made by it shall
not relieve any other Bank of its obligation, if
any, hereunder to make its Advance on the date of
such Advance. No Bank shall be responsible for
the failure of any other Bank to make an Advance
to be made by such Bank on the date of any such
Advance. The Administrative Agent shall promptly
give the Borrowers notice of any Bank's failure
to make its Advance. Each request for an Advance
shall be deemed a representation and warranty by
the Borrowers, binding upon each of the
Borrowers, that all conditions precedent to such
Advance under Article III are satisfied as of the
date of such request and as of the date of such
Advance.
(e) Revolving Credit Notes. The Advances (other
than any OverAdvance) made by a Bank shall be
evidenced by, and be payable in accordance with
the terms of, the Note made by the Borrowers
payable to the order of such Bank in a principal
amount equal to the Commitment of such Bank;
subject, however, to the provisions of such Note
to the effect that the principal amount payable
thereunder at any time shall not exceed the then
unpaid principal amount of the Advances made by
such Bank. Each of the Borrowers hereby
irrevocably authorizes each Bank to make or cause
to be made, at or about the time of each Advance
made by such Bank, an appropriate notation on the
records of such Bank, reflecting the principal
amount of such Advance, and such Bank shall make
or cause to be made, on or about the time of
receipt of payment of any principal of any
Advance, an appropriate notation on its records
reflecting such payment and such Bank will, prior
to any transfer of any of such Note, endorse on
the reverse side thereof the outstanding
principal amount of the Advances evidenced
thereby. Failure to make any such notation shall
not affect the Borrowers' obligations in respect
of such Advances. The aggregate amount of all
Advances set forth on the records of such Bank
shall be rebuttable presumptive evidence of the
principal amount owing and unpaid on such Bank's
Note. The aggregate amount of all Over-Advances
set forth on the records of CBT shall be
rebuttable presumptive evidence of the principal
amount owing and unpaid on the OverAdvances.
Upon request of the Borrowers, or either of them,
each Bank agrees to provide the Borrowers with a
written summary of the records maintained by it
under this Section 2.1(e).
(f) Interest on Advances. The Borrowers agree
to pay interest on the aggregate outstanding
principal amount of the Advances as follows:
(A) with respect to any Advance constituting a
Base Rate Loan, at a fluctuating rate per annum
equal to the Base Rate; and
(B) with respect to any Advance constituting a
LIBOR Base Loan, at a rate per annum equal at all
times during the Interest Period relating to such
LIBOR Base Loan to the sum of the Adjusted LIBOR
Rate, plus the Applicable Margin (as determined
in accordance with Section 2.1(g)).
The Borrowers agree to pay interest on any
overdue installment of principal of or interest
on any Advance from the due date thereof until
paid, (i) in the case of any Base Rate Loan, at a
rate per annum at all times equal to the sum of
the rate in effect thereon plus 1.50% per annum
and (ii) in the case of any LIBOR Base Loan, at a
rate per annum equal to the sum of 1.50% plus the
rate of interest in effect thereon at the time of
such default until the end of the Interest Period
then applicable thereto and thereafter at a rate
per annum equal to the sum of 1.50% per annum
plus the Base Rate from time to time in effect.
Interest accrued on each Advance shall be
payable (A) with respect to each Base Rate Loan,
on each Monthly Payment Date; and (B) with
respect to each LIBOR Base Loan, on the last day
of each Interest Period applicable thereto and in
the case of any Interest Period in excess of
three (3) months, on each date occurring at three
(3) month intervals after the first day of such
Interest Period. Interest accrued after the
Termination Date shall be payable upon demand.
No provision of this Agreement or the Notes shall
require the payment or permit the collection of
interest in excess of the rate permitted by
applicable law. Interest shall be calculated for
actual days elapsed on the basis of a 360 day
year.
(g) Determination of Applicable Margin.
(i) The Applicable Margin in respect of any
LIBOR Base Loan shall be determined by reference
to the table set forth below on the basis of the
Indebtedness Ratio determined by reference to the
most recent financial statements delivered
pursuant to Section 5.1(a) or 5.1(b).
Indebtedness Ratio Applicable Margin
- ------------------------ -----------------------
Greater than 4.50:1.00 3.00%
Less than or equal to 4.50:100
but greater than 4.00:100 2.75%
Less than or equal to 4.00:1.00
but greater than 3.50:100 2.50%
Less than or equal to 3.50:1.00
but greater than 3.00:100 2.25%
Less than or equal to 3.00:1.00
but greater than 2.50:100 1.75%
Less than or equal to 2.50:100 1.25%
(ii) Upon receipt of the financial statements
delivered pursuant to Section 5.1(a)
or Section 5.1(b), as applicable, the Applicable
Margin shall be adjusted, such adjustment being
effective on the tenth Business Day after receipt
of such financial statements and the Compliance
Certificate to be delivered in connection
therewith; provided, however, if the Borrowers
shall not have timely delivered such financial
statements in accordance with Section 5.1(a) or
Section 5.1(b), as applicable, beginning with the
date upon which such financial statements should
have been delivered and continuing until such
financial statements are delivered, the
Applicable Margin shall equal the Applicable
Margin for the prior period; provided further,
however, that if upon delivery of such financial
statements the Applicable Margin is adjusted
upwards, the adjustment of the Applicable Margin
shall be retroactive to the date upon which such
financial statements should have been delivered.
(h) Prepayment. (i) The Borrowers shall have
the right, by giving written notice to the
Administrative Agent by not later than 11:00 a.m.
(Houston, Texas time) on the second Business Day
preceding the date of such prepayment, to prepay
all or any portion of an Advance, without premium
or penalty; provided, that any Base Rate Loan may
be prepaid in whole or in part at any time and
any LIBOR Base Loan may be prepaid in whole or in
part on the last day of the Interest Period
applicable thereto; provided further, that each
partial prepayment shall be in an aggregate
principal amount of not less than $100,000.00 and
shall be accompanied by accrued interest to the
date of prepayment on the amount prepaid. No
voluntary prepayment of any LIBOR Base Loan prior
to the last day of the Interest Period applicable
thereto shall be made.
(ii) Concurrently with the consummation of a
sale, in a transaction or a series of related
transactions, of all or a portion of the assets
of the Borrowers and their Subsidiaries
(including without limitation the capital stock
of any Subsidiary of QDI but excluding the assets
sold in any Permitted Disposition described in
clauses (i), (ii), (iii) and (iv) of the
definition of Permitted Disposition) the
aggregate Net Proceeds of which exceed
$10,000,000 (the "Excess Proceeds"), the
Borrowers shall (i) prepay the Loans in a
principal amount equal to the Net Proceeds of
such sale and (ii) permanently and automatically
reduce the Commitments of the Banks in an amount
equal to the Excess Proceeds.
(iii) At any time that the sum of the
aggregate outstanding principal balance of the
Loans and the aggregate stated amount of
outstanding Letters of Credit exceeds the
aggregate Commitments, the Borrowers shall
immediately prepay the outstanding principal
amount of the Loans in an amount equal to such
excess.
2.2. Election by Borrower. The Borrowers, or
either of them, may elect in accordance with this
Section 2.2 to obtain and maintain all or any
portion of an Advance as a Base Rate Loan or all
or any portion of an Advance which is in an
integral multiple of $500,000.00 as a LIBOR
Base Loan. In addition, the Borrowers, or either
of them, may elect in accordance with this
Section 2.2 to convert all or any portion of any
Advance from one type of Loan to another type of
Loan; provided however, that (a) any conversion
to a LIBOR Base Loan shall be only in an integral
multiple of $500,000.00, (b) any conversion of
any LIBOR Base Loan into a Base Rate Loan shall
be made on, and only on, the last day of the
Interest Period then applicable thereto and (c)
no Loan may be obtained, continued as, or
converted into, a LIBOR Base Loan when any
Default or Event of Default has occurred and is
continuing. Subject to the provisions of the
prior sentence, the Borrowers, or either of them,
may convert a LIBOR Base Loan into a Base Rate
Loan upon one Business Day's prior written notice
to the Administrative Agent of the Borrower's
election to do so. A Borrower, not less than
three (3) Business Days prior to the date on
which (i) a LIBOR Base Loan is to be obtained, (ii) a
Base Rate Loan is to be converted into a LIBOR
Base Loan or (iii) any LIBOR Base Loan is to be
continued as a LIBOR Base Loan at the end of the
Interest Period then applicable thereto, shall
give written notice to the Administrative Agent
of such Borrower's election to do so; said notice
shall specify the amount of such LIBOR Base Loan
and the first day and duration of the Interest
Period pertaining thereto. If, upon the
expiration of any Interest Period, the Borrowers
shall fail to elect the duration of a new
Interest Period for any LIBOR Base Loan or to
designate a Base Rate Loan in accordance with
this Section 2.2, the Borrowers shall be deemed
to have elected automatically to convert such
LIBOR Base Loan into a Base Rate Loan on the last
day of the Interest Period then applicable
thereto. On the date on which the aggregate
unpaid principal amount of any LIBOR Base Loan
shall be reduced, by payment or prepayments or
otherwise, to less than an integral multiple of
$500,000.00, such LIBOR Base Loan shall
automatically convert into a Base Rate Loan at
the end of the Interest Period then applicable
thereto. Each of the Borrowers hereby irrevocably
authorizes each Bank to make, or cause to be
made, an appropriate notation on the records of
such Bank, reflecting the date and original
principal amount of each Advance made by such
Bank, the dates for each period when such Advance
is being maintained as a Base Rate Loan or a
LIBOR Base Loan, the interest rate for each such
period and the dates of principal and interest
payments on such Advance. Failure to make any
such notation shall not affect the Borrowers'
obligations in respect of such Advances.
Each Bank's records shall be rebuttable
presumptive evidence of the matters stated
therein. Upon request by the Borrowers, or
either of them, each Bank agrees to provide the
Borrowers with a written summary of the records
maintained by it under this Section 2.2.
2.3. Increased Costs; Capital Adequacy.
(a) Increased Costs. If (i) as a result of any
Regulatory Change (A) any reserve (other than the
amount of such reserve as has been included in
the computation of the Adjusted LIBOR Rate),
special deposit or similar requirements relating
to any extension of credit or other assets of or
any deposits with or other liabilities of, any
Bank which affects the making or maintaining by
such Bank of any loans (including the Loans) or
letters of credit (including the Letters of
Credit) are imposed, modified or deemed
applicable; or (B) any other condition affecting
this Agreement or the making or maintaining by
any Bank of any loans (including the Loans) or
letters of credit (including the Letters of
Credit) is imposed on such Bank; or (ii) other
circumstances arise affecting any Bank or the
position of any Bank in the relevant market, and
such Bank reasonably determines that, by reason
thereof, the cost to such Bank of making or
maintaining any loans (including the Loans) or letters of credit
(including the Letters of Credit) is increased as
a result of such change in circumstances, or any
amount receivable hereunder in respect of any
Loan or Letter of Credit is reduced (and such
Bank shall not have been compensated for such
increase or reduction by an increase in interest
or otherwise by Regulatory Change), then such
Bank shall promptly notify the
Borrowers in writing and the Borrowers shall pay
upon request such additional amount or amounts
(which shall be specified in such request) as
will (in the reasonable determination of such
Bank) compensate such Bank for such additional
cost or reduction; provided, however, that the
Borrowers' liability for additional amounts
computed in accordance with this Section 2.3(a)
shall be neither changed nor waived by any
failure to give such notice.
(b) Capital Adequacy. If any Regulatory Change
imposes, modifies or deems applicable any capital
adequacy, capital maintenance or similar
requirement (including a request or requirement
which affects the manner in which any Bank
allocates capital resources to its commitments,
including its Commitment hereunder) and as a
result thereof, the rate of return on any Bank's
capital as a consequence of its Commitment
hereunder or the making or maintaining of
any Loans or Letters of Credit hereunder is
reduced to a level below that which such Bank
could reasonably have achieved but for such
circumstances, then and in each such case upon
notice from time to time by a Bank to the
Borrowers, the Borrowers shall pay to such Bank
such additional amount or amounts as shall
compensate such Bank for such reduction in rate
of return; provided, however, that the Borrowers'
liability for additional amounts computed in accordance with
this Section 2.3(b) shall be neither changed nor
waived by any failure to give such notice.
(c) Taxes. If any Regulatory Change shall
subject any Bank or any Loan or Letter of Credit
to any tax (including, without limitation, any
United States interest equalization tax or
similar tax however named applicable to the
acquisition or holding of debt obligations and
any interest or penalties with respect thereto),
duty, charge, stamp tax, fee, deduction or
withholding in respect of this Agreement or any
Loan or Letter of Credit, except such taxes as
may be measured by the overall net income of such
Bank and imposed by the jurisdiction, or any
political subdivision or taxing authority
thereof, in which such Bank's principal executive
office or its lending branch is located and such
Bank in good faith determines that the result
thereof is to increase the cost (whether by incurring
a cost or adding to a cost) to such Bank of making or
maintaining any Loan or Letter of Credit
hereunder or to reduce the amount of principal or
interest received by such Bank (without benefit
of, or credit for, any prorations, exemptions,
credits or other offsets available under any such
laws, treaties, regulations, guidelines or
interpretations thereof), then such Bank shall
promptly notify in writing the Borrowers and the
Borrowers shall pay, upon request, such
additional amount or amounts as will (in the
reasonable determination of such Bank) compensate
such Bank for such additional cost or reduction;
provided, however, that the Borrowers' liability
for additional amounts computed in accordance
with this Section 2.3(c) shall be neither changed
nor waived by any failure to give such notice.
(d) Applicable Tax Forms. On or prior to the
Effective Date in the case of each Bank which is
a party hereto as of the Effective Date, and on
the date of the delivery to the Administrative
Agent of the Assignment Agreement pursuant to
which it became a Bank in the case of each other
Bank, each Bank organized under the laws of a
jurisdiction outside the United States shall
provide the Administrative Agent and the
Borrowers with the forms prescribed by the
Internal Revenue Service of the United States
certifying that such Bank is exempt from United
States withholding taxes with respect to
all payments to be made to such Bank hereunder
and under the Notes. Each Bank which so delivers
such a form further undertakes to deliver to
each of the Borrowers and the Administrative
Agent additional copies of such form (or a
successor form)on or before the date that such
form expires or becomes obsolete or after the
occurrence of any event requiring a change in
the most recent forms so delivered by it, and
such amendments thereto or extensions or
renewals thereof as may be reasonably requested
by the Borrowers or the Administrative Agent, in
each case certifying that such Bank is entitled
to receive payments under this Agreement and the
Notes without deduction or withholding of any
United States federal income taxes. If for any
reason during the term of this Agreement, any
Bank becomes unable to submit the forms referred
to above or the information or representations
contained therein are no longer accurate in any
material respect, such Bank shall promptly
notify the Administrative Agent and the
Borrowers in writing to that effect. Unless the
Borrowers and the Administrative Agent have
received forms or other documents satisfactory
to them indicating that payments hereunder or
under any Note are not subject to United States
withholding tax, the Borrowers or the
Administrative Agent shall withhold taxes from
such payments at the applicable statutory rate
in the case of payments to or for any
Bank organized under the laws of a jurisdiction
outside the United States.
(e) Change in Lending Office. Any Bank claiming
any additional amounts payable pursuant to this
Section 2.3 shall use its best efforts (consistent
with its internal policy and legal and regulatory
restrictions) to change the jurisdiction of its
lending office or branch if the making of such
change would avoid the need for, or reduce the
amount of, any such additional amounts which may
thereafter accrue and would not, in the reasonable
judgment of such Bank, be otherwise
disadvantageous to such Bank.
(f) Conclusive and Binding; Survival. With
respect to any additional amount or amounts owing
by the Borrowers pursuant to this Section 2.3, a
statement of a Bank as to any such additional
amount or amounts shall, in the absence of
manifest error, be conclusive and binding on the
Borrowers. In determining such amount, a Bank may
use any method of averaging and attribution that
it (in its sole and absolute discretion) shall
deem applicable. The obligations of the Borrowers
under this Section 2.3 shall survive the
termination of this Agreement.
2.4. Liquidation Fee. Each of the Borrowers
understands that upon the request for a LIBOR Base
Loan for an Interest Period, each Bank intends to
enter into funding arrangements with third parties
on terms and conditions which could result in
substantial losses to such Bank if such LIBOR Base
Loan is not made or does not remain outstanding
for the entire Interest Period.
Therefore, if either (a) after a Borrower requests
a LIBOR Base Loan, the LIBOR Base Loan is not made
on the first day of the specified Interest Period
for any reason (including, but not limited to, the
failure of the Borrowers to comply with one or
more of the conditions precedent to any
Advance under this Agreement) other than a
wrongful failure by such Bank to make the LIBOR
Base Loan, or (b) any LIBOR Base Loan is repaid in
whole or in part prior to the last day of its
Interest Period (whether as a result of
acceleration, operation of law or otherwise), the
Borrowers agree to indemnify such Bank for any
loss, cost and expense incurred by it resulting therefrom, including
without limitation any loss of profit and any loss
or cost in liquidating or employing deposits
acquired to fund or maintain the LIBOR Base Loan.
2.5. Basis for Determining LIBOR Rate Inadequate
or Unfair. If with respect to any
Interest Period:
(a) a Bank is advised that deposits in lawful
money of the United States of America (in the
applicable amounts) are not being offered to such
Bank in the eurodollar market for the relevant
Interest Period, or a Bank otherwise determines
(which determination shall be binding and
conclusive on all parties) that by reason of
circumstances affecting the relevant market or the
position of such Bank in such market adequate and
reasonable means do not exist for ascertaining the
Adjusted LIBOR Rate; or
(b) a Bank determines that the Adjusted LIBOR
Rate will not adequately and fairly reflect the
cost to such Bank of maintaining or funding a
LIBOR Base Loan for the relevant Interest Period, or
that the making or funding of a LIBOR Base Loan has become
impracticable as a result of an event occurring
after the date of this Agreement which in the
opinion of such Bank materially affects such LIBOR
Base Loan; or
(c) a Bank determines in good faith that any
Regulatory Change makes it unlawful or
impracticable for such Bank to make or continue to
maintain any LIBOR Base Loan;
then such Bank shall promptly notify the Borrowers
of such circumstances and then so long as such
circumstances shall continue: (i) the obligation
of such Bank to make a LIBOR Base Loan and to
convert any Loan into a LIBOR Base Loan shall be
terminated and (ii) all LIBOR Base Loans of such
Bank then outstanding shall automatically be
converted into Base Rate Loans on the last day of
the Interest Period then applicable thereto,
provided that if it shall become unlawful or
impracticable for such Bank to maintain any LIBOR
Base Loan, such Loan shall automatically and
immediately be converted into a Base Rate Loan.
2.6. Payments. Any other provision of this
Agreement to the contrary notwithstanding, the
Borrowers shall make each payment of interest on
and principal of the Notes and fees and other
payments due under this Agreement in immediately
available funds to the Administrative Agent at its
office referred to in Section 10.3 hereof not
later than 11:00 a.m. (Houston, Texas time) on the
date when due. Each of the Borrowers hereby
authorizes and directs the Administrative Agent
and agrees that on the Business Day on which any
payment of principal, interest and/or fees are
due, the Administrative Agent may automatically
charge one or more demand deposit accounts of the
Borrowers maintained with the Administrative
Agent. All payments by the Borrowers under this
Agreement shall be made without offset,
counterclaim or other deduction and in such
amounts as may be necessary in order that all such
payments shall not be less than the amounts
otherwise specified to be paid under this
Agreement and the Notes. The Administrative Agent
will promptly thereafter distribute like funds
ratably to each Bank (unless such amount is not to
be shared ratably in accordance with the terms
hereof).
2.7. Setoff; etc. Upon the occurrence and during
the continuance of an Event of Default, each Bank is
hereby authorized at any time and from time to
time, without notice to the Borrower (any such
notice being expressly waived by the Borrowers),to
set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Bank to or
for the credit or the account of the Borrowers, or
either of them, including specifically any amounts
held in any account maintained at such Bank,
against any and all amounts which may be owed to
the Administrative Agent or the Banks, or any of
them, by the Borrowers, or either of them, in
connection with this Agreement or any Loan
Document. The rights of the Banks under this
Section 2.7 are in addition to other rights and
remedies (including, without limitation, other
rights of setoff) which the Banks may have. Each
of the Borrowers agrees that any holder of a Note
or of any participation in a Note may, to the
fullest extent permitted by law, exercise
all its rights of payment (including set-off) with
respect to such participation as fully as if such
holder were the direct creditor of such Borrower
in the amount of such participation. Each Bank
agrees to use reasonable efforts to notify the
Borrowers of any exercise of its rights pursuant
to this Section 2.7, provided, however, that
failure to provide such notice shall not affect
the Bank's rights under this Section 2.7 or the
effectiveness of any action taken pursuant hereto.
2.8. Sharing. If any Bank shall obtain any
payment (whether voluntary, involuntary, by
application of offset or otherwise) on account of
the Loans made by it in excess of such Bank's
ratable share of payments on account of the Loans
obtained by all the Banks, such Bank shall
purchase from the other Banks such participations
in the Loans made by them as shall be necessary to
cause such purchasing Bank to share the excess
payment ratably with each of them; provided,
however, that if all or any portion of the excess
payment is thereafter recovered from such
purchasing Bank, the purchase shall be rescinded
and the purchase price restored pro rata according
to the extent of such recovery, but without
interest. Each of the Borrowers agrees that any
Bank so purchasing a participation from another
Bank pursuant to this Section 2.8 may, to the
fullest extent permitted by law, exercise all its
rights of payment (including the right to setoff)
with respect to such participation as fully as if
such Bank were the direct creditor of such
Borrower in the amount of such participation.
2.9. Commitment Fee. (a) The Borrowers agree,
jointly and severally, to pay a commitment fee
(the "Commitment Fee") for the period (including,
without limitation, any portion thereof when the
Banks' obligations to lend shall be suspended by
reason of the Borrowers' inability to satisfy the
conditions of Article III) commencing on the Monthly
Payment Date immediately preceding the Effective Date and
continuing through the Termination Date in an
amount equal to the Applicable Fee Percentage (as
determined in accordance with subsection (b)of
this Section 2.9) per annum of the Unused Portion.
Such Commitment Fee shall be payable to the Agent
for the ratable benefit of the Banks in arrears on
each Monthly Payment Date occurring after the
Effective Date.
(b) The Applicable Fee Percentage shall be
determined by reference to the table set forth
below on the basis of the Indebtedness Ratio
determined by reference to the most recent
financial statements delivered pursuant to
Section 5.1(a) or 5.1(b).
Indebtedness Ratio Applicable Fee Percentage
- ------------------ -------------------------
Greater than 4.00:1.00 0.50%
Less than or equal to 4.00:100
but greater than 3.00:100 0.375%
Less than or equal to 3.00:100 0.25%
Upon receipt of the financial statements delivered
pursuant to Section 5.1(a) or Section 5.1(b), as
applicable, the Applicable Fee Percentage shall be
adjusted, such adjustment being effective on the
tenth Business Day after receipt of such financial
statements and the Compliance Certificate to be
delivered in connection therewith; provided,
however, if the Borrowers shall not have timely
delivered such financial statements in accordance
with Section 5.1(a) or Section 5.1(b), as
applicable, beginning with the date upon which
such financial statements should have been
delivered and continuing until such financial
statements are delivered, the Applicable Fee
Percentage shall equal the Applicable Fee
Percentage for the prior period; provided further,
however, that if upon delivery of such financial
statements the Applicable Fee Percentage is
adjusted upwards, the adjustment of the Applicable
Fee Percentage shall be retroactive to the date
upon which such financial statements should have
been delivered.
2.10. Amendment Fees. The Borrowers agree to
pay on the Effective Date to the Administrative
Agent for the ratable benefit of the Banks which are
party hereto a nonrefundable amendment fee pursuant
to the terms of a letter dated April 20, 1999 (the "Fee
Letter"), between the Borrowers and the Administrative Agent.
2.11. Lending Branch. Subject to the
provisions of Section 2.3(e), each Bank may, at
its option, elect to make, fund or maintain its
Loans hereunder at the branch or office specified
on the signature pages hereto or such other of its
branches or offices as such Bank may from time to
time elect.
2.12. Letters of Credit.
(a) Subject to all of the terms and conditions
hereof (including Section 2.1(a) hereof, assuming
the Borrowers had requested an Advance in the
amount of the stated amount of the Letter of
Credit), at the written request of a Borrower,
CBT will on or after the date hereof issue
standby letters of credit ("Letters of Credit")
for the account or benefit of such Borrower
expiring on or before the Termination Date;
provided, however, CBT shall not be required to
issue a Letter of Credit if, after giving effect
thereto, (i) the aggregate stated amount of all
outstanding Letters of Credit, plus unreimbursed
reimbursement obligations, would exceed
$5,000,000 or (ii) the sum of the aggregate
outstanding principal amount of all Advances and
the aggregate stated amount of all outstanding
Letters of Credit would exceed the aggregate
amount of the Commitments. The aggregate stated
amount of any and all Letters of Credit shall
count against and reduce the available
Commitments hereunder on a pro rata basis.
(b) Immediately upon the issuance of each Letter
of Credit hereunder, each Bank shall be deemed to
have automatically, irrevocably and
unconditionally purchased and received from CBT
an undivided interest and participation in and to
such Letter of Credit, the obligations of the
Borrowers in respect thereof, and the liability
of CBT thereunder in an amount equal to the
amount available for drawing under such Letter of
Credit multiplied by such Bank's Percentage. The
Administrative Agent will notify each Bank
promptly (a) upon the issuance of any Letter of
Credit and (b) upon any draw under a Letter of
Credit. On or before the Business Day on which
CBT makes payment of any draw on a Letter of
Credit, on demand of CBT (which demand shall not
require payment prior to the Business Day such
payment is required to be made under the Letter
of Credit), each Bank shall make payment to the
Administrative Agent for the account of CBT, in
immediately available funds an amount equal to
such Bank's Percentage of the amount of such
payment or draw. The obligation of each Bank to
reimburse the Administrative Agent for the
account of CBT shall be unconditional,
continuing, irrevocable and absolute. In the
event that any Bank fails to make payment to the
Administrative Agent for the account of CBT of
any amount due hereunder, the Administrative
Agent shall be entitled to receive, retain and
apply against such obligation the principal and
interest otherwise payable to such Bank hereunder
until the Administrative Agent receives such
payment from such Bank on behalf of CBT or such
obligation is otherwise fully satisfied;
provided, however, that nothing contained in this
sentence shall relieve such Bank of its obligation
to reimburse the Administrative Agent on behalf of
CBT for such amount in accordance with this Section 2.12.
(c) If and to the extent a drawing is at any
time made under such a Letter of Credit, the
Borrowers agree to pay to the Administrative
Agent, for the account of CBT and the Banks
immediately and unconditionally upon demand in
lawful money of the United States, an amount
equal to each amount which shall be so drawn; and
the Administrative Agent shall have the right to
convert automatically the reimbursement
obligation of the Borrowers arising out of any
such drawing into an Advance made under this
Agreement (each of the Borrowers hereby
irrevocably authorizing the Administrative Agent
to refinance without notice to the Borrowers the
reimbursement obligation of the Borrowers arising
out of any such drawing into such an Advance and
to take all action on behalf of the Borrowers
required pursuant to Section 2.1(d) hereof to
request such Advance), and such Advance to be
evidenced by the Notes and for all purposes of
this Agreement although without regard to the
conditions precedent to making any such Advance
and any requirement of this Agreement that each
Advance under this Agreement be in a minimum
amount. If and to the extent any such Letter of
Credit expires or otherwise terminates in a
manner satisfactory to CBT without having been
drawn upon, the available Commitments of the
Banks shall to such extent be reinstated.
(d) The Borrowers agree to pay (i) monthly, in
arrears, to the Administrative Agent for the
ratable benefit of the Banks a letter of credit
fee, computed at an annual rate equal to the
Applicable Margin in effect from time to time
applied to the aggregate amount available for
drawing under all of the Letters of Credit issued for the
account of the Borrowers, or either of them, from
the date of issuance of each Letter of Credit
until the expiration thereof, and (ii) to CBT
directly for its benefit as issuing bank, all
customary fees (including fronting fees) and
other issuance, amendment, document examination,
negotiation and presentment expenses and related
charges in connection with the issuance,
amendment, presentation of drafts, and the like
customarily charged by CBT with respect to
standby letters of credit, payable at the time of
invoice of such amounts.
(e) (i) In addition to amounts payable as
elsewhere provided in this Agreement, each of the
Borrowers hereby agrees to protect, indemnify,
pay and save harmless the Administrative Agent,
each Bank and CBT from and against any and all
liabilities and costs which the Administrative
Agent, any Bank or CBT may incur or be subject to
as a consequence, direct or indirect, of the
issuance of any Letter of Credit other than, in
the case of CBT, as a result of (A) its gross
negligence or willful misconduct, as determined
by the final judgment of a court of competent
jurisdiction, in determining whether documents
presented under any Letter of Credit comply with
the terms thereof, or (B) the failure of CBT to
honor a drawing under such Letter of Credit as a
result of any act or omission, whether rightful
or wrongful, of any present or future de
jure or de facto governmental authority (all such
acts or omissions herein called "Governmental
Acts").
(ii) As among the Borrowers, the Banks, CBT and
the Administrative Agent, the Borrowers assume
all risks of the acts and omissions of, or misuse
of such Letter of Credit by, the beneficiary of
any Letter of Credit. In furtherance and not in
limitation of the foregoing, subject to the
provisions of the Letter of Credit applications
and Letter of Credit reimbursement agreements
executed by the Borrowers, or either of them, at
the time of request for any Letter of Credit,
CBT, the Administrative Agent and the Banks shall
not be responsible: (A) for the form, validity,
sufficiency, accuracy, genuineness or legal
effect of any document submitted by any party in
connection with the application for and issuance
of the Letters of Credit, even if it should in
fact prove to be in any or all respects invalid,
insufficient , inaccurate, fraudulent or forged;
(B) for the validity or sufficiency of any
instrument transferring or assigning or
purporting to transfer or assign a Letter of
Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may
prove to be invalid or ineffective for any
reason; (C) for failure of the beneficiary of a
Letter of Credit to comply with conditions
required in order to draw upon such Letter of
Credit; (D) for errors, omissions, interruptions
or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex, or
other similar form of teletransmission or
otherwise; (E) for errors in interpretation of technical
trade terms; (F) for any loss or delay in the
transmission or otherwise of any document
required in order to make a drawing under any
Letter of Credit or of the proceeds thereof; (G)
for the misapplication by the beneficiary of a
Letter of Credit of the proceeds of any drawing
under such Letter of Credit; and (H) for any
consequences arising from causes beyond the
control of the Administrative Agent, CBT and the
Banks.
(iii) In furtherance and extension and not in
limitation of the specific provisions hereinabove
set forth, any action taken or omitted by CBT
under or in connection with Letters
of Credit issued on behalf of the Borrowers, or
either of them, or any related certificates shall
not, in the absence of gross negligence or willful
misconduct of CBT, as determined by the final
judgment of a court of competent jurisdiction, in
determining whether documents presented under any
Letter of Credit comply with the terms thereof,
put CBT, the Agent or any Bank under any
resulting liability to the Borrowers or relieve
the Borrowers of any of their obligations
hereunder to any such Person.
(iv) Without prejudice to the survival of any
other agreement of the Borrowers hereunder, the
agreements and obligations of the Borrowers
contained in this Section 2.12(e) shall survive
the payment in full of principal and interest
hereunder, the termination of the Letters of
Credit and termination of this Agreement.
2.13. Application of Payments and Collections.
(a) Subject to the provisions of subsection (b)
below or any agreement of the Administrative
Agent and the Banks to the contrary, all payments
and prepayments and any other amounts received by
the Administrative Agent from or for the benefit
of the Borrowers shall be applied, first, to pay
principal of and interest on any portion of the
Advances which the Administrative Agent may have
advanced on behalf of any Bank for which the
Administrative Agent has not then been reimbursed
by such Bank or the Borrowers, second, to pay all
other obligations in respect of fees, expenses,
reimbursements or indemnities then due and
payable, third, to pay interest then due in
respect of the Loans, and fourth, to pay the
principal of the Loans then due and payable.
(b) After the occurrence of an Event of Default
and while the same is continuing, the
Administrative Agent shall, unless the
Administrative Agent and the Banks shall agree
otherwise, apply all payments and prepayments in
respect of any Obligations hereunder in the
following order:
FIRST, to pay interest on and then principal of
any portion of the Advances which the Administrative
Agent may have advanced on behalf of any Bank for
which the Administrative Agent has not then been
reimbursed by such Bank or the Borrowers;
SECOND, to pay Obligations in respect of any
fees, expense reimbursements or
indemnities then due to the Administrative Agent;
THIRD, to pay Obligations in respect of any
fees, expenses, reimbursements or indemnities
then due to the Banks;
FOURTH, to the payment of interest accrued
on the Loans and any amounts due pursuant to
Section 2.3, to be allocated among the Banks pro
rata based on the respective
aggregate amounts of such accrued interest and
amounts owed to them; and
FIFTH, to the payment of the outstanding
principal amounts of the Loans and to the
provision of cash collateral for Unfunded
Obligations, to be allocated among the Banks and
CBT pro rata based on the respective outstanding
principal amounts of the Loans and the aggregate
outstanding Unfunded Obligations.
(c) Each of the Banks hereby irrevocably
designates the Administrative Agent its attorney in fact for the
purpose of receiving any and all payments to be
made to such Bank in respect of Obligations held
by it, and hereby directs each payor of any such
payment to make such payment to the
Administrative Agent; and each of the Banks
hereby further agrees that if, notwithstanding
the foregoing, it should receive any such
payment, it shall hold such payment in trust for,
and promptly deliver such payment to, the
Administrative Agent.
(d) Whenever any portion of any payment received
or amount realized by the Administrative Agent is
applied pursuant to FIFTH of clause (b) above,
the part thereof allocated to Unfunded
Obligations shall be held by the Administrative
Agent for the benefit of CBT and the Banks. Upon
any draw on a Letter of Credit, the
Administrative Agent shall pay the amounts
allocated in respect of such Unfunded Obligation
to CBT. Pending distribution of such amounts,
the Administrative Agent shall hold such amounts
in a cash collateral account. Upon cancellation
or termination of a Letter of Credit without its
being fully drawn, the Administrative Agent shall
reapply the amounts allocated in respect of such
Unfunded Obligation as provided in clause (a) or
(b) above, as applicable, as if such portion had
then been paid to the Administrative Agent by the
Borrowers for application pursuant to said
clause.
(e) The Administrative Agent shall promptly
distribute to each Bank at its primary address
set forth on the appropriate signature page
hereof or at such other address as a Bank may
request in writing, such funds as such Bank may
be entitled to receive.
2.14. Extension of Termination Date. At
least 90 but not more than 120 days prior to each
anniversary of the date hereof, the Borrowers may
request the Banks, by written notice to the
Administrative Agent, to consent to a one-year
extension of the Termination Date. Each Bank
shall, in its sole discretion, determine whether
to consent to such request and shall notify the
Administrative Agent of its determination within
30 days of such Bank's receipt of notice of such
request. If any Bank shall not have consented to
such request during such 30-day period, the
Termination Date shall not be extended. If such
request shall have been consented to by the
Administrative Agent and all the Banks, the
Administrative Agent shall notify the Borrowers
in writing of such consent, and such extension
shall become effective upon the delivery by the
Borrowers to the Administrative Agent and each
Bank, on or prior to such anniversary date, of
(i)a certificate of a duly authorized officer of
the Borrowers, dated such date, as to the
accuracy, both before and after giving effect to
such proposed extension, of the representations
and warranties set forth in Article IV and as to
the absence, both before and after giving effect
to such proposed extension, of any Default or
Event of Default, (ii) certified copies of all
corporate and governmental approvals, if any,
required to be obtained by the Borrowers, or
either of them, or any of the Subsidiary Guarantors
in connection with such extension and (iii) an opinion
or opinions of counsel to the Borrowers and the Subsidiary
Guarantors as to the matters set forth in Exhibit
C after giving effect to such extension and such
other matters as any Bank, through the
Administrative Agent, may reasonably request.
ARTICLE III.
CONDITIONS PRECEDENT
3.1. Conditions Precedent to Effectiveness.
The effectiveness of this Agreement and the
obligation of each of the Banks to make any
Advance hereunder or of CBT to issue any Letter
of Credit hereunder is subject to the following
conditions precedent:
(a) The Administrative Agent shall have received
copies (in sufficient number for each of the
Banks to receive a copy) of all of the
following, each in form and substance reasonably
satisfactory to the Administrative Agent and the
Banks, unless waived by each of the Banks:
(i) This Agreement, appropriately completed and
duly executed by the parties hereto;
(ii) Reaffirmation of Subsidiary Guaranty, duly
executed and delivered by each of the Subsidiary
Guarantors;
(iii) A certificate of the secretary of each
of the Borrowers, certifying that (i) a correct
and complete copy of its Articles of Incorporation, with all
amendments thereto, is attached to the
certificate, (ii) a correct and complete copy of
its Bylaws, with all amendments thereto, is
attached to the certificate, (iii) a correct and
complete copy of the resolutions of its Board of
Directors authorizing the execution, delivery and
performance of the Loan Documents to which it is
a party are attached to the certificate, and such
resolutions have not been subsequently modified
or repealed and (iv) there are no proceedings
pending or contemplated as to the merger,
consolidation, liquidation or dissolution of such
Borrower;
(iv) A certificate of the secretary of each
Subsidiary Guarantor, certifying that (i) with
respect to each Subsidiary Guarantor which is a
corporation, (A) there have been no changes to
its Articles of Incorporation or By-laws since
the date of certification thereof to the
Banks, (B) if there have been any changes to such
Subsidiary Guarantor's Articles of Incorporation
or By-laws, a correct and complete copy of its
Articles of Incorporation, certified by the
Secretary of State of its state of incorporation,
or Bylaws, as applicable, is attached to the
certificate and (C) a correct and complete copy of the
resolutions of its Board of Directors authorizing
the execution, delivery and performance of the
Loan Documents to which it is a party are
attached to the certificate, and such resolutions
have not been subsequently modified or repealed,
(ii) with respect to each Subsidiary Guarantor which is a
limited partnership, (A) there has been no change
to such Subsidiary Guarantor's agreement of
limited partnership since the date of
certification thereof to the Banks, or if there
has been any such change, a correct and complete
copy of the agreement of limited partnership,
with all amendments thereto, is attached to the
certificate and (B) all action on behalf of the
partnership and the partners necessary to
authorize the execution, delivery and performance
of the Loan Documents to which it is a party have
been taken, and (iii) there are no proceedings
pending or contemplated as to the merger,
consolidation, liquidation or dissolution of such
Subsidiary Guarantor;
(v) A certified copy of all documents evidencing
any necessary consent or governmental approvals
(if any) with respect to the execution, delivery
and performance of the Loan Documents and the consummation of the
transactions contemplated hereby;
(vi) A certificate executed by the secretary or
any assistant secretary of each of the Borrowers
certifying the names of the officers of such
Borrower authorized to sign the Loan Documents
and to give notices and other communications in
connection with this Agreement and
the transactions contemplated hereby, together
with a sample of the true signature of such
officers;
(vii) A certificate executed by the secretary
or an assistant secretary of each of the
Subsidiary Guarantors certifying the names of the
officers of such Subsidiary authorized to sign
the Subsidiary Guaranty or the Reaffirmation of
Subsidiary Guaranty, as applicable, together with
a sample of the true signature of such officers;
(viii) A favorable opinion of
counsel to the Borrowers and the Subsidiary
Guarantors substantially in the form of Exhibit C
attached hereto;
(ix) A closing certificate (the "Closing
Certificate"), executed by the president, senior
vice president or chief financial officer of QDI,
certifying that (i) the representations and
warranties contained in this Agreement and each
other Loan Document are true and accurate in all
material respects, (ii) no Default or Event of
Default has occurred and is continuing and
(iii)except as disclosed therein, there has been
no change to the insurance maintained by QDI and
its Subsidiaries as set forth in the evidence of
insurance delivered to the Banks in connection
with execution and delivery of the Existing
Credit Agreement; and
(x) Such other approvalsor documents as the
Administrative Agent or the
Required Banks may reasonably request;
(b) Application of the proceeds of the Mortgage
Transactions to the repayment of the Loans
outstanding in a principal amount of not less
than $45,000,000, together with the accrued
interest thereon, plus, in the event that such
prepayment results in the prepayment of a LIBOR
Base Loan, any amounts which are payable under
Section 2.4 hereof;
(c) Payment by QDI to the Administrative Agent
for the ratable benefit of the Banks of a
nonrefundable amendment fee in accordance with
the provisions of Section 2.10 hereof; and
(d) Payment by the Borrowers of all costs and
expenses of the Administrative Agent's special
counsel (including, without limitation, legal
fees and expenses) incurred in connection with
the preparation and execution of the Loan
Documents and incident to all proceedings in
connection with, transactions contemplated by,
and documents relating to this Agreement and the Loan
Documents.
