UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 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 001-15581
CNL AMERICAN PROPERTIES FUND, INC.
(Exact name of registrant as specified in its charter)
Florida 59-3239115
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
450 South Orange Avenue
Orlando, Florida 32801
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (407) 540-2000
Securities registered pursuant to Section 12 (b) of the Act:
Title of each class: Name of exchange on which registered:
None Not Applicable
Securities registered pursuant to section 12(g) of the Act:
Common Stock, $0.01 par value per share
(Title of class)
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 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
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [x]
Aggregate market value of the voting stock held by nonaffiliates of the
registrant: The registrant has made three offerings of Shares of common stock
(the "Shares") on Form S-11 under the Securities Act of 1933, as amended. The
number of Shares held by non-affiliates as of March 19, 2000 was 37,335,919.
Since no established market for such Shares exists, there is no market value for
such Shares. Each Share