Upon the making of the initial Advance hereunder,
the foregoing conditions shall be deemed to be
satisfied; provided, however, that the making of
such Advance shall not constitute a waiver by the
Administrative Agent or any Bank of any right
which the Administrative Agent or such Bank may
have in the event that any certificate, financial
statement or other document delivered pursuant to
this Section 3.1 or otherwise in connection with
the transactions contemplated by this Agreement
shall prove to have been false or misleading in
any material respect.
3.2. Conditions Precedent to All Advances. The
obligation of each of the Banks to make any
Advance hereunder or of CBT to issue any Letters
of Credit shall be further subject to the
satisfaction of each of the following conditions,
unless waived in writing by each of the Banks:
(a) In the case of an Advance, a Notice of
Borrowing appropriately completed and duly
executed by a Borrower and, in the case of a
Letter of Credit, an application for a letter of
credit, in form and substance satisfactory to CBT,
appropriately completed and duly executed by a
Borrower;
(b) The representations and warranties set forth
in Article IV hereof and in each of the other
Loan Documents are true and correct on the
Effective Date and on the date of and after
giving effect to the making of the Advance or the
issuance of the Letter of Credit, except that the
representations and warranties set forth in
Section 4.5 as to the financial statements of QDI
shall be deemed a reference to the audited and
unaudited financial statements of QDI, as the
case may be, most recently delivered to the Banks
pursuant to Section 5.1;
(c) No Default or Event of Default and no
Material Adverse Occurrence shall then have
occurred and be continuing on
the date of the making of the Advance or the
issuance of the Letter of Credit; and
(d) The making of the Advance by such Bank is
not in violation of any applicable law, rule or
regulation or any directive, request or order of
any court or governmental authority having
jurisdiction over such Bank. The delivery of the
Notice of Borrowing or the application for the
issuance of a Letter of Credit by a Borrower
shall constitute a certification by the
Borrowers, binding upon each of the Borrowers, as
to the matters set forth in subsections (b) and
(c) above.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
Each of the Borrowers represents and warrants to
the Administrative Agent and each of the Banks that
as of the date hereof, as of the Effective Date,
and as of the date of each Advance and each
issuance of a Letter of Credit, as follows:
4.1. Organization; etc. Each of the Borrowers is
a corporation validly organized and existing and
in good standing under the laws of the state of
its organization, has full power and authority to
own its property and conduct its business as
conducted by it and is duly qualified to do
business and is in good standing as a foreign
corporation in each jurisdiction where the nature
of its business or the character of its property
makes such qualification or licensing necessary.
A list of jurisdictions in which each of the
Borrowers is qualified to do business is set
forth in Annex I. Each of the Borrowers has full
power and authority to enter into and to perform
its obligations under the Loan Documents and to
request Advances under the Agreement. Each of
the Borrowers has all licenses, permits and
Franchises necessary to carry on its business as
now being conducted and to own and operate its
Property, except for permits, licenses and
Franchises the failure of which to obtain will
not result in a Material Adverse Occurrence.
4.2. Due Authorization. The execution, delivery
and performance by each of the Borrowers and of
each of the Subsidiary Guarantors of the Loan
Documents to which it is a party have been duly
authorized by all necessary corporate action, do
not require any approval or consent of, or any
registration, qualification or filing with, any
governmental agency or authority or any approval
or consent of any other Person, do not and will
not conflict with, result in any violation of or
constitute any default under, any provision of
the articles of incorporation or bylaws of either
of the Borrower or any of the Subsidiary
Guarantors, any agreement binding on or
applicable to the Borrowers, or either of them,
any of the Subsidiary Guarantors or any of their
respective Property, or any law or governmental
regulation or court decree or order binding upon
or applicable to the Borrowers, or either of
them, any of the Subsidiary Guarantors or any of
their respective Property and will not result in
the creation or imposition of any Lien on any of
their respective Property pursuant to the
provisions of any agreement binding on or
applicable to the Borrowers, either of them, any
of the Subsidiary Guarantors or any of their
respective Property.
4.3. Subsidiaries. Neither of the Borrowers has
any Subsidiaries except those listed on Annex II,
which correctly sets forth the name of each
Subsidiary, the jurisdiction of its incorporation
and the percentage ownership of each Subsidiary
which is owned, of record or beneficially, by
each Borrower and/or one or more of its
Subsidiaries. Each of the Borrowers and QDI's
Subsidiaries has good and marketable title to all
of the shares or other equity interests it
purports to own of each of its Subsidiaries, free
and clear of any Lien and all such shares
havebeen duly issued and are fully paid and
nonassessable. Each Subsidiary has been duly
organized and is validly existing and in good
standing under the laws of its jurisdiction of
incorporation or organization and is duly
licensed or qualified and in good standing as a
foreign corporation in each other jurisdiction
where the nature of the business transacted by it
or the character of its properties owned or
leased makes such qualification or licensing
necessary. A list of the jurisdictions in
which each Subsidiary is qualified to do business
is set forth on the attached Annex II. Each
Subsidiary has full power and authority to own
and operate its properties, to carry on its
business as now conducted and, as to each
Subsidiary Guaranty, to enter into and perform
the Subsidiary Guaranty. Each Subsidiary has all
licenses, permits and Franchises necessary to
carry on its business as not being conducted and to own and
operate its properties, except for permits,
licenses and Franchises the failure of which to
obtain will not result in a Material Adverse
Occurrence.
4.4. Validity of the Agreement; etc. Each Loan
Document is the legal, valid and binding
obligation of each of the Borrowers and of each
of the Subsidiary Guarantors which are a party
thereto and is enforceable in accordance with its
terms.
4.5. Financial Statements. The consolidated
balance sheets of QDI and its Subsidiaries as of
October 25, 1998, October 26, 1997 and October
27, 1996 and the related consolidated statements
of income, stockholders' equity and cash flows
for the three years ended October 25, 1998,
October 26, 1997 and October 27, 1996 certified
by PricewaterhouseCoopers LLC, QDI's independent public
accountants, copies of which have heretofore been delivered
to the Banks, were prepared in accordance with generally
accepted accounting principles consistently
applied throughout the periods involved and
present fairly the financial condition and
results of operations and cash flows of QDI and
its Subsidiaries for and as of the end of each of
such years. The unaudited consolidated balance
sheet of QDI and its Subsidiaries as of February
14, 1999 and the unaudited statements of
operations for the sixteen week period ended on
said date, copies of which have heretofore been
delivered to the Banks, have been prepared in
accordance with GAAP, present fairly in all
material respects the financial position of QDI
and its Subsidiaries, on a consolidated basis, as
of said date and the result of operations and
cash flows of QDI and its Subsidiaries, on a
consolidated basis, for said period, subject to
customary year-end adjustments.
4.6. Litigation; etc. Except as disclosed in
QDI's Quarterly Report on Form 10-Q for the
quarter ended February 14, 1999, there is no
action, suit or proceeding at law or equity, or
before or by any federal, state, local or other
governmental department, commission, board,
bureau, agency or instrumentality, domestic or
foreign, pending, or to the knowledge of the
Borrowers threatened, against the Borrowers or
any of QDI's Subsidiaries or any of their
respective Property, which if determined
adversely would be a Material Adverse Occurrence
or would affect the ability of the Borrowers or
any of QDI's WhollyOwned Subsidiaries to perform
their respective obligations under the Loan
Documents; and neither of the Borrowers nor any
of QDI's Subsidiaries is in default with respect to
any final judgment, writ, injunction, decree,
rule or regulation of any court or federal,
state, local or other governmental department,
commission, board, bureau, agency or
instrumentality, domestic or foreign, where the
effect of such default would be a Material
Adverse Occurrence.
4.7. Compliance with Law. Neither of the
Borrowers nor any of QDI's Subsidiaries is (a) in
default with respect to any order, writ,
injunction or decree of any court, governmental
authority or arbitration board or tribunal to
which it is a named party or (b) in violation of
any law, rule, regulation, ordinance or order relating to
its or their respective business, the violation
of which would result in a Material Adverse
Occurrence.
4.8. ERISA Compliance. The Internal Revenue
Service has issued a determination that each Plan
(except for any Plan which is unfunded and
maintained primarily for the purpose of providing
deferred compensation for a select group of
management or highly compensated employees) is
qualified under Section 401(a) and related
provisions of the Code, as amended by ERISA, and
that each related trust or custodial account is
exempt from taxation under Section
501(a) of the Code. All Plans comply in all
material respects with ERISA and other applicable
laws. There exist with respect to the Borrowers,
or either of them, or any of QDI's Subsidiaries
no "multi-employer plans," as defined in the
Multi-employer Pension Plan Amendments Act of
1980, for which a material withdrawal or termination
liability may be incurred. There exist with
respect to all Plans or trusts: (a) no material
accumulated funding deficiency within the meaning
of ERISA; (b) no termination of any Plan or trust
which would result in any material liability to
the PBGC or any "reportable event," as that term
is defined in ERISA, which is likely to constitute grounds for
termination of any Plan or trust by the PBGC; and
(c) no "prohibited transaction," as that term is
defined in ERISA, which is likely to subject any
Plan, trust or party dealing with any Plan or
trust to any material tax or penalty on
prohibited transactions imposed by Section 4975
of the Code.
4.9. Title to Assets. Each of the Borrowers and
each of QDI's Subsidiaries has good and
marketable fee simple title to all of its
Property constituting real property and good and
marketable title to and ownership of all of its
Property and assets constituting personal
property, in each case as disclosed on the
consolidated financial statements of QDI as of
and for the period ending February 14, 1999
(except for any such Property disposed of by the
Borrowers or any of QDI's Subsidiaries in the
ordinary course of business), free and clear of
all Liens except for Liens and other encumbrances
permitted pursuant to Section 6.4.
4.10. Indebtedness. Except for Indebtedness
listed in Annex III, neither of the Borrowers nor
any of QDI's Subsidiaries has any Indebtedness.
4.11. Use of Proceeds. The proceeds of the
Advances will be used by the Borrowers to fund
the working capital requirements of the Borrowers
and for other general corporate purposes.
4.12. Margin Stock. No part of any Advance
shall be used at any time by the Borrowers, or
either of them, to purchase or carry margin stock
(within the meaning of Regulation U) or to extend
credit to others for the purpose of purchasing or
carrying any margin stock. Neither of the
Borrowers nor any of QDI's Subsidiaries is
engaged principally, or as one of its important
activities, in the business of extending credit
for the purposes of purchasing or carrying any
such margin stock. No part of the proceeds of
any Advance will be used by the Borrowers, or
either of them, for any purpose which violates,
or which is inconsistent with, any regulations
promulgated by the Board of Governors of the
Federal Reserve System.
4.13. Investment Company Act. Neither of the
Borrowers nor any of QDI's Subsidiaries is an
"investment company," or an "affiliated person"
of, or a "promoter" or "principal underwriter"
for, an "investment company," as such terms are
defined in the Investment Company Act of 1940, as
amended. The making of the Advances, the
application of the proceeds and repayment thereof
by the Borrowers and the performance of the
transactions contemplated by the Agreement will
not violate any provision of said Act, or any
rule, regulation or order issued by the
Securities and Exchange Commission thereunder.
4.14. Unregistered Securities. Neither of the
Borrowers nor any of QDI's Subsidiaries has (a)
issued any unregistered securities in violation
of the registration requirements of Section 5 of
the Securities Act of 1933, as amended, or any
other law; or (b) violated any rule, regulation
or requirement under the Securities Act of 1933,
as amended, or the Securities Exchange Act of
1934, as amended.
4.15. Public Utility Holding Company Act.
Neither of the Borrowers nor any of QDI's
Subsidiaries is a "holding company," or a
"subsidiary company" of a "holding company," or
an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company,"
within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
4.16. Accuracy of Information. All
information heretofore or herewith furnished by
or on behalf of the Borrowers to the
Administrative Agent or the Banks for purposes of
or in connection with the Agreement or any
transaction contemplated by the Agreement is, and
all other such information hereafter furnished by
or on behalf of the Borrowers to the
Administrative Agent or the Banks will be, true
and accurate in every material respect on the
date as of which such information is dated or
certified and no such information contains any
material misstatement of fact or omits to state a
material fact or any fact necessary to make the
statements contained therein not misleading.
4.17. Tax Returns; Audits. Each of the
Borrowers and QDI's Subsidiaries has filed all
federal, state and local income tax returns and
other reports which are required to be filed, and
has paid all taxes as shown on said returns and
on all assessments received by any such Person
(except for any assessments which are being
contested in good faith by appropriate
proceedings that will prevent a forfeiture or
sale of any property and for which an adequate
book reserve in accordance with GAAP shall have
been set aside), to the extent that such taxes
have become due or has obtained extensions with
respect to the filing of such returns and has
made provision for the payment of taxes
anticipated to be payable in connection with such
returns. Each of the Borrowers and QDI's
Subsidiaries has made all required withholding
deposits. The Borrowers do not have
knowledge of any objections to or claims for
additional taxes by federal, state or local
taxing authorities against it or any of its
Subsidiaries which would be a Material Adverse
Occurrence.
4.18. Environmental and Safety Regulations.
Each of the Borrowers and each of QDI's
Subsidiaries are in compliance with all
requirements of applicable federal, state and
local environmental, pollution control, health
and safety statutes, laws and regulations except
for any noncompliance which, individually or in
the aggregate, could not result in a Material
Adverse Occurrence with respect to such Borrower
or such Subsidiary and are not the subject of any
federal or state investigation evaluating whether any
remedial action is needed to respond to a release
of any toxic or hazardous waste or substance into
the environment. Each of the Borrowers further
represents and warrants that (i) the Real
Property and its intended use complies with all
applicable laws, governmental regulations and the
terms of any enforcement action by any federal,
state, regional or local governmental agency, including,
without limitation, all applicable federal, state
and local laws pertaining to air and water
quality, hazardous waste, waste disposal and
other environmental matters (including, but not
limited to, the Clean Water, Clean Air, Federal Water Pollution
Control, Solid Waste Disposal, Resource
Conservation and Recovery and Comprehensive
Environmental Response, Compensation, and
Liability Acts, as said acts may be amended), and
the rules, regulations and ordinances of all
applicable federal, state and local agencies and
bureaus, except in each case for any
noncompliance which, individually or in the
aggregate, could not result in a Material Adverse
Occurrence and (ii) no notice, demand, request
for information, citation, summons or order has
been issued, no complaint has been filed, no
penalty has been assessed and no investigation or
review is pending or threatened by any governmental or
other entity with respect to any alleged
failure by the Borrowers, or either of them,
or any of QDI's Subsidiaries to comply in any
respect with any of such environmental laws
except for any such liability for which an
adequate book reserve in accordance with GAAP
shall have been set aside in respect thereto.
4.19. Forecasts. The forecasts of QDI and
its Subsidiaries, furnished to the Administrative
Agent and each of the Banks, consisting of
consolidated balance sheets, consolidated cash
flow statements and consolidated income
statements of QDI and its Subsidiaries after
giving effect to the making of the Advances
hereunder and the application of the proceeds
thereof, together with appropriate supporting
details and a statement of underlying
assumptions, have been prepared in the light of
the past business history of QDI and its
Subsidiaries and on the basis of the assumptions
set forth therein, which assumptions are in the
opinion of the Borrowers reasonable. Such
forecasts have been prepared in good faith and
represent the good faith opinion of the Borrowers
as to the most probable course of business of QDI
and its Subsidiaries on the basis of the
assumptions which are set forth therein.
4.20. Solvency. After giving effect to the
transactions contemplated by this Agreement, each
of the Borrowers and QDI's Subsidiaries has
capital sufficient to carry on its business, is
solvent and is able to pay its debts and
obligations as they mature in the ordinary
course. After giving effect to the consummation
of the transactions contemplated by this
Agreement, each of the Borrowers and QDI's
Subsidiaries now owns property having a value,
both at fair valuation and at present fair
saleable value, greater than the amount required
to pay its debts, obligations and contingent
liabilities.
4.21. No Default. As of the date hereof, no
Default or Event of Default has occurred and is
continuing.
4.22. Subsidiary Guarantors. Each of the
Wholly-Owned Subsidiaries of QDI have executed
the Subsidiary Guaranty and the Security
Agreement, except for any SPE (for so long as
such SPE remains a single purpose entity engaged
solely in a Mortgage Transaction) and except for
Wholly-Owned Subsidiaries of QDI (other than any
SPE) which do not in the aggregate have assets in
excess of $500,000. Grady's Inc. does not have
assets in excess of $225,000.
4.23. Year 2000 Compliance. (a) Each of the
Borrowers has conducted, and have caused each of
their respective Subsidiaries to conduct, an
analysis of all of its products, services,
businesses and operations, including without
limitation surveys of Systems (as defined below)
and surveys of and discussions with customers,
suppliers and vendors, to determine the extent to
which a Borrower or its Subsidiaries may be
adversely affected by its failure to be Year 2000
Compliant (as defined below). The Borrowers and
their respective Subsidiaries have developed a
plan (the "Year 2000 Plan") to become Year 2000
Compliant and remedy any material loss it may
suffer if it fails to be Year 2000 Compliant on a
timely basis. Each of the Borrowers and their
respective Subsidiaries have implemented and
continue to proceed with the Year 2000 Plan
materially in accordance with its terms and
timetables.
(b) Each of the Borrowers reasonably
believes that the Year 2000 Plan, if implemented in accordance with
its terms, will result in the Borrowers and their
respective Subsidiaries being Year 2000 Compliant
on a timely basis.
(c) Each of the Borrowers reasonably
believe that each of such Borrowers' and its Subsidiaries'
customers, suppliers and vendors whose failure to
be Year 2000 Compliant could result in a Material
Adverse Occurrence, is Year 2000 Compliant or has
developed a plan to become Year 2000 Compliant
and remedy any material loss such person may
suffer if it fails to be Year 2000 Compliant on a
timely basis with respect to all of its own
computer systems and applications.
The term "Year 2000 Compliant" means that all of such person(s)
computer systems and applications, including
without limitation software and hardware
("Systems"), will function prior to, during, and
after the calendar year 2000, and that no change
in or to such calendar year will have a material
effect on the performance of the Systems or on
the functioning of the business of any of the
Borrowers or their respective Subsidiaries.
ARTICLE V.
CERTAIN AFFIRMATIVE COVENANTS
Each of the Borrowers agrees with the
Administrative Agent and each of the Banks that,
from the date hereof and thereafter for so long
as any portion of any Advance or any Letter of
Credit shall be outstanding or any Bank shall
have any Commitment hereunder, unless the
Required Banks shall otherwise consent in writing:
5.1. Financial Information; etc. The Borrowers
will furnish to the Administrative Agent and each
of the Banks copies of the following financial
statements, reports and information:
(a) as soon as available and in any event within ninety (90)
days after the end of each fiscal year of QDI, a
copy of its annual consolidated audited report,
including balance sheet, related statements of
income, statements of stockholders' equity and
statements of cash flows of QDI and its
consolidated Subsidiaries for such fiscal year,
with comparative figures for the preceding fiscal
year, prepared in accordance with GAAP certified
without qualification or exception by a
nationally recognized firm of independent public
accountants which are reasonably acceptable to
the Administrative Agent and the Required Banks;
(b) as soon as available and in any event within
forty-five (45) days after the end of each of the
first three (3) fiscal quarterly periods of each
fiscal year of QDI, consolidated statements of
income, stockholders' equity and cash flows of
QDI and its consolidated Subsidiaries
for such period and for the period from the
beginning of the respective fiscal year to the
end of such period, and the related consolidated
balance sheets as at the end of such period,
setting forth in each case in comparative form
the corresponding consolidated figures for the
corresponding period in the preceding fiscal
year, accompanied by a certificate of a senior
financial officer of QDI which shall state that
said financial statements fairly present the
consolidated financial condition and results of
operations of QDI and its Subsidiaries in
accordance with GAAP for such period;
(c) with each financial statement required by
Section 5.1(a) and (b) to be delivered to the
Administrative Agent and each of the Banks, (i) a
certificate ("Compliance Certificate") in a form
acceptable to the Administrative Agent and the
Required Banks signed by the president, the
senior vice president or the chief financial
officer of QDI (i) stating that, to the best of his knowledge
after reasonable investigation, no Default or
Event of Default has occurred and is continuing,
or if a Default or an Event of Default has
occurred and is continuing, a statement of the
nature thereof and the action which the Borrowers
propose to take with respect thereto, and (ii)
setting forth, in sufficient detail, the
information and computations required to
establish whether or not the Borrowers were in
compliance with the requirements of Sections 6.1
through 6.3, inclusive, during the periods
covered by the financial reports then being
furnished and as of the end of such periods;
(d) with each financial statement required by
Section 5.1(a) to be delivered to the
Administrative Agent and each of the Banks for a
fiscal year, a separate written statement of the
independent public accountant which certified
such financial statements that (i) such
accountants have obtained no knowledge of any Default or
Event of Default having occurred and continuing,
or if such accountants have obtained knowledge of
any such Default or Event of Default, the
accountants shall disclose such Defaults or
Events of Default and the nature thereof and (ii)
that such accountants have reviewed the
Compliance Certificate to be delivered by QDI for
and as of the end of such fiscal year and found the
calculations contained therein to be accurate and
in agreement with such financial statements;
(e) promptly upon their becoming available,
copies of all registration statements and reports
(including without limitation reports on Forms 10-
K, 10-Q and 8-K) which QDI shall have filed with
the Securities and Exchange Commission;
(f) promptly upon the mailing thereof to the
stockholders of QDI, copies of all financial
statements, reports and proxy statements so mailed;
(g) promptly after a Borrower knows or has
reason to know that any Default has occurred, a
notice of such Default describing the same in
reasonable detail and a description of the action
that the Borrowers have taken and propose to take
with respect thereto;
(h) promptly after receipt thereof, all letters
and reports to management of QDI prepared by its
independent certified public accountants and the
response of the management of QDI thereto;
(i) promptly following the commencement of any
litigation, suit, administrative proceeding or
arbitration relating to the Borrowers, or either
of them, or any of QDI's Subsidiaries relating to
the transactions contemplated by this Agreement
or which if adversely determined
could be a Material Adverse Occurrence, a notice
thereof describing the allegations of such
litigation, suit, administrative proceeding or
arbitration and such Borrower's or such
Subsidiary's response thereto;
(j) promptly upon learning thereof, a notice of
any "reportable event" or "prohibited
transaction" or the imposition of a withdrawal or
termination liability within the meaning of ERISA
in connection with any Plan and, when known, any
action taken by the Internal Revenue Service,
Department of Labor or PBGC with respect thereto;
and
(k) such other information with respect to the
financial condition and operations of the
Borrowers or any of QDI's Subsidiaries as the
Administrative Agent or any Bank may reasonably
request.
5.2. Maintenance of Corporate Existence; etc.
Except as permitted by Section 6.7, each of the
Borrowers shall maintain and preserve, and cause
each of their respective Subsidiaries to maintain
and preserve, its corporate existence and
qualification and good standing in all states in
which such qualification and good standing are
required in order to conduct its business and own
its property as conducted and owned in such
states.
5.3. Payment of Taxes; etc. Each of the
Borrowers shall pay and discharge, and shall
cause each of their respective Subsidiaries to
pay and discharge, as the same may become due and
payable, all taxes, assessments and other
governmental charges or levies against or on any
of its Property, as well as claims of any kind
which, if unpaid, might become a Lien upon any of
its Property; provided, however, that the
foregoing shall not require the Borrowers or any
of their Subsidiaries to pay any such tax,
assessment, charge, levy or Lien so long as the
validity thereof shall be contested in good faith
by appropriate proceedings that will prevent a
forfeiture or sale of any Property and an adequate
book reserve in accordance with GAAP shall have been
set aside with respect thereto. Each of the Borrowers
shall make, and shall cause each of their
respective Subsidiaries to make, all required
withholding deposits.
5.4. Compliance with Laws. Each of the Borrowers
shall carry on, and shall cause each of their
respective Subsidiaries to carry on, its business
activities in substantial compliance with all
applicable federal or state laws and all
applicable rules, regulations and orders of all
governmental bodies and offices having power to
regulate or supervise its business activities,
including, without limitation, all applicable
environmental, pollution control, health and
safety statutes, laws and regulations. Each of
the Borrowers shall maintain, and shall cause each of their
respective Subsidiaries to maintain, all material
rights, liens, franchises, permits, certificates
of compliance or grants of authority required in
the conduct of its business. Each of the
Borrowers agrees that the Real Property and its
intended use will comply at all times with all
applicable laws, governmental regulations and the
terms of any enforcement action now or hereafter
commenced by any federal, state, regional or
local governmental agency, including, without
limitation, all applicable federal, state and
local laws pertaining to air and water quality,
hazardous waste, waste disposal and other
environmental matters (including, but not limited
to, the Clean Water, Clean Air, Federal Water
Pollution Control, Solid Waste Disposal, Resource
Conservation and Recovery and Comprehensive
Environmental Response, Compensation, and
Liability Acts, as said acts may be amended from
time to time), and the rules, regulations and
ordinances of all applicable federal, state and
local agencies and bureaus. 5.5. Books and
Records; etc. Each of the Borrowers shall keep,
and shall cause each of their respective
Subsidiaries to keep, books and records
reflecting all of its business affairs and
transactions in accordance with GAAP and permit
the Administrative Agent and each of the Banks
and their respective representatives, at
reasonable times and intervals and upon
reasonable notice to the Borrowers, to visit the
offices of Borrowers and their Subsidiaries,
discuss financial matters with officers of the
Borrowers or their Subsidiaries and with its
independent public accountants (and by this provision
each of the Borrowers authorizes its independent public
accountants to participate in such discussions)
and examine any of the Borrowers' or any of its
Subsidiaries' books and other corporate records.
5.6. Insurance. Each of the Borrowers will
maintain, and will cause each of their respective
Subsidiaries to maintain, insurance coverage in
such forms and amounts and against such risks
including without limitation insurance with
respect to its Property, the operation thereof
and its business against casualties,
contingencies and risks and insurance against
loss or damage from such hazard and risks to the
person or property of others, as are customary
for corporations similarly situated and engaged
in the same or a similar business and owning and
operating similar properties. All such insurance
shall be carried with financially sound and
reputable insurers.
5.7. Conduct of Business. Each of the Borrowers
shall maintain and keep, and shall cause each of
their respective Subsidiaries to maintain and
keep, its assets, property and equipment in good
repair, working order and condition and from time
to time make or cause to be made all needed
renewals, replacements and repairs.
5.8. Maintain Business. Each of the Borrowers
shall continue to engage primarily, and shall
cause each of their respective Subsidiaries to
continue to engage primarily, in the business or
businesses being conducted on the date of this
Agreement.
5.9. ERISA.
(a) Each of the Borrowers agrees that all
assumptions and methods used to determine the
actuarial valuation of employee benefits, both
vested and unvested, under any Plan, and each
such Plan, will comply in all material respects
with ERISA and other applicable laws.
(b) Neither of the Borrowers will at any time
permit any Plan to:
(i) engage in any "prohibited transaction" as
such term is defined in Section 4975 of the Code
or in Section 406 of ERISA;
(ii) incur any "accumulated funding deficiency"
as such term is defined in Section 302 of ERISA,
whether or not waived; or
(iii) be terminated under circumstances which
are likely to result in the imposition of a lien
on the property of the Borrowers, or either of
them, or any of QDI's Subsidiaries pursuant to
Section 4068 of ERISA, if and to the extent such
termination is within the control of the
Borrower;
if the event or condition described in (i), (ii)
or (iii) above is likely to subject the
Borrowers, or either of them, or any Subsidiary
or ERISA Affiliate to a Material AdverseOccurrence.
(c) Upon the request of the Administrative Agent
or any Bank, the Borrowers will furnish a copy of
the annual report of each Plan (Form 5500)
required to be filed with the Internal Revenue
Service. Copies of annual reports shall be
delivered no later than thirty (30) days after
the date the copy is requested.
5.10. Changes to GAAP. In the event that the
Borrowers, or either of them, makes any changes to the
generally accepted accounting principles used in
the preparation of such Borrower's books and/or
financial statements such that such principles
are not applied consistently with any
such principles applied during any prior period,
(a) such change shall be in accordance with the
generally accepted accounting principles in
effect at the time of such change and shall be
concurred in by the certified public accountants
certifying the financial statements of QDI and
its Subsidiaries, and (b) the Borrowers shall
give the Administrative Agent thirty (30) days
prior written notice thereof. The Required Banks are
hereby authorized, in consultation with the
Borrowers, to adjust the financial covenants of
this Agreement to reflect the effect of such
changes.
5.11. Use of Proceeds. The Borrowers will
use the proceeds of the Advances only for lawful
purposes and in accordance with Sections 4.11
and 4.12 hereof.
5.12. Subsidiary Guaranty. QDI hereby agrees
to cause each Person which is or may hereafter
become a Wholly-Owned Subsidiary of QDI (other
than (i) GAGHC and (ii) WhollyOwned Subsidiaries
of QDI which in the aggregate have assets of less
than $500,000) to execute, deliver and perform
the Subsidiary Guaranty. At the time that any
Wholly-Owned Subsidiary becomes a party to the
Subsidiary Guaranty, the Borrowers shall have
delivered to theAdministrative Agent copies (in
sufficient number for each of the Banks to receive a
copy) of each of the following documents in form and substance
reasonably satisfactory to the Administrative
Agent and the Banks:
(a) Counterpart signature page to the Subsidiary
Guaranty, duly executed by such Subsidiary;
(b) A copy of the articles of incorporation (or
similar charter document), including all
amendments thereto, of such Subsidiary, certified
by the Secretary of State of the state of its
incorporation;
(c) A copy of (i) the By-laws (or similar
charter document) of such Subsidiary and (ii) the
resolutions of the Board of Directors and of the
shareholders (if required) of such Subsidiary
authorizing the execution, delivery and
performance of the Subsidiary Guaranty, each
certified as true and complete by the secretary
or assistant secretary of such Subsidiary;
(d) An incumbency certificate executed by the
secretary or assistant secretary of such
Subsidiary, certifying the names of the officers
authorized to execute the Subsidiary Guaranty,
together with a sample of the true signatures of
such officers;
(e) Certificates of good standing (or the
substantial equivalent thereof) for such
Subsidiary certified by the Secretaries of State
of the state of its incorporation and each other
state in which it is required to be qualified;
and
(f) a favorable opinion of counsel to such
Subsidiary in form and substance reasonably
satisfactory to the Administrative Agent.
Notwithstanding the foregoing, for so long as any
SPE remains a single purpose entity engaged solely in
a Mortgage Transaction, such SPE shall not be
required to execute, deliver and perform the
Subsidiary Guaranty.
5.13. Security Documents. (a) If at any time
either Borrower or any Subsidiary of a Borrower
acquires an ownership interest in or creates an
entity which is or becomes a Subsidiary, such
Borrower shall, or shall cause its Subsidiaries,
to take all such action and execute such
agreements, documents and instruments, including
without limitation execution and delivery of a
counterpart signature page in the form of Annex I
to the Pledge Agreement and Annex I to the
Security Agreement, that may be necessary or
desirable to grant to the Administrative Agent,
for the benefit of the Banks, a first priority,
perfected security interest in all of the assets
of and all of the capital stock of such new Subsidiary.
Notwithstanding the foregoing, (i) the Borrowers
shall not be required to, or be required to cause
its Subsidiaries to, pledge the assets or capital
stock of any Subsidiary if QDI and/or any of its
Subsidiaries is subject to any contractual
obligation which prohibits the pledge of the
assets or capital stock of such Subsidiary
pursuant to the Pledge Agreement or the Security
Agreement; provided that QDI and/or its
Subsidiaries shall use reasonable efforts to
obtain any necessary waivers, consents or
amendments to permit such pledge or to obtain
reasonably equivalent security and (ii) the
Borrowers and their Subsidiaries shall not
be obligated to pledge the assets or capital
stock of a Subsidiary, provided that the
aggregate value of the assets and the capital
stock of the Subsidiaries that have not been
pledged to theAdministrative Agent for the
benefit of the Banks shall not at any time exceed
$500,000.
(b) At the time that any Borrower or any
Subsidiary or Affiliate thereof becomes a party
to a Security Document, the Borrowers shall have
delivered to the Administrative Agent copies (in
sufficient number for each of the Banks to
receive a copy) of each of the following
documents in form and substance reasonably
satisfactory to the Administrative Agent and the
Banks:
(i) (A) Counterpart signature page to the Pledge
Agreement, duly executed by such Borrower or such
Subsidiary and (B) counterpart signature page to
the Security Agreement, duly executed by the applicable Pledgor.
(ii) A copy of (A) the articles of incorporation
(or similar charter document), including all
amendments thereto, of each Pledgor, (B) the By-
laws (or similar charter document)
of each Pledgor and (C) the resolutions of the
Board of Directors and of the shareholders (if
required) of each Pledgor authorizing the
execution, delivery and performance of each such
Security Document, each certified as true and
complete by the secretary or assistant secretary
of such Pledgor;
(iii) An incumbency certificate executed by
the secretary or assistant secretary of each
Pledgor, certifying the names of the officers
authorized to execute each such Security
Document, together with a sample of the true
signatures of such officers;
(iv) A favorable opinion of counsel to each
Pledgor in form and substance reasonably
satisfactory to the Administrative Agent;
(v) Delivery of stock certificates, stock
powers, irrevocable proxies, instructions or
other instruments or documents required to be
delivered pursuant to the applicable Security Document; and
(vi) UCC-1 Financing Statements in form
acceptable to the Administrative Agent
appropriately completed, duly executed by the
applicable Pledgor and filed in all places that
the Administrative Agent, in its sole judgment,
deems necessary or desirable.
Notwithstanding the foregoing, for so long as any
SPE remains a single purpose entity engaged
solely in a Mortgage Transaction, such SPE shall
not be required to execute, deliver and perform
any Security Documents.
5.14. Year 2000 Compliance. The Borrowers
shall, and shall cause each of their respective
Subsidiaries to, take all action necessary or
desirable in order to implement the Year 2000
Plan in all material respects and in order to
ensure that the Borrowers and their Subsidiaries
are Year 2000 Compliant on a timely basis. The
Borrowers shall, and shall cause each of their
respective Subsidiaries to, monitor the progress
of their respective customers, suppliers and
vendors to assure that such Persons are Year 2000
Compliant on a timely basis and take all action
necessary to remedy any potential material loss
which the Borrowers and their Subsidiaries could
suffer if such Persons fail to be Year 2000
Compliant on a timely basis. The Borrowers shall
notify the Administrative Agent promptly upon
learning of any failure, or prospective failure,
of the Borrowers or their respective
Subsidiaries, or of any customer, supplier or
vendor to the Borrowers or their Subsidiaries, to
be Year 2000 Compliant on a timely basis which
could result in a Material Adverse Occurrence.
5.15. Survival of Warranties and
Representations. Each of the Borrowers
covenants, warrants and represents to the
Administrative Agent and each Bank that all
representations and warranties of the Borrowers
contained in this Agreement and in the other Loan
Documents shall be true at the time of Borrowers'
execution of this Agreement and shall survive the
execution, delivery and acceptance hereof and
thereof by the parties thereto and the closing of
the transactions described herein and therein or
related hereto and thereto and any investigation
at any time made by or on behalf of the
Administrative Agent or any of the Banks shall
not diminish their rights to rely thereon.
ARTICLE VI.
CERTAIN FINANCIAL COVENANTS AND NEGATIVE
COVENANTS
Each of the Borrowers agrees with the
Administrative Agent and each of the Banks that,
from the date hereof and thereafter for so long
as any portion of any Advance or any Letter of
Credit shall be outstanding or any Bank shall
have any Commitment hereunder, unless the
Required Banks shall otherwise consent in
writing:
6.1. Fixed Charge Coverage Ratio. (a) For each
twelve-month period ending on the last day of
each fiscal quarter of QDI, the Borrowers shall
maintain a ratio of Earnings Available for Fixed
Charges to Fixed Charges of not less than the
ratio set forth below:
Applicable Fiscal Quarter Minimum Fixed Charge Coverage Ratio
- -------------------------- -----------------------------------
Each fiscal quarter of 1999 fiscal year 1.35:1.00
Each fiscal quarter of 2000 fiscal year 1.40:1.00
Each fiscal quarter of 2001 fiscal year 1.45:1.00
Each fiscal quarter thereafter 1.55:1.00
(b) Neither of the Borrowers will, nor permit any
of its Subsidiaries to, enter into any Operating
Lease if after giving effect thereto on a pro forma
basis the ratio of Earnings Available for Fixed
Charges to Fixed Charges would be less than the
ratio set forth above for the applicable period.
6.2. Ratio of Funded Debt to Pro Forma Consolidated
Cash Flow. For each twelve-month period ending on
the last day of each fiscal quarter of QDI, the
Borrowers shall maintain a ratio of Funded Debt of
QDI and its Subsidiaries, on a consolidated basis,
as of the last day of such fiscal quarter to Pro
Forma Consolidated Cash Flow for the twelvemonth
period ending on such date, of not more than the
ratio set forth below:
Maximum Ratio of Funded
Debt to Pro Forma Consolidated
Applicable Fiscal Quarter Cash Flow
- --------------------------------------- ------------------------------
First, second and third fiscal quarters
of 1999 fiscal year 5.00:1.00
Fourth fiscal quarter of 1999 fiscal
year and each fiscal quarter of 2000
fiscal year 4.75:1.00
Each fiscal quarter of 2001 fiscal year 4.50:1.00
First and second fiscal quarters
of 2002 fiscal year 4.25:1.00
Each fiscal quarter thereafter 3.75:1.00
6.3. Limitations on Indebtedness. Neither of
the Borrowers will, nor will permit any of its
Subsidiaries to, create, issue, guarantee or
otherwise become liable in respect of any
Indebtedness, except:
(a) Capital Lease Obligations existing on the
date hereof and disclosed on Annex III hereto;
(b) Capital Lease Obligations incurred after
April 26, 1996, provided that, after taking into
account the incurrence of such Capital Lease
Obligations, (x) the aggregate outstanding
Capital Lease Obligations incurred pursuant to
this clause (b) shall not exceed $5,000,000 and
(y) no Default or Event of Default shall exist;
(c) Indebtedness represented by the Notes or
outstanding under the Subsidiary Guaranty or any
other Loan Document;
(d) Indebtedness owing to QDI or any of its
Wholly-Owned Subsidiaries (other than
any SPE);
(e) Rate Hedging Obligations permitted by
Section 6.15 hereof; and
(f) For so long as any SPE remains a single
purpose entity engaged solely in a
Mortgage Transaction, Indebtedness incurred by
such SPE in connection with such Mortgage
Transaction, provided that aggregate principal
amount incurred by the SPEs pursuant to this
clause (e) shall not exceed $45,000,000; and
provided further that none of QDI and its
Subsidiaries shall have entered into any guarantee of,
or otherwise be liable (other than as a lessee of Subject
Assets in a Mortgage Transaction or as a guarantor of
any lessee's obligations under a lease entered
into in connection with a Mortgage Transaction) on,
such Indebtedness.
6.4. Liens. Neither of the Borrowers will, nor
will permit any of its Subsidiaries to,
create, incur or permit to exist any Lien on its
Property, whether now owned or hereafter
acquired, or upon any income or profits therefrom, or own
or acquire or agree to acquire Property of any
kind subject to any Lien, except the following:
(a) Liens securing taxes, assessments or
governmental charges or levies or the claims
or demands of contractors,
materialmen, mechanics, carriers, warehousemen,
landlords and other like Persons, provided the
payment thereof is not at the time required by
Section 5.3 hereof;
(b) Liens incurred or deposits made in the
ordinary course of business (A) in
connection with workmen's compensation,
unemployment insurance, social security and other
like laws or (B) to secure the performance of letters
of credit, bids, tenders, sales contracts,
leases, statutory obligations, surety, appeal and
performance bonds and other similar obligations
not incurred in connection with the borrowing of
money, the obtaining of advances or the payment
of the deferred purchase price of Property;
(c) attachments, judgment and other similar
Liens arising in connection with court
proceedings, provided the execution or other
enforcement of such Liens is effectively stayed
and the claims secured thereby are being actively
contested in good faith and by appropriate
proceedings in such manner as not to have the
Property subject to such Liens forfeitable;
(d) easements, rights-of-ways, reservations,
exceptions, minor encroachments, restrictions and similar
charges created or incurred in the ordinary
course of business which in the aggregate do not
materially interfere with the business operations
of the Borrowers, or either of
them, or any of their respective Subsidiaries;
(e) Liens securing Capital Lease Obligations
existing on April 26, 1996 and disclosed
on Annex III hereto;
(f) Liens securing Capital Lease Obligations
incurred pursuant to Section 6.3(b)hereof;
(g) Liens on tangible personal property at any
site which secure Capital Lease Obligations or
obligations under Operating Leases in respect of
such site, in each case existing on the date
hereof and disclosed on Annex III hereto;
(h) Liens in favor of QDI or a Subsidiary
Guarantor;
(i) Liens in favor of the Administrative Agent
for the benefit of the Banks;
(j) Liens on QDI's equity interest in Six Edison
Lakes, L.L.C., a limited liability company ("Six
Edison"), to secure the performance of QDI's
obligations under the Lease, dated September 19,
1996, between QDI and Six Edison regarding the
office building at QDI's headquarters; and
(k) Liens on the Subject Assets to secure
Indebtedness incurred pursuant to Section 6.3(e)
hereof.
For purposes of this Section 6.4, all Liens of a
Person which becomes a Subsidiary and which are
outstanding as of the date such Person becomes a
Subsidiary shall be deemed to have been incurred
as of such date.
6.5. Dividends, Stock Purchases and Restricted
Payments. Neither of the Borrowers will, nor
permit any of its Subsidiaries to, except as
hereinafter provided: (a) declare or pay any
dividends, either in cash or Property, on any
shares of its capital stock of any class (except
dividends payable by QDI solely in shares of
common stock of QDI and dividends payable solely
to QDI or a Wholly-Owned Subsidiary of QDI, other
than any SPE); or (b) directly or indirectly, or
through any Subsidiary, purchase, redeem, retire,
or otherwise acquire any shares of its capital
stock, or other equity interests therein, of any
class or any warrants, rights or options to
purchase or acquire any shares of its capital
stock, or other equity interests therein (except
for any such purchases, redemptions, retirements
or other acquisitions payable solely in shares of
common stock of QDI); or (c) make any other
distribution, either directly or indirectly or
through any Subsidiary, in respect of its capital
stock, or other equity interests therein (such
declarations or payments of dividends, purchases,
redemptions or retirements of stock and warrants,
rights or options, and all such other
distributions being herein collectively called
"Restricted Payments"); provided that,
notwithstanding the foregoing, QDI may repurchase
shares of its capital stock outstanding if (i)
after giving effect thereto, the aggregate
cumulative amount of all Restricted Payments made
in respect of such repurchases in any fiscal year does not exceed
$5,000,000, (ii) after giving effect thereto, the
aggregate cumulative amount of all Restricted
Payments made in respect of such repurchases
since May 9, 1999 does not exceed the Restricted
Payments Basket, (iii) as of the date of payment
of such Restricted Payment the ratio of Funded
Debt of QDI and its Subsidiaries, on a
consolidated basis, as of the last day of the
preceding fiscal quarter of QDI to Pro Forma
Consolidated Cash Flow of QDI for the twelve-
month period ending on such date, after giving
effect to such Restricted Payment (and any
Indebtedness incurred in connection therewith),
is less than (x) in respect of any such
repurchase during fiscal year 1999, 4.25 to 1.00,
and (y) in respect of any repurchase during
fiscal year 2000 and thereafter, 4.00 to 1.00 and
(iv) at the time of payment of such Restricted Payment
no Default or Event of Default exists and, after giving effect
to such Restricted Payment, no Default or an
Event of Default would exist; and provided,
further, that the restrictions set forth in this
Section 6.5 shall not apply to any Rights nor to
any shares of Series B Participating Cumulative
Preferred Stock distributed or issued pursuant to
the Rights Agreement, dated as of March 27, 1997,
between QDI and ChaseMellon Shareholder Services,
L.L.C., as successor Rights Agent (the "Rights
Agreement"). As used herein, the term "Rights" shall
have the same meaning ascribed to it in the Rights Agreement.
For purposes of this Section 6.5, the amount of
any Restricted Payment which is payable or
distributable in Property other than cash or
shares of capital stock of QDI shall be deemed to
be the fair market value (as determined in good
faith by the Board of Directors of QDI) of such
Property as of the date of the payment of such
Restricted Payment.
6.6. Sales of Assets. Neither of the Borrowers
will, nor permit any of its Subsidiaries
to, sell, lease, transfer or otherwise dispose of
assets (including without limitation the capital
stock of any Subsidiary), other than (i) Permitted
Dispositions and (ii) the sale of the Subject
Assets to a SPE in connection with a Mortgage Transaction.
6.7. Mergers and Consolidations. Neither of the
Borrowers will, nor permit any of its
Subsidiaries to, consolidate with or merge into
any other Person or permit any other Person to
consolidate with or merge into it (except that a
Subsidiary may consolidate with or merge into
QDI or a Wholly-Owned Subsidiary of QDI, other
than any SPE); provided that the foregoing
restriction does not apply to the merger or
consolidation of QDI with another corporation if:
(i) the corporation which results from such
merger or consolidation (the "surviving
corporation") is organized under the laws of the
United States of America or a jurisdiction
thereof;
(ii) the due and punctual payment of the
principal of and premium, if any, and interest on
the Notes, according to their tenor, and the due
and punctual performance and observance of all of
the covenants in the Notes and this Agreement to
be performed or observed by
QDI, are expressly assumed in writing by the
surviving corporation; and
(iii) immediately after the consummation of
the transaction and after giving effect thereto, no
condition or event shall exist which constitutes
a Default, an Event of Default or a Change of Control.
6.8. Preferred Stock of Subsidiaries. The
Borrowers will not permit any Subsidiary of QDI
to issue Preferred Stock, any security
convertible into Preferred Stock or options,
warrants or rights to purchase Preferred Stock of
any Subsidiaries of QDI except shares held by QDI
or a WhollyOwned Subsidiary of QDI (other than
any SPE) and shares of Preferred Stock held by
others at the time such Subsidiary becomes a
Subsidiary of QDI, provided that such shares of
Preferred Stock are not issued or transferred by
QDI or any Subsidiary to others in contemplation
of, or in connection with, such Subsidiary
becoming a Subsidiary.
6.9. Disposition of Securities of a Subsidiary.
Neither of the Borrowers will, nor permit any of
its Subsidiaries to, sell or otherwise dispose of
any shares of the stock or other equity interests
therein (or any options or warrants to purchase
stock or other equity interests therein or other
securities convertible or exchangeable therefor)
of a Subsidiary (said stock, options, warrants
and other securities herein called "Subsidiary
Stock"), nor will either of the Borrowers permit
any of its Subsidiaries to issue, sell or
otherwise dispose of any shares of its own
Subsidiary Stock, if the effect of the
transaction would be to reduce the proportionate
interest of such Borrower and its other
Subsidiaries in the outstanding Subsidiary Stock
of the Subsidiary whose shares are the subject of
the transaction, provided that the foregoing
restrictions shall not apply to:
(a) the issue of directors' qualifying shares; or
(b) the sale for cash consideration to a Person
in a single transaction (other than directly or
indirectly to an Affiliate) of the entire
investment (whether represented by stock, debt,
claims or otherwise) of such Borrower and its
other Subsidiaries in any Subsidiary (other than
GAGHC), if all of the following conditions are
met:
(i) the sale or other disposition of the assets
of such Borrower and its other
Subsidiaries is permitted by Section 6.6;
(ii) in the opinion of such Borrower's Board of
Directors, the sale is for fair value and is in
the best interests of such Borrower;
(iii) the Subsidiary being disposed of has no
continuing investment in any other Subsidiary not
being simultaneously disposed of or in the
Borrowers; and
(iv) immediately after the consummation of the
transaction and after giving effect thereto, no
condition or event shall exist which constitutes
a Default or an Event of
Default.
Notwithstanding the foregoing, (i) GAGHC
shall at all times remain a Wholly-Owned
Subsidiary of QDI and (ii) neither QDI nor any
Subsidiary may dispose of any Subsidiary Stock to
any SPE.
6.10. Investments. Neither of the Borrowers
will, nor permit any of its Subsidiaries to, make
or permit to exist any Investment other than
Permitted Investments.
6.11. Transactions with Affiliates. Neither
of the Borrowers will, nor permit any of its
Subsidiaries to, enter into any material
transaction (including, without limitation, the
purchase, sale or exchange of Property, the
rendering of any service, the making of any
material investment in an Affiliate or the
repayment of any indebtedness owed to an
Affiliate) with an Affiliate (other than a
Borrower or a Subsidiary Guarantor (other than Grady's Inc.)),
except in the ordinary course of business and pursuant to
the reasonable requirements of such Borrower's or
such Subsidiary's business, upon terms which are
fair and reasonable to such Borrower or such
Subsidiary and which are not less favorable to
such Borrower or such Subsidiary than would be
obtained in a comparable transaction with a
Person not an Affiliate.
6.12. Capital Expenditures.
The Borrowers shall not, and shall not permit any
of their Subsidiaries to, expend or contract to
expend any amount for Capital Expenditures during
any fiscal year if as a result thereof the
Consolidated Capital Expenditures for such fiscal
year shall exceed the sum of (i) the amount
specified below opposite such fiscal year plus
(ii) the aggregate amount, if positive, of the
Maximum Consolidated Capital Expenditures set
forth below for each of the preceding fiscal
years, commencing with fiscal year 1999, on a
cumulative basis, less the actual aggregate
amount of Consolidated Capital Expenditures made
in such prior fiscal years, on a cumulative
basis:
Fiscal Year Maximum Consolidated
Capital Expenditures
- --------------- --------------------
1999 $11,500,000
2000 $17,500,000
2001 $17,500,000
2002 $18,000,000
6.13. Acquisitions. The Borrowers shall not,
nor permit any of their respective Subsidiaries
to, make any Acquisitions, other than an
Acquisition relating to the operation and
development of Burger King restaurants and/or
Chili's Grill and Bar restaurants.
6.14. SPE. No SPE shall engage
in any activity or conduct any business other
than a Mortgage Transaction.
6.15. Rate Hedging Obligations. Neither of
the Borrowers will, nor permit any of its
Subsidiaries to, create, incur, guarantee or
otherwise become liable on or in respect of any
Rate Hedging Obligations, except for any such
Rate Hedging Obligations entered into on
commercially reasonable terms with a commercial
or investment bank or other financial institution
in the ordinary course of business and not for
speculative purposes.
6.16. Franchise Agreements. Neither of the
Borrowers will, nor permit any of its
Subsidiaries to, terminate or agree to terminate
any Franchise Agreement to which such Person is a
party, or amend, modify or grant a waiver of any
material provisions of any such Franchise
Agreement, if such termination, amendment,
modification or waiver results in a Material
Adverse Occurrence.
ARTICLE VII.
EVENTS OF DEFAULT
7.1. Events of Default. The term "Event of
Default" shall mean any of the following
events:
(a) A default in the payment when due of the
principal of the Notes;
(b) A default in the payment when due of any
interest on the Notes or of fees under this
Agreement and such default shall continue
unremedied for five (5) days;
(c) A default in the due performance and
observance of any of the covenants contained
in Sections 5.2, 5.6, 6.1 through 6.16,
inclusive;
(d) A default (other than those defaults
described in other subsections of this Section
7.1) by the Borrowers, or either of them, in the
due performance and observance of any of
the covenants contained in this Agreement and
such default shall continue unremedied for a
period of thirty (30) days after notice from the
Administrative Agent or any Bank to either of the
Borrowers thereof;
(e) A default by the Borrowers, or either of
them, or any of their respective Subsidiaries on
any Indebtedness or any event shall occur or any
condition shall exist in respect of any
Indebtedness of such Borrower or such Subsidiary,
or under any agreement securing or relating to
such Indebtedness, the effect of which is (i) to
result in the failure to pay when due at least
$500,000 in aggregate principal amount of such
Indebtedness or (ii) to cause or permit any
holder of such Indebtedness or a trustee to cause
at least $500,000 in aggregate principal amount
of such Indebtedness to become due prior to its
stated maturity or prior to its regularly
scheduled dates of payment;
(f) An involuntary case under any applicable
federal or state bankruptcy laws shall be
commenced against either of Borrowers or any of
QDI's Subsidiaries and the petition shall not be
dismissed, stayed, bonded or discharged within
sixty (60) days after the commencement of the
case; the entry of a decree or order by a court
having jurisdiction in the premises in respect of
either of the Borrowers or any of QDI's
Subsidiaries under the federal bankruptcy laws,
as now or hereafter constituted, or any other
applicable federal or state bankruptcy,
insolvency or other similar law; or the entry of
a decree or order by a court having jurisdiction
in the premises appointing a receiver,
liquidator, assignee, trustee, sequestrator or
other similar official of either of the Borrowers
or any of QDI's Subsidiaries or of any
substantial part of the property of either of the
Borrowers or any of QDI's Subsidiaries, or
ordering the winding up or liquidation of its
affairs, and the continuance of any such
decree or order unstayed and in effect for a
period of sixty (60) consecutive days;
(g) The commencement by either of the Borrowers
or any of QDI's Subsidiaries of a voluntary case
under the federal bankruptcy laws, as now or
hereafter constituted, or any other applicable
federal or state bankruptcy, insolvency or other
similar law or the consent by it to the
appointment of a receiver, liquidator, assignee,
trustee, sequestrator or other similar official
of the Borrower or any of QDI's Subsidiaries or
of any substantial part of the property of either
of the Borrowers or any of QDI's Subsidiaries, or
the making by it of an assignment for the benefit
of creditors, or the failure by either of the
Borrowers or any of QDI's Subsidiaries to pay its
debts generally as they become due, or the taking
of any action by either of the Borrowers or any
of QDI's Subsidiaries in furtherance thereof;
(h) Any judgments, writs, warrants of
attachment, executions or similar process (to the
extent not covered by insurance) shall be issued
or levied against either of the Borrowers or any
of QDI's Subsidiaries or any of the assets of
either of the Borrowers or any of QDI's
Subsidiaries where the amount of such judgments,
writs, warrants of attachment, executions or
similar process exceeds $500,000 in the aggregate
and where such judgments, writs, warrants of
attachment, executions or similar process are not
released, vacated, suspended, stayed, abated or
fully bonded prior to any sale and in any event
within thirty (30) days after its issue or levy;
(i) Any representation or warranty set forth in
this Agreement or any other Loan Document shall
be untrue in any material respect on the date as
of which the facts set forth are stated or
certified;
(j) Default shall occur in the observance or
performance by any Subsidiary of any provision,
covenant or agreement of the Subsidiary Guaranty;
(k) The Subsidiary Guaranty shall cease to be in
full force and effect or any Subsidiary
shall so state in writing;
(l) A Change of Control shall occur; or
(m) Any Security Document shall cease to be in
full force and effect or any Pledgor shall so
state in writing; or the Administrative Agent,
for the benefit of the Banks, shall cease to have
a first priority, perfected security interest on
all or any portion of the collateral subject or
purported to be subject to any Security Document.
7.2. Action If Event of Default.
If an Event of Default described in Section
7.1(f) or (g) shall occur, the full unpaid
principal amount of the Note and all other
amounts due and owing hereunder shall
automatically be due and payable without any
declaration, notice, presentment, protest or
demand of any kind (all of which are hereby
waived) and the obligation of the Banks to
make additional Advances or to issue Letters of
Credit shall automatically terminate. If any
other Event of Default shall occur and be continuing,
the Required Banks, upon written notice to the
Borrowers, may terminate the Banks' obligation to
make additional Advances and CBT's obligation to
issue Letters of Credit and may declare the
outstanding principal amount of the Notes
and all other amounts due and owing hereunder to
be due and payable without other notice to the Borrowers,
presentment, protest or demand of any kind (all
of which are hereby waived), whereupon the full
unpaid amount of the Notes and any and all other
amounts, which shall be so declared due and
payable shall be and become immediately due and
payable.
7.3. Remedies. The Administrative Agent,
personally or by attorney, may in its discretion,
proceed to protect and enforce its rights by
pursuing any available remedy including a suit or
suits in equity or at law, whether for damages or
for the specific performance of any obligation,
covenant or agreement contained in this Agreement
or in the Notes, or in aid of the execution of
any power herein or therein granted, or for the
enforcement of any other appropriate legal or
equitable remedy, as the Administrative Agent
shall deem most effectual to collect the payments
then due and thereafter to become due on the
Notes or under this Agreement, to enforce
performance and observance of any obligation,
agreement or covenant of the Borrowers hereunder
or under the Notes or to protect and enforce any
of the Administrative Agent's or any Bank's
rights or duties hereunder.
(b) No remedy herein conferred upon or reserved
to the Administrative Agent or any Bank is
intended to be exclusive of any other remedy or
remedies, and each and every such remedy shall be
cumulative, and shall be in addition to every
other remedy given hereunder or under any other
Loan Document now or hereafter existing at law,
in equity or by statute.
(c) Each Bank agrees that it will not take any
action, nor institute any actions or proceedings,
against the Borrowers hereunder or under any Loan
Document, without the prior written consent of
the Required Banks or, as may be provided in this
Agreement or the other Loan Documents, at the
direction of the Administrative Agent.
ARTICLE VIII.
THE AGENT
8.1. Appointment and Authorization. Each Bank
hereby irrevocably appoints CBT as the
administrative agent of such Bank and authorizes
the Administrative Agent to act on such Bank's
behalf to the extent provided herein or under any
of the other Loan Documents or in connection
therewith, and to take such other action and
exercise such other powers as may be reasonably
incidental thereto. Notwithstanding the use of
the term "Agent," it is expressly understood and
agreed that the Administrative Agent shall not
have any fiduciary responsibilities to any Bank
by reason of this Agreement and that the
Administrative Agent is merely acting as the
representative of the Banks with only those
duties as are expressly set forth in this
Agreement and the other Loan Documents. In its
capacity as the Banks' contractual
representative, the Administrative Agent (i) does
not hereby assume any fiduciary duties to any of
the Banks and (ii) is acting as an independent contractor, the
rights and duties of which are limited to those
expressly set forth in this Agreement and the
other Loan Documents. Each of the Banks hereby
agrees to assert no claim against the
Administrative Agent on any agency theory or any
other theory of liability for breach of
fiduciary duty, all of which claims each Bank
hereby waives.
8.2. Power. The Administrative Agent shall have
and may exercise such powers under this Agreement and
any other Loan Documents as are specifically
delegated to the Administrative Agent by the
terms hereof or thereof, together with such
powers as are reasonably incidental thereto. As
to any matters not expressly provided for by the
Loan Documents (including, without limitation,
enforcement or collection of the Notes), the
Administrative Agent shall not be required to
exercise any discretion or take any action, but
shall be required to act or to refrain from
acting (and shall be fully protected in so
acting or refraining from acting) upon the
instructions of the Required Banks, and such
instructions shall be binding upon all Banks and
all holders of the Notes; provided, however,
that the Administrative Agent shall not be
required to take any action which exposes the
Administrative Agent to personal liability or
which is contrary to any Loan
Document or applicable law. The Administrative
Agent shall not have any implied duties or any
obligation to take any action under this
Agreement or any other Loan Document except such
action as is specifically provided by this
Agreement or any other Loan Document to be taken
by the Administrative Agent. The Administrative
Agent shall act as an independent contractor in
performing its obligations as Administrative
Agent hereunder and nothing contained herein
shall be deemed to create a fiduciary
relationship among or between the Administrative
Agent and the Borrowers or among or between the
Administrative Agent and any Bank.
8.3. Employment of Counsel; etc. The
Administrative Agent may execute any of its
duties under this Agreement or any other Loan
Document, and any instrument, agreement or
document executed, issued or delivered pursuant
hereto or connection herewith, by or through
employees, agents and attorneys-infact and shall
not be answerable for the default or misconduct
of any such employee, agent or attorney-infact
selected by it with reasonable care. The
Administrative Agent shall be entitled to rely on
advice of counsel (including counsel who are the
employees of the Administrative Agent) selected
by the Administrative Agent concerning all
matters pertaining to the agency hereby created
and its duties under any of the Loan Documents.
8.4. Reliance. The Administrative Agent shall be
entitled to rely upon and shall not be under a
duty to examine or pass upon the validity,
effectiveness, genuineness of any notice,
consent, waiver, amendment, certificate,
affidavit, letter, telegram, statement, paper,
document or writing believed by it to be genuine and to have
been signed or sent by the proper Person or
Persons, and the Administrative Agent shall be
entitled to assume that the same are valid,
effective and genuine and what they purport to be.
8.5. General Immunity. Neither the
Administrative Agent nor any of the
Administrative Agent's directors, officers,
agents, attorneys or employees shall be liable to
any Bank for any action taken or omitted to be
taken by it or them under the Loan Documents or
in connection therewith except that the
Administrative Agent shall be obligated on the
terms set forth herein for performance of its
express obligations hereunder and except that no
Person shall be relieved of any liability imposed
by law for willful misconduct or gross
negligence. Without limitation on the generality
of the foregoing, the Administrative Agent: (a)
shall not be responsible to any Bank for any
recitals, statements, warranties or representations under
the Loan Documents or any agreement or document
relative thereto or for the financial condition
of the Borrowers; (b) shall not be responsible
for the authenticity, accuracy, completeness,
value, validity, effectiveness, due execution,
legality, genuineness, enforceability or
sufficiency of any of the Loan Documents;
(c) shall not be responsible for the validity,
genuineness, creation, perfection or priority of
any of the liens created or reaffirmed by any of the
Loan Documents, or the validity, genuineness,
enforceability, existence, value or sufficiency
of any collateral or other security; (d) shall
not be bound to ascertain or inquire as to the
performance or observance of any of the terms,
covenants or conditions of any of the Loan
Documents on the part of the Borrowers or of any
of the terms of any such agreement by any party
thereto and shall have no duty to inspect the
property (including the books and records) of the
Borrowers; (e) shall incur no liability under or
in respect of any of the Loan Documents or any
other document or Collateral by acting upon any
notice, consent, certificate or other instrument
or writing (which may be by telegram, cable or
telex) believed by the Administrative Agent to be
genuine and signed or sent by the proper party;
and (f) may consult with legal counsel (including
counsel for the Borrowers), independent public
accountants and other experts selected by the
Administrative Agent and shall not be liable for
any action taken or omitted to be taken in good
faith in accordance with the advice of such
counsel, accountants or experts.
8.6. Credit Analysis. Each Bank has made, and
shall continue to make, its own independent
investigation or evaluation of the operations,
business, property and condition, financial and
otherwise, of the Borrowers in connection with
the making of its commitments hereunder and has
made, and will continue to make, its own
independent appraisal of the creditworthiness of
the Borrowers. Without limiting the generality of
the foregoing, each Bank acknowledges that prior
to the execution of this Agreement, it had this
Agreement and all other Loan Documents and such
other documents or matters as it deemed
appropriate relating thereto reviewed by its own
legal counsel as it deemed appropriate, and it is
satisfied with the form of this Agreement and all
other Loan Documents. Each Bank agrees and
acknowledges that neither the Administrative
Agent nor any of its directors, officers,
attorneys or employees makes any representation
or warranties about the creditworthiness of the
Borrowers or with respect to the due
execution, legality, validity, genuineness,
effectiveness, sufficiency or enforceability of
this Agreement or any other Loan Documents, or
the validity, genuineness, execution, perfection
or priority of Liens created or reaffirmed by any
of the Loan Documents, or the validity,
genuineness, enforceability, existence, value or
sufficiency of any collateral or other security.
Each of the Banks shall use its best efforts to
provide the other Banks with any credit or other
material information which comes into the
possession of such Bank on or before a Default or
Event of Default or at any time thereafter with
respect to the operations, business, property
condition or creditworthiness of the Borrowers
but no Bank shall have any liability to any other
Bank for its inadvertent failure to do so. Each
Bank, upon the request of another Bank, shall
deliver to such other bank any financial
statement, report, certificate or other document
required to be delivered to the Banks
pursuant to Section 5.1 which the requesting Bank
did not receive. Except as explicitly provided
herein, neither the Administrative Agent nor any
Bank has any duty or responsibility, either
initially or on a continuing basis, to provide
any other Bank with any credit or other
information with respect to such operations,
business, property, condition or
creditworthiness, whether such information comes
into its possession on or before a Default or an
Event of Default or at any time thereafter.
8.7. Agent and Affiliates. With respect to the
Loans made by it and the Notes issued to it, each
Agent, in its individual capacity, shall have the
same rights and powers under the Loan Documents
as any other Bank and may exercise the same as
though it were not an Agent; and the
term "Bank" or "Banks" shall, unless otherwise
expressly indicated, include each Agent in its
individual capacity. Each Agent, in its
individual capacity, and its Affiliates may
accept deposits from, lend money to, act as
trustee under indentures of, and generally engage
in any kind of business with, the Borrowers, or
either of them, and any person or entity who may
do business with or own securities of the
Borrowers, or either of them, all as if it were
not an Agent and without any duty to account
therefor to the Banks.
8.8. Indemnification. The Banks jointly and
severally agree to indemnify and hold harmless
the Administrative Agent and its officers,
directors, employees and agents (to the extent
not reimbursed by the Borrowers), ratably
according to their respective Commitments, from
and against any and all claims, liabilities,
obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever
which may be imposed on, incurred by, or asserted against the
Administrative Agent or any of its officers,
directors, employees or agents, in any way
relating to or arising out of any investigation,
litigation or proceeding concerning or relating
to the transaction contemplated by this Agreement
or any of the other Loan Documents, or any of
them, or any action taken or omitted by the
Administrative Agent or any of its officers,
directors, employees or agents, under any of the
Loan Documents; provided, however, that no Bank
shall be liable for any portion of such claims,
liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the
gross negligence or willful misconduct of the
Administrative Agent or any of its officers,
directors, employees or agents. Without
limitation of the foregoing, each Bank agrees to
reimburse the Administrative Agent promptly upon
demand for such Bank's proportionate share of any
out-ofpocket expenses (including counsel fees)
incurred by Administrative Agent or its officers,
directors, employees or agents in connection with
the preparation, execution, administration, or
enforcement of, or legal advice in respect of
rights or responsibilities under any of, the Loan
Documents, to the extent that the Administrative
Agent is not reimbursed for such expenses by the
Borrowers.
8.9. Successor Administrative Agent. The
Administrative Agent may resign at any time as
Administrative Agent under the Loan Documents by
giving thirty (30) days' prior written notice
thereof to the Banks and the Borrowers. Upon any
such resignation, the Required Banks shall have
the right to appoint a successor Administrative
Agent hereunder; provided that prior to the
occurrence of a Default the Borrowers
shall consent (which consent shall not be
unreasonably withheld) thereto. If no successor
Administrative Agent shall have been so appointed
by the Required Banks, and shall have accepted
such appointment, within 30 days after the
retiring Administrative Agent's giving of notice
of resignation, then the retiring Administrative
Agent may, on behalf of the Banks, appoint a
successor Administrative Agent, which shall be a
commercial bank organized under the laws of the
United States or of any state thereof and having
a combined capital and surplus of at least
$200,000,000.00. Upon the acceptance of any
appointment as Administrative Agent under the
Loan Documents by a successor Administrative
Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its
duties and obligations under the Loan Documents.
After any retiring Administrative Agent's
resignation or removal as Administrative Agent
under the Loan Documents, the provisions of this
Article VIII shall inure to its benefit as to any
actions taken or omitted to be taken by it while
it was Administrative Agent under the Loan
Documents. 8.10. Agents' Fees. The Borrowers
agree to pay to CBT, for its own account, the
fees agreed to by QDI and CBT pursuant to the Fee
Letter, or as otherwise agreed from time to time.
8.11. Collateral Matters. The Administrative
Agent is authorized on behalf of all the Banks,
without the necessity of any notice to or further
consent from the Banks, from time to time to take
any action with respect to the Security Documents
or any collateral thereunder which may
be necessary to perfect and maintain perfected
the security interest in and Liens upon the
collateral granted pursuant to the Security
Documents. The Banks irrevocably authorize the
Administrative Agent, at its option and in its
discretion, to release any Lien granted to or
held by the Administrative Agent upon any
collateral (i) upon termination of the
Commitments and payment in full of all Loans and all
other obligations of the Borrowers known to the
Administrative Agent and payable under this Agreement
or any other Loan Document; (ii) constituting property
sold or to be sold or disposed of as part of or in
connection with any disposition permitted
hereunder; (iii) consisting of an instrument
evidencing Indebtedness or other debt instrument,
if the Indebtedness evidenced thereby has been
paid in full; or (iv) if approved, authorized or
ratified in writing by all the Banks. Upon
request by the Administrative Agent at any time
the Banks will confirm in writing the
Administrative Agent's authority to release
particular types or items of
collateral pursuant to this Section 8.11,
provided that the absence of any such
confirmation for whatever reason shall not affect
the Administrative Agent's rights under this Section 8.11.
ARTICLE IX.
AMENDMENT AND RESTATEMENT
9.1. Amendment and Restatement of Existing Credit
Agreement. The Borrowers, the Banks, and the
Agents agree that, upon the execution and
delivery by each of the parties hereto of this
Agreement and satisfaction of the conditions set
forth in Article III, the terms and provisions
of the Existing Credit Agreement shall be and
hereby are amended, superseded and restated in
their entirety by the terms and provision of this
Agreement. It is the intention of the parties to
this Agreement that this Agreement not constitute a
novation of the obligations under the Existing
Credit Agreement and shall not operate as a
novation, waiver of any right, power or remedy of the Administrative
Agent or any Bank nor constitute an amendment or
a waiver of any provision of the Loan Documents,
except as expressly set forth herein and shall be
limited to the particular instance expressly set
forth herein. All Loans made and Obligations
incurred under the Existing Credit Agreement
which are outstanding on the Effective Date shall
continue as Loans and Obligations under (and
shall be governed by the terms of) this
Agreement. From and after the Effective Date,
the Existing Credit Agreement shall be amended
and restated hereby and all references herein to
"hereunder," "hereof," or words of like import
and all references in any other Loan Document to
the "Credit Agreement" or words of like import
shall mean and be a reference to the Existing
Credit Agreement as amended and restated hereby.
9.2. Master Assignment. Prior to the Effective
Date, the Commitment of each of the Existing
Banks under the Existing Credit Agreement are
equal to the amounts set forth opposite the
Bank's name in Part A to Schedule I. As of the
Effective Date, each of the Banks' Commitments
shall equal the amounts set forth opposite such
Bank's name in Part B of Schedule I and each such
Banks' outstanding Obligations and rights and
duties hereunder shall be allocated ratably
according to its new Percentage. To effect such
reallocation, the parties hereto agree as
follows:
(a) Assignment and Assumption. Each of the Banks
whose Percentage on the Effective Date is less
than its Percentage prior to the Effective Date
(the "Assignors") hereby sell and assign to the
other Banks (the "Assignees"), and each of the
Assignees hereby purchases and assumes from the
Assignors, as of the Effective Date an interest
in and to the Assignors' rights and obligations
under the Agreement (including without limitation
the Assignor's Commitment, outstanding Loans and
other Obligations and rights and obligations with
respect to Letters of Credit), such that after
giving effect to such assignment, the Commitment
of each of the Assignees and each of the
Assignors shall equal the amounts set forth in
Part B of Schedule I opposite such Bank's name.
As of the Effective Date, each of the Assignees
shall have the rights and obligations
of a Bank under the Loan Documents with respect
to the rights and obligations assigned to the
Assignees hereunder by the Assignors and each of
the Assignors shall relinquish its rights and be
released from its Obligations under this
Agreement with respect to the rights and
obligations assigned to the Assignees hereunder.
From and after the Effective Date, any Existing
Bank which shall not have a Commitment as of the
Effective Date shall no longer constitute a
"Bank" for purposes of this Agreement, but shall
retain its rights as an Assignor against the
Assignees pursuant to paragraphs (b) and (e)
hereof. The Administrative Agent hereby waives
the processing fee for the assignments pursuant to this Section
9.2 provided for in Section 10.10(b) of this Agreement.
(b) Payment Obligations. On and after the
Effective Date, each of the Assignees shall be
entitled to receive from the Administrative Agent
all payments of principal, interest and fees with
respect to the interest assigned hereby. Each of
the Assignees shall advance funds directly to
the Administrative Agent with respect to all
Advances and reimbursement payments made on or
after the Effective Date with respect to the
interest assigned hereby. In consideration for
the sale and assignment of Loans hereunder, the
Assignees shall pay on the Effective Date to the
Administrative Agent for the ratable account of
the Assignors an amount for each Assignee equal
to the principal amount of the portion of all
Loans assigned to such Assignee hereunder. Each
of the Assignees will also promptly remit to the
Administrative Agent for the ratable benefit of
the Assignors any amounts of interest on Loans
and fees received from the Administrative Agent
which relate to the portion of the Loans assigned
to the Assignees hereunder for periods prior to
the Effective Date and not previously paid by the
Assignees to the Assignors. In the event that any
party hereto receives any payment to which any
other party hereto is entitled, then the party
receiving such amount shall promptly remit it to
the Administrative Agent on behalf of the other
party hereto. In no event will the Effective
Date occur if the payments required to be made by
each of the Assignees to the Administrative Agent
for the account of the Assignors under this
paragraph (b) are not made on the proposed
Effective Date.
(c) Representations of the Assignors; Limitation
of the Assignors' Liability. Each of the
Assignors represents and warrants that with
respect to its interest assigned hereby, it is
the legal and beneficial owner of the interest
being assigned by it hereunder and that such
interest is free and clear of any adverse claim
created by the respective Assignor. It is
understood and agreed that the assignment and
assumption hereunder are made without recourse to
the Assignors and that the Assignors make no
other representation or warranty of any kind to
the Assignees. Neither the Assignors nor any of
their respective, officers, directors, employees,
agents or attorneys shall be responsible for (i)
the due execution, legality, validity,
enforceability, genuineness, sufficiency or
collectability of any Loan Documents, (ii) any
representation, warranty or statement made in or
in connection with any of the Loan Documents,
(iii) the financial condition or creditworthiness
of the Borrowers or any guarantor, (iv) the
performance of or compliance with any of the terms or
provisions of any of the Loan Documents, (v) inspecting
any of the property, books or records of the Borrowers,
or (vi) any mistake, error of judgment, or action
taken or omitted to be taken in connection with
the Loans, Letters of Credit or the Loan
Documents.
(d) Representations of the Assignees. Each of
the Assignees (only as to itself)
(i) confirms that as of the Effective Date, it is
a Bank under this Agreement and has received a
copy of the Agreement and the other Loan
Documents, together with copies of the financial
statements requested by such Assignee and such
other documents and information as it has
deemed appropriate to make its own credit
analysis and decision to enter into the
Agreement; (ii) agrees that it will, independently and
without reliance upon CBT or the Assignors or any
other Bank and based on such documents and information
as it shall deem appropriate at the time,
continue to make its own credit decisions in
taking or not taking action under the Loan
Documents; and (iii) confirms that none of the
funds, monies, assets or other consideration being
used to make the purchase and assumption
hereunder are "plan assets" as defined under
ERISA and that its rights, benefits and interests
in and under the Loan Documents will not be "plan assets" under ERISA.
(e) Indemnity. Each of the Assignees severally
agrees to indemnify and hold harmless the
Assignors against any and all losses, cost and
expenses (including, without limitation,
reasonable attorneys' fees) and liabilities
incurred by it in connection with or arising in
any manner from such Assignee's nonperformance of
the obligations assumed under this Section 9.2.
(f) Subsequent Assignments. After the Effective
Date, each of the Banks shall have the rights
pursuant to Section 10.10 of this Agreement to
assign the rights which are assigned to such
Assignee hereunder to any entity or person,
provided that, unless the prior written consent
of the Assignors is obtained, the Assignee is not
thereby released from its obligations to the
Assignors hereunder, if any remain unsatisfied,
including, without limitation, its obligations
under paragraphs (b) and (e) hereof.
9.3. Replacement Notes. The Borrowers shall
execute and deliver replacement Notes to each of
the Banks. Each of the Notes amends and restates
and is issued in substitution for each of the
Existing Notes. On the Effective Date: (a) each
of the Existing Banks shall return its Existing
Note to the Borrowers; (b) each of the Banks
shall receive a new Note in the principal amount
of such Bank's Commitment; and (c) all loans made
pursuant to the Existing Credit Agreement
outstanding on such date shall be deemed to be
Loans hereunder by the Banks, ratably in
accordance with their respective Commitments,
shall be evidenced by the Notes, and shall be
entitled to all of the benefits and bear all of
the obligations of this Agreement.
9.4. Security Documents. Each of the Borrowers
hereby acknowledges and agrees that the
Obligations, including the Notes, all Advances
now outstanding or hereafter made hereunder and
all amounts now or hereafter owing to the
Administrative Agent and the Banks under or
pursuant to this Agreement or any other Loan
Document and all Rate Hedging Obligations owing
by the Borrowers and/or their Subsidiaries to the
Bank or any Bank, shall be secured under and
pursuant to the Note Pledge Agreement, the Pledge
Agreement, the Security Agreement and each and
every other Security Document and that all
references therein to the "Credit Agreement"
shall be deemed a reference to this Agreement and
all capitalized terms not otherwise defined
therein shall have the meanings ascribed thereto
in this Agreement.
9.5. Release of Subject Assets. Each of the Banks
hereby authorizes the Administrative Agent, upon
the later of the Effective Date or the
consummation of a Mortgage Transaction, to
release any and all security interests or liens
granted to the Administrative Agent, for the
benefit of the Banks, under any Security
Documents in the Subject Assets which are being
disposed of in a Mortgage Transaction and to
execute such other documents and instruments as
may be necessary to evidence such release.
ARTICLE X.
MISCELLANEOUS
10.1. Waivers, Amendments; etc. The
provisions of this Agreement, including the
closing conditions set forth herein, may from
time to time be amended, modified or waived, if
such amendment, modification or waiver is in
writing and consented to by the Borrowers and the
Required Banks; provided, that no amendment,
waiver or consent shall, unless in writing and
signed by all the Banks, do any of the following:
(a) waive any of the conditions specified in
Article III, (b) increase the Commitments of the
Banks or subject the Banks to any additional
obligations, (c) reduce the principal of, or
interest on, the Notes or any fees or other
amounts payable hereunder, (d) postpone any date
fixed for any payment of principal of, or
interest on, the Notes or any fees or other
amounts payable hereunder, (e) change the
percentage of the Commitments or of the aggregate
unpaid principal amount of the Notes, or the
number of Banks, which shall be required for the
Banks or any of them to take any action
hereunder, or (f) amend this Section 10.1 or (g)
except as specifically permitted hereby or
thereby, release or impair the security interest
in any of the collateral granted to the
Administrative Agent, for the benefit of the
Banks, under the Security Documents or discharge
any Subsidiary Guarantor; provided, further,
that no amendment, waiver or consent shall,
unless in writing and signed by the
Administrative Agent in addition to the Banks
required above to take such action, affect the
rights or duties of the Administrative Agent
under this Agreement or any Note.
No failure or delay on the part of the
Administrative Agent, any Bank or the holder of any Note in
exercising any power or right under this
Agreement or any Note shall operate as a waiver
thereof, nor shall any single or
partial exercise of any such power or right
preclude any other or further exercise thereof or
the exercise of any other power or right. No
notice to or demand on the Borrowers in any case
shall entitle it to any notice or demand in
similar or other circumstances.
10.2. Payment Dates. Whenever any payment to
be made hereunder by or to the Banks or to the
holder of any Note shall otherwise be due on a
day which is not a Business Day, such payment
shall be made on the next succeeding Business
Day, and such extension of time shall be included
in computing the fees or interest payable on such
next succeeding Business Day.
10.3. Notices. All communications and
notices provided under this Agreement shall be in
writing by mail, telecopy or personal delivery
and if to the Borrowers addressed or delivered to
QDI at its address shown on the signature page
hereof or if to the Administrative Agent or the
Banks delivered to it at the address shown on the
signature page hereof, or to any party at such
other address as may be designated by such party
in a notice to the other parties. Any notice, if
mailed properly addressed, shall be deemed given
upon the third Business Day after the placing
thereof in the United States mail, postage
prepaid; any notice shall be deemed given when
transmitted by telecopier or when personally
delivered.
10.4. Costs and Expenses. The Borrowers
agree to pay, or reimburse, the Administrative
Agent for all reasonable expenses for the
preparation of this Agreement, including
exhibits, and the Loan Documents and any
amendments hereto or thereto or consents or
waivers hereunder or thereunder as
may from time to time hereafter be required
thereby or by the transactions contemplated
hereby, including, but not limited to, the fees
and out-ofpocket expenses of the Administrative
Agent, charges and disbursements of special
counsel to the Administrative Agent from time to
time incurred in connection with the preparation
and execution of this Agreement and any document
relevant to this Agreement, including the Loan
Documents, any amendments hereto or thereto, or
consents or waivers hereunder or thereunder, and
the consideration of legal questions relevant
hereto and thereto. The Borrowers agree to pay,
or reimburse, the Administrative Agent and each Bank
upon demand for all reasonable costs and expenses
(including attorneys', auditors' and accountants'
fees and expenses) arising out of the
transactions contemplated by this Agreement and
the Loan Documents, in connection with any work-
out or restructuring of the transactions
contemplated hereby and by the Loan Documents and
any collection or enforcement of the obligations
of the Borrowers hereunder or thereunder, whether
or not suit is commenced, including, without limitation,
reasonable attorneys' fees and legal expenses in connection
with any appeal of a lower court's order or
judgment. The obligations of the Borrowers under
this Section 10.4 shall survive any termination of
this Agreement.
10.5. Indemnification. In consideration of
the execution and delivery of this Agreement by
the Administrative Agent and the Banks, the
Borrowers agree to indemnify, exonerate and hold
the Administrative Agent, each Bank and their
respective officers, directors, employees and
agents (the "Indemnified Parties") free and
harmless from and against any and all actions,
causes of action, suits, losses, claims, damages,
penalties, judgments, liabilities and damages,
and expenses in connection therewith, including, without
limitation, reasonable attorneys' fees and
disbursements and all expenses of litigation or
preparation therefor whether or not the Administrative
Agent or such Bank is a party thereto (the "Indemnified
Liabilities"), incurred by the Indemnified
Parties or any of them as a result of, or arising
out of, or relating to:
(a) any transaction financed or to be financed
in whole or in part directly or indirectly with
proceeds of any Advance, or
(b) the execution, delivery, performance or
enforcement of this Agreement, the Loan Documents
or any document executed pursuant hereto or
thereto by any of the Indemnified Parties,
except for any such Indemnified Liabilities arising on
account of such Indemnified Party's breach of
contract or such Indemnified Party's gross
negligence or willful misconduct in violation of
law or in tort. The provisions of this Section
10.5 shall survive termination of this Agreement
and payment in full of the Notes.
10.6. Severability. Any provision of this
Agreement or the Notes executed pursuant hereto
which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or
unenforceability without invalidating the
remaining provisions of this Agreement or the
Notes or affecting the validity or enforceability
of such provision in any other jurisdiction.
10.7. Cross-References. References in this
Agreement to any Section or Article are, unless
otherwise specified, to such Section or Article
of this Agreement.
10.8. Headings. The various headings of this
Agreement are inserted for convenience only and
shall not affect the meaning or interpretation of
this Agreement or any provisions hereof.
10.9. Governing Law. This Agreement and the
Notes shall each be deemed to be a contract made
under and governed by the internal laws (and not
the law of conflicts) of the State of Indiana.
10.10. Successors and Assigns. (a) This
Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their
respective successors and assigns except that:
(i)neither of the Borrowers may assign or
transfer its rights hereunder without the prior
written consent of each of the Banks; and (ii)
any assignment by a Bank must be made in
compliance with subsection (b) below.
Notwithstanding clause (ii) of this subsection
(a), any Bank may at any time, without the
consent of Borrowers or the Administrative Agent,
assign all or any portion of its rights under
this Agreement and its Notes to a Federal Reserve
Bank; provided, however, that no such assignment
shall release the transferor Bank from its
obligations hereunder. Except to the extent
otherwise required by its context, the word
"Bank" where used in this Agreement shall mean
and include any such assignee and such assignee
shall be bound by and have the benefits of this
Agreement the same as if such holder had been a
signatory hereto.
(b) Any Bank may, in the ordinary course of its
business and in accordance with applicable law,
at any time assign to one or more banks or other
entities ("Purchasers") all or a portion of its
rights and obligations under this Agreement
(including, without limitation, its Commitments,
all Loans owing to it, all of its participation
interests in existing Letters of Credit, and its
obligation to participate in additional Letters
of Credit hereunder) in accordance with the
provisions of this subsection (b). Each
assignment shall be of a constant, and not a
varying, ratable percentage of all of the
assigning Bank's rights and obligations under
this Agreement. Such assignment shall be
substantially in the form of Exhibit D hereto and
shall not be permitted hereunder unless (i) such
assignment is for all of such Bank's rights and
obligations under the Loan Documents or (ii) the
amount of the Commitment assigned by the
assigning Bank pursuant to each assignment shall
be at least $10,000,000 and the amount of the
Commitment retained by the assigning Bank shall be
at least $10,000,000. The consent of the Administrative
Agent (which consent shall not be unreasonably withheld or
delayed) shall be required prior to an assignment
becoming effective with respect to a transferee
which is not a Bank or an Affiliate thereof if at
the time of such assignment no Event of Default
shall have occurred and is continuing. In
addition, the consent of the Borrowers shall be
required (which consent shall not be unreasonably
withheld or delayed) prior to an assignment
becoming effective if such assignment is at a
time when no Default or Event of Default has
occurred and is continuing. Upon (i) delivery to
the Administrative Agent of an executed
Assignment Agreement, together with any required
consents and (ii) payment of a $2,000 fee to the
Administrative Agent for processing such assignment,
such assignment shall become effective on the effective
date specified in such Assignment Agreement. On and
after the effective date of such assignment, such
transferee, if not already a Bank, shall for all
purposes be a Bank party to this Agreement and
any other Loan Documents executed by the Banks
and shall have all the rights and obligations of
a Bank under the Loan Documents, to the same
extent as if it were an original party hereto,
and no further consent or action by the
Borrowers, the Banks or the Administrative Agent
shall be required to release the transferor Bank
with respect to the percentage of the Commitment,
Loans and Letter of Credit participations
assigned to such transferee Bank. Upon the
consummation of any assignment pursuant to this
Section 10.10, the Administrative Agent and the
Borrowers shall make appropriate arrangements so
that replacement Notes are issued to such
transferor Bank and new Notes or, as appropriate,
replacement Notes, are issued to such transferee
Bank, in each case in principal amounts
reflecting their Commitment, as adjusted pursuant
to such assignment.
(c) Each Bank may, without the consent of the
Borrowers or the Administrative Agent, sell
participations to one or more banks or other
entities in all or a portion of its rights and
obligations under this Agreement (including all
or a portion of its Commitment, the Loans owing
to it, its interest as an issuer with respect to
Letters of Credit, its participations in Letters
of Credit and its obligation to participate in
additional Letters of Credit hereunder);
provided, however, that (i) such Bank's
obligations under this Agreement shall remain
unchanged, (ii) such Bank shall remain solely
responsible to the other parties hereto for the
performance of such obligations, (iii) the
participating banks or other entities shall be
entitled to the benefit of the cost protection
provisions contained in Section 2.3 to the extent
of the Bank selling such participation and the
Borrowers' aggregate obligations with respect to
Section 2.3 shall not be increased by reason of
such participation, and (iv) the Borrowers, the
Administrative Agent and the other Banks shall
continue to deal solely and directly with such
Bank in connection with such Bank's rights and
obligations under this Agreement, and such Bank
shall retain the sole right (and shall not limit
its rights) to enforce the obligations of the
Borrowers relating to the Loans and to approve
any amendment, modification or waiver of any
provision of this Agreement (other than
amendments, modifications or waivers with respect
to any fees payable hereunder (to the extent such
participants are entitled to such fees) or the
amount of principal of or the rate at which
interest is payable on the Loans, or the dates
fixed for payments of principal of or interest on
the Loans).
10.11. Execution in Counterparts.
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate
counterparts, each of which when so executed
shall be deemed to be an original and all of
which taken together shall constitute one and
the same agreement.
10.12. Joint and Several Liability. The
obligations of the Borrowers to make payment of
the Obligations hereunder and under the Notes
are joint and several. The Administrative Agent
may proceed directly against either or both of
the Borrowers to obtain performance of and to
collect and recover the full amount, or any
portion, of the Obligations, without first
proceeding against the other Borrower or any
other Person, or against any security or
collateral for the Obligations.
10.13. Financial Information. Each Borrower
assumes responsibility for keeping itself
informed of the financial condition of the other
Borrower and any and all endorsers and/or other
guarantors of all or any part of the Obligations,
and of all other circumstances bearing upon the
risk of nonpayment of the Obligations, or any
part thereof, that diligent inquiry would reveal,
and such Borrower agrees that the Administrative
Agent and the Banks shall have no duty to advise
such Borrower of information known to them
regarding such condition or any such
circumstances.
10.14. Consent to Jurisdiction. EACH OF THE
BORROWERS HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY INDIANA STATE OR FEDERAL
COURT SITTING IN SOUTH BEND, INDIANA, OVER ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE NOTES OR ANY OTHER LOAN
DOCUMENT AND EACH OF THE BORROWERS HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF
SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH ILLINOIS STATE OR FEDERAL
COURT. EACH OF THE BORROWERS HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY
DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO
THE MAINTENANCE OF SUCH ACTION OR PROCEEDING.
EACH OF THE BORROWERS IRREVOCABLY CONSENTS TO THE
SERVICE OF COPIES OF THE SUMMONS AND COMPLAINT
AND ANY OTHER PROCESS WHICH MAY BE SERVED IN ANY
SUCH ACTION OR PROCEEDING BY THE MAILING BY
UNITED STATES CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, OF COPIES OF SUCH PROCESS TO THE
BORROWER'S ADDRESS SPECIFIED IN SECTION 10.3.
EACH OF THE BORROWERS AGREES THAT A JUDGMENT,
FINAL BY APPEAL OR EXPIRATION OF TIME TO APPEAL
WITHOUT AN APPEAL BEING TAKEN, IN ANY SUCH ACTION
OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
NOTHING IN THIS SECTION 10.14 SHALL AFFECT THE
RIGHT OF THE ADMINISTRATIVE AGENT OR ANY BANK TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR AFFECT THE RIGHT OF THE ADMINISTRATIVE
AGENT OR ANY BANK TO BRING ANY ACTION OR
PROCEEDING AGAINST THE BORROWERS OR EITHER OF
THEM, OR THEIR RESPECTIVEPROPERTY IN THE COURTS
OF ANY OTHER JURISDICTION.
10.15. Waiver of Jury Trial. EACH OF THE
BORROWERS, THE AGENT AND THE BANKS HEREBY
IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY NOTE,
OR ANY OTHER INSTRUMENT OR DOCUMENT DELIVERED
HEREUNDER OR THEREUNDER.
[The rest of this page intentionally left blank.]
IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be executed
by their respective officers thereunto duly
authorized as of the day and year first above
written.
QUALITY DINING,INC.
Address: 4220 Edison Lakes Parkway
Mishawaka, Indiana 46545
Attention: John C.
Firth Executive Vice President, General
Counsel and Secretary
with a copy to: David M. Findlay,
Senior Vice President Finance
By:_______________________
John C. Firth
Executive Vice President,
General Counsel and
Secretary
GAGHC, INC.
By:______________________
David M. Findlay
Vice President
CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION, in its individual
capacity and as Administrative Agent
Address: 712 Main Street
Houston, Texas
77002-8059
Attention: Manager, Franchise System Finance
By:__________________________
Name:________________________
Title:_______________________
NBD BANK, N.A., in its individual capacity
and as Documentation Agent
Address: One Indiana Square Suite 7028
Indianapolis, IN 46266
Attention: John C. Otteson
By:_________________________
Name:_______________________
Title:______________________
LASALLE BANK N.A.
(formerly, LaSalle National Bank)
Address: 120 S. LaSalle Street
Chicago, IL 60603
Attention: David Knapp
By:________________________
Name:______________________
Title:_____________________
NATIONSBANK, N.A., in its individual capacity
and as Co-Agent
Address: 600 Peachtree Street, NE, 19th Floor
Atlanta, GA 30308
Attention: Michelle Sommerset-Brown
By:_________________________
Name:_______________________
Title:______________________
THE NORTHERN TRUST COMPANY
Address: 50 S.LaSalle
Street, B-2
Chicago, IL 60675
Attention: Art Fogel
By:_________________________
Name:_______________________
Title:______________________
KEYBANK NATIONAL ASSOCIATION
(successor in interest to SOCIETY NATIONAL BANK)
Address: 127 Public Square OH-01-27-0606
Cleveland, OH 44114
Attention: Mark LoSchiavo
By:_______________________
Name:_______________________
Title:______________________
SUNTRUST BANK, CENTRAL FLORIDA, N.A.
Address: c/o SunTrust Banks, Inc.
201 Fourth Avenue North
3rd Floor
Nashville, TN 37219
Attention: Vipul H. Patel
Vice President
By:________________________
Name:______________________
Title:_____________________
SCHEDULE I
PART A
EXISTING COMMITMENTS
Bank Commitment Percentage
- ---------------------------------------- -------------- ----------
Chase Bank of Texas National Association $26,000,000.00 20.00%
NBD Bank, N.A. $26,000,000.00 20.00%
LaSalle Bank N.A. $21,666,666.67 16.67%
NationsBank, N.A. $17,333,333.33 13.33%
SunTrust Bank, Central Florida, N.A. $17,333,333.33 13.33%
The Northern Trust Company $13,000,000.00 10.00%
Key Bank N.A. $ 8,666,666.67 6.67%
PART B
COMMITMENTS AS OF EFFECTIVE DATE
Bank Commitment Percentage
- ---------------------------------------- -------------- ----------
Chase Bank of Texas National Association $16,000,000.00 20.00%
NBD Bank, N.A. $15,000,000.00 18.75%
NationsBank, N.A. $15,000,000.00 18.75%
LaSalle Bank N.A. $13,336,000.00 16.67%
SunTrust Bank, Central Florida,N.A. $10,664,000.00 13.33%
The Northern Trust Company $10,000,000.00 12.50%
Key Bank N.A. --0-- 0 %
ANNEX I
LIST OF JURISDICTIONS IN WHICH THE BORROWER IS
QUALIFIED TO DO BUSINESS
See attached
ANNEX II
LIST OF SUBSIDIARIES; JURISDICTION OF
INCORPORATION AND STOCK OWNERSHIP
See attached
ANNEX III
INDEBTEDNESS; LIENS
See attached
ANNEX IV
INVESTMENTS
See attached
ANNEX V
DESCRIPTION OF REAL PROPERTY
See attached
EXHIBIT A
[Form of Note]
PROMISSORY NOTE
$__________ __________, 199_ Mishawaka,Indiana
FOR VALUE RECEIVED, QUALITY
DINING, INC., an Indiana corporation, and
GAGHC, Inc., a Delaware corporation (collectively
together with their successors and assigns, the
"Borrowers"), hereby promise, jointly and
severally, to pay to ____________________ (the
"Holder"), the principal sum of __________
DOLLARS ($__________), or such lesser amount as
shall equal the aggregate unpaid principal amount
of the Advances (as defined in the hereinafter
defined Credit Agreement) made by the Holder to
the Borrowers, or either of them, under the
Credit Agreement, on the Termination Date (as
defined in the Credit Agreement) and to pay
interest on the unpaid principal amount of each
Advance, for the period commencing on the date of
such Advance until such Advance shall be paid in
full, at the rates per annum and on
the dates provided in the Credit Agreement.
Both principal and interest are payable in
lawful money of the United States of America and
in immediately available funds to the
Administrative Agent (as defined in the Credit
Agreement) to such domestic account as the
Administrative Agent may designate. The date,
amount and type of each Advance made by the
Holder to the Borrowers, or either of them, and
each payment made on account of the principal
thereof, shall be recorded by the Holder on its
books and, prior to any transfer of this Note,
endorsed by the Holder on the schedule attached
hereto or any continuation thereof; provided
that the Holder's failure to make any such
recordation or notation shall not affect the
Obligations of the Borrowers hereunder or under
the Credit Agreement.
This Note is one of the Notes referred to in the
Third Amended and Restated Revolving Credit Agreement
(as amended from time to time, the "Credit Agreement")
dated as of May 11, 1999 by and between the Borrowers, the banks
party thereto (the "Banks"), Chase Bank of Texas
National Association, as administrative agent
(the "Administrative Agent"), NBD Bank, N.A., as
documentation agent, and NationsBank, N.A.
(South), as CoAgent, which amends and
restates the Second Amended and Restated
Revolving Credit Agreement dated as of September
11, 1998 by and between the Borrowers, the banks
party thereto and Chase Bank of Texas National
Association, as administrative agent for the
Banks and NBD Bank, N.A., as documentation agent
(the "Existing Credit Agreement"). This Note
amends and restates and is issued in substitution
for a Promissory Note dated September 11, 1998
(the "Existing Note") issued by the Borrowers
pursuant to the Existing Credit Agreement and
evidences Advances made thereunder. This Note
does not constitute a novation of the obligations
of the Borrowers under the Existing Note.
Capitalized terms used in this Note have the
respective meanings assigned to them in the
Credit Agreement.
The Credit Agreement provides for
the acceleration of the maturity of the Advances
evidenced by this Note upon the occurrence of
certain events and for prepayments of Advances
upon the terms and conditions specified therein.
This Note is secured by a Subsidiary Guaranty issued
by certain Wholly-Owned Subsidiaries of Quality Dining, Inc. in
favor of the Administrative Agent for the benefit
of the Banks, by certain assets of the Borrowers
and their respective Subsidiaries pursuant to the
Pledge Agreement, the Security Agreement and the
Note Pledge Agreement and may now or hereafter be
secured by one or more other security agreements,
pledge agreements, assignments,mortgages,
guaranties, instruments or agreements of the
Borrowers or any other Person.
The Borrowers hereby waivedemand, presentment, protest and notice of
nonpayment and protest.
THIS NOTE SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF INDIANA.
QUALITY DINING, INC.
By:_________________________
John C. Firth
Executive Vice President,
General Counsel and
Secretary
GAGHC, INC.,
By:___________________
David M. Findlay
Vice President
Schedule to Promissory Note
Date Principal
Date of Advance Amount of Advance Type of Advance of Advance Repaid
- --------------- ----------------- --------------- -----------------
EXHIBIT B
NOTICE OF BORROWING
CHASE BANK OF TEXAS NATIONAL ASSOCIATION, as
Administrative Agent
712 Main Street
Houston, Texas 77002-8059
Attention: ________, 19__
(Date of Notice)
Ladies and Gentlemen:
The undersigned, [Quality
Dining, Inc., an Indiana corporation] [GAGHC,
Inc., a Delaware corporation], refers to the
Third Amended and Restated Revolving Credit
Agreement, dated as of May 11, 1999 (said Third
Amended and Restated Revolving Credit Agreement,
as amended, modified or supplemented from time to
time being the "Agreement") by and between
Quality Dining, Inc. and GAGHC, Inc., as
borrowers, the banks party thereto, Chase Bank of
Texas National Association, as administrative
agent, NBD Bank, N.A., as documentation agent,
and NationsBank, N.A. (South), as Co-Agent. The
terms used herein shall have the meanings
ascribed thereto in the Agreement. Pursuant to
the terms of the Agreement the undersigned hereby
requests an Advance under the Agreement, and in
that connection sets forth below the information
relating to such Advance (the "Proposed
Advance"):
(i) The borrowing date (which shall be a
Business Day) of the Proposed Advance is
__________, 19__.
(ii) The aggregate amount of the Proposed Advance
is $_________.
(iii) The Proposed Advance is to be made as the following type(s) of Loan:
(A) $______________Base Rate Loan; or
(B) $______________LIBOR Base Loan.
(iv) If the Proposed Advance is to be made as a
LIBOR Base Loan, the Interest Period
applicable thereto is________months.
The undersigned confirms that
the conditions precedent set forth in Article
III of the Agreement are satisfied as of the date hereof.
[QUALITY DINING, INC.]
[GAGHC, INC.]
By:__________________________________ ___
Its: ________________________________
EXHIBIT C
LEGAL OPINION OF COUNSEL
The opinion of counsel for the Borrowers shall be
addressed to the Agents and each of
the Banks and shall be to the effect that:
1. Each of the Borrowers and the
Subsidiary Guarantors (other than Grady's, Inc.
as to which I express no opinion and Grady's
American Grill, LP and GAGLC, Inc. (the "Texas
Entities") which are addressed in paragraph 2
below) is a corporation organized and validly
existing in good standing under the laws of its
jurisdiction of incorporation, and has all
requisite corporate power and authority to carry
on the business now being conducted by it and to
own its property and to enter into and perform
the Credit Agreement and the Reaffirmation of
Subsidiary Guaranty to which it is a party.
2. Grady's American Grill,
LP is a limited partnership organized and validly
existing in good standing under the laws of the
State of Texas and has all requisite power and
authority to carry on the business now being
conducted by it and to enter into and perform the
Subsidiary Guaranty. GAGLC, Inc. is a
corporation organized and validly existing in
good standing under the laws of the State of
Texas and has all requisite corporate power and
authority to carry on the business now being
conducted by it and to own its property and to
enter into and perform the Reaffirmation of
Subsidiary Guaranty. In expressing the opinions
set forth in this paragraph 2, I have relied on
the opinions of Munsch Hardt Kopf Harr & Dinan,
P.C. dated December 20, 1995
and October 31, 1997 (the "Texas Opinions").
3. Each of the Borrowers and each
of the Subsidiary Guarantors (other than Grady's, Inc. as to which
I express no opinion) is duly qualified and in
good standing as a foreign corporation in the
jurisdictions enumerated in Annex I and Annex
attached to this opinion and such jurisdictions
are all of the jurisdictions where the nature of
their business or the character of their
properties makes such qualification or licensing
necessary.
4. Each of the Credit Agreement and the Reaffirmation of
Subsidiary Guaranty have been duly authorized by
proper corporate (or partnership) action on the
part of the Borrowers and the Subsidiary
Guarantors (other than Grady's, Inc. as to which
I express no opinion) which are
party thereto and have been duly executed and
delivered by an authorized officer (or general
partner) of each of such Borrowers and Subsidiary
Guarantors. Each of the Credit Agreement and the
Reaffirmation of Subsidiary Guaranty constitutes
the legal, valid and binding obligations
of the Borrowers and the Subsidiary Guarantors
which are a party thereto, enforceable in
accordance with their respective terms, except to
the extent that enforcement thereof may be
limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws of
general application relating to or affecting the
enforcement of the rights of creditors or by
equitable principles (regardless of whether
enforcement is sought in a proceeding in equity
or at law). In expressing the opinions set forth
in this paragraph 4 that relate to the Texas
Entities, I have relied on the Texas Opinions. I
am not aware of changes in business or operations
of the Texas Entities since December 20, 1995
which could affect such opinions.
4. Each of the Security Documents creates an
enforceable security interest in favor of the
Administrative Agent for the benefit of the Banks
in the collateral described therein, which is
subject to Article 9 of the Indiana Uniform
Commercial Code as security for the payment, to
the extent set forth therein, of the Obligations.
5. No authorization, approval or consent of any
governmental or regulatory body is necessary or
required in connection with the lawful execution,
delivery and performance by the Borrowers and the
Subsidiary Guarantors (other than Grady's, Inc.
as to which I express no opinion) of the Credit
Agreement and the Reaffirmation of Subsidiary
Guaranty.
6. The execution and delivery of the Credit
Agreement and the Reaffirmation of Subsidiary
Guaranty and compliance with the terms thereof by
the Borrowers and the Subsidiary Guarantors will
not conflict with, or result in any breach of any
of the provisions of, or constitute a default
under, or result in the creation or imposition of
any Lien upon any of the Property of the
Borrowers or the Subsidiary Guarantors pursuant
to the provisions of the articles of
incorporation, by-laws or other charter document
of the Borrowers or the Subsidiary Guarantors or
any loan agreement under which Borrowers or the
Subsidiary Guarantors are bound, or other
agreement or instrument under which the Borrowers
or the Subsidiary Guarantors or their
Property is bound.
7. There are no actions, suits or proceedings
pending or, to the best of my knowledge after due
inquiry, threatened against, or affecting the
Borrowers or the Subsidiary Guarantors at law or
in equity or before or by any federal, state,
municipal or other governmental department,
commission, board, bureau, agency or
instrumentality, domestic or foreign, which (i)
would contest or affect the execution, validity or
performance of any of the Loan Documents, or
(ii) could result, either individually or
collectively, in a Material Adverse Occurrence,
except as disclosed in Quality Dining, Inc.'s
Report on Form 10-Q for the quarter ended
February 14, 1999.
8. Each of the Borrowers and the Subsidiary
Guarantors have all franchises, permits, licenses
and other authority as are material to enable
them to carry on their business as
now being conducted and as proposed to be
conducted, and they are not in default under any
of such franchises, permits, licenses or other
authority, which defaults could, individually or
in the aggregate, result in a Material Adverse
Occurrence.
9. The execution and delivery of the Credit
Agreement and the Reaffirmation of Subsidiary Guaranty and the
performance thereof by the Borrowers and the
Subsidiary Guarantors will not result in a breach
or violations of any of the terms, conditions, or
provisions of any law or regulation (including
any usury laws), order, writ, injunction or
decree of any court or governmental authority
applicable to the Borrowers or the Subsidiary
Guarantors.
10. None of the Borrowers or Subsidiary
Guarantors is (i) a "public utility company" or a
"holding company," or an "affiliate" or a
"subsidiary company" of a "holding company" or an
"affiliate" of such a "subsidiary company," as
such terms are defined in the Public Utility
Holding Company Act of 1935, as amended, or (ii)
a "public utility" as defined in the Federal
Power Act, as amended, or (iii) an "investment
company" or an "affiliated person" thereof or an
"affiliated person" of any such "affiliated
person", as such terms are defined in the
Investment Company Act of 1940, as amended.
11. All of the issued and outstanding shares of
capital stock of each of the Subsidiary
Guarantors (other than Grady's Inc. as to which I
express no opinion) have been duly and validly
issued, are fully paid and nonassessable and are
owned by Quality Dining, Inc., and/or a
subsidiary of Quality Dining, Inc. as reflected
on Annex II attached to this opinion free and
clear of any lien or encumbrance. The general partner
and limited partner of Grady's American Grill, LP
are Grady's American Grill Restaurant Corporation
and GAGHC, Inc., respectively.
EXHIBIT D
FORM OF ASSIGNMENT AGREEMENT
Reference is made to the Third Amended and
Restated Revolving Credit Agreement dated as of
May 11, 1999 (the "Credit Agreement") among
Quality Dining, Inc. an Indiana corporation, and
GAGHC, Inc., a Delaware corporation (collectively
the "Borrowers"), the Banks party thereto (the
"Banks"), Chase Bank of Texas, National
Association, as administrative agent (in such
capacity, the "Administrative Agent"), NBD Bank,
N.A., as documentation agent, and NationsBank,
N.A., as co-agent. Terms defined in the Credit
Agreement are used herein with the same meanings.
___________________________________ __ (the
"Assignor") and
___________________________________ _______ (the
"Assignee") agree as follows:
1. The Assignor hereby sells and assigns
to the Assignee, and the Assignee hereby
purchases and assumes from the Assignor, a ___%
interest in and to the Assignor's rights and
obligations under the Credit Agreement and the
other Loan Documents as of the Effective Date (as
defined below) (including, without limitation,
such percentage interest in the Commitment, such
percentage interest of the Assignor's
participations in Letters of Credit on the
Effective Date and such percentage interest in
each Loan owing to the Assignor outstanding on the
Effective Date, together with such percentage interest in
all unpaid interest and Commitment Fees accrued
to the Effective Date).
2. The Assignor represents that as of the date
hereof (without giving effect to
assignments thereof which have not yet become
effective): (i) its Commitment is $__________,
(ii) the outstanding principal balance (unreduced
by any assignments thereof which have not yet
become effective) of its Note is
$________________ and the stated amount of its
participations in Letters of Credit is $______________. The
Assignor (i) makes no representation or warranty
and assumes no responsibility with respect to any
statements, warranties or representations made in
or in connection with the Credit Agreement or the
execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit
Agreement, any other Legal Document or any
other instrument or document furnished pursuant
thereto, other than that it is the legal and
beneficial owner of the interest being assigned
by it hereunder and that such interest is free
and clear of any adverse claim; and (ii) makes no
representation or warranty and assumes no
responsibility with respect to the financial
condition of the Borrowers or any of their
Subsidiaries or the performance or observance by
the Borrowers or any of their Subsidiaries of any
of their respective obligations under the Credit
Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto
or thereto.
3. The Assignee (i) represents and warrants
that it is legally authorized to enter into this
Assignment Agreement; (ii) confirms that it has
received a copy of the Credit Agreement, together
with copies of the most recent financial statements
delivered pursuant to Section 5.1 thereof and such other
documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter
into this Assignment Agreement; (iii) agrees that
it will, independently and without reliance upon
the Administrative Agent, the Assignor or any
other person which has become a Bank and based on such
documents and information as it shall deem
appropriate at the time, continue to make its own
credit decisions in taking or not taking action
under the Credit Agreement; (iv) appoints and
authorizes the Administrative Agent to take such
action as agent on its behalf and to exercise
such powers under the Credit Agreement as is
delegated to the Administrative Agent by the
terms thereof, together with such powers as are
reasonably incidental thereto and (v) agrees that
it will be bound by the provisions of the Credit
Agreement and will perform in accordance with
their terms all the obligations which by the
terms of the Credit Agreement are required to be
performed by it as a Bank.
4. The effective date of
this Assignment and Acceptance shall be
_______________ (the "Effective Date").
5. From and after the Effective Date, (i)
the Assignee shall be a party to the Credit
Agreement and, to the extent provided in this
Assignment Agreement, have the rights and
obligations of a Bank thereunder and under the
Loan Documents and (ii) the Assignor shall, to
the extent provided in this Assignment Agreement,
relinquish its rights and be released from its
obligations under the
Credit Agreement.
6. This Assignment and Acceptance shall
be governed by and construed in
accordance with the internal laws (and not the
law of conflicts) of the State of Illinois.
[NAME OF ASSIGNOR],
by
___________________________________
Title:
[NAME OF ASSIGNEE],
by ____________________________________
Title:
The Effective Date must be at least five
Business Days after the delivery of the executed
Assignment Agreement to the Agent.
EXHIBIT 4-J
FIRST AMENDMENT TO THIRD AMENDED AND
RESTATED REVOLVING CREDIT AGREEMENT
Dated as of July 26, 1999
This First Amendment to Third
Amended and Restated Revolving
Credit Agreement (this "Amendment")
dated as of July 26, 1999 by and
between Quality Dining, Inc., an
Indiana corporation, and GAGHC,
Inc., a Delaware corporation, as
Borrowers, the banks now party to
the hereinafter defined Credit
Agreement (the "Banks") and Chase
Bank of Texas, National Association,
in its capacity as Administrative
Agent for the Banks (the "Agent"),
amends that certain Third Amended
and Restated Revolving Credit
Agreement dated as of May 11, 1999
by and between Quality Dining, Inc.
and GAGHC, Inc., as Borrowers, the
Banks which are party thereto and
Chase Bank of Texas, National
Association, in its individual
capacity and as Administrative Agent
(the "Credit Agreement").
Capitalized terms used herein and
not defined herein shall have the
meanings assigned thereto in the
Credit Agreement.
WHEREAS, the Borrowers have
requested that the Agent and the
Banks agree to amend certain of the
covenants set forth in the Credit
Agreement to facilitate the closing
of the Mortgage Transaction; and
WHEREAS, the parties have determined
that it is in their best interests
to enter into this Amendment upon
the terms set forth herein.
NOW, THEREFORE, in consideration of
the terms and conditions contained
herein, the parties hereto agree as
follows:
Section 1 Amendments to Article I.
(a) The definition of "Commitment"
in Article I of the Credit Agreement
is hereby amended by replacing the
figure "$80,000,000" at the end
thereof with the figure
"$76,000,000".
(b) The definition of "SPE" in
Article I to the Credit Agreement is
hereby amended by (i) inserting
"partnerships or limited liability
companies" immediately after
"corporations" in the first line of
said definition and (ii) deleting
the word "corporation" at the end of
said definition and replacing it
with the word "Person".
(c) The definition of "Subject
Assets" is hereby amended in its
entirety to read as follows:
""Subject Assets" shall mean the fee
interests and/or leasehold interests
in the parcels of real property
identified in Annex V hereto and the equipment
(including fixtures) located on such
parcels of real property."
(d) A new definition of
"Intercreditor Agreement" is hereby
inserted in Article I of the Credit
Agreement immediately after the
definition of "Indebtedness Ratio"
to read as follows: ""Intercreditor
Agreement" shall mean the
intercreditor agreement in
substantially the form attached
hereto as Exhibit E among the
parties thereto, as it may be
amended, modified, restated or
replaced from time to time."
Section 2 Amendments to Article III.
(a) Section 3.1(a) of the Credit
Agreement is hereby amended by
deleting the "and" at the end of
clause (ix) of said Section, by
renumbering clause (x) as clause
(xvi) and by inserting immediately
following clause (ix) of said
Section, new clauses (x) through
(xv) to read as follows:
"(x) Collateral Assignments of
Franchise Agreements, in form and
substance acceptable to the
Administrative Agent, duly executed
by the appropriate parties, granting
to the Administrative Agent, for the
benefit of the Banks, a security
interest in the franchise agreements
of certain of the Subsidiary
Guarantors with either Burger King
Corporation or Brinker
International, Inc., as franchisor,
in all cases subject to the
Intercreditor Agreement and any
intercreditor agreements and/or
consents to collateral assignment
entered into with each such
franchisor;
(xi) Collateral Assignments of
Leases, in form and substance
acceptable to the Administrative
Agent, duly executed by the
appropriate parties, granting to the
Administrative Agent, for the
benefit of the Banks, a security
interest in each of the leases
relating to the Subject Assets
entered into as part of the Mortgage
Transaction, in each case subject to
the Intercreditor Agreement;
(xii) Agreements regarding Leases,
in form and substance acceptable to
the Administrative Agent, in respect
of each of the leases relating to
the Subject Assets entered into as
part of the Mortgage Transaction, in
each case subject to the
Intercreditor Agreement;
(xiii) Opinion of Counsel to the
Borrowers and their respective
Subsidiaries, in form and substance
reasonably satisfactory to the
Administrative Agent, relating to,
among other things, enforceability
of the Security Documents identified
in clauses (x) and (xi) above (the
"Amendment Security Documents")
against the Borrowers and their
respective Subsidiaries which
are party thereto and the valid
creation, perfection and priority of
the security interests in the favor
of the Administrative Agent, for the
benefit of the Banks, in the
collateral covered by the Amendment
Security Documents;
(xiv) Certificates of the Secretary
or an Assistant Secretary of each of
the Pledgors which is a party to an
Amendment Security Document,
certifying that attached thereto is
a true and correct copy of the
resolutions of such Pledgor's Board
of Directors authorizing the
execution, delivery and performance
of the Amendment Security Documents
to which such Pledgor is a party and
any other documents or instruments
executed and delivered in
connection therewith and the
performance of all the terms and
provisions thereof; (xv) Incumbency
Certificates, certified by the
Secretary of each of the Pledgors
which is a party to an Amendment
Security Document; and" (b) Section
3.1(b) of the Credit Agreement is
hereby amended by deleting the
reference to "$45,000,000" in the
second line thereof and replacing it
with "$49,066,000".
Section 3 Amendments to Article V.
(a) Section 5.13 of the Credit
Agreement is hereby amended by
inserting a new sentence at the end
of subsection (a) of said Section to
read as follows:
"The Borrowers shall use their best
efforts to provide collateral
assignments of leases and to obtain
agreements regarding each of the
leases relating to sites of Burger
King and/or Chili's restaurants from
the respective landlords thereof
regarding, among other things, lien
waivers and access rights, each in
form and substance reasonably
satisfactory to the Administrative
Agent."
Section 4 Amendments to Article VI.
(a) Section 6.3 of the Credit
Agreement is hereby amended by (i)
deleting the reference to
"$45,000,000" in the fourth line of
clause (f) of said Section and
replacing it with "$49,066,000".
(b) Section 6.4 of the Credit
agreement is hereby amended by
deleting the reference to "Section
6.3(e)" in the second line of clause
(k) of said Section and replacing it
with "Section 6.3(f)".
Section 5 Amendment to Schedule I.
Schedule I to the Credit Agreement
is hereby amended in its entirety to
read as set forth on Exhibit A
hereto.
Section 6 Addition of Exhibit E. A
new Exhibit E is hereby inserted in
the Credit Agreement to read as set
forth on Exhibit
B hereto.
Section 7 Representations and
Warranties of Borrowers. In order
to induce the Banks and the
Administrative Agent to enter into
this Amendment, each of the
Borrowers represents and warrants
that:
(a) The execution and delivery by
such Borrower of this Amendment have
been duly authorized by proper
corporate proceedings and this
Amendment and the Agreement, as
amended hereby, constitute the
legal, valid and binding obligations
of such Borrower, enforceable
against such Borrower in accordance
with their respective terms.
(b) Neither the execution and
delivery by such Borrower of this
Amendment nor compliance with the
provisions hereof will violate any
law, rule, regulation, order, writ,
judgment, injunction, decree or
award binding on such
Borrower or the articles of
incorporation or bylaws of such
Borrower or the provisions of any
indenture, instrument or agreement
to which such Borrower is a party
or is subject, or by which it or
its property is bound, or conflict
with or constitute a default
thereunder.
(c) Such Borrower has not received
any notice to the effect that its
operations are not in material
compliance with any of the
requirements of applicable federal,
state and local environmental,
health and safety statutes and
regulations or the subject of any
federal or state investigation
evaluating whether any remedial
action is needed to respond to a
release of any toxic or hazardous
waste or substance into the
environment, which non compliance
or remedial action would constitute
a Material Adverse Occurrence.
(d)The representations and warranties
set forth in Article IV of the
Agreement, as amended hereby, are
true and correct on the date hereof
and after giving effect hereto,
except that the representations and
warranties set forth in Section 4.5
as to financial statements of QDI
shall be deemed a reference to the
audited and unaudited financial
statements of QDI, as the case may
be, most recently delivered to the
Banks pursuant to Section 5.1.
(e) No Default or Event of Default
has occurred and is continuing and,
since October 25, 1998, no Material
Adverse Occurrence has occurred.
Section 8 Effective Date. This
Amendment shall become effective as
of the date (the "Amendment
Effective Date") first above
written upon receipt by the
Administrative Agent of each of the
following items:
(a) Counterparts of this Amendment
duly executed by each of the
Borrowers, the Administrative Agent
and each of the Banks;
(b) Reaffirmation of Subsidiary
Guaranty, duly executed and
delivered by each of the Wholly
Owned Subsidiaries of the Borrower
(other than GAGHC);
(c) Certificates of the
Secretary or an Assistant Secretary
of each of QDI and GAGHC,
certifying that (i) there has been
no amendment to the articles of
incorporation or by-laws of such
Borrower since May 11, 1999 and
(ii) attached is a true and correct
copy of the resolutions of such
Borrower's Board of Directors
authorizing the execution, delivery
and performance of this Amendment
and any other documents or
instruments executed and delivered
in connection herewith and the
performance of all the terms and
provisions hereof and thereof;
(d) Incumbency Certificates,
certified by the Secretary of each
of the Borrowers;
(e) Certificates of the Secretary or an Assistant
Secretary of each Subsidiary
Guarantor certifying that (i)
either (A) there has been no
amendment to the articles of
incorporation or by-laws of such
Subsidiary Guarantor since May 11,
1999 or (B) attached thereto is a
true and correct copy of the
articles of incorporation and by-
laws of such Subsidiary
Guarantor and (ii) attached is a
true and correct copy of
resolutions of such Subsidiary
Guarantor's Board of Directors
authorizing the execution and
delivery of the Reaffirmation of
Subsidiary Guaranty;
(f) Incumbency Certificates of
each Subsidiary Guarantor,
certified by the Secretary of such
Subsidiary Guarantor;
(g) Written opinion of counsel to each of the
Borrowers and the Subsidiary
Guarantors, in form and substance
reasonably satisfactory to the
Administrative Agent, relating to,
among other things, enforceability
of this Amendment and the
Reaffirmation of Subsidiary
Guaranty against the Borrowers and
the Subsidiary Guarantors which are
party thereto; and ;
(h) Payment by the Borrowers of
all costs and expenses of the
Administrative Agent's special
counsel (including without
limitation legal fees and expenses)
incurred in connection with
preparation and execution of this
Amendment and the transactions
contemplated hereby; and
(i) Such other documents and
instruments as the Administrative
Agent shall reasonably request.
Section 9 Release of Subject Assets.
The Banks hereby authorize the
Administrative Agent, upon the
later of the Effective Date or the
consummation of the Mortgage Transaction, to
release any and all security
interests or liens granted to the
Administrative Agent, for the
benefit of the Banks, under any
Security Documents in the Subject
Assets and to execute such other
documents and instruments as may be
necessary to evidence such release.
Section 10 Release of Stock of
Grayling Corporation. The Banks
hereby authorize the Administrative
Agent at any time after the
Amendment Effective Date, to
release any and all security
interests or liens granted to the
Administrative Agent, for the
benefit of the Banks, under the
Security Documents in any and all
capital stock of Grayling
Corporation and to execute such
other documents and instruments as
may be necessary to evidence such
release.
Section 11 Approval of
Intercreditor Agreement. Each of
the Banks signatory hereto hereby
approves the Intercreditor
Agreement in substantially the form
attached to the Credit Agreement as
Exhibit E and authorizes the
Administrative Agent, as agent for
the Banks, upon the later of the
Effective Date or the consummation
of the Mortgage Transaction, to
execute said Intercreditor
Agreement by and on behalf of such
Bank and agrees to be bound by and
comply with the terms thereof.
Section 12 References to Credit
Agreement. From and after the
effective date hereof, each
reference in the Credit Agreement
to "this Agreement," "hereof," or
"hereunder" or words of like
import, and all references to the
Credit Agreement in any and all
agreements, instruments, documents,
notes, certificates and other
writings of every kind and nature
shall be deemed to mean the Credit
Agreement, as modified and amended
by this Amendment.
Section 13 Ratification. The
Credit Agreement, as amended
hereby, shall remain in full force
and effect and is hereby ratified,
approved and confirmed in all
respects.
Section 14 Applicable Law.
This Amendment shall be governed by
and construed in accordance with
the laws of the State of Indiana
(without regard to any choice of
law provisions thereof).
Section 15 Counterparts. This
Amendment may be executed in two or
more counterparts, each of which
shall constitute an original, but
all of which when taken together
shall constitute but one
instrument.
Section 16 Expenses. The
Borrowers shall pay all reasonable
out-of-pocket expenses incurred by
the Administrative Agent in
connection with the preparation of
this Amendment, including, but not
limited to, the reasonable fees and
disbursements of special counsel
for the Administrative Agent.
[The rest of this page
intentionally left blank.]
IN WITNESS WHEREOF, the
parties hereto have caused this
Agreement to be executed by their
respective officers thereunto
duly authorized as of the day and
year first above written.
QUALITY DINING, INC.
By:__________________
Its:_________________
GAGHC, INC.
By:_________________
Its:________________
CHASE BANK OF TEXAS NATIONAL ASSOCIATION, in its individual
capacity and as Agent for the Banks (as that term is defined in
the Credit Agreement).
By:________________________
(Signature
_________________________________
(typed or printed name and title)
BANK ONE, INDIANA , N.A.
By:_______________________
(Signature)
__________________________________
(typed or printed name and title)
THE NORTHERN TRUST COMPANY
By:____________________________
(Signature)
________________________________
(typed or printed name and title)
KEYBANK NATIONAL ASSOCIATION
(successor in interest to Society
National Bank)
By:_______________________________
(Signature)
(typed or printed name and title)
LASALLE BANK NATIONAL ASSOCIATION
By:______________________________
(Signature)
__________________________________
(typed or printed name and title)
NATIONSBANK, N.A. (SOUTH)
By:____________________
(Signature)
(typed or printed name and title)
SUNTRUST BANK, CENTRAL FLORIDA, N.A.
By:____________________
(Signature)
(typed or printed name and title)
Exhibit A to
Amendment
SCHEDULE I
PART A
EXISTING COMMITMENTS
Bank Commitment Percentage
- ---------------------------------------- ----------- ---------
Chase Bank of Texas National Association $26,000,000.00 20.00%
Bank One, Indiana, N.A. $26,000,000.00 20.00%
LaSalle Bank National Association $21,666,666.67 16.67%
NationsBank, N.A. $17,333,333.33 13.33%
SunTrust Bank, Central Florida, N.A. $17,333,333.33 13.33%
The Northern Trust Company $13,000,000.00 10.00%
Key Bank N.A. $ 8,666,666.67 6.67%
PART B
COMMITMENTS AS OF EFFECTIVE DATE
Bank Commitment Percentage
- ------------------------------------- ---------- ----------
Chase Bank of Texas National Association $15,200,000.00 20.00%
Bank One, Indiana, N.A. $14,250,000.00 18.75%
NationsBank, N.A. $14,250,000.00 18.75%
LaSalle Bank National Association $12,669,200.00 16.67%
SunTrust Bank, Central Florida, N.A. $10,130,800.00 13.33%
The Northern Trust Company $ 9,500,000.00 12.50%
Key Bank N.A. --0-- 0 %
Exhibit B to
Amendment
Form of Intercreditor Agreement
EXHIBIT 4-K
SECOND AMENDMENT TO THIRD AMENDED
AND RESTATED REVOLVING CREDIT
AGREEMENT
Dated as of September 9, 1999
This Second Amendment to Third Amended
and Restated Revolving Credit Agreement
(this "Amendment") dated as of September
9, 1999 by and between Quality Dining,
Inc., an Indiana corporation, and GAGHC,
Inc., a Delaware corporation, as
Borrowers, the banks now party to the
hereinafter defined Credit Agreement
(the "Banks") and Chase Bank of Texas,
National Association, in its capacity as
Administrative Agent for the Banks (the
"Agent"), amends that certain Third
Amended and Restated Revolving Credit
Agreement dated as of May 11, 1999 by
and between Quality Dining, Inc. and
GAGHC, Inc., as Borrowers, the Banks
which are party thereto and Chase Bank
of Texas, National Association, in its
individual capacity and as
Administrative Agent (the "Original
Credit Agreement"), as amended by a
First Amendment to Third Amended and
Restated Revolving Credit Agreement
dated as of July 26, 1999 (the "First
Amendment", and the Original Credit
Agreement as amended by the First
Amendment, the "Credit Agreement").
Capitalized terms used herein and not
defined herein shall have the meanings
assigned thereto in the Credit
Agreement.
WHEREAS, the Borrowers have requested
that the Agent and the Banks agree to
amend Section 6.5 of the Credit
Agreement; and
WHEREAS, the parties have determined
that it is in their best interests to
enter into this Amendment upon the terms
set forth herein.
NOW, THEREFORE, in consideration of the
terms and conditions contained herein,
the parties hereto agree as follows:
Section 1.Amendments to Credit
Agreement. (a) A new definition of
"Maximum Repurchase Amount" is hereby
inserted in Article I of the Credit
Agreement immediately after the
definition of "Material Adverse
Occurrence" to read as follows:
""Maximum Repurchase Amount" shall mean,
as of any date of determination thereof,
(i) with respect to fiscal year 1999,
zero, and (ii) with respect to any
fiscal year thereafter, the sum of the
Allowable Repurchase Amounts for the
current fiscal year and for each of the
preceding fiscal years, commencing with
fiscal year 2000, less the aggregate
amount of Restricted Payments,
immediately prior to and without giving
effect to the proposed Restricted
Payment, made to repurchase capital
stock of QDI pursuant to clause (i) of
the first proviso to Section 6.5 hereof.
For purposes hereof, "Allowable
Repurchase Amount" for each fiscal year
shall mean $5,000,000."
(b) Section 6.5 of the Credit Agreement
is hereby amended by replacing the first
paragraph of said section with the following:
"Dividends, Stock Purchases and
Restricted Payments.
Neither of the Borrowers will, nor
permit any of its Subsidiaries to,
except as hereinafter provided:
(a) declare or pay any dividends,
either in cash or Property, on any
shares of its capital stock of any class
(except dividends payable by QDI solely
in shares of common stock of QDI and
dividends payable solely to QDI or a
WhollyOwned Subsidiary of QDI, other
than any SPE); or (b) directly or indirectly, or through
any Subsidiary, purchase, redeem,
retire, or otherwise acquire any shares
of its capital stock, or other equity
interests therein, of any class or any
warrants, rights or options to purchase
or acquire any shares of its capital
stock, or other equity interests therein
(except for any such purchases,
redemptions, retirements or other
acquisitions payable solely in shares of
common stock of QDI); or (c) make any
other distribution, either directly or
indirectly or through any Subsidiary, in
respect of its capital stock, or other
equity interests therein (such
declarations or payments of dividends,
purchases, redemptions or retirements of
stock and warrants, rights or options,
and all such other distributions being
herein collectively called "Restricted
Payments"); provided that,
notwithstanding the foregoing, QDI may
repurchase shares of its capital stock
outstanding if (i) after giving effect
thereto, the aggregate cumulative amount
of all Restricted Payments (other than
any such Restricted Payments made in
respect of the repurchase of capital
stock of QDI pursuant to the last
sentence of this paragraph) made in
respect of such repurchases does not
exceed the then applicable Maximum
Repurchase Amount, (ii) after giving effect thereto, the
aggregate cumulative amount of all
Restricted Payments made in respect of
such repurchases since May 9, 1999 does
not exceed the Restricted Payments
Basket, (iii) as of the date of payment
of such Restricted Payment the ratio of
Funded Debt of QDI and its Subsidiaries,
on a consolidated basis, as of the last
day of the preceding fiscal quarter of
QDI to Pro Forma Consolidated Cash Flow
of QDI for the twelve-month period
ending on such date, after giving effect
to such Restricted Payment (and any
Indebtedness incurred in connection
therewith), is less than (x) in respect
of any such repurchase during fiscal
year 2000, 4.25 to 1.00, and (y) in
respect of any repurchase during fiscal
year 2001 and thereafter, 4.00 to 1.00
and (iv) at the time of payment of such
Restricted Payment no Default or Event
of Default exists and, after giving
effect to such Restricted Payment, no
Default or an Event of Default would
exist; and provided, further, that the
restrictions set forth in this Section
6.5 shall not apply to any Rights nor to
any shares of Series B Participating
Cumulative Preferred Stock distributed
or issued pursuant to the Rights
Agreement, dated as of March 27, 1997,
between QDI and ChaseMellon Shareholder
Services, L.L.C., as successor Rights
Agent (the "Rights Agreement"). As used
herein, the term "Rights" shall have the
same meaning ascribed to it in the Rights Agreement.
Notwithstanding the foregoing, and in
addition to the foregoing, QDI may make
Restricted Payments in an aggregate
cumulative amount, from and after May
11, 1999, not to exceed $5,000,000 in
respect of the repurchase of shares of
its capital stock outstanding."
Section 2.Representations and Warranties of Borrowers.
In order to induce the Banks and the
Administrative Agent to enter into this
Amendment, each of the Borrowers
represents and warrants that:
(a) The execution and delivery by such
Borrower of this Amendment have been
duly authorized by proper corporate
proceedings and this Amendment and the
Credit Agreement, as amended hereby,
constitute the legal, valid and binding
obligations of such Borrower,
enforceable against such Borrower in
accordance with their respective terms.
(b) Neither the execution and delivery
by such Borrower of this Amendment nor
compliance with the provisions hereof
will violate any law, rule, regulation,
order, writ, judgment, injunction,
decree or award binding on such Borrower
or the articles of incorporation or by-
laws of such Borrower or the provisions
of any indenture, instrument or
agreement to which such Borrower is a
party or is subject, or by which it or
its property is bound, or conflict with
or constitute a default thereunder.
(c) No Default or Event of Default has
occurred and is continuing and, since
October 25, 1998, no Material Adverse
Occurrence has occurred.
Section 3.Effective Date.
This Amendment shall become effective as
of the date first above written upon
receipt by the Administrative Agent of
counterparts of this Amendment duly
executed by each of the Borrowers, the
Administrative Agent and the Required
Banks.
Section 4.References to Credit Agreement.
From and after the effective date
hereof, each reference in the Credit
Agreement to "this Agreement," "hereof,"
or "hereunder" or words of like import,
and all references to the Credit
Agreement in any and all agreements,
instruments, documents, notes,
certificates and other writings of every
kind and nature shall be deemed to mean
the Credit Agreement, as modified and
amended by this Amendment.
Section 5.Ratification.
The Credit Agreement, as amended hereby,
shall remain in full force and effect
and is hereby ratified, approved and
confirmed in all respects.
Section 6.Applicable Law.
This Amendment shall be governed by and
construed in accordance with the laws of
the State of Indiana (without regard to
any choice of law provisions
thereof).
Section 7.Counterparts.
This Amendment may be executed in two or
more counterparts, each of which shall
constitute an original, but all of which
when taken together shall constitute but
one instrument.
Section 8.Expenses.
The Borrowers shall pay all reasonable
out-of-pocket expenses incurred by the
Administrative Agent in connection with
the preparation of this Amendment,
including, but not limited to, the
reasonable fees and disbursements of
special counsel for the Administrative
Agent.
[The rest of this page intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their
respective officers thereunto duly
authorized as of the day and year first
above written.
QUALITY DINING, INC. By: /s/ John C. Firth
--------------------------
Its: Executive Vice President and General Counsel
GAGHC, INC.
By: /s/ David M. Findlay
----------------------
Its: Vice President
CHASE BANK OF TEXAS NATIONAL
ASSOCIATION, in its individual capacity
and as Agent for the Banks (as that term
is defined in the Credit Agreement).
By: /s/________________________
(Signature)
Michael Costello
- ---------------------------------
(typed or printed name and title)
BANK ONE, INDIANA , N.A.
By:_____________________
(Signature)
________________________________
(typed or printed name and title)
THE NORTHERN TRUST COMPANY
By: /s/________________________
(Signature)
Arthur J. Fogel
- ---------------------------------
(typed or printed name and title)
LASALLE BANK NATIONAL ASSOCIATION
By: /s/________________________
(Signature)
David Knapp
- --------------------------------
(typed or printed name and title)
BANK OF AMERICA NATIONAL ASSOCIATION
By: /s/_________________________
(Signature)
Michele Sommerset-Brown
- ---------------------------------
(typed or printed name and title)
SUNTRUST BANK, CENTRAL FLORIDA, N.A.
By: /s/____________________________
(Signature)
Vipul H. Patel
- ----------------------------------
(typed or printed name and title)
Exhibit 10-D
Second Amendment to Development Agreement
- -----------------------------------------
This Second Amendment to Develoment Agreement (the "Amendment") is
entered into as of the effective date herof by and between SOUTHWEST
DINING, INC., an Indiana corporation ("Developer") and BRINKER INTERNATIONAL,
INC., a Delaware corporation ("Franchisor")
WITNESSETH
- ----------
WHEREAS, Developer's predecessor in interest, Quality Dining, Inc., an
Indiana corporation ("Quality"), and Franchisor have heretofore entered
into that certain Chili's Grill & Bar Restaurant Development Agreement
dated June 27, 1990, under and pursuant to which Franchisor granted
Developer certain rights to develop and operate Chili's Grill & Bar
Restaurants in a specified territory; and
WHEREAS, Quality, of which Developer is a wholly owned subsidiary,
Franchisor and others entered into that certain Assignment and
Assumption of Franchise and Development Agreement and Brinker
International, Inc. Consent to Assignment and Consent to Initial
Public Offering of Securities dated December 23, 1993 ("Assignment"),
and Franchisor delivered to Quality that certain Franchisor Consent
on December 22, 1993 ("Consent"), under and pursuant to which,
among other things, Franchisor consented to the initial public
offering of securities by Quality and agreed to the assiginment of
the Chili's Grill & Bar Restaurant Development Agreement to
Developer; hereianfter, the Chili's Grill & Bar Restaurant
Development Agreement, as assigned by the Assignment and Consent,
shall be referred to as the "Development Agreement;" and
WHEREAS, Developer and Franchisor entered into a First Amendment
to Development Agreement (the "First Amendment") with an "Amendment
Effective Date" of January 1, 1995; and
WHEREAS, the Parties wish to amend the Development Schedule contained
in Paragraph 5 of the First Amendment; and
NOW, THEREFORE, in consideration of the mutual terms and obligations
of this Amendment, the Parties agree as follows:
1. The Development Scheduled contained in Paragraph 5 of the First
Amendment is replaced and superseded with the following:
By (Date) Cumulative Total Minimum Number
of Chili's Grill & Bar Restaurants Which
Developer Shall Have Open and in Operation
_______________________________________________________________________
Midwest Region Philadelphia Region Entire Territory
-------------- ------------------- ----------------
December 31, 1994 8 9* 17
December 31, 1995 9 9 18
December 31, 1996 10 10 20
December 31, 1997 11 12 23
December 31, 1998 12 13 25
December 31, 1999 13 14 28**
December 31, 2000 14 15 31**
December 31, 2001 15 16 33**
December 31, 2002 15 16 35
December 31, 2003 15 16 37
2. Developer agrees that Franchisor may develop or sub-license a Chili's
Too Restaurant within the interior of the Franklin Mills Mall in
Philadelphia, Pennsylvania. This permission shall automatically expire
should construction on such location not commence by June 1, 2000.
3. Except as modified herein, all other terms shall remain unchanged.
IN WITNESS WHEREOF, Developer and Franchisor have executed this Amendment
to be effective as of the Amendment Effective Date.
DEVELOPER
SOUTHWEST DINING,INC.
an Indiana corporation
Date: 7/23/99 By: /s/_____________________
Daniel B. Fitzpatrick, President
FRANCHISOR
BRINKER INTERNATIONAL, INC.
a Delaware corporation
Date: 7/23/99 By: /s/_____________________
David N. Tyner
Vice President
EXHIBIT 10-G
EMPLOYMENT AGREEMENT
THIS AGREEMENT (this "Agreement"), dated August 24, 1999, is made by
QUALITY DINING, INC., an Indiana corporation, having its principal
place of business at 4220 Edison Lakes Parkway, Mishawaka, Indiana
(the "Company"), and JOHN C. FIRTH, (the "Executive").
Recitals
1. The Executive is currently
employed as the Executive Vice President and General
Counsel of the Company and the Company desires to assure the
continued service of Executive.
2. The Executive is willing to continue
such employment by the Company on the terms set forth herein.
Agreement
NOW, THEREFORE, in consideration of the mutual
covenants and premises herein contained, the Company and the
Executive hereby agree as follows:
1. Certain Definitions.
(a) "Effective Date" shall mean the date of this Agreement.
(b) "Change of Control
Date" shall mean the first date
during the Employment Period (as
defined in Section 1 (c) on which a
Change of Control (as defined in
Section 2) occurs. Anything in this
Agreement to the contrary
notwithstanding, if a Change of
Control occurs and if the
Executive's employment with the
Company is terminated or the
Executive ceases to be an officer of
the Company prior to the date on
which the Change of Control occurs,
and if it is reasonably demonstrated
by the Executive that such
termination of employment or
cessation of status as an officer
(i) as at the request of a third
party who has taken steps reasonably
calculated to effect the Change of
Control, or (ii) otherwise arose in
connection with or anticipation of
the Change in Control, then for all
purposes of this Agreement the
"Change of Control Date" shall mean
the date immediately prior to the
date of any such termination of
employment or cessation of officer
status.
(c) "Employment Period"
shall mean the period commencing on
the Effective Date and, unless
earlier terminated under Section 5
hereof or extended as hereinafter
provided, ending on the 23rd day of
August, 2002. Commencing on June 24,
2000, and on each anniversary of
such date (each such anniversary
shall be hereinafter referred to as
the "Renewal Date"), the Employment
Period shall be automatically
extended so as to terminate on the
third anniversary of such Renewal
Date.
(d) "Board" shall mean
the Board of Directors of the Company.
2. Change of Control. For the
purpose of this Agreement, "Change of Control"
shall mean:
(a) The acquisition by any
individual, entity or group (within
the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (a
"Person") of beneficial ownership
(within the meaning of Rule 13d3
promulgated under the Exchange Act
as in effect from time to time) of
20% or more of either (i) the then
outstanding shares of common stock
of the Company or (ii) the combined
voting power of the
then outstanding voting securities
of the Company entitled to vote
generally in the election of
directors; provided, however, that
the following acquisitions shall not
constitute an acquisition of
control: (A) any acquisition
directly from the Company (excluding
an acquisition by virtue of the
exercise of a conversion privilege),
(B) any acquisition by the Company,
(C) any acquisition by any employee
benefit plan (or related trust)
sponsored or maintained by the
Company or any corporation
controlled by the Company, (D) any
acquisition by any corporation
pursuant to a reorganization, merger
or consolidation, if, following such
reorganization, merger or
consolidation, the conditions
described in clauses (i), (ii) and
(iii) of subsection (c) of this
Section 2 are satisfied, or (5) any
acquisition by any Person (or by
such Person's estate or heirs upon
such Person's death) who on the date
of this Agreement is a director or
officer of the Company or is the
beneficial owner of 20% or more of
the outstanding voting securities of
the Company ("Affiliated Person");
or
(b) Individuals who, as of the date
hereof, constitute the Board of
Directors of the Company (the
"Incumbent Board") cease for any
reason to constitute at least a
majority of the Board of Directors
of the Company (the "Board");
provided, however, that any
individual becoming a director
subsequent to the date hereof whose
election, or nomination for election
by the Company's shareholders, was
approved by a vote of at least a
majority of the directors then
comprising the Incumbent Board shall
be considered as though such
individual were a member of the
Incumbent Board, but excluding, for
this purpose, any such individual
whose initial assumption of office
occurs as a result of either an
actual or threatened election
contest (as such terms are used in
Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act)
or other actual or threatened
solicitation of proxies or consents
by or on behalf of a Person other
than the Board; or
(c) The Company enters into an
agreement for a reorganization,
merger or consolidation, in each
case, unless, following such
reorganization, merger or
consolidation, (i) more than eighty
percent (80%) of, respectively, the
then outstanding shares of common
stock of the corporation resulting
from such reorganization, merger or
consolidation and the
combined voting power of the then
outstanding voting securities of
such corporation entitled to vote
generally in the election of
directors is then beneficially
owned, directly or indirectly, by
all or substantially all of the
individuals and entities who were
the beneficial owners, respectively,
of the outstanding Company common
stock and outstanding Company voting
securities immediately prior to such
reorganization, merger or
consolidation in substantially the
same proportions as their ownership,
immediately prior to such
reorganization, merger or
consolidation, of the outstanding
Company stock and outstanding
Company voting securities, as the
case may be, (ii) no Person
(excluding the Company, any employee
benefit plan or related trust of the
Company or such corporation
resulting from such reorganization,
merger or consolidation and any
Person beneficially owning,
immediately prior to such
reorganization, merger or
consolidation, directly or
indirectly, 20% or more of the
outstanding Company common stock or
outstanding voting securities, as
the case may be) beneficially owns,
directly or indirectly, 20% or more
of, respectively, the then
outstanding shares of common stock
of the corporation resulting from
such reorganization, merger or
consolidation or the combined voting
power of the then outstanding voting
securities of such corporation
entitled to vote generally in the
election of directors and (iii) at
least a majority of the members of
the board of directors of the
corporation resulting from such
reorganization, merger or
consolidation were members of the
Incumbent Board at the time of the
execution of the initial agreement
providing for such reorganization,
merger or consolidation; or
(d) Approval by the shareholders of
the Company of a complete
liquidation or dissolution of the
Company or the Company enters into
an agreement for the sale or other
disposition of all or substantially
all of the assets of the Company,
other than to a corporation
with respect to which following such
sale or other disposition (i) more
than 80% of, respectively, the then
outstanding shares of common stock
of such corporation and the combined
voting power of the then outstanding
voting securities of such
corporation entitled to vote
generally in the election of
directors is then beneficially owned, directly
or indirectly, by all or
substantially all of the individuals
and entities who were the beneficial
owners, respectively, of the
outstanding Company common stock and
outstanding Company voting
securities immediately prior to such
sale or other disposition in
substantially the same proportion as
their ownership, immediately prior
to such sale or other disposition,
of the outstanding Company common
stock and outstanding Company voting
securities, as the case may be, (ii)
no Person (excluding the Company and
any employee benefit plan or related
trust of the Company or such
corporation, any Affiliated Person
and any Person beneficially owning,
immediately prior to such sale or
other disposition, directly or
indirectly, 20% or more of the
outstanding Company common stock or
outstanding Company voting
securities, as the case may be)
beneficially owns, directly or
indirectly, 20% or more of, respectively, the then
outstanding shares of common stock
of such corporation and the combined
voting power of the then outstanding
voting securities of such
corporation entitled to vote
generally in the election of
directors and (iii) at least a
majority of the members of the board
of directors of such corporation
were members of the Incumbent Board
at the time of the execution of the
initial agreement or action of the
Board providing for such sale or
other disposition of assets of the
Company.
(e) Notwithstanding the foregoing,
none of the transactions
contemplated in subsections (a),
(b), (c)or (d) shall constitute a
Change of Control if such
transaction occurs in connection
with or as the result of a
transaction subject to Rule 13e-3
promulgated under the Exchange Act
as in effect from time to time
provided that executive officers of
the Company are the beneficial
owners of 75% or more of the voting
securities of the Company
outstanding following such
transaction.
3. Employment. Subject to the
terms and conditions provided
herein, the Company hereby agrees,
during the Employment Period, to
employ the Executive as its
Executive Vice President and General
Counsel. The Executive hereby agrees to accept
such employment and offices during
the Employment Period.
4. Terms of Employment.
(a) Position and Location.
(i) Before Change of Control. During the Employment
Period and prior to the Change of
Control Date, the Executive, in his
capacity as Executive Vice President
and General Counsel of the Company,
shall have the duties, authority and
responsibility normally associated
with and typically afforded to the
position of Executive Vice President
and General Counsel of a publicly-
owned and traded corporation. The
Executive's duties shall only be
performed at Mishawaka, Indiana, except for
travel reasonably required in the
performance of the Executive's
duties.
(ii) After Change of Control. During the Employment
Period and on and after the Change
of Control Date, (A) the Executive's
position (including, without
limitation, the Executive's status,
offices, titles and reporting
relationships), authority, duties
and responsibilities shall be at
least commensurate in all material
respects with the most significant
of those held or exercised by,
and/or assigned to, the Executive at
any time during the ninety (90) day
period immediately preceding the
Change of Control Date, and (B) the
Executive's duties shall be
performed at the location where such
services were performed immediately
preceding the Change of Control
Date.
(iii) Responsibilities. Subject
to the immediately succeeding sentence,
during the Employment Period,
excluding any periods of vacation
and sick leave to which the
Executive is entitled, the Executive agrees
to devote his full business time during normal
business hours to the business and
affairs of the Company and, to the
extent necessary to discharge the
responsibilities assigned to the
Executive hereunder, to use the
Executive's reasonable best efforts
to perform faithfully and
efficiently the duties and
responsibilities set forth in this
Section 4(a). During the Employment
Period it shall not be a violation
of this Agreement for the Executive
to (A) serve on community,
corporate, civic or charitable
boards or committees, (B) deliver
lectures, fulfill speaking
engagements or teach at educational
institutions, (C) serve as "Of
Counsel" to Sopko & Firth and
provide such services on behalf of
clients incidental to the
responsible representation and
orderly transition of clients and
matters to the firm, provided that
Executive shall not provide
substantial work for the firm and
will not receive direct compensation
from the firm other than the
periodic payments which the firm is
obligated to make pursuant to
Executive's Retirement Agreement,
and/or (D) manage personal affairs
and/or investments, so long as such
activities do not significantly
interfere with the performance of
the Executive's duties and
responsibilities under this
Agreement. Notwithstanding the
above, the Executive shall not be
required to perform any duties
and/or responsibilities which, in
the Executive's reasonable judgment,
would be likely to result in a non-
compliance with or violation of any
applicable law, regulation or rule
of professional conduct.
(iv) Reporting. The Executive
shall report solely and directly to
the Chief Executive Officer of the
Company.
(b) Compensation.
(i) Base Salary. During the
Employment Period, the Executive
shall receive a base salary of no
less than $240,000 per annum (the
"Base Salary"), payable in
accordance with normal payroll
practices. During the Employment
Period, the Base Salary shall be
reviewed at least once annually for
increase and shall be increased (but
not decreased) at any time and from
time to time as shall be
substantially consistent with
increases in base salary awarded in
the ordinary course of business to
other officers of the Company. Any
increase in the Base Salary shall
not serve to limit or reduce any
other obligation to the Executive
under this Agreement and any such
increased Base Salary shall then
constitute the "Base Salary" for
purposes of this Agreement.
(ii) Annual Bonus, Incentive,
Savings and Retirement Plans. For
each fiscal year of the Company
ending during the Employment Period,
the Executive shall also be eligible
for an annual bonus of up to 50% of
the Base Salary, payable no later
than 75 days after the end of each
fiscal year of the Company. During
the Employment Period, the Executive
shall also be entitled to
participate in all bonus, short-or
longterm incentive, savings and
retirement plans, practices,
policies and programs maintained or
provided by the Company from time to
time on or after the Effective Date for the
benefit of senior executives of the
Company.
(iii) Welfare Benefit Plans.
During the Employment Period, the
Executive and/or the Executive's
family, as the case may be, shall be
entitled to participate in and shall
receive all benefits under any and
all welfare benefit plans,
practices, policies and programs
maintained or provided by the
Company (including, without
limitation, medical, hospitalization, prescription,
dental, retiree health, disability,
salary continuance, employee, life,
group life, accidental death/dismemberment and travel
accident insurance plans and
programs) from time to time on or
after the Effective Date for the
benefit of senior executives of the
Company and, in addition thereto,
shall maintain on behalf of and for
the benefit of Executive (or his
designee) life insurance with death
benefits of no less than $500,000.
(iv) Fringe Benefits. During the
Employment Period, the Executive
shall be entitled to perquisites
and/or fringe benefits in accordance
with the plans, practices, policies
and programs maintained or provided
by the Company from time to time on
or after the Effective Date for the
benefit of senior executives of the
Company.
(v) Vacation. During the
Employment Period, the Executive shall
be paid vacation in accordance with plans,
practices, policies and programs maintained or
provided by the Company from time to
time on or after the Effective Date
for the benefit of senior executives
of the Company.
(vi) Restricted Stock Grant;
Additional Cash Bonus. Concurrently
with the execution of this
Agreement, the Company shall make a
grant of Restricted Stock under the
Company's 1997 Stock Option and
Incentive Plan in an amount equal to
the quotient of $10,000 divided by
the closing price of the Company's
stock on the date of grant which
grant shall fully vest six (6)
months from the date of grant. In
addition, the Company shall pay the
Executive a one-time cash bonus of
$40,000 payable concurrently with
the annual bonus for fiscal 1999,
provided that the Executive's
employment has not terminated prior
to such date for Cause or without
Good Reason (each as hereinafter
defined).
5. Termination.
(a) Death or Disability. The
Employment Period shall terminate
automatically upon the Executive's
death. If during the Employment
Period, the Disability (as defined
below) of the Executive has
occurred, the Company may give the
Executive written notice (in
accordance with Section 13(b) of
this Agreement) of its intention to
terminate the Executive's employment
with the Company due to such
Disability. The Executive's
employment with the Company as the
case may be, shall be terminated by
the Company on the 90th day (the
"Disability Effective Date"), after
receipt by the Executive of such
notice if, within the ninety (90)
day period commencing on the date
such notice is received, the
Executive shall not have returned to
the full-time performance of the
Executive's duties. For purposes of
this Agreement, "Disability" means
physical or mental disability which,
at least six months after its
commencement, is determined to be
total and permanent by a physician
mutually selected by the Company and
the Executive (or the Executive's
legal representative).
(b) Cause. During the Employment
Period, the Company may terminate
the Executive's employment with the
Company hereunder for "Cause." For
purposes of this Agreement, "Cause"
means (i) an act or acts of personal dishonesty
taken by the Executive and intended
to result in substantial personal
enrichment of the Executive at the
expense of the Company, (ii)
repeated violations by the Executive
of the Executive's obligations under
Section 4(a) of this Agreement which
are demonstrably willful and
deliberate on the Executive's part
and which are not remedied in a
reasonable period of time after
receipt of written notice from the
Company or the Parent, or (iii) the
conviction of the Executive of a
felony involving moral turpitude.
(c) Good Reason. During the
Employment Period, the Executive's
employment with the Company
hereunder may be terminated by the
Executive for "Good Reason." For
purposes of this Agreement, "Good
Reason" means:
(i) the assignment to the Executive
of any duties inconsistent in any
respect with the Executive's
position (including, without
limitation, the Executive's status,
offices, titles and reporting
relationships), authority, duties or
responsibilities as contemplated by
Section 4(a) of this Agreement, or
any other action by the Company,
which, in his reasonable judgment,
results in a diminution in such
position, authority, duties or
responsibilities, excluding for this
purpose an isolated, insubstantial
and inadvertent action not taken in
bad faith and which is remedied by
the Company promptly after receipt
of notice thereof given by the
Executive; or
(ii) (A) failure by the Company to
comply with any of the provisions of
Section 4(b) of this Agreement,
other than an isolated, insubstantial and inadvertent
failure not occurring in bad faith
and which is remedied by the Company
promptly after receipt of notice
thereof given by the Executive, or
(B) after the Change of Control
Date, any failure to pay the Base
Salary in accordance with Section
4(b)(i), or any failure to maintain
or provide for the benefit of the
Executive the plans, practices,
policies and programs and the
benefits provided thereunder,
described in Sections 4(b),(ii)
through (v) on the most favorable
basis such plans, practices,
policies and programs were
maintained, and such benefits
provided, during the ninety (90) day
period immediately preceding the
Change of Control Date, or, if more
favorable to the Executive and/or
the Executive's family, as in effect
at any time thereafter; or
(iii) the Company requiring the
Executive to be based at any office
or location other than that set
forth in Section 4(a) hereof, except
for travel reasonably required in
the performance of the Executive's
duties; or
(iv) any purported termination by
the Company of the Executive's
employment otherwise than as
expressly permitted by this
Agreement or expressly consented to
in writing by the Executive; or
(v) any failure by the Company to
comply with and satisfy Section 5(c)
of this Agreement.
For purposes of this Section 5(c),
any good faith determination of
"Good Reason" made by the Executive
on or after the Change of Control
Date shall be conclusive, final and
binding on all persons. Anything in
this Agreement to the contrary
notwithstanding, a termination by
the Executive for any reason during
the one (1) year period immediately
following the Change of Control Date
shall be deemed to be a termination
for Good Reason for all purposes of
this Agreement.
(d) Voluntary Termination. During
the Employment Period, the Company
may terminate, upon thirty (30) days
advance written notice given to the
Executive, the Executive's
employment with the Company
hereunder other than for Cause and
the Executive may voluntarily
terminate, upon thirty (30) days
advance written notice given to the
Company, the Executive's employment
with the Company hereunder without
Good Reason.
(e) Notice of Termination. Any
termination by the Company for cause
or by the Executive for Good Reason
shall be communicated by a notice of
termination as defined below, given
in accordance with Section 13(b) of
this Agreement and which specifies
(i) the termination provision in
this Agreement relied upon, (ii) the
facts and circumstances (in
reasonable detail) claimed to
provide a basis for termination of
the Executive's employment under the
provision so indicated, and (iii)
the Date of Termination (as defined
below). The failure by the Executive
to set forth in such notice of
termination any fact or circumstance
which contributes to a showing of
Good Reason shall not waive any
right of the Executive hereunder or
preclude the Executive from
asserting such fact or circumstance
in enforcing his rights hereunder.
6. Obligations of the Company upon Termination.
(a) Death. If the Executive's
employment is terminated by reason
of the Executive's death, the
Executive, or the Executive's legal
representatives, as the case may be,
shall be entitled to receive (i) the
Executive's Base Salary through the
date of death at the rate in effect
(as provided for in Section 4(b) of
this Agreement) on the date of
death, (ii) any compensation
previously deferred by
the Executive (together with any
accrued interest thereon) and not
yet paid by the Company, and (iii)
any accrued vacation pay not yet
paid by the Company (such amounts
specified in clauses (i), (ii) and
(iii), are hereinafter referred to
as the "Accrued Obligations"). All
such Accrued Obligations shall be
paid to the Executive's estate or
beneficiary, as applicable, in a
lump sum in cash within thirty (30)
days after the date of death. In
addition, the Executive's family
shall be entitled to receive the
most favorable family death and
other benefits provided by the
Company to surviving families of
senior executives of the Company
under the plans, practices, policies and
programs, if any, maintained or
provided by the Company (or the
economic equivalent thereof).
(b) Disability. If the Executive's
employment with the Company and/or
the Parent hereunder is terminated
due to the Executive's Disability,
the Employment Period shall
terminate on the date of termination
and the Executive shall be entitled
to receive all Accrued Obligations.
All such Accrued Obligations shall
be paid to the Executive in a lump
sum in cash within thirty (30) days
after the Date of Termination. In
addition, the Executive shall be
entitled to receive (A) after the
Disability Effective Date the most
favorable disability benefits
provided by the Company to disabled
senior executives of the Company
under the plans, practices, policies
and programs, if any, maintained or
provided by the Company (or the
economic equivalent thereof).
(c) Cause; Without Good Reason. If
the Executive's employment with the
Company shall be terminated for
Cause by the Company or by the
Executive without Good Reason, the
Employment Period shall terminate on
the date of termination and the
Executive shall be entitled to
receive all Accrued Obligations. All
such Accrued Obligations shall be
paid to the Executive in a lump sum
in cash within thirty (30) days
after the date of termination.
(d) Good Reason; Other than for
Cause, Death or Disability. If,
during the Employment Period, the
Company hereunder shall terminate
the Executive's employment with the
Company hereunder (other than for
Cause, Death or Disability), or the
Executive shall terminate his
employment with the Company
hereunder for Good Reason (i) the
Executive shall receive the Accrued
Obligations, payable in a lump sum
in cash within thirty (30) days
after the date of termination, (ii)
a lump sum payment equal to two (2)
times the sum of (A) the Executive's
Base Salary on the date of
termination, plus (B) the full
amount of the bonus the Executive
was eligible to receive in the
current fiscal year assuming for
purposes hereof that the Executive
would have received 100% of the
Executive's bonus potential
payable at the same time payment of
the Accrued Obligations is
made, (iii) additional and
accelerated vesting and
exercisability as to the portion of
any outstanding option scheduled to
vest on the next following vesting
date for any such option (as if the
Executive remained employed through
such next date), and (iv) for one
(1) year, after the date, or such
longer period as any plan, practice,
policy or program may provide,
the Company shall continue the
benefits described in Section
4(b)(iii) to the Executive and/or
the Executive's family, including,
without limitation, health insurance
and life insurance, in amounts and
on a basis at least equal to those
provided to senior executives (and
their families) of the Company or
the economic equivalent thereof.
7. Non-exclusivity of Rights.
Nothing in this Agreement shall
prevent or limit the Executive's
continuing or future participation
in any benefit, bonus, incentive or
other plans, practices, policies or
programs, provided by the Company
nor shall anything herein limit or
otherwise affect such rights as the
Executive may have under any stock
option, stock appreciation, short or
long term incentive plans,
restricted stock or other plans,
arrangements, or agreements with or
maintained by the Company and any
compensation or benefits which are
vested in the Executive or which the
Executive is otherwise entitled to
receive under any plan, practice,
policy or program of the Company at
or subsequent to the date of
termination shall be payable in
accordance with the terms and
provisions of such plan, practice,
policy or program.
8. Full Settlement. The Company's
obligations to make the payments
provided for in this Agreement and
otherwise to perform their
obligations hereunder shall not be
affected by any set-off,
counterclaim, recoupment, defense or
other claim, right or action which
the Company may have against the
Executive or others. In no event
shall the Executive be obligated to
seek other employment or take any
other action by way of mitigation of
the amounts payable to the Executive
under any of the provisions of this
Agreement. The Company agrees to
pay all the legal fees and expenses
incurred by the Company, the
Executive and others as a result of
the negotiation and/or drafting of
this Agreement or any contest or
dispute (regardless of the outcome thereof)
arising out of this Agreement
including, without limitation, any
contest regarding the amount of any
payment pursuant to this Agreement.
9. Certain Additional Payments by the Company.
(a) Additional Payments. Anything
in this Agreement to the contrary
notwithstanding, if it shall be
determined that any payment or
distribution by the Company to or
for the benefit of the Executive,
whether paid or payable or
distributed or distributable,
pursuant to the terms of this
Agreement or otherwise (a
"Payment"), would be subject to the
excise tax imposed by Section 4999
of the Internal Revenue Code of
1986, as amended (the "Code") (or
any similar tax) and/or any
interest or penalties with respect to such
excise tax (such excise tax,
together with any such interest and
penalties, are hereinafter
collectively referred to as the
"Excise Tax"), then the Executive
shall be entitled to receive an
additional payment from the Company
(a "GrossUp Payment") in an amount
such that, after payment by the
Executive of all taxes (including,
without limitation, any interest or
penalties imposed with respect to
such taxes), including, without
limitation, any Excise Tax, imposed
upon or attributable to the Gross-Up
Payment, the Executive retains an
amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the
Payments.
(b) Related Determinations. All
determinations required to be made
under this Section 9, including whether and
when the GrossUp Payment is required
and the amount of such Gross-Up
Payment including any determination
of the parachute payments under Code
Section 280G(b)(2), and the
assumptions to be utilized in
arriving at such determinations
shall be made by a nationally recognized
certified public accounting firm
that is mutually selected by the
Executive and the Company (the
"Accounting Firm") which shall
provide detailed supporting
calculations both to the Company
and the Executive within fifteen
business days of the receipt of
notice from the Executive that
there has been a Payment, or such
earlier time as is requested by the
Company. All fees and expenses of
the Accounting Firm shall be borne
solely by the Company. Any Gross-
Up Payment shall be paid by the
Company to the Executive within five days of
the receipt of the Accounting
Firm's determination. Any
determination by the Accounting
Firm shall be binding upon the
Company and the Executive. As a
result of uncertainty in the
application of Section 4999 of the
Code at the time of the initial
determination by the Accounting
Firm hereunder, it is possible that
the Gross-Up Payment made will have
been an amount less than the
Company should have paid pursuant
to this Section 9 (the
"Underpayment"). In the event that
the Executive thereafter is
required to make a payment of any
Excise Tax, the Accounting Firm
shall determine the amount of the
Underpayment and any such
Underpayment shall be promptly paid
by the Company to or for the
benefit of the Executive. The
obligations of the parties under
this Section 9 shall indefinitely
survive the termination of the
Executive's employment with the
Company and the termination of this
Agreement.
10. (a). Restrictive Covenants.
In consideration of the Employee's
continued employment and the mutual
promises contained herein, Employee
agrees and promises that Employee
will not, directly or indirectly,
for Employee or any other person,
firm, corporation, entity or business:
(i) Compete with Company. During
the term of his employment by the
Company and for a period of one
year after termination of
employment with the Company for any
reason own, manage, operate,
control or otherwise be in any
manner affiliated or
connected with, or engage or
participate in the ownership,
management, operation or control of
(as principal, agent, proprietor,
partner, member, shareholder,
director, trustee, officer,
administrator, employee,
consultant, independent contractor,
or otherwise), any business or
entity that owns or operates any
full service or quick service
restaurants within 15 miles of any
restaurant owned by the Company on
the last day of Employee's
employment.
(ii) Employees. For a period of
one year after termination of
employment by the Company, Employee
shall not, directly or indirectly,
(i) induce or influence or attempt
to induce or influence, any person
who is engaged as an employee,
agent, independent contractor or
otherwise by the Company to
terminate his or her employment or
engagement with the Company, nor
(ii) aid, assist or abet any other
person, firm, or corporation in any
of the prohibited matters
identified in clause (i) of this
Section 10(a).
(b). Severability. The parties
hereto intend that the covenants
contained in Section 10(a)(i) shall
be construed as a series of
separate covenants, one for each
restaurant operated by the Company.
Except for geographic coverage,
each such separate covenant shall
be deemed identical in terms to the
covenants contained in Section
10(a)(i). If, in any judicial proceeding, a court
shall refuse to enforce any of the
separate covenants deemed included
in this section, then this
unenforceable covenant shall be
deemed eliminated from these
provisions for the purpose of those
proceedings to the extent necessary
to permit the remaining separate
covenants to be enforced.
(c). Proprietary and Confidential
Information. The parties hereto
acknowledge and agree that
proprietary and confidential
information means information or
material which is not generally
available to or used by others
outside the Company or the utility
or value of which is not generally
known or recognized as standard
practice, whether or not the
underlying details are in the
public domain. Information and
material which is considered
proprietary and confidential by the
Company includes, but is not
limited to, the following:
(i) Information and material which
relates to the Company's
purchasing, accounting, operating
or marketing methods;
(ii) Information and material
related to business plans and
methods of operations or methods of
doing business or relating to
marketing or expansion plans
developed or to be developed by the
Company;
(iii) Information and material
related to the Company's method and
manner of compensating its
employees;
(iv) Any of the information of the
type described above which the
Company obtained from another
source and which the Company treats
as proprietary or designates as
confidential, whether or not owned
or developed by the Company.
(d). Use of Information. Employee
acknowledges and agrees that he is
in a fiduciary relationship with
the Company and as a consequence of
this fiduciary relationship and the
trust and confidence reposed in the Employee
by the Company, Employee will
receive proprietary and
confidential information and/or
trade secrets of the Company, as
previously defined in this
Agreement. In partial consideration for the
mutual promises contained herein,
the Employee agrees not to directly
or indirectly divulge, publish,
communicate, use to the detriment
of the Company, use for the benefit
of any person, firm, corporation,
or business or misuse in any way
any such proprietary and
confidential information and/or
trade secrets either during or
subsequent to employment with the
Company, whether or not conceived,
originated, discovered or developed
in whole or in part by Employee.
(e). Availability of Injunctive
Relief. The parties acknowledge
that compliance with the covenants
in Sections 10(a)(c) and (d) is
necessary to protect the business,
goodwill and proprietary interests
of the Company. The parties
further agree that the remedy at
law for breach of any of the
provisions of such covenants is
inadequate and that the Company
shall be entitled, in addition to
other such remedies as it may have,
to injunctive relief for any breach
or threatened breach of Sections
10(a)(c) and (d) without proof of
any actual damages that may have
been or may be caused to the
Company by such breach or
threatened breach.
(f) Exclusion. Notwithstanding
the foregoing, nothing contained in
this Section 10 is intended nor
shall it be construed to prevent,
limit or impair Executive's ability
to practice law, including the
representation of clients that
operate restaurants within the
geographic areas identified in
Section 10(a)(i), provided such
representation does not otherwise
violate the Rules of Professional
Conduct applicable to Executive.
11. Successors. (a) This
Agreement is personal to the
Executive. Without the prior
written consent of the Company it
shall not be assignable by the
Executive otherwise than by will
or the laws of descent and
distribution. This Agreement shall
inure to the benefit of and be
enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to
the benefit of and be binding upon
the Company and its successors and
assigns.
(c) The Company will require any
successor (whether direct or
indirect, by purchase, merger,
consolidation or otherwise) to all
or substantially all of the
business and/or assets of the
Company to assume expressly and
agree to perform this Agreement in
the same manner and to the same
extent that the Company would be
required to perform it if no such
succession had taken place.
12. Miscellaneous. (a) This
Agreement shall be governed by and
construed in accordance with the
laws of the State of Indiana,
without reference to principles of
conflict of laws thereunder. The
captions of this Agreement are not
part of the provisions hereof and
shall not have any force or effect.
This Agreement may not be amended
or modified otherwise than by a
written agreement executed by the
parties hereto or their respective
successors and legal
representatives.
(b) All notices and other
communications hereunder shall be
in writing and shall be given by
facsimile transmission, hand
delivery to the other party or by
registered or certified mail,
return receipt requested, postage
prepaid, addressed as follows:
If to the Executive:
John C. Firth
4220 Edison Lakes Parkway
Mishawaka, Indiana 46545
If to the Company:
Daniel B. Fitzpatrick
Chief Executive Officer
Quality Dining, Inc.
4220 Edison Lakes Parkway
Mishawaka, Indiana 46545
or to such other address as either
party shall have furnished to the
other in writing in accordance
herewith. Notice and
communications shall be effective
when actually received by the
addressee.
(c) The invalidity or
unenforceability of any provision
of this Agreement shall not affect
the validity or enforceability of
any other provision of this
Agreement.
(d) The Company may withhold from
any amounts payable under this
Agreement such federal, state or
local taxes as shall be required to
be withheld pursuant to any
applicable law or regulation.
(e) The Executive's failure to
insist upon strict compliance with
any provision hereof shall not be
deemed to be a waiver of such provision or
any other provision thereof.
(f) This Agreement contains the
entire understanding of the Company
and the Executive with respect to
the subject matter hereof.
IN WITNESS WHEREOF, the Executive
and the Company have each caused
this Agreement to be executed in
their name and on their behalf on
the date first above written.
QUALITY DINING, INC.
/s/_______________________
By: Daniel B. Fitzpatrick
Its: President and Chief
Executive Officer
EXECUTIVE
/s/__________________
John C. Firth
Exhibit 10-Q
NONCOMPETE AGREEMENT
THIS NONCOMPETE AGREEMENT (the "Agreement") is entered into
to be effective as of the 1st day of June, 1999, by and
between Quality Dining, Inc., an Indiana corporation
(sometimes hereinafter collectively referred to with its
affiliates as the "Company"), and James K. Fitzpatrick (the
"Employee").
Agreement
1. Employment. The parties hereto acknowledge that
the Employee's employment by the Company is an "at will"
employment
and nothing in this Agreement shall in any way limit the
Company's ability to terminate Employee with or without
cause.
2. Restrictive Covenants. In consideration of the
Employee's continued employment, the right to receive a
"Change of Control" (as hereinafter defined) payment and the
mutual promises contained herein, Employee agrees and
promises that Employee will not, directly or indirectly, for
Employee or any other person, firm, corporation, entity or
business:
(a) Compete with Company. During the term of his
employment by the Company and for a period of one year after
termination of employment with the Company for any reason
own, manage, operate, control or otherwise be in any manner
affiliated or connected with, or engage or participate in
the ownership, management, operation or control of (as
principal, agent, proprietor, partner, member, shareholder,
director, trustee, officer, administrator, employee,
consultant, independent contractor, or otherwise), any
business or entity that owns or operates any full service or
quick service restaurants within 15 miles of any restaurant
owned by the Company on the last day of Employee's
employment.
(b) Employees. For a period of one year after termination
of employment by the Company, Employee shall not, directly
or indirectly, (i) induce or influence or attempt to induce
or influence, any person who is engaged as an employee,
agent, independent contractor or otherwise by the Company to
terminate his or her employment or engagement with the
Company, nor (ii) aid, assist or abet any other person,
firm, or corporation in any of the prohibited matters
identified in clause (i) of this paragraph 2(b).
3. Severability. The parties hereto intend that the
covenants contained in Section 2 shall be construed as a
series of separate covenants, one for each restaurant
operated by the Company. Except for geographic coverage,
each such separate covenant shall be deemed identical in
terms to the covenants contained in Section 2. If, in any
judicial proceeding, a court shall refuse to enforce any of
the separate covenants deemed included in this section, then
this unenforceable covenant shall be deemed eliminated from
these provisions for the purpose of those proceedings to the
extent necessary to permit the remaining separate covenants
to be enforced.
4. Proprietary and Confidential Information. The parties
hereto acknowledge and agree that proprietary and
confidential information means information or material which
is not generally available to or used by others outside the
Company or the utility or value of which is not generally
known or recognized as standard practice, whether or not the
underlying details are in the public domain. Information
and material which is considered proprietary and
confidential by the Company includes, but is not limited to,
the following:
(a) Information and material which relates to the Company's
purchasing, accounting, operating or marketing methods;
(b) Information and material related to business plans and
methods of operations or methods of doing business or
relating to marketing or expansion plans developed or to be
developed by the Company;
(c) Information and material related to the Company's
method and manner of compensating its employees;
(d) Any of the information of the type described above
which the Company obtained from another source and which the
Company treats as proprietary or designates as confidential,
whether or not owned or developed by the Company.
5. Use of Information. Employee acknowledges and
agrees that he is in a fiduciary relationship with the
Company and as a consequence of this fiduciary relationship
and the trust and confidence reposed in the Employee by the
Company, Employee will receive proprietary and confidential
information and/or trade secrets of the Company, as
previously defined in this Agreement. In partial
consideration for the mutual promises contained herein, the
Employee agrees not to directly or indirectly divulge,
publish, communicate, use to the detriment of the Company,
use for the benefit of any person, firm, corporation, or
business or misuse in any way any such proprietary and
confidential information and/or trade secrets either during
or subsequent to employment with the Company, whether or not
conceived, originated, discovered or developed in whole or
in part by Employee.
6. Availability of Injunctive Relief. The parties
acknowledge that compliance with the covenants in Sections
2, 4, and 5 is necessary to protect the business, goodwill
and proprietary interests of the Company. The parties
further agree that the remedy at law for breach of any of
the provisions of such covenants is inadequate and that the
Company shall be entitled, in addition to other such
remedies as it may have, to injunctive relief for any breach
or threatened breach of Sections 2, 4, and 5 without proof
of any actual damages that may have been or may be caused to
the Company by such breach or threatened breach.
7. Change of Control Payment.
(a) If Employee is employed by the Company at the time of
any Change of Control (as defined below) of the Company,
Employee shall be entitled to the following:
(i) within 10 days after the date of the Change of Control
be paid a lump sum payment by the Company equal to 2 times
the sum of (A) Employee's then current annual salary, plus
(B) the full amount of the bonus Employee was eligible to
receive for the fiscal year in which the Change of Control
occurred, assuming for purposes hereof that Employee would
have received 100% of Employee's bonus potential.
(ii) accelerated vesting and exercisability of all
outstanding stock options and Employee shall have up to six
months after the date of the Change of Control to exercise
all operations previously granted to Employee;
(iii) accelerated vesting of all restricted
shares previously awarded to Employee free from any "Lockup
Period" that might otherwise apply pursuant to the Company's
Strategic Long Term Plan; and
(iv) continued enrollment for a period of one year in the
Company's group life and health insurance all on terms that
are no less favorable to Employee than those that were in
effect on the date of the Change of Control, whether or not
Employee remains in the employ of the Company for any or all
of such period.
(b) As used in this Agreement, "Change of Control" of the
Company means:
(i) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act") (a "Person") of beneficial ownership (within the
meaning of Rule 13d3 promulgated under the Exchange Act as
in effect from time to time) of 20% or more of either (A)
the then outstanding shares of common stock of the Company
or (B) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally
in the election of directors; provided, however, that the
following acquisitions shall not constitute an acquisition
of control: (1) any acquisition directly from the Company
(excluding an acquisition by virtue of the exercise of a
conversion privilege), (2) any acquisition by the Company,
(3) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any
corporation controlled by the Company, (4) any acquisition
by any corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or
consolidation, the conditions described in clauses (A), (B)
and (C) of subsection (iii) of this Section 7(b) are
satisfied, or (5) any acquisition by any Person who on the
date of this Agreement is a director or officer of the
Company or is the beneficial owner of 20% or more of the
outstanding voting securities of the Company ("Affiliated
Person");
(ii) Individuals who, as of the date hereof, constitute the
Board of Directors of the Company (the "Incumbent Board")
cease for any reason to constitute at least a majority of
the Board of Directors of the Company (the "Board");
provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination
for election by the Company's shareholders, was approved by
a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than
the Board; or
(iii) The Company enters into an agreement for a
reorganization, merger or consolidation, in each case,
unless, following such reorganization, merger or
consolidation, (A) more than eighty percent (80%) of,
respectively, the then outstanding shares of common stock of
the corporation resulting from such reorganization, merger
or consolidation and the combined voting power of the then
outstanding voting securities of such corporation entitled
to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were
the beneficial owners, respectively, of the outstanding
Company common stock and outstanding Company voting
securities immediately prior to such reorganization, merger
or consolidation in substantially the same proportions as
their ownership, immediately prior to such reorganization,
merger or consolidation, of the outstanding Company stock
and outstanding Company voting securities, as the case may
be, (B) no Person (excluding the Company, any employee
benefit plan or related trust of the Company or such
corporation resulting from such reorganization, merger or
consolidation and any Person beneficially owning,
immediately prior to such reorganization, merger or
consolidation, directly or indirectly, 20% or more of the
outstanding Company common stock or outstanding voting
securities, as the case may be) beneficially owns, directly
or indirectly, 20% or more of, respectively, the then
outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation
or the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in
the election of directors and (C) at least a majority of the
members of the board of directors of the corporation
resulting from such reorganization, merger or consolidation
were members of the Incumbent Board at the time of the
execution of the initial agreement providing for such
reorganization, merger or consolidation; or
(iv) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company or the
Company enters into an agreement for the sale or other
disposition of all or substantially all of the assets of the
Company, other than to a corporation with respect to which
following such sale or other disposition (A) more than 80%
of, respectively, the then outstanding shares of common
stock of such corporation and the combined voting power of
the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were
the beneficial owners, respectively, of the outstanding
Company common stock and outstanding Company voting
securities immediately prior to such sale or other
disposition in substantially the same proportion as their
ownership, immediately prior to such sale or other
disposition, of the outstanding Company common stock and
outstanding Company voting securities, as the case may be,
(B) no Person (excluding the Company and any employee
benefit plan or related trust of the
Company or such corporation, any Affiliated Person and any
Person beneficially owning, immediately prior to such sale
or other disposition, directly or indirectly, 20% or more of
the outstanding Company common stock or outstanding Company
voting securities, as the case may be) beneficially owns,
directly or indirectly, 20% or more of, respectively, the
then outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in
the election of directors and (C) at least a majority of the
members of the board of directors of such corporation were
members of the Incumbent Board at the time of the execution
of the initial agreement or action of the Board providing
for such sale or other disposition of assets of the Company.
(v) Notwithstanding the foregoing, none of the transactions
contemplated in subsections (i), (ii), (iii) or (iv) shall
constitute a Change of Control if such transaction occurs in
connection with or as a result of a transaction subject to
Rule 13e-3 promulgated under the Exchange Act as in effect
from time to time provided that executive officers of the
Company prior to such transaction are the beneficial owners
of 75% of more of the voting securities of the Company
outstanding following such transaction.
8. Assignment. Neither this Agreement nor any right or
obligation created hereunder shall be assignable or
delegated by Employee.
9. Entire Agreement. This Agreement constitutes the
entire agreement between the parties hereto pertaining to
the subject matter hereof and supersede all prior and
contemporaneous agreements and understandings of the
parties, and there are no warranties, representations or
other agreements between the parties in connection with the
subject matter hereof except as specifically set forth
herein. No supplement, modification,
waiver or termination of this Agreement shall be binding
unless executed in writing by the party to be bound thereby.
No waiver of any of the provisions of this Agreement shall
be deemed or shall constitute a waiver or continuing waiver
of any other provision hereof.
10. Partial Invalidity. In the event one or more of the
provisions contained in this Agreement, or any portion of
any such provisions, shall for any reason be held invalid,
illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other
provision of this Agreement, or any portion of any such
provision, but the Agreement shall be construed as if such
invalid, illegal or unenforceable provision, or portion
thereof, had never been contained herein.
11. Governing Law. This Agreement and all rights,
obligations and liabilities arising hereunder shall be
construed and enforced in accordance with the laws of the
State of Indiana.
12. Titles and Headings. Titles and headings to
provisions of this Agreement are for the purpose of
reference only and shall in no way limit, define or
otherwise affect the interpretation or construction of such
provisions.
13. Binding Agreement. The rights and obligations of the
Company under this Agreement shall inure to the benefit of
and shall be binding on the successors and assigns of the
Company.
14. No Third Parties. The provisions of this Agreement
shall not inure to the benefit of any third party who is not
a signatory hereto except as otherwise provided for in
Section 13.
IN WITNESS WHEREOF, the parties have hereto executed
this Agreement as of the day and year first written above.
QUALITY DINING, INC.
/s/______________________
By: John C. Firth
Its: Executive Vice President and General Counsel
EMPLOYEE
/s/_________________
James K. Fitzpatrick
Exhibit 10-R
NONCOMPETE AGREEMENT
THIS NONCOMPETE AGREEMENT (the "Agreement") is entered into
to be effective as of the 1st day of June, 1999, by and
between Quality Dining, Inc., an Indiana corporation
(sometimes hereinafter collectively referred to with its
affiliates as the "Company"), and Gerald O. Fitzpatrick (the "Employee").
Agreement
1. Employment. The parties hereto acknowledge that the
Employee's employment by the Company is an "at will"
employment and nothing in this Agreement shall in any way
limit the Company's ability to terminate Employee with or
without cause.
2. Restrictive Covenants. In consideration of the
Employee's continued employment, the right to receive a
"Change of Control" (as hereinafter defined) payment and the
mutual promises contained herein, Employee agrees and
promises that Employee will not, directly or indirectly, for
Employee or any other person, firm, corporation, entity or
business:
(a) Compete with Company. During the term of his
employment by the Company and for a period of one year after
termination of employment with the Company for any reason
own, manage, operate, control or otherwise be in any manner
affiliated or connected with, or engage or participate in
the ownership, management, operation or control of (as
principal, agent, proprietor, partner, member, shareholder,
director, trustee, officer, administrator, employee,
consultant, independent contractor, or otherwise), any
business or entity that owns or operates any quick service
restaurant within 15 miles of any Burger King restaurant
owned by the Company on the last day of Employee's
employment.
(b) Employees. For a period of one year after termination
of employment by the Company, Employee shall not, directly
or indirectly, (i) induce or influence or attempt to induce
or influence, any person who is engaged as an employee,
agent, independent contractor or otherwise by the Company to
terminate his or her employment or engagement with the
Company, nor (ii) aid, assist or abet any other person,
firm, or corporation in any of the prohibited matters
identified in clause (i) of this paragraph 2(b).
3. Severability. The parties hereto intend that the
covenants contained in Section 2 shall be construed as a
series of separate covenants, one for each restaurant
operated by the Company. Except for geographic coverage,
each such separate covenant shall be deemed identical in
terms to the covenants contained in Section 2. If, in any
judicial proceeding, a court shall refuse to enforce any of
the separate covenants deemed included in this section, then
this unenforceable covenant shall be deemed eliminated from
these provisions for the purpose of those proceedings to the
extent necessary to permit the remaining separate covenants
to be enforced.
4. Proprietary and Confidential Information. The parties
hereto acknowledge and agree that proprietary and
confidential information means information or material which
is not generally available to or used by others outside the
Company or the utility or value of which is not generally
known or recognized as standard practice, whether or not the
underlying details are in the public domain. Information and
material which is considered proprietary and confidential by the Company
includes, but is not limited to, the following:
(a) Information and material which relates to the Company's
purchasing, accounting, operating or marketing methods;
(b) Information and material related to business plans and
methods of operations or methods of doing business or
relating to marketing or expansion plans developed or to be
developed by the Company;
(c) Information and material related to the Company's
method and manner of compensating its employees;
(d) Any of the information of the type described above
which the Company obtained from another source and which the
Company treats as proprietary or designates as confidential,
whether or not owned or developed by the Company.
5. Use of Information. Employee acknowledges and
agrees that he is in a fiduciary relationship with the
Company and as a consequence of this fiduciary relationship
and the trust and confidence reposed in the Employee by the
Company, Employee will receive proprietary and confidential
information and/or trade secrets of the Company, as
previously defined in this Agreement. In partial
consideration for the mutual promises contained herein, the
Employee agrees not to directly or indirectly divulge,
publish, communicate, use to the detriment of the Company,
use for the benefit of any person, firm, corporation, or
business or misuse in any way any such proprietary and
confidential information and/or trade secrets either during
or subsequent to employment with the Company, whether or not
conceived, originated, discovered or developed in whole or
in part by Employee.
6. Availability of Injunctive Relief. The parties
acknowledge that compliance with the covenants in Sections
2, 4, and 5 is necessary to protect the business, goodwill
and proprietary interests of the Company. The parties
further agree that the remedy at law for breach of any of
the provisions of such covenants is inadequate and that the
Company shall be entitled, in addition to other such
remedies as it may have, to injunctive relief for any breach
or threatened breach of Sections 2, 4, and 5 without proof
of any actual damages that may have been or may be caused to
the Company by such breach or threatened breach.
7. Change of Control Payment.
(a) If Employee is employed by the Company at the time of
any Change of Control (as defined below) of the Company,
Employee shall be entitled to the following:
(i) within 10 days after the date of the Change of
Control be paid a lump sum payment by the Company equal to
one and one-half times the sum of (A) Employee's then
current annual salary, plus (B) the full amount of the bonus
Employee was eligible to receive for the fiscal year in
which the Change of Control occurred, assuming for purposes
hereof that Employee would have received 100% of Employee's
bonus potential.
(ii) accelerated vesting and exercisability of all
outstanding stock options and Employee shall have up to six
months after the date of the Change of Control to exercise
all operations previously granted to Employee;
(iii) accelerated vesting of all restricted shares
previously awarded to Employee free from any "Lockup Period"
that might otherwise apply pursuant to the Company's
Strategic Long Term Plan; and
(iv) continued enrollment for a period of one year in the
Company's group life and health insurance all on terms that
are no less favorable to Employee than those that were in
effect on the date of the Change of Control, whether or not
Employee remains in the employ of the Company for any or all
of such period.
(b) As used in this Agreement, "Change of Control" of the
Company means: (i) The acquisition by any individual,
entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") (a "Person") of beneficial ownership
(within the meaning of Rule 13d3 promulgated under the
Exchange Act as in effect from time to time) of 20% or more
of either (A) the then outstanding shares of common stock of
the Company or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to
vote generally in the election of directors; provided,
however, that the following acquisitions shall not
constitute an acquisition of control: (1) any acquisition
directly from the Company (excluding an acquisition by
virtue of the exercise of a conversion privilege), (2) any
acquisition by the Company, (3) any acquisition by any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by
the Company, (4) any acquisition by any corporation pursuant
to a reorganization, merger or consolidation, if, following
such reorganization, merger or consolidation, the conditions
described in clauses (A), (B) and (C) of subsection (iii) of
this Section 7(b) are satisfied, or (5) any acquisition by
any Person who on the date of this Agreement is a director
or officer of the Company or is the beneficial owner of 20%
or more of the outstanding voting securities of the Company
("Affiliated Person");
(ii) Individuals who, as of the date hereof, constitute the
Board of Directors of the Company (the "Incumbent Board")
cease for any reason to constitute at least a majority of
the Board of Directors of the
Company (the "Board"); provided, however, that any
individual becoming a director subsequent to the date hereof
whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board shall
be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest
(as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board; or
(iii) The Company enters into an agreement for a
reorganization, merger or consolidation, in each case,
unless, following such reorganization, merger or
consolidation, (A) more than eighty percent (80%) of,
respectively, the then outstanding shares of common stock of
the corporation resulting from such reorganization, merger
or consolidation and the combined voting power of the then
outstanding voting securities of such corporation entitled
to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were
the beneficial owners, respectively, of the outstanding
Company common stock and outstanding Company voting
securities immediately prior to such reorganization, merger
or consolidation in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger or
consolidation, of the outstanding Company stock and
outstanding Company voting securities, as the case may be,
(B) no Person (excluding the Company, any employee benefit
plan or related trust of the Company or such corporation
resulting from such reorganization, merger or consolidation
and any Person beneficially owning, immediately prior to
such reorganization, merger or consolidation, directly or
indirectly, 20% or more of the outstanding Company common
stock or outstanding voting securities, as the case may be)
beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of
the corporation resulting from such reorganization, merger
or consolidation or the combined voting power of the then
outstanding voting securities of such corporation entitled
to vote generally in the election of directors and (C) at
least a majority of the members of the board of directors of
the corporation resulting from such reorganization, merger
or consolidation were members of the Incumbent Board at the
time of the execution of the initial agreement providing for
such reorganization, merger or consolidation; or
(iv) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company or the
Company enters into an agreement for the sale or other
disposition of all or substantially all of the assets of the
Company, other than to a corporation with respect to which
following such sale or other disposition (A) more than 80%
of, respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the outstanding Company common stock and
outstanding Company voting securities immediately prior to
such sale or other disposition in substantially the same
proportion as their ownership, immediately prior to such
sale or other disposition, of the outstanding Company common
stock and outstanding Company voting securities, as the case
may be, (B) no Person (excluding the Company and any
employee benefit plan or related trust of the Company or
such corporation, any Affiliated Person and any Person
beneficially owning, immediately prior to such sale or other
disposition, directly or indirectly, 20% or more of the
outstanding Company common stock or outstanding Company
voting securities, as the case may be) beneficially owns,
directly or indirectly, 20% or more of, respectively, the
then outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in
the election of directors and (C) at least a majority of the
members of the board of directors of such corporation were
members of the Incumbent Board at the time of the execution
of the initial agreement or action of the Board providing
for such sale or other disposition of assets of the Company.
(v) Notwithstanding the foregoing, none of the transactions
contemplated in subsections (i), (ii), (iii) or (iv) shall
constitute a Change of Control if such transaction occurs in
connection with or as a result of a transaction subject to
Rule 13e-3 promulgated under the Exchange Act as in effect
from time to time provided that executive officers of the
Company prior to such transaction are the beneficial owners
of 75% of more of the voting securities of the Company
outstanding following such transaction.
8. Assignment. Neither this Agreement nor any right or
obligation created hereunder shall be assignable or
delegated by Employee.
9. Entire Agreement. This Agreement constitutes the
entire agreement between the parties hereto pertaining to
the subject matter hereof and supersede all prior and
contemporaneous agreements and understandings of the
parties, and there are no warranties, representations or
other agreements between the parties in connection with the
subject matter hereof except as specifically set forth
herein. No supplement, modification, waiver or termination
of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. No waiver of any
of the provisions of this Agreement shall be deemed or shall
constitute a waiver or continuing waiver of any other
provision hereof.
10. Partial Invalidity. In the event one or more of the
provisions contained in this Agreement, or any portion of
any such provisions, shall for any reason
be held invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not
affect any other provision of this Agreement, or any portion
of any such provision, but the Agreement shall be construed
as if such invalid, illegal or unenforceable provision, or
portion thereof, had never been contained herein.
11. Governing Law. This Agreement and all rights,
obligations and liabilities arising hereunder shall be
construed and enforced in accordance with the laws of the
State of Indiana.
12. Titles and Headings. Titles and headings to provisions
of this Agreement are for the purpose of reference only and
shall in no way limit, define or otherwise affect the
interpretation or construction of such provisions.
13. Binding Agreement. The rights and obligations of the
Company under this Agreement shall inure to the benefit of
and shall be binding on the successors and assigns of the
Company.
14. No Third Parties. The provisions of this Agreement
shall not inure to the benefit of any third party who is not
a signatory hereto except as otherwise provided for in
Section 13.
IN WITNESS WHEREOF, the parties have hereto executed
this Agreement as of the day and year first written above.
QUALITY DINING, INC.
/s/____________________
By: John C. Firth
Its: Executive Vice President and General Counsel
EMPLOYEE
/s/_________________
Gerald O. Fitzpatrick
EXHIBIT 10-S
NONCOMPETE AGREEMENT
THIS NONCOMPETE AGREEMENT (the "Agreement") is entered into
to be effective as of the 1st day of June, 1999, by and
between Quality Dining, Inc., an Indiana corporation
(sometimes hereinafter collectively referred to with its
affiliates as the "Company"), and David M. Findlay (the
"Employee").
Agreement
1. Employment. The parties hereto acknowledge that the
Employee's employment by the Company is an "at will"
employment and nothing in this Agreement shall in any way
limit the Company's ability to terminate Employee with or
without cause.
2. Restrictive Covenants. In consideration of the
Employee's continued employment, the right to receive a
"Change of Control" (as hereinafter defined) payment and the
mutual promises contained herein, Employee agrees and
promises that Employee will not, directly or indirectly, for
Employee or any other person, firm, corporation, entity or
business:
(a) Compete with Company. During the term of his
employment by the Company and for a period of one year after
termination of employment with the Company for any reason
own, manage, operate, control or otherwise be in any manner
affiliated or connected with, or engage or participate in
the ownership, management, operation or control of (as
principal, agent, proprietor, partner, member, shareholder,
director, trustee, officer, administrator, employee,
consultant, independent contractor, or otherwise), any
business or entity that owns or operates any full service or
quick service restaurant within 15 miles of any restaurant
owned by the Company on the last day of Employee's
employment.
(b) Employees. For a period of one year after termination
of employment by the Company, Employee shall not, directly
or indirectly, (i) induce or influence or attempt to induce
or influence, any person who is engaged as an employee,
agent, independent contractor or otherwise by the Company to
terminate his or her employment or engagement with the
Company, nor (ii) aid, assist or abet any other person,
firm, or corporation in any of the prohibited matters
identified in clause (i) of this paragraph 2(b).
3. Severability. The parties hereto intend that the
covenants contained in Section 2 shall be construed as a
series of separate covenants, one for each restaurant
operated by the Company. Except for geographic coverage,
each such separate covenant shall be deemed identical in
terms to the covenants contained in Section 2. If, in any
judicial proceeding, a court shall refuse to enforce any of
the separate covenants deemed included in this section, then
this unenforceable covenant shall be deemed eliminated from
these provisions for the purpose of those proceedings to the
extent necessary to permit the remaining separate covenants
to be enforced.
4. Proprietary and Confidential Information. The parties
hereto acknowledge and agree that proprietary and
confidential information means information or material which
is not generally available to or used by others outside the
Company or the utility or value of which is not generally
known or recognized as standard practice, whether or not the
underlying details are in the public domain. Information
and material which is considered
proprietary and confidential by the Company includes, but is
not limited to, the following:
(a) Information and material which relates to the Company's
purchasing, accounting, operating or marketing methods;
(b) Information and material related to business plans and
methods of operations or methods of doing business or
relating to marketing or expansion plans developed or to be
developed by the Company;
(c) Information and material related to the Company's
method and manner of compensating its employees;
(d) Any of the information of the type described above
which the Company obtained from another source and which the
Company treats as proprietary or designates as confidential,
whether or not owned or developed by the Company.
5. Use of Information. Employee acknowledges and
agrees that he is in a fiduciary relationship with the
Company and as a consequence of this fiduciary relationship
and the trust and confidence reposed in the Employee by the
Company, Employee will receive proprietary and confidential
information and/or trade secrets of the Company, as
previously defined in this Agreement. In partial
consideration for the mutual promises contained herein, the
Employee agrees not to directly or indirectly divulge,
publish, communicate, use to the detriment of the Company,
use for the benefit of any person, firm, corporation, or
business or misuse in any way any such proprietary and
confidential information and/or trade secrets either during
or subsequent to employment with the Company, whether or not
conceived, originated, discovered or developed in whole or
in part by Employee.
6. Availability of Injunctive Relief. The parties
acknowledge that compliance with the covenants in Sections
2, 4, and 5 is necessary to protect the business, goodwill
and proprietary interests of the Company. The parties
further agree that the remedy at law for breach of any of
the provisions of such covenants is inadequate and that the
Company shall be entitled, in addition to other such
remedies as it may have, to injunctive relief for any breach
or threatened breach of Sections 2, 4, and 5 without proof
of any actual damages that may have been or may be caused to
the Company by such breach or threatened breach.
7. Change of Control Payment.
(a) If Employee is employed by the Company at the time of
any Change of Control (as defined below) of the Company,
Employee shall be entitled to the following:
(i) within 10 days after the date of the Change of Control
be paid a lump sum payment by the Company equal to one and
one-half times the sum of (A) Employee's then current annual
salary, plus (B) the full amount of the bonus Employee was
eligible to receive for the fiscal year in which the Change
of Control occurred, assuming for purposes hereof that
Employee would have received 100% of Employee's bonus
potential.
(ii) accelerated vesting and exercisability of all
outstanding stock options and Employee shall have up to six
months after the date of the Change of Control to exercise
all operations previously granted to Employee;
(iii) accelerated vesting of all restricted shares
previously awarded to Employee free from any "Lockup Period"
that might otherwise apply pursuant to the Company's
Strategic Long Term Plan; and
(iv) continued enrollment for a period of one year in the
Company's group life and health insurance all on terms that
are no less favorable to Employee than those that were in
effect on the date of the Change of Control, whether or not
Employee remains in the employ of the Company for any or all
of such period.
(b) As used in this Agreement, "Change of Control" of the
Company means:
(i) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act") (a
"Person") of beneficial ownership (within the meaning of
Rule 13d3 promulgated under the Exchange Act as in effect
from time to time) of 20% or more of either (A) the then
outstanding shares of common stock of the Company or (B) the
combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors; provided, however, that the following
acquisitions shall not constitute an acquisition of control:
(1) any acquisition directly from the Company (excluding an
acquisition by virtue of the exercise of a conversion
privilege), (2) any acquisition by the Company, (3) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation
controlled by the Company, (4) any acquisition by any
corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or
consolidation, the conditions described in clauses (A), (B)
and (C) of subsection (iii) of this Section 7(b) are
satisfied, or (5) any acquisition by any Person who on the
date of this Agreement is a director or officer of the
Company or is the beneficial owner of 20% or more of the
outstanding voting securities of the Company ("Affiliated
Person");
(ii) Individuals who, as of the date hereof, constitute the
Board of Directors of the Company (the "Incumbent Board")
cease for any reason to constitute at least a majority of
the Board of Directors of the Company (the "Board");
provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination
for election by the Company's shareholders, was approved by
a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than
the Board; or
(iii) The Company enters into an agreement for a
reorganization, merger or consolidation, in each case,
unless, following such reorganization, merger or
consolidation, (A) more than eighty percent (80%) of,
respectively, the then outstanding shares of common stock of
the corporation resulting from such reorganization, merger
or consolidation and the combined voting power of the then
outstanding voting securities of such corporation entitled
to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were
the beneficial owners, respectively, of the outstanding
Company common stock and outstanding Company voting
securities immediately prior to such reorganization, merger
or consolidation in substantially the same proportions as
their ownership, immediately prior to such reorganization,
merger or consolidation, of the outstanding Company stock
and outstanding Company voting securities, as the case may
be, (B) no Person (excluding the Company, any employee
benefit plan or related trust of the Company or such
corporation resulting from such reorganization, merger or
consolidation and any Person beneficially owning,
immediately prior to such reorganization, merger or
consolidation, directly or indirectly, 20% or more of the
outstanding Company common stock or outstanding voting
securities, as the case may be) beneficially owns, directly
or indirectly, 20% or more of, respectively, the then
outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation
or the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in
the election of directors and (C) at least a majority of the
members of the board of directors of the corporation
resulting from such reorganization, merger or consolidation
were members of the Incumbent Board at the time of the
execution of the initial agreement providing for such
reorganization, merger or consolidation; or
(iv) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company or the
Company enters into an agreement for the sale or other
disposition of all or substantially all of the assets of the
Company, other than to a corporation with respect to which
following such sale or other disposition (A) more than 80%
of, respectively, the then outstanding shares of common
stock of such corporation and the combined voting power of
the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were
the beneficial owners, respectively, of the outstanding
Company common stock and outstanding Company voting
securities immediately prior to such sale or other
disposition in substantially the same proportion as their
ownership, immediately prior to such sale or other
disposition, of the outstanding Company common stock and
outstanding Company voting securities, as the case may be,
(B) no Person (excluding the Company and any employee
benefit plan or related trust of the Company or such
corporation, any Affiliated Person and any Person
beneficially owning, immediately prior to such sale or other
disposition, directly or indirectly, 20% or more of the
outstanding Company common stock or outstanding Company
voting securities, as the case may be) beneficially owns,
directly or indirectly, 20% or more of, respectively, the
then outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in
the election of directors and (C) at least a majority of the
members of the board of directors of such corporation were
members of the Incumbent Board at the time of the execution
of the initial agreement or action of the Board providing
for such sale or other disposition of assets of the Company.
(v) Notwithstanding the foregoing, none of the transactions
contemplated in subsections (i), (ii), (iii) or (iv) shall
constitute a Change of Control if such transaction occurs in
connection with or as a result of a transaction subject to
Rule 13e-3 promulgated under the Exchange Act as in effect
from time to time provided that executive officers of the
Company prior to such transaction are the beneficial owners
of 75% of more of the voting securities of the Company outstanding following
such transaction.
8. Assignment. Neither this Agreement nor any right or
obligation created hereunder shall be assignable or
delegated by Employee.
9. Entire Agreement. This Agreement constitutes the
entire agreement between the parties hereto pertaining to
the subject matter hereof and supersede all prior and
contemporaneous agreements and understandings of the
parties, and there are no warranties, representations or
other agreements between the parties in connection with the
subject matter hereof except as specifically set forth
herein. No supplement, modification, waiver or
termination of this Agreement shall be binding unless
executed in writing by the party to be bound thereby. No
waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver or continuing waiver of
any other provision hereof.
10. Partial Invalidity. In the event one or more of the
provisions contained in this Agreement, or any portion of
any such provisions, shall for any reason be held invalid,
illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other
provision of this Agreement, or any portion of any such
provision, but the Agreement shall be construed as if such
invalid, illegal or unenforceable provision, or portion
thereof, had never been contained herein.
11. Governing Law. This Agreement and all rights,
obligations and liabilities arising hereunder shall be
construed and enforced in accordance with the laws of the
State of Indiana.
12. Titles and Headings. Titles and headings to provisions
of this Agreement are for the purpose of reference only and
shall in no way limit, define or otherwise affect the
interpretation or construction of such provisions.
13. Binding Agreement. The rights and obligations of the
Company under this Agreement shall inure to the benefit of
and shall be binding on the successors and assigns of the
Company.
14. No Third Parties. The provisions of this Agreement
shall not inure to the benefit of any third party who is not
a signatory hereto except as otherwise provided for in
Section 13.
IN WITNESS WHEREOF, the parties have hereto executed
this Agreement as of the day and year first written above.
QUALITY DINING, INC.
/s/______________________
By: John C. Firth
Its: Executive Vice President and General Counsel
EMPLOYEE
/s/______________
David M. Findlay
EXHIBIT 10-U
NONCOMPETE AGREEMENT
THIS NONCOMPETE AGREEMENT (the "Agreement") is entered into
to be effective as of the 1st day of June, 1999, by and
between Quality Dining, Inc., an Indiana corporation
(sometimes hereinafter collectively referred to with its
affiliates as the "Company"), and Robert C. Hudson (the
"Employee").
Agreement
1. Employment. The parties hereto acknowledge that
the Employee's employment by the Company is an "at will"
employment and nothing in this Agreement shall in any way
limit the Company's ability to terminate Employee with or
without cause.
2. Restrictive Covenants. In consideration of the
Employee's continued employment, the right to receive a
"Change of Control" (as hereinafter defined) payment and the
mutual promises contained herein, Employee agrees and
promises that Employee will not, directly or indirectly, for
Employee or any other person, firm, corporation, entity or
business:
(a) Compete with Company. During the term of his
employment by the Company and for a period of one year after
termination of employment with the Company for any reason
own, manage, operate, control or otherwise be in any manner
affiliated or connected with, or engage or participate in
the ownership, management, operation or control of (as
principal, agent, proprietor, partner, member, shareholder,
director, trustee, officer, administrator, employee,
consultant, independent contractor, or otherwise), any
business or entity that owns or operates any full service
restaurants within 15 miles of any Grady's restaurant owned
by the Company on the last day of Employee's employment.
(b) Employees. For a period of one year after termination
of employment by the Company, Employee shall not, directly
or indirectly, (i) induce or influence or attempt to induce
or influence, any person who is engaged as an employee,
agent, independent contractor or otherwise by the Company to
terminate his or her employment or engagement with the
Company, nor (ii) aid, assist or abet any other person,
firm, or corporation in any of the prohibited matters
identified in clause (i) of this paragraph 2(b).
3. Severability. The parties hereto intend that the
covenants contained in Section 2 shall be construed as a
series of separate covenants, one for each restaurant
operated by the Company. Except for geographic coverage,
each such separate covenant shall be deemed identical in
terms to the covenants contained in Section 2. If, in any
judicial proceeding, a court shall refuse to enforce any of
the separate covenants deemed included in this section, then
this unenforceable covenant shall be deemed eliminated from
these provisions for the purpose of those proceedings to the
extent necessary to permit the remaining separate covenants
to be enforced.
4. Proprietary and Confidential Information. The parties
hereto acknowledge and agree that proprietary and
confidential information means information or material which
is not generally available to or used by others outside the
Company or the utility or value of which is not generally
known or recognized as standard practice, whether or not the
underlying details are in the public domain. Information
and material which is considered proprietary and
confidential by the Company includes, but is not limited to,
the following:
(a) Information and material which relates to the Company's
purchasing, accounting, operating or marketing methods;
(b) Information and material related to business plans and
methods of operations or methods of doing business or
relating to
marketing or expansion plans developed or to be developed by
the Company;
(c) Information and material related to the Company's
method and manner of compensating its employees;
(d) Any of the information of the type described above
which the Company obtained from another source and which the
Company treats as proprietary or designates as confidential,
whether or not owned or developed by the Company.
5. Use of Information. Employee acknowledges and
agrees that he is in a fiduciary relationship with the
Company and as a consequence of this fiduciary relationship
and the trust and confidence reposed in the Employee by the
Company, Employee will receive proprietary and confidential
information and/or trade secrets of the Company, as
previously defined in this Agreement. In partial
consideration for the mutual promises contained herein, the
Employee agrees not to directly or indirectly divulge,
publish, communicate, use to the detriment of the Company,
use for the benefit of any person, firm, corporation, or
business or misuse in any way any such proprietary and
confidential information and/or trade secrets either during
or subsequent to employment with the Company, whether or not
conceived, originated, discovered or developed in whole or
in part by Employee.
6. Availability of Injunctive Relief. The parties
acknowledge that compliance with the covenants in Sections
2, 4, and 5 is necessary to protect the business, goodwill
and proprietary interests of the Company. The parties
further agree that the remedy at law for breach of any of
the provisions of such covenants is inadequate and that the
Company shall be entitled, in addition to other such
remedies as it may have, to injunctive relief for any breach
or threatened breach of Sections 2, 4, and 5 without proof
of any actual damages that may have been or may be caused to
the Company by such breach or threatened breach.
7. Change of Control Payment.
(a) If Employee is employed by the Company at the time of
any Change of Control (as defined below) of the Company,
Employee shall be entitled to the following:
(i) within 10 days after the date of the Change of Control
be paid a lump sum payment by the Company equal to the sum
of Employee's then current annual salary, plus the full
amount of the bonus Employee was eligible to receive for the
fiscal year in which the Change of Control occurred,
assuming for purposes hereof that Employee would have
received 100% of Employee's bonus potential.
(ii) accelerated vesting and exercisability of all
outstanding stock options and Employee shall have up to six
months after the date of the Change of Control to exercise
all operations previously granted to Employee;
(iii) accelerated vesting of all restricted shares
previously awarded to Employee free from any "Lockup Period"
that might otherwise apply pursuant to the Company's
Strategic Long Term Plan; and
(iv) continued enrollment for a period of six months in the
Company's group life and health insurance all on terms that
are no less favorable to Employee than those that were in
effect on the date of the Change of Control, whether or not
Employee remains in the employ of the Company for any or all of such
period.
(b) As used in this Agreement, "Change of Control" of the
Company means:
(i) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act") (a "Person") of beneficial ownership (within the
meaning of Rule 13d3 promulgated under the Exchange Act as
in effect from time to time) of 20% or more of either (A)
the then outstanding shares of common stock of the Company
or (B) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally
in the election of directors; provided, however, that the
following acquisitions shall not constitute an acquisition
of control: (1) any acquisition directly from the Company
(excluding an acquisition by virtue of the exercise of a
conversion privilege), (2) any acquisition by the Company,
(3) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any
corporation controlled by the Company, (4) any acquisition
by any corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or
consolidation, the conditions described in clauses (A), (B)
and (C) of subsection (iii) of this Section 7(b) are
satisfied, or (5) any acquisition by any Person who on the
date of this Agreement is a director or officer of the
Company or is the beneficial owner of 20% or more of the
outstanding voting securities of the Company ("Affiliated
Person");
(ii) Individuals who, as of the date hereof, constitute the
Board of Directors of the Company (the "Incumbent Board")
cease for any reason to constitute at least a majority of
the Board of Directors of the Company (the "Board");
provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination
for election by the Company's shareholders, was approved by
a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result
of either an actual or threatened election contest (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a
Person other than the Board; or
(iii) The Company enters into an agreement for a
reorganization, merger or consolidation, in each case,
unless, following such reorganization, merger or
consolidation, (A) more than eighty percent (80%) of,
respectively, the then outstanding shares of common stock of
the corporation resulting from such reorganization, merger
or consolidation and the combined voting power of the then
outstanding voting securities of such corporation entitled
to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were
the beneficial owners, respectively, of the outstanding
Company common stock and outstanding Company voting
securities immediately prior to such reorganization, merger
or consolidation in substantially the same proportions as
their ownership, immediately prior to such reorganization,
merger or consolidation, of the outstanding Company stock
and outstanding Company voting securities, as the case may
be, (B) no Person (excluding the Company, any employee
benefit plan or related trust of the Company or such
corporation resulting from such reorganization, merger or
consolidation and any Person beneficially owning,
immediately prior to such reorganization, merger or
consolidation, directly or indirectly, 20% or more of the
outstanding Company common stock or outstanding voting
securities, as the case may be) beneficially owns, directly
or indirectly, 20% or more of, respectively, the then
outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation
or the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in
the election of directors and (C) at least a majority of the
members of the board of directors of the corporation
resulting from such reorganization, merger or consolidation
were members of the Incumbent Board at the time of the
execution of the initial agreement providing for such
reorganization, merger or consolidation; or
(iv) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company or the
Company enters into an agreement for the sale or other
disposition of all or substantially all of the assets of the
Company, other than to a corporation with respect to which
following such sale or other disposition (A) more than 80%
of, respectively, the then outstanding shares of common
stock of such corporation and the combined voting power of
the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were
the beneficial owners, respectively, of the outstanding
Company common stock and outstanding Company voting securities
immediately prior to such sale or other disposition in
substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the
outstanding Company common stock and outstanding Company
voting securities, as the case may be, (B) no Person
(excluding the Company and any employee benefit plan or
related trust of the Company or such corporation, any
Affiliated Person and any Person beneficially owning,
immediately prior to such sale or other disposition,
directly or indirectly, 20% or more of the outstanding
Company common stock or outstanding Company voting
securities, as the case may be) beneficially owns, directly
or indirectly, 20% or more of, respectively, the then
outstanding shares of common stock of such corporation and
the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in
the election of directors and (C) at least a majority of the
members of the board of directors of such corporation were
members of the Incumbent Board at the time of the execution
of the initial agreement or action of the Board providing
for such sale or other disposition of assets of the Company.
(v) Notwithstanding the foregoing, none of the transactions
contemplated in subsections (i), (ii), (iii) or (iv) shall
constitute a Change of Control if such transaction occurs in
connection with or as a result of a transaction subject to
Rule 13e-3 promulgated under the Exchange Act as in effect
from time to time provided that executive officers of the
Company prior to such transaction are the beneficial owners
of 75% of more of the voting securities of the Company
outstanding following such transaction.
8. Assignment. Neither this Agreement nor any right or
obligation created hereunder shall be assignable or
delegated by Employee.
9. Entire Agreement. This Agreement constitutes the
entire agreement between the parties hereto pertaining to the
subject matter hereof and supersede all prior and
contemporaneous agreements and understandings of the
parties, and there are no warranties, representations or
other agreements between the parties in connection with the
subject matter hereof except as specifically set forth
herein. No supplement, modification, waiver or termination
of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. No waiver of any
of the provisions of this Agreement shall be deemed or shall
constitute a waiver or continuing waiver of any other
provision hereof.
10. Partial Invalidity. In the event one or more of the
provisions contained in this Agreement, or any portion of
any such provisions, shall for any reason be held invalid,
illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other
provision of this Agreement, or any portion of any such
provision, but the Agreement shall be construed as if such
invalid, illegal or unenforceable provision, or
portion thereof, had never been contained herein.
11. Governing Law. This Agreement and all rights,
obligations and liabilities arising hereunder shall be
construed and enforced in accordance with the laws of the
State of Indiana.
12. Titles and Headings. Titles and headings to provisions
of this Agreement are for the purpose of reference only and
shall in no way limit, define or otherwise affect the
interpretation or construction of such provisions.
13. Binding Agreement. The rights and obligations of the
Company under this Agreement shall inure to the benefit of
and shall be binding on the successors and assigns of the
Company.
14. No Third Parties. The provisions of this Agreement
shall not inure to the benefit of any third party who is not
a signatory hereto except as otherwise provided for in
IN WITNESS WHEREOF, the parties have hereto executed
this Agreement as of the day and year first written above.
QUALITY DINING, INC.
/s/_____________________
By: John C. Firth
Its: Executive Vice President and General Counsel
EMPLOYEE
/s/______________
Robert C. Hudson
EXHIBIT 10-AH
AGREEMENT FOR PURCHASE OF OPTION
THIS AGREEMENT made to be effective as of the 1st day of
June, 1999 by and between QUALITY DINING, INC. (the
"Company") and DANIEL B. FITZPATRICK (the "Executive").
Statement of Facts
1. The Company has previously
granted the Executive certain options (the "Options") to
purchase the Company's common stock pursuant to the
Company's 1993 Stock Option and Incentive Plan (the "Plan"),
which options are identified on Schedule A hereto.
2. The Company desires to cancel
the Options by purchasing them from the Executive and the
Executive is willing to surrender the Options all on the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
conditions contained herein, the parties hereto agree as
follows:
1. Surrender. The Executive hereby surrenders the
Options to the Company and releases any and all of
Executive's right, title and interest in and to the Options, whether
vested or unvested, and any and all rights, privileges and
appurtenances thereto.
2. Purchase Price. The Company shall pay to the
Executive, the product of the number of options surrendered
times $.15, namely $23,698.50. The Company and the Executive
acknowledge that the Purchase Price set forth herein equals
the fair market value of the Options on the date hereof.
3. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of
Indiana.
4. Entire Agreement. This Agreement constitutes
the entire agreement of the parties with respect to the
subject matter hereof and may not be amended or modified
otherwise than by a written agreement executed by the
parties hereto.
5. Withholding. The Company may withhold from the
amount payable under Section 2 above, such federal, state or
local taxes as shall be required to be withheld pursuant to
any applicable law or regulation.
IN WITNESS WHEREOF, the Executive and the Company have each
caused this Agreement to be executed as of the day and
year first above written.
"Company"
QUALITY DINING, INC.
/s/_________________
By: John C. Firth
Its: Executive Vice President and General Counsel
"Executive" /s/_______________
Daniel B. Fitzpatrick
SCHEDULE A
Daniel B. Fitzpatrick
Grant Date Options Granted
- ---------- ----------------
12/27/96 40,440
12/29/95 17,550
5/30/96 100,000
-------
TOTAL 157,990
EXHIBIT 10-AI
AGREEMENT FOR PURCHASE OF OPTIONS
THIS AGREEMENT made to be effective as of the 1st day of
June, 1999 by and between QUALITY DINING, INC. (the
"Company") and JOHN C. FIRTH (the "Executive").
Statement of Facts
1. The Company has previously granted the Executive
certain options (the "Options") to purchase the Company's
common stock pursuant to the Company's 1993 Stock Option and
Incentive Plan (the "Plan"), which options are identified on
Schedule A hereto.
2. The Company desires to cancel the Options by purchasing
them from the Executive and the Executive is willing to
surrender the Options all on the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
conditions contained herein, the parties hereto agree as
follows:
1. Surrender. The Executive hereby surrenders the
Options to the Company and releases any and all of
Executive's right, title and interest in and to the Options,
whether vested or unvested, and any and all rights,
privileges and appurtenances thereto.
2. Purchase Price. The Company shall pay to the
Executive, the product of the number of options surrendered
times $.15, namely $5,250.00. The Company and the Executive
acknowledge that the Purchase Price set forth herein equals
the fair market value of the Options on the date hereof.
3. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of
Indiana.
4. Entire Agreement. This Agreement constitutes the
entire agreement of the parties with respect to the subject
matter hereof and may not be amended or modified otherwise
than by a written agreement executed by the parties hereto.
5. Withholding. The Company may withhold from the amount
payable under Section 2 above, such federal, state or local
taxes as shall be required to be withheld pursuant to any
applicable law or regulation.
IN WITNESS WHEREOF, the Executive and
the Company have each caused this Agreement to be executed
as of the day and year first above written.
"Company"
QUALITY DINING, INC.
/s/__________________
By: Daniel B. Fitzpatrick
Its: President "Executive"
/s/_________________________
John C. Firth
SCHEDULE A
John C. Firth
Grant Date Options Granted
- ---------- ---------------
12/27/96 15,000
6/24/96 20,000
______
TOTAL 35,000
EXHIBIT-10AJ
AGREEMENT FOR PURCHASE OF OPTIONS
THIS AGREEMENT made to be effective as of the 1st day of
June, 1999 by and between QUALITY DINING, INC. (the
"Company") and JAMES K. FITZPATRICK (the "Executive").
Statement of Facts
1. The Company has previously granted the Executive certain
options (the "Options") to purchase the Company's common
stock pursuant to the Company's 1993 Stock Option and
Incentive Plan (the "Plan"), which options are identified on
Schedule A hereto.
2. The Company desires to cancel the Options by purchasing
them from the Executive and the Executive is willing to
surrender the Options all on the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
conditions contained herein, the parties hereto agree as
follows:
1. Surrender. The Executive hereby surrenders the Options
to the Company and releases any and all of Executive's
right, title and interest in and to the Options, whether
vested or unvested, and any and all rights, privileges and
appurtenances thereto.
2. Purchase Price. The Company shall pay to the Executive,
the product of the number of options surrendered times $.15,
namely $3,175.50. The Company and the Executive acknowledge
that the Purchase Price set forth herein equals the fair
market value of the Options on the date hereof.
3. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of
Indiana.
4. Entire Agreement. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter
hereof and may not be amended or modified otherwise than by
a written agreement executed by the parties hereto.
5. Withholding. The Company may withhold from the amount
payable under Section 2 above, such federal, state or local
taxes as shall be required to be withheld pursuant to any
applicable law or regulation.
IN WITNESS WHEREOF, the Executive and the
Company have each caused this Agreement to be executed as of
the day and year first above written.
"Company"
QUALITY DINING, INC.
/s/_________________
By: John C. Firth
Its: Executive Vice President and General Counsel
"Executive"
/s/______________________
James K. Fitzpatrick
SCHEDULE A
James K. Fitzpatrick
Grant Date Options Granted
___________ _______________
12/27/96 4,670
12/29/95 6,500
5/30/96 10,000
------
TOTAL 21,170
EXHIBIT 10-AK
AGREEMENT FOR PURCHASE OF OPTIONS
THIS AGREEMENT made to be effective as of the 1st day of
June, 1999 by and between QUALITY DINING, INC. (the
"Company") and GERALD O. FITZPATRICK (the "Executive").
Statement of Facts
1. The Company has previously granted
the Executive certain options (the "Options") to purchase
the Company's common stock pursuant to the Company's 1993
Stock Option and Incentive Plan (the "Plan"), which options
are identified on Schedule A hereto.
2. The Company desires to cancel the Options by purchasing
them from the Executive and the Executive is willing to
surrender the Options all on the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
conditions contained herein, the parties hereto agree as
follows:
1. Surrender. The Executive hereby surrenders the Options
to the Company and releases any and all of Executive's
right, title and interest in and to the Options, whether
vested or unvested, and any and all rights, privileges and
appurtenances thereto.
2. Purchase Price. The Company shall pay to the
Executive, the product of the number of options surrendered
times $.15, namely $2,593.50. The Company and the Executive
acknowledge that the Purchase Price set forth herein equals
the fair market value of the Options on the date hereof.
3. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of
Indiana.
4. Entire Agreement. This Agreement constitutes the
entire agreement of the parties with respect to the subject
matter hereof and may not be amended or modified otherwise
than by a written agreement executed by the parties hereto.
5. Withholding. The Company may withhold from the amount
payable under Section 2 above, such federal, state or
local taxes as shall be required to be withheld pursuant to
any applicable law or regulation.
IN WITNESS WHEREOF, the Executive and the Company have each
caused this Agreement to be executed as of the day and year
first above written.
"Company"
QUALITY DINING,INC.
/s/________________
By: John C. Firth Its: Executive Vice President and
General Counsel
"Executive"
/s/___________________
Gerald O. Fitzpatrick
SCHEDULE A
Gerald O. Fitzpatrick
Grant Date Options Granted
12/27/96 3,980
12/29/95 5,810
5/30/96 7,500
------
TOTAL 17,290
EXHIBIT 10-AL
AGREEMENT FOR PURCHASE OF OPTIONS
THIS AGREEMENT made to be effective as of the 1st day of
June, 1999 by and between QUALITY DINING, INC. (the
"Company") and DAVID M. FINDLAY (the "Executive").
Statement of Facts
1. The Company has previously granted the Executive
certain options (the "Options") to purchase the Company's
common stock pursuant to the Company's 1993 Stock Option and
Incentive Plan (the "Plan"), which options are identified on
Schedule A hereto.
2. The Company desires to cancel the Options
by purchasing them from the Executive and the Executive is
willing to surrender the Options all on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the
mutual covenants and conditions contained herein, the
parties hereto agree as follows:
1. Surrender. The Executive hereby surrenders the Options
to the Company and releases any and all of Executive's
right, title and interest in and to the Options, whether
vested or unvested, and any and all rights, privileges and
appurtenances thereto.
2. Purchase Price. The Company shall pay to the
Executive, the product of the number of options surrendered
times $.15, namely $2,674.50. The Company and the Executive
acknowledge that the Purchase Price set forth herein equals
the fair market value of the Options on the date hereof.
3. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of Indiana.
4. Entire Agreement. This Agreement
constitutes the entire agreement of the parties with respect
to the subject matter hereof and may not be amended or
modified otherwise than by a written agreement executed by
the parties hereto.
5. Withholding. The Company may withhold from the
amount payable under Section 2 above, such federal, state or
local taxes as shall be required to be withheld pursuant to any
applicable law or regulation.
IN WITNESS WHEREOF, the Executive and the Company have each
caused this Agreement to be executed as of the day and year
first above written.
"Company"
QUALITY DINING, INC. /s/___________________
By: John C. Firth Its: Executive Vice President and
General Counsel
"Executive" /s/____________________
David M. Findlay
SCHEDULE A
David M. Findlay
Grant Date Options Granted
- ---------- ----------------
12/27/96 11,780
12/29/95 1,050
5/30/96 5,000
------
TOTAL 17,830
EXHIBIT 10-AM
AGREEMENT FOR PURCHASE OF OPTIONS THIS AGREEMENT made to be
effective as of the 1st day of June, 1999 by and between
QUALITY DINING, INC. (the "Company") and ROBERT C. HUDSON
(the "Executive").
Statement of Facts
1. The Company has previously granted the Executive
certain options (the "Options") to purchase the Company's
common stock pursuant to the Company's 1993 Stock Option and
Incentive Plan (the "Plan"), which options are identified on
Schedule A hereto.
2. The Company desires to cancel the Options by purchasing
them from the Executive and the Executive is willing to
surrender the Options all on the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
conditions contained herein, the parties hereto agree as
follows:
1. Surrender. The Executive hereby surrenders the
Options to the Company and releases any and all of
Executive's right, title and interest in and to the Options,
whether vested or unvested, and any and all rights,
privileges and appurtenances thereto.
2. Purchase Price. The Company shall pay to the
Executive, the product of the number of options surrendered
times $.15, namely $295.50. The Company and the Executive
acknowledge that the Purchase Price set forth herein equals
the fair market value of the Options on the date hereof.
3. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of
Indiana.
4. Entire Agreement. This Agreement constitutes the
entire agreement of the parties with respect to the subject
matter hereof and may not be amended or modified otherwise
than by a written agreement executed by the parties hereto.
5. Withholding. The Company may withhold from the amount
payable under Section 2 above, such federal, state or local
taxes as shall be required to be withheld pursuant to any
applicable law or regulation.
IN WITNESS WHEREOF, the Executive and the Company have each
caused this Agreement to be executed as of the day and year
first above written.
"Company"
QUALITY DINING, INC.
/s/_________________
By: John C. Firth Its: Executive Vice President and
General Counsel
"Executive"
/s/_________________
Robert C. Hudson
SCHEDULE A
Robert C .Hudson
Grant Date Options Granted
- ----------- ---------------
12/27/96 650
12/22/95 1,320
-----
TOTAL 1,970
EHIBIT 10-AN
AGREEMENT FOR PURCHASE OF OPTIONS THIS AGREEMENT made to be
effective as of the 1st day of June, 1999 by and between
QUALITY DINING, INC. (the "Company") and PATRICK J. BARRY
(the "Executive").
Statement of Facts
1. The Company has previously granted the Executive
certain options (the "Options") to purchase the Company's
common stock pursuant to the Company's 1993 Stock Option and
Incentive Plan (the "Plan"), which options are identified on
Schedule A hereto.
2. The Company desires to cancel the Options by purchasing
them from the Executive and the Executive is willing to
surrender the Options all on the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
conditions contained herein, the parties hereto agree as
follows:
1. Surrender. The Executive hereby surrenders the Options
to the Company and releases any and all of Executive's
right, title and interest in and to the Options, whether
vested or unvested, and any and all rights, privileges and appurtenances
thereto.
2. Purchase Price. The Company shall pay to the
Executive, the product of the number of options surrendered
times $.15, namely $2,250.00. The Company and the Executive
acknowledge that the Purchase Price set forth herein equals the fair
market value of the Options on the date hereof.
3. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of
Indiana.
4. Entire Agreement. This Agreement constitutes the
entire agreement of the parties with respect to the subject
matter hereof and may not be amended or modified otherwise than by a written
agreement executed by the parties hereto.
5. Withholding. The Company may withhold from the amount
payable under Section 2 above, such federal, state or local
taxes as shall be required to be withheld pursuant to any
applicable law or regulation.
IN WITNESS WHEREOF, the Executive and the Company have each
caused this Agreement to be executed as of the day and year
first above written.
"Company"
QUALITY DINING, INC.
/s/__________________
By: John C. Firth
Its: Executive Vice President and General Counsel
"Executive"
/s/__________________
Patrick J. Barry
SCHEDULE A
Patrick J. Barry
GRANT DATE OPTIONS GRANTED
- ---------- ---------------
10/22/96 15,000
EXHIBIT 10-AO
AGREEMENT FOR PURCHASE OF OPTIONS
THIS AGREEMENT made to be effective as of the 1st day of
June, 1999 by and between QUALITY DINING, INC. (the
"Company") and MARTI'N L. MIRANDA (the "Executive"). Statement of Facts
1. The Company has previously granted the
Executive certain options (the "Options") to purchase the
Company's common stock pursuant to the Company's 1993 Stock
Option and Incentive Plan (the "Plan"), which options are
identified on Schedule A hereto.
2. The Company desires to cancel the Options
by purchasing them from the Executive and the Executive is
willing to surrender the Options all on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
conditions contained herein, the parties hereto agree as
follows:
1. Surrender. The Executive hereby surrenders
the Options to the Company and releases any and all of
Executive's right, title and interest in and to the Options,
whether vested or unvested, and any and all rights,
privileges and appurtenances thereto.
2. Purchase Price. The Company shall pay to the
Executive, the product of the number of options surrendered
times $.15, namely $595.50. The Company and the Executive
acknowledge that the Purchase Price set forth herein equals
the fair market value of the Options on the date hereof.
3. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of
Indiana.
4. Entire Agreement. This Agreement constitutes the
entire agreement of the parties with respect to the subject
matter hereof and may not be amended or modified otherwise
than by a written agreement executed by the parties hereto.
5. Withholding. The Company may withhold from the amount
payable under Section 2 above, such federal, state or local
taxes as shall be required to be withheld pursuant to any
applicable law or regulation.
IN WITNESS WHEREOF, the Executive and the Company have each
caused this Agreement to be executed as of the day and year
first above written.
"Company"
QUALITY DINING, INC.
/s/_________________
By: John C. Firth Its: Executive Vice President and
General Counsel
"Executive"
/s/_________________
Marti'n L. Miranda
SCHEDULE A
Marti'n L. Miranda
Grant Date Options Granted
- ---------- ---------------
12/27/96 720
12/29/95 750
5/30/96 2,500
-----
TOTAL 3,970
EXHIBIT 10-AP
AGREEMENT FOR RESTRICTED SHARES GRANTED UNDER
QUALITY DINING, INC. 1997 STOCK OPTION AND INCENTIVE PLAN
This Agreement has been entered into as of the
1st day of June, 1999 between Quality Dining,
Inc., an Indiana corporation (the "Company")
and Daniel B. Fitzpatrick, an employee of the
Company (the "Employee"), pursuant to the
Company's 1997 Stock Option and Incentive Plan
(the "Plan") and evidences and sets forth
certain terms of the grant to the Employee
pursuant to the Plan of an aggregate of 20,000
Restricted Shares as of the date of this
Agreement. Capitalized terms used herein and
not defined herein have the meanings set forth
in the Plan.
Section 1. Receipt of Plan; Restricted Shares and this Agreement Subject to
Plan. The Employee acknowledges receipt of a
copy of the Plan. This Agreement and the
Restricted Shares granted to Employee are
subject to the terms and conditions of the
Plan, all of which are incorporated herein by
reference.
Section 2. Restricted Period; Lapse of
Restrictions and Vesting. The Restricted
Shares granted in this Agreement shall vest
seven (7) years from the date of this
Agreement. Notwithstanding the foregoing, of
the Restricted Shares granted to the Employee,
the restrictions on the specified portions
shall lapse and such portion of the shares
shall become fully vested and not subject to
forfeiture to the Company as follows:
(a) 6,667 Restricted Shares shall vest when
the Market Value of the Company's Common Stock
for ten out of 20 consecutive trading days is
at least $4.00.
(b) 6,667 Restricted Shares shall vest when
the Market Value of the Company's Common Stock
for ten out of 20 consecutive trading days is
at least $5.00.
(c) 6,666 Restricted Shares shall vest when
the Market Value of the Company's Common Stock
for ten out of 20 consecutive trading days is
at least $7.00.
(d) All of the Restricted Shares granted to
Employee under this Agreement shall immediately
vest upon a Change in Control, whether or not
the event constituting the Change in Control
was approved in advance by the Board.
Section 3. Certificates for Shares. Each
certificate representing the Restricted Shares
granted to the Employee shall be registered in
the name of the Employee and deposited by the
Employee, together with a stock power endorsed
in blank, with the Company and shall bear the
following (or a similar) legend:
"The transferability of this certificate and
the shares of stock represented hereby are
subject to the terms and conditions (including
forfeiture) contained in the 1997 Stock Option
and Incentive Plan of Quality Dining, Inc. and
an Agreement for Restricted Shares entered into
between the registered owner and Quality
Dining, Inc. Copies of such Plan and Agreement
are on file in the office of the Secretary of
Quality Dining, Inc." Upon the lapse of restrictions on any portion
of such Restricted Shares, the Company shall
promptly deliver a stock certificate for such
portion of shares to the Employee.
Section 4. Transferability. Until such time
as the restrictions on the Restricted Shares
granted to Employee have lapsed and such shares
are no longer subject to forfeiture to the
Company, the Employee shall not sell, assign,
transfer, pledge or otherwise encumber (a
"Transfer") such Restricted Shares. In
addition, if any portion of the Restricted
Shares vest pursuant to the accelerated vesting
provisions of Section 2 above, the
Employee shall not Transfer such portion of the
shares for a period of one year from the date
of accelerated vesting; provided, however, that
this lockup period shall immediately terminate
upon the death of employee or upon the
occurrence of any event constituting a Change
in Control under the Plan, whether or not the
Board has approved such occurrence.
Section 5. Termination. If a participant
ceases Continuous Service for any reason,
including death, before the Restricted Shares
have vested, the Participant's rights with
respect to the unvested portion of the
Restricted Shares shall terminate and be
returned to the Company.
Section 6. 83(b) Election. The Employee
agrees not to make any election under Section
83(b) of the Code with respect to any
Restricted Shares granted under this Agreement.
IN WITNESS WHEREOF, this Agreement has been
executed by the undersigned thereunto duly
authorized as of the date first above written.
QUALITY DINING, INC.
/s/___________________________________
By: John C. Firth
Its: Executive Vice President and
General Counsel
/s/___________________________________
Daniel B. Fitzpatrick
EXHIBIT 10-AQ
AGREEMENT FOR RESTRICTED SHARES GRANTED UNDER
QUALITY DINING, INC. 1997 STOCK OPTION AND
INCENTIVE PLAN
This Agreement has been entered into as of the
1st day of June, 1999 between Quality Dining,
Inc., an Indiana corporation (the "Company")
and John C. Firth, an employee of the Company
(the "Employee"), pursuant to the Company's
1997 Stock Option and Incentive Plan (the
"Plan") and evidences and sets forth certain
terms of the grant to the Employee pursuant to
the Plan of an aggregate of 18,668 Restricted
Shares as of the date of this Agreement.
Capitalized terms used herein and not defined
herein have the meanings set forth in the Plan.
Section 1. Receipt of Plan; Restricted Shares
and this Agreement Subject to Plan. The
Employee acknowledges receipt of a copy
of the Plan. This Agreement and the Restricted
Shares granted to Employee are subject to the
terms and conditions of the Plan, all of which
are incorporated herein by reference.
Section 2. Restricted Period; Lapse of
Restrictions and Vesting. The Restricted
Shares granted in this Agreement shall vest
seven (7) years from the date of this
Agreement. Notwithstanding the foregoing, of
the Restricted Shares granted to the Employee,
the restrictions on the specified portions
shall lapse and such portion of the shares
shall become fully vested and not subject to
forfeiture to the Company as follows:
(a) 6,223 Restricted Shares shall vest when
the Market Value of the Company's Common Stock
for ten out of 20 consecutive trading days is
at least $4.00.
(b) 6,223 Restricted Shares shall vest when
the Market Value of the Company's Common Stock
for ten out of 20 consecutive trading days is
at least $5.00.
(c) 6,222 Restricted Shares shall vest when
the Market Value of the Company's Common Stock
for ten out of 20 consecutive trading days is
at least $7.00.
(d) All of the Restricted Shares granted to
Employee under this Agreement shall immediately
vest upon a Change in Control, whether or not
the event constituting the Change in Control
was approved in advance by the Board.
Section 3. Certificates for Shares. Each
certificate representing the Restricted Shares
granted to the Employee shall be registered in
the name of the Employee and deposited by the
Employee, together with a stock power endorsed
in blank, with the Company and shall bear the
following (or a similar) legend:
"The transferability of this certificate and
the shares of stock represented hereby are
subject to the terms and conditions (including
forfeiture) contained in the 1997 Stock Option
and Incentive Plan of Quality Dining, Inc. and
an Agreement for Restricted Shares entered into
between the registered owner and Quality
Dining, Inc. Copies of such Plan and Agreement
are on file in the office of the Secretary of
Quality Dining, Inc." Upon the lapse of
restrictions on any portion of such Restricted
Shares, the Company shall promptly deliver a
stock certificate for such portion of shares to
the Employee.
Section 4. Transferability. Until such time
as the restrictions on the Restricted Shares
granted to Employee have lapsed and such shares
are no longer subject to forfeiture to the
Company, the Employee shall not sell, assign,
transfer, pledge or otherwise encumber (a
"Transfer") such Restricted Shares. In
addition, if any portion of the Restricted
Shares vest pursuant to the accelerated vesting
provisions of Section 2 above, the Employee
shall not Transfer such portion of the shares
for a period of one year from the date of
accelerated vesting; provided, however, that
this lockup period shall immediately terminate
upon the death of employee or upon the
occurrence of any event constituting a Change
in Control under the Plan, whether or not the
Board has approved such occurrence.
Section 5. Termination. If a participant
ceases Continuous Service for any reason,
including death, before the Restricted Shares
have vested, the Participant's rights with
respect to the unvested portion of the
Restricted Shares shall terminate and be
returned to the Company.
Section 6. 83(b) Election. The Employee
agrees not to make any election under Section
83(b) of the Code with respect to any
Restricted Shares granted under this Agreement.
IN WITNESS WHEREOF, this Agreement has been
executed by the undersigned thereunto duly
authorized as of the date first above written.
QUALITY DINING, INC.
/s/___________________________________
By: Daniel B. Fitzpatrick Its: President
/s/_____________________________________
John C. Firth
EXHIBIT 10-AR
AGREEMENT FOR RESTRICTED SHARES GRANTED UNDER
QUALITY DINING, INC. 1997 STOCK OPTION AND
INCENTIVE PLAN
This Agreement has been entered into as of the
1st day of June, 1999 between Quality Dining,
Inc., an Indiana corporation (the "Company")
and James K. Fitzpatrick, an employee of the
Company (the "Employee"), pursuant to the
Company's 1997 Stock Option and Incentive Plan
(the "Plan") and evidences and sets forth
certain terms of the grant to the Employee
pursuant to the Plan of an aggregate of 14,652
Restricted Shares as of the date of this
Agreement. Capitalized terms used herein and
not defined herein have the meanings set forth
in the Plan.
Section 1. Receipt of Plan; Restricted Shares
and this Agreement Subject to Plan. The
Employee acknowledges receipt of a copy of the
Plan. This Agreement and the Restricted Shares
granted to Employee are subject to the terms
and conditions of the Plan, all of which are
incorporated herein by reference.
Section 2. Restricted Period; Lapse of
Restrictions and Vesting. The Restricted
Shares granted in this Agreement shall vest
seven (7) years from the date of this
Agreement. Notwithstanding the foregoing, of
the Restricted Shares granted to the Employee,
the restrictions on the specified portions
shall lapse and such portion of the shares
shall become fully vested and not subject to
forfeiture to the Company as follows:
(a) 4,884 Restricted Shares shall vest when
the Market Value of the Company's Common Stock
for ten out of 20 consecutive trading days is
at least $4.00.
(b) 4,884 Restricted Shares shall vest when
the Market Value of the Company's Common Stock
for ten out of 20 consecutive trading days is
at least $5.00.
(c) 4,884 Restricted Shares shall vest when
the Market Value of the Company's Common Stock
for ten out of 20 consecutive trading days is
at least $7.00.
(d) All of the Restricted Shares granted to
Employee under this Agreement shall immediately
vest upon a Change in Control, whether or not
the event constituting the Change in Control
was approved in advance by the Board.
Section 3. Certificates for Shares. Each
certificate representing the Restricted Shares
granted to the Employee shall be registered in
the name of the Employee and deposited by the
Employee, together with a stock power endorsed
in blank, with the Company and shall bear the
following (or a similar) legend:
"The transferability of this certificate and
the shares of stock represented hereby are
subject to the terms and conditions (including
forfeiture) contained in the 1997 Stock Option
and Incentive Plan of Quality Dining, Inc. and
an Agreement for Restricted Shares entered into
between the registered owner and Quality
Dining, Inc. Copies of such Plan and Agreement
are on file in the office of the Secretary of
Quality Dining, Inc." Upon the lapse of
restrictions on any portion of such Restricted
Shares, the Company shall promptly deliver a
stock certificate for such portion of shares to
the Employee.
Section 4. Transferability. Until such time
as the restrictions on the Restricted Shares
granted to Employee have lapsed and such shares
are no longer subject to forfeiture to the
Company, the Employee shall not sell, assign,
transfer, pledge or otherwise encumber (a
"Transfer") such Restricted Shares. In
addition, if any portion of the Restricted
Shares vest pursuant to the accelerated vesting
provisions of Section 2 above, the Employee
shall not Transfer such portion of the shares
for a period of one year from the date of
accelerated vesting; provided, however, that
this lockup period shall immediately terminate
upon the death of employee or upon the
occurrence of any event constituting a Change
in Control under the Plan, whether or not the
Board has approved such occurrence.
Section 5. Termination. If a participant
ceases Continuous Service for any reason,
including death, before the Restricted Shares
have vested, the Participant's rights with
respect to the unvested portion of the
Restricted Shares shall terminate and be
returned to the Company.
Section 6. 83(b) Election. The Employee
agrees not to make any election under Section
83(b) of the Code with respect to any
Restricted Shares granted under this Agreement.
IN WITNESS WHEREOF, this Agreement has been
executed by the undersigned thereunto duly
authorized as of the date first above written.
QUALITY DINING, INC.
/s/___________________________________
By: John C. Firth Its: Executive Vice
President and General Counsel
/s/___________________________________
James K. Fitzpatrick
10-AS
AGREEMENT FOR RESTRICTED SHARES GRANTED UNDER
QUALITY DINING, INC. 1997 STOCK OPTION AND
INCENTIVE PLAN
This Agreement has been entered into as of the
1st day of June, 1999 between Quality Dining,
Inc., an Indiana corporation (the "Company")
and Gerald O. Fitzpatrick, an employee of the
Company (the "Employee"), pursuant to the
Company's 1997 Stock Option and Incentive Plan
(the "Plan") and evidences and sets forth
certain terms of the grant to the Employee
pursuant to the Plan of an aggregate of 14,366
Restricted Shares as of the date of this
Agreement. Capitalized terms used herein and
not defined herein have the meanings set forth
in the Plan.
Section 1. Receipt of Plan; Restricted Shares
and this Agreement Subject to Plan. The
Employee acknowledges receipt of a copy of the
Plan. This Agreement and the Restricted Shares
granted to Employee are subject to the terms
and conditions of the Plan, all of which are
incorporated herein by reference.
Section 2. Restricted Period; Lapse of
Restrictions and Vesting. The Restricted
Shares granted in this Agreement shall vest
seven (7) years from the date of this
Agreement. Notwithstanding the foregoing, of
the Restricted Shares granted to the Employee,
the restrictions on the specified portions
shall lapse and such portion of the shares
shall become fully vested and not subject to
forfeiture to the Company as follows:
(a) 4,789 Restricted Shares shall vest when
the Market Value of the Company's Common Stock
for ten out of 20 consecutive trading days is
at least $4.00.
(b) 4,789 Restricted Shares shall vest when
the Market Value of the Company's Common Stock
for ten out of 20 consecutive trading days is
at least $5.00.
(c) 4,788 Restricted Shares shall vest when
the Market Value of the Company's Common Stock
for ten out of 20 consecutive trading days is
at least $7.00.
(d) All of the Restricted Shares granted to
Employee under this Agreement shall immediately
vest upon a Change in Control, whether or not
the event constituting the Change in Control
was approved in advance by the Board.
Section 3. Certificates for Shares. Each
certificate representing the Restricted Shares
granted to the Employee shall be registered in
the name of the Employee and deposited by the
Employee, together with a stock power endorsed
in blank, with the Company and shall bear the
following (or a similar) legend:
"The transferability of this certificate and
the shares of stock represented hereby are
subject to the terms and conditions (including
forfeiture) contained in the 1997 Stock Option
and Incentive Plan of Quality Dining, Inc. and
an Agreement for Restricted Shares entered into
between the registered owner and Quality
Dining, Inc. Copies of such Plan and Agreement
are on file in the office of the Secretary of
Quality Dining, Inc." Upon the lapse of
restrictions on any portion of such Restricted
Shares, the Company shall promptly deliver a
stock certificate for such portion of shares to
the Employee.
Section 4. Transferability. Until such time
as the restrictions on the Restricted Shares
granted to Employee have lapsed and such shares
are no longer subject to forfeiture to the
Company, the Employee shall not sell, assign,
transfer, pledge or otherwise encumber (a
"Transfer") such Restricted Shares. In
addition, if any portion of the Restricted
Shares vest pursuant to the accelerated vesting
provisions of Section 2 above, the Employee
shall not Transfer such portion of the shares
for a period of one year from the date of
accelerated vesting; provided, however, that
this lockup period shall immediately terminate
upon the death of employee or upon the
occurrence of any event constituting a Change
in Control under the Plan, whether or not the
Board has approved such occurrence.
Section 5. Termination. If a participant
ceases Continuous Service for any reason,
including death, before the Restricted Shares
have vested, the Participant's rights with
respect to the unvested portion of the
Restricted Shares shall terminate and be
returned to the Company.
Section 6. 83(b) Election. The Employee
agrees not to make any election under Section
83(b) of the Code with respect to any
Restricted Shares granted under this Agreement.
IN WITNESS WHEREOF, this Agreement has been
executed by the undersigned thereunto duly
authorized as of the date first above written.
QUALITY DINING, INC.
/s/___________________________________
By: John C. Firth
Its: Executive Vice President and
General Counsel
/s/___________________________________
Gerald O. Fitzpatrick
EXHIBIT 10-AT
AGREEMENT FOR RESTRICTED SHARES
GRANTED UNDER QUALITY DINING, INC.
1997 STOCK OPTION AND INCENTIVE PLAN
This Agreement has been entered into as of the
1st day of June, 1999 between Quality Dining,
Inc., an Indiana corporation (the "Company")
and David M. Findlay, an employee of the
Company (the "Employee"), pursuant to the
Company's 1997 Stock Option and Incentive Plan
(the "Plan") and evidences and sets forth
certain terms of the grant to the Employee
pursuant to the Plan of an aggregate of 9,505
Restricted Shares as of the date of this
Agreement. Capitalized terms used herein and
not defined herein have the meanings set forth
in the Plan.
Section 1. Receipt of Plan; Restricted Shares
and this Agreement Subject to Plan. The
Employee acknowledges receipt of a copy of the
Plan. This Agreement and the Restricted Shares
granted to Employee are subject to the terms
and conditions of the Plan, all of which are
incorporated herein by reference.
Section 2. Restricted Period; Lapse of
Restrictions and Vesting. The Restricted
Shares granted in this Agreement shall vest
seven (7) years from the date of this
Agreement. Notwithstanding the foregoing, of
the Restricted Shares granted to the Employee,
the restrictions on the specified portions
shall lapse and such portion of the shares
shall become fully vested and not subject to
forfeiture to the Company as
follows:
(a) 3,168 Restricted Shares shall vest when
the Market Value of the Company's Common Stock
for ten out of 20 consecutive trading days is
at least $4.00.
(b) 3,168 Restricted Shares shall vest when
the Market Value of the Company's Common Stock
for ten out of 20 consecutive trading days is
at least $5.00.
(c) 3,169 Restricted Shares shall vest when
the Market Value of the Company's Common Stock
for ten out of 20 consecutive trading days is
at least $7.00.
(d) All of the Restricted Shares granted to
Employee under this Agreement shall immediately
vest upon a Change in Control, whether or not
the event constituting the Change in Control
was approved in advance by the Board.
Section 3. Certificates for Shares. Each
certificate representing the Restricted Shares
granted to the Employee shall be registered in
the name of the Employee and deposited by the
Employee, together with a stock power endorsed
in blank, with the Company and shall bear the
following (or a similar) legend:
"The transferability of this certificate and
the shares of stock represented hereby are
subject to the terms and conditions (including
forfeiture) contained in the 1997 Stock Option
and Incentive Plan of Quality Dining, Inc. and
an Agreement for Restricted Shares entered into
between the registered owner and Quality
Dining, Inc. Copies of such Plan and Agreement
are on file in the office of the Secretary of
Quality Dining, Inc." Upon the lapse of
restrictions on any portion of such Restricted
Shares, the Company shall promptly deliver a
stock certificate for such portion of shares to
the Employee.
Section 4. Transferability. Until such time
as the restrictions on the Restricted Shares
granted to Employee have lapsed and such shares
are no longer subject to forfeiture to the
Company, the Employee shall not sell, assign,
transfer, pledge or otherwise encumber (a
"Transfer") such Restricted Shares. In
addition, if any portion of the Restricted
Shares vest pursuant to the accelerated vesting
provisions of Section 2 above, the Employee
shall not Transfer such portion of the shares
for a period of one year from the date of
accelerated vesting; provided, however, that
this lockup period shall immediately terminate
upon the death of employee or upon the
occurrence of any event constituting a Change
in Control under the Plan, whether or not the
Board has approved such occurrence.
Section 5. Termination. If a participant
ceases Continuous Service for any reason,
including death, before the Restricted Shares
have vested, the Participant's rights with
respect to the unvested portion of the
Restricted Shares shall terminate and be
returned to the Company.
Section 6. 83(b) Election. The Employee
agrees not to make any election under Section
83(b) of the Code with respect to any
Restricted Shares granted under this Agreement.
IN WITNESS WHEREOF, this Agreement has been
executed by the undersigned thereunto duly
authorized as of the date first above written.
QUALITY DINING, INC.
/s/___________________________________
By: John C. Firth
Its: Executive Vice President and General
Counsel /s/__________________________________
David M. Findlay
EXHIBIT -AU
AGREEMENT FOR RESTRICTED SHARES GRANTED UNDER
QUALITY DINING, INC. 1997 STOCK OPTION AND
INCENTIVE PLAN
This Agreement has been entered into as of the
1st day of June, 1999 between Quality Dining,
Inc., an Indiana corporation (the "Company")
and Robert C. Hudson, an employee of the
Company (the "Employee"), pursuant to the
Company's 1997 Stock Option and Incentive Plan
(the "Plan") and evidences and sets forth
certain terms of the grant to the Employee
pursuant to the Plan of an aggregate of 7,290
Restricted Shares as of the date of this
Agreement. Capitalized terms used herein and
not defined herein have the meanings set forth
in the Plan.
Section 1. Receipt of Plan; Restricted Shares
and this Agreement Subject to Plan. The
Employee acknowledges receipt of a copy of the
Plan. This Agreement and the Restricted Shares
granted to Employee are subject to the terms
and conditions of the Plan, all of which are
incorporated herein by reference.
Section 2. Restricted Period; Lapse of
Restrictions and Vesting. The Restricted
Shares granted in this Agreement shall vest
seven (7) years from the date of this
Agreement. Notwithstanding the foregoing, of
the Restricted Shares granted to the Employee,
the restrictions on the specified portions
shall lapse and such portion of the shares
shall become fully vested and not subject to
forfeiture to the Company as follows:
(a) 2,430 Restricted Shares shall vest when
the Market Value of the Company's Common Stock
for ten out of 20 consecutive trading days is
at least $4.00.
(b) 2,430 Restricted Shares shall vest when
the Market Value of the Company's Common Stock
for ten out of 20 consecutive trading days is
at least $5.00.
(c) 2,430 Restricted Shares shall vest when
the Market Value of the Company's Common Stock
for ten out of 20 consecutive trading days is
at least $7.00.
(d) All of the Restricted Shares granted to
Employee under this Agreement shall immediately
vest upon a Change in Control, whether or not
the event constituting the Change in Control
was approved in advance by the Board.
Section 3. Certificates for Shares. Each
certificate representing the Restricted Shares
granted to the Employee shall be registered in
the name of the Employee and deposited by the
Employee, together with a stock power endorsed
in blank, with the Company and shall bear the
following (or a similar) legend:
"The transferability of this certificate and
the shares of stock represented hereby are
subject to the terms and conditions (including
forfeiture) contained in the 1997 Stock Option
and Incentive Plan of Quality Dining, Inc. and
an Agreement for Restricted Shares entered into
between the registered owner and Quality
Dining, Inc. Copies of such Plan and Agreement
are on file in the office of the Secretary of
Quality Dining, Inc." Upon the lapse of
restrictions on any portion of such Restricted
Shares, the Company shall promptly deliver a
stock certificate for such portion of shares to
the Employee.
Section 4. Transferability. Until such time
as the restrictions on the Restricted Shares
granted to Employee have lapsed and such shares
are no longer subject to forfeiture to the
Company, the Employee shall not sell, assign,
transfer, pledge or otherwise encumber (a
"Transfer") such Restricted Shares. In
addition, if any portion of the Restricted
Shares vest pursuant to the accelerated vesting
provisions of Section 2 above, the Employee
shall not Transfer such portion of the shares
for a period of one year from the date of
accelerated vesting; provided, however, that
this lockup period shall immediately terminate
upon the death of employee or upon the
occurrence of any event constituting a Change
in Control under the Plan, whether or not the
Board has approved such occurrence.
Section 5. Termination. If a participant
ceases Continuous Service for any reason,
including death, before the Restricted Shares
have vested, the Participant's rights with
respect to the unvested portion of the
Restricted Shares shall terminate and be
returned to the Company.
Section 6. 83(b) Election. The Employee
agrees not to make any election under Section
83(b) of the Code with respect to any
Restricted Shares granted under this Agreement.
IN WITNESS WHEREOF, this Agreement has been
executed by the undersigned thereunto duly
authorized as of the date first above
written.
QUALITY DINING, INC.
/s/___________________________________
By: John C. Firth Its: Executive Vice
President and General Counsel
/s/___________________________________
Robert C. Hudson
EXHIBIT-AV
AGREEMENT FOR RESTRICTED SHARES GRANTED UNDER
QUALITY DINING, INC. 1997 STOCK OPTION AND
INCENTIVE PLAN
This Agreement has been entered into as of the
1st day of June, 1999 between Quality Dining,
Inc., an Indiana corporation (the "Company")
and Patrick J. Barry, an employee of the
Company (the "Employee"), pursuant to the
Company's 1997 Stock Option and Incentive Plan
(the "Plan") and evidences and sets forth
certain terms of the grant to the Employee
pursuant to the Plan of an aggregate of 14,080
Restricted Shares as of the date of this
Agreement. Capitalized terms used herein and
not defined herein have the meanings set forth
in the Plan.
Section 1. Receipt of Plan; Restricted Shares
and this Agreement Subject to Plan. The
Employee acknowledges receipt of a copy of the
Plan. This Agreement and the Restricted Shares
granted to Employee are subject to the terms
and conditions of the Plan, all of which are
incorporated herein by reference.
Section 2. Restricted Period; Lapse of
Restrictions and Vesting. The Restricted
Shares granted in this Agreement shall vest
seven (7) years from the date of this
Agreement. Notwithstanding the foregoing, of
the Restricted Shares granted to the Employee,
the restrictions on the specified portions
shall lapse and such portion of the shares
shall become fully vested and not subject to
forfeiture to the Company as follows:
(a) 4,693 Restricted Shares shall vest when
the Market Value of the Company's Common Stock
for ten out of 20 consecutive trading days is
at least $4.00.
(b) 4,693 Restricted Shares shall vest when
the Market Value of the Company's Common Stock
for ten out of 20 consecutive trading days is
at least $5.00.
(c) 4,694 Restricted Shares shall vest when
the Market Value of the Company's Common Stock
for ten out of 20 consecutive trading days is
at least $7.00.
(d) All of the Restricted Shares granted to
Employee under this Agreement shall immediately
vest upon a Change in Control, whether or not
the event constituting the Change in Control
was approved in advance by the Board.
Section 3. Certificates for Shares. Each
certificate representing the Restricted Shares
granted to the Employee shall be registered in
the name of the Employee and
deposited by the Employee, together with a
stock power endorsed in blank, with the Company
and shall bear the following (or a similar)
legend: "The transferability of this
certificate and the shares of stock represented
hereby are subject to the terms and conditions
(including forfeiture) contained in the 1997
Stock Option and Incentive Plan of Quality
Dining, Inc. and an Agreement for Restricted
Shares entered into between the registered
owner and Quality Dining, Inc. Copies of such
Plan and Agreement are on file in the office of
the Secretary of Quality Dining, Inc."
Upon the lapse of restrictions on any portion
of such Restricted Shares, the Company shall
promptly deliver a stock certificate for such
portion of shares to the Employee.
Section 4. Transferability. Until such time
as the restrictions on the Restricted Shares
granted to Employee have lapsed and such shares
are no longer subject to forfeiture to the
Company, the Employee shall not sell, assign,
transfer, pledge or otherwise encumber (a
"Transfer") such Restricted Shares. In
addition, if any portion of the Restricted
Shares vest pursuant to the accelerated vesting
provisions of Section 2 above, the Employee
shall not Transfer such portion of the shares
for a period of one year from the date of
accelerated vesting; provided, however, that
this lockup period shall immediately terminate
upon the death of employee or upon the
occurrence of any event constituting a Change
in Control under the Plan, whether or not the
Board has approved such occurrence.
Section 5. Termination. If a participant
ceases Continuous Service for any reason,
including death, before the Restricted Shares
have vested, the Participant's rights with
respect to the unvested portion of the
Restricted Shares shall terminate and be
returned to the Company.
Section 6. 83(b) Election. The Employee
agrees not to make any election under Section
83(b) of the Code with respect to any
Restricted Shares granted under this Agreement.
IN WITNESS WHEREOF, this Agreement has been
executed by the undersigned thereunto duly
authorized as of the date first above written.
QUALITY DINING, INC.
/s/___________________________________
By: John C. Firth
Its: Executive Vice President and General
Counsel
/s/___________________________________
Patrick J. Barry
EXHIBIT 10-AW
AGREEMENT FOR RESTRICTED SHARES GRANTED UNDER
QUALITY DINING, INC. 1997 STOCK OPTION AND
INCENTIVE PLAN
This Agreement has been entered into as of the
1st day of June, 1999 between Quality Dining,
Inc., an Indiana corporation (the "Company")
and Marti'n L. Miranda, an employee of the
Company (the "Employee"), pursuant to the
Company's 1997 Stock Option and Incentive Plan
(the "Plan") and evidences and sets forth
certain terms of the grant to the Employee
pursuant to the Plan of an aggregate of 4,553
Restricted Shares as of the date of this
Agreement. Capitalized terms used herein and
not defined herein have the meanings set forth
in the Plan.
Section 1. Receipt of Plan; Restricted Shares
and this Agreement Subject to Plan. The
Employee acknowledges receipt of a copy of the
Plan. This Agreement and the Restricted Shares
granted to Employee are subject to the terms
and conditions of the Plan, all of which are
incorporated herein by reference.
Section 2. Restricted Period; Lapse of
Restrictions and Vesting. The Restricted
Shares granted in this Agreement shall vest
seven (7) years from the date of this
Agreement. Notwithstanding the foregoing, of
the Restricted Shares granted to the
Employee, the restrictions on the specified
portions shall lapse and such portion of the
shares shall become fully vested and not
subject to forfeiture to the Company as
follows:
(a) 1,518 Restricted Shares shall vest when
the Market Value of the Company's Common Stock
for ten out of 20 consecutive trading days is
at least $4.00.
(b) 1,518 Restricted Shares shall vest when
the Market Value of the Company's Common Stock
for ten out of 20 consecutive trading days is
at least $5.00.
(c) 1,517 Restricted Shares shall
vest when the Market Value of the Company's
Common Stock for ten out of 20 consecutive
trading days is at least $7.00.
(d) All of the Restricted Shares granted to
Employee under this Agreement shall immediately
vest upon a Change in Control, whether or not
the event constituting the Change in Control
was approved in advance by the Board.
Section 3. Certificates for Shares. Each
certificate representing the Restricted Shares
granted to the Employee shall be registered in
the name of the Employee and deposited by the
Employee, together with a stock power endorsed
in blank, with the Company and shall bear the
following (or a similar) legend:
"The transferability of this certificate and
the shares of stock represented hereby are
subject to the terms and conditions (including
forfeiture) contained in the 1997 Stock Option
and Incentive Plan of Quality Dining, Inc. and
an Agreement for Restricted Shares entered into
between the registered owner and Quality
Dining, Inc. Copies of such Plan and Agreement
are on file in the office of the Secretary of
Quality Dining, Inc." Upon the lapse of
restrictions on any
portion of such Restricted Shares, the Company
shall promptly deliver a stock certificate for
such portion of shares to the Employee.
Section 4. Transferability. Until such time
as the restrictions on the Restricted Shares granted
to Employee have lapsed and such shares are no
longer subject to forfeiture to the Company,
the Employee shall not sell, assign, transfer,
pledge or otherwise encumber (a "Transfer")
such Restricted Shares. In addition, if any
portion of the Restricted Shares vest pursuant
to the accelerated vesting provisions of
Section 2 above, the Employee shall not
Transfer such portion of the shares for a
period of one year from the date of accelerated
vesting; provided, however, that this lockup period shall
immediately terminate upon the death of
employee or upon the occurrence of any event
constituting a Change in Control under the
Plan, whether or not the Board has approved
such occurrence.
Section 5. Termination. If a participant
ceases Continuous Service
for any reason, including death, before the
Restricted Shares have vested, the
Participant's rights with respect to the
unvested portion of the Restricted Shares shall
terminate and be returned to the Company.
Section 6. 83(b) Election. The Employee
agrees not to make any election under Section
83(b) of the Code with respect to any
Restricted Shares granted under this Agreement.
IN WITNESS WHEREOF, this Agreement has been
executed by the undersigned thereunto duly
authorized as of the date first above written.
QUALITY DINING, INC.
/s/___________________________________
By: John C. Firth Its: Executive Vice President and
General Counsel
/s/___________________________________
Martin' L. Miranda
EXHIBIT 10-AX
CONSULTING AND RESIGNATION AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement") is
made to be effective as of the 13th day of August, 1999,
by and between William R. Schonsheck ("Consultant") and Quality
Dining, Inc., an Indiana corporation ("Company").
Recitals
----------
1. Consultant has been employed by the
Company pursuant to an Employment Agreement dated as of
August 14, 1995 (the "Employment Agreement") the term of
which expires on the effective date hereof.
2. Consultant desires to resign his employment with the
Company upon the effective date of this Agreement.
3. Consultant is also a party to a NonCompetition
Agreement with the Company dated as of August 14,
1995 ("NonCompetition Agreement") the term of which expires
on the date hereof.
4. Consultant is, and will continue to be,
knowledgeable concerning the Company's business and through
years of experience has gained valuable knowledge and
expertise in the Burger King restaurant business.
5. The Company desires to retain Consultant as a
consultant and Consultant desires to be so retained, upon the terms and
conditions set forth in this Agreement.
Agreement
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NOW, THEREFORE, in consideration of the foregoing and the
mutual undertakings contained herein, the parties hereto
agree as follows:
SECTION 1
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Term
Section 1.1. Term. The term ("Term") of
this Agreement shall commence on August 13, 1999, and shall
continue through August 12, 2001.
SECTION 2
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Resignation
Section 2.1. Resignation.
Consultant hereby resigns his employment with the Company
effective as of the effective date hereof.
Section 2.2 Stock Options.
Consultant acknowledges that any and all stock options to
acquire shares of the Company's common stock are
"underwater" and hereby agrees that all such options shall
be terminated as of the effective date hereof.
SECTION 3
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Consulting Services
Section 3.1. Creation of the Relationship.
Upon the terms of this Agreement, and in recognition of Consultant's
extensive experience and expertise, the Company hereby
agrees to retain Consultant, and Consultant hereby agrees
to be retained by the Company, during the Term of this Agreement and on the
terms and conditions set forth herein, in the capacity of a
consultant to the Company.
Section 3.2. Duties of Consultant.
During the Term hereof, Consultant agrees to render
service to the Company as a consultant from time to time
as may be reasonably requested by the Company, including
but not limited to, advising the Company with respect to (i)
the operations, marketing and development of the Company's
Burger King business, (ii) assisting the Company in
evaluating any potential Burger King acquisitions and (iii)
such other matters as may reasonably be requested by the
Company. There shall not be a prescribed minimum or
maximum number of hours to be devoted by Consultant in
fulfillment of Consultant's duties hereunder. Consultant
may provide services to the Company under this Agreement
from Consultant's home or business location by telephone or
in such other manner as is acceptable to Consultant and the Company.
The relationship of Consultant to the Company hereunder shall
be that of independent contractor and not as employee.
SECTION 4
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Compensation
Section 4.1. Compensation. Consultant shall be entitled
to a consulting fee of $100,000 per year during the Term of
this Agreement, payable in arrears in equal monthly
installments of $8,333.34 on the 15th day of each month
commencing September 15, 1999, with the last installment
due on August 12, 2001. In the event of Consultant's
death during the Term of this Agreement, Consultant shall
be entitled only to the compensation provided for herein
through the date of his death.
SECTION 5
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Non-Competition Provisions
Section 5.1. Covenant Not-to-Compete.
Until August 13, 2002, except as may be for the benefit of the Company
or as the Company may otherwise consent in writing,
Consultant shall not, directly or indirectly, own, manage,
operate, control or otherwise engage or participate in the
ownership, management, operation or control of (as
principal, agent, proprietor, partner, member,
shareholder, director, trustee, officer, administrator,
employee, consultant, independent contractor, or
otherwise), any business or entity which as one of its
business activities competes, directly or indirectly,
with the Company within any city, town, or metropolitan
area in which the Company, during such period, owns or
operates a restaurant or has the right
to own or operate a restaurant. Notwithstanding anything
to the contrary in this Agreement, the Consultant may
directly or indirectly, (a) continue to engage in the
ownership and operation of two Burger
King restaurants (store #7900 and store #8732), (b) own
securities of the Company, and (c) own securities of any
person or entity which securities are publicly traded
on a national or regional stock exchange or on an over-
the-counter market as long as Consultant does not own 5% or
more of any class of securities of any such person or
entity.
Section 5.2. Trade Secrets.
For purposes of this Agreement, the term "Trade
Secret" includes not only that confidential or
proprietary information defined as a "Trade Secret"
under the Indiana Trade Secrets Act, I.C. 24-2-3-1 et
seq. (the "Act"), but also that information which
possesses independent economic benefit to the Company (including
without limitation customer lists) and, from not being generally known
by other persons who can obtain economic benefit from its disclosure or use.
Consultant covenants that Consultant will, at all times,
conform Consultant's conduct to the requirements of the
Act and will not misappropriate (e.g., use or disclose
to any third party) any Trade Secret of the Company.
Consultant recognizes that the penalties for a Trade Secret violation may
include disgorgement of profits, payment of royalties,
compensatory damages, punitive damages, and
attorney's fees. Consultant understands that (a) Consultant may ask the
Company to render an opinion as to whether the Company considers
certain knowledge to be a Trade Secret, if such a
question should arise, and (b) upon termination of this
Agreement for any reason, Consultant will continue to
be prohibited from any time thereafter from
misappropriating any Trade Secret of the Company.
Section 5.3. Confidentiality.
During the Term of this Agreement, Consultant shall keep
confidential all Trade Secrets of the Company; maintain in
trust, as the Company's property, all information
concerning the Company's business; and return to the
Company, all documents that belong to the Company and any
and all copies thereof in Consultant's possession or under
Consultant's control when this Agreement terminates, or
at any time upon request by the Company.
Section 5.4. Covenant Not to Raid Employees.
Until August 13, 2002, Consultant shall not, directly or indirectly,
employ, engage for personal service or favor (whether or not
compensated), solicit for employment or advise or
recommend to any other person that such person
employ, or solicit for employment, any individual now or
hereafter employed by the Company, or any affiliate of
the Company; nor induce or entice any such employee to
leave his or her employment; nor adversely interfere with
past, present or prospective relationships between the
Company and any of their clients, customers, suppliers,
dealers, employees, agents or other persons or entities
with which any of such companies deals. Notwithstanding
anything to the contrary in this Agreement, the
restrictions set forth in this Section 5.4 above will
not apply with regard to any individual (a) who has
been terminated by the Company or any such affiliate, or
(b) beginning six months after such individual ceases
or terminates his relationship (for any reason) with the
Company or any such affiliate.
Section 5.5. Separate Covenants.
The parties hereto acknowledge and agree that the
covenants contained herein shall be construed as a
series of separate covenants. In the event that any of
the covenants as to a geographical area shall be held
invalid or unenforceable, then the remaining provisions
and covenants thereof shall nevertheless continue to be valid and
enforceable as though the invalid or unenforceable parts
had not been included therein to the extent necessary to
permit the remaining separate provisions and covenants
to be enforced. Additionally, if such geographical
area, class of protected clients or any time period
referenced herein shall be declared by a court of
competent jurisdiction to exceed the maximum area, class
of clients or time period such court deems reasonable and
enforceable, such area of restriction or time period
shall be deemed to become and thereafter be the maximum area or time
period which such court deems reasonable and enforceable.
Section 5.6. Remedies.
Consultant acknowledges and agrees that the Company would
suffer irreparable harm as a result of any breach of the
covenants contained herein and, therefore, agrees that, in
the event of any actual or threatened breach of any such
covenant, in addition to any other right or remedy which
the Company may have (including monetary damages), the
Company shall be entitled to specific enforcement through
injunctive or other equitable relief obtained from a
court with appropriate equity jurisdiction.
SECTION 6
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Company Stock
Section 6.1. Restrictions on Transfer; Right of First Refusal.
(a) Consultant owns an aggregate of 349,234 shares
of the Company's common stock ("Company Stock") as of the
date of this Agreement. Consultant agrees that, without
the prior written consent of the Company, he will not,
during the Term of this Agreement, transfer, pledge,
grant a security interest in or otherwise encumber any
shares of Company Stock now or hereafter owned by him.
(b) Consultant hereby agrees that, should he wish to sell
any Company Stock during the term of this Agreement,
he will give the Company prior written notice of
the number of shares of Company Common Stock he wishes to
sell. Within 60 days after the date of such notice, the
Company (or its designee) shall have the right to
acquire from Consultant the number of shares specified in
such notice at a per share price equal to the average
of the closing prices of the Company Stock on the Nasdaq National
Market System on the five trading days commencing on the date of
Consultant's notice to the Company. The Company (or its
designee) shall exercise this right of first refusal
by written notice to the Consultant and closing of the
purchase shall take place within five business days after
the date of the notice of exercise by the Company (or its
designee). Payment for the shares of Company Stock
shall be made in immediately available funds at the
closing. If the Company (or its designee) does not
exercise its right of first refusal to purchase the
shares of Company Stock specified in the Consultant's
notice to the Company within 60 days after the
date of such notice, the Consultant shall thereafter
have the right to sell such specified shares of Company
Common Stock for a period of 120 days after the date of
such notice to the Company.If the Consultant does not
sell the specified shares within such period, such shares
of Company Common Stock shall again be subject to the
right of first refusal described in this Section 6.1.
Section 6.2. Covenant Regarding Joining Group.
The Consultant hereby covenants that, during the term
of this Agreement and for one (1) year following the
expiration of this Agreement, he will not, directly or indirectly,
join with any other individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended, for
the purpose of acquiring, holding or disposing of any
shares of Company Stock, soliciting any proxies for any
meetings of the holders of Company Stock, or otherwise
attempting to influence in any manner how any holder of
Company Stock votes on any matters presented to such
holders.
SECTION 7
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Miscellaneous
Section 7.1. Termination and Release.
The Consultant and the Company acknowledge and agree
that the Employment Agreement is hereby terminated and
each hereby releases the other from any claims each may
have under those agreements except that the Company shall
pay to the Consultant, the sum of $49,783.65 representing
the bonus to which Consultant is entitled in respect of his
employment during the Company's 1999 fiscal year though
the date of termination of his employment. Such amount
shall be paid to Consultant at the time of and in
accordance with the Company's usual practice for paying
bonuses.
Section 7.2. Benefit and Burden.
Consultant acknowledges that the covenants of Consultant are
unique and personal; accordingly, Consultant may not
assign any of Consultant's rights or delegate any of
Consultant's duties or obligations under this Agreement.
The rights and obligations of the Company under this
Agreement shall inure to the benefit of, and be binding
upon, the successors and assigns of the Company. The
rights and obligations of Consultant under this Agreement
shall inure to the benefit of and be binding upon the
heirs, legal representatives, successors and permitted
assigns of Consultant.
Section 7.3. Nature of Relationship.
The relationship of Consultant to the Company hereunder
shall be that of an independent contractor, and not as
an employee, a partner or joint venturer of the Company
for any purpose. Consultant shall not have any right to
make contracts or commitments for or on behalf of the
Company, or to act in any manner as a
representative of the Company.
Section 7.4. Notices.
Any notices to be given hereunder shall be deemed
sufficiently given when in writing and when (a) actually
served on the party to be notified, or (b) deposited
in a receptacle of the United States mail, certified
or registered, postage prepaid, addressed appropriately as
follows:
If to Company at: Daniel B. Fitzpatrick
Quality Dining,Inc.
4220 Edison Lakes Parkway
Mishawaka, IN 46545
If to Consultant at: William R. Schonsheck
9024 Thornbury Lane
Las Vegas, NV 89134
Such addresses may be changed by any party by written
advice given pursuant to this Section.
Section 7.5. Applicable Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Indiana.
Section 7.6. No Waiver.
No failure on the part of any party at any time to require
the performance by any other party of any term of this
Agreement shall be taken or held to be a waiver of such
term or in any way affect such parties' right to enforce
such term, and no waiver on the part of any party of any
term of this Agreement shall be deemed a continuing waiver
or a waiver of any other term hereof or the breach
thereof.
Section 7.7. Modifications.
This Agreement may not be amended, modified, or supplemented without the
written agreement of the parties at the time of such amendment,
modification, or supplement.
Section 7.8. Captions.
The captions in this Agreement are for convenience and
identification purposes only, are not an integral part of
this Agreement, and are not to be considered in the
interpretation of any part hereof.
Section 7.9. Attorneys' Fees.
In any action at law or in equity to enforce any of the provisions or rights
under this Agreement, the unsuccessful party or parties to such
litigation, as determined by the court in a final judgment
or decree, shall pay the successful party or parties all
costs, expenses, and reasonable attorneys' fees incurred
by the successful party or parties (including without
limitation, costs, expenses, and fees on any appeals), and
if the successful party or parties recovers judgment in
any such action or proceeding, such costs, expenses, or
attorneys' fees shall be included as part of the judgment.
Section 7.10. Severability.
The invalidity or unenforceability of any particular
provision, or part thereof, of this Agreement shall not
affect the other provisions, and this Agreement shall
continue in all respects as if such invalid or
unenforceable provision had not been contained herein.
If any provision of this Agreement is in conflict with
any applicable statute, rule, or other law, it shall be
deemed, if possible, to be modified or altered to conform
thereto or, if not possible, to be omitted herefrom.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the day and year first above written.
QUALITY DINING, INC.
By:___/s/__________________________
Daniel B. Fitzpatrick, President
______/s/__________________________
William R. Schonsheck
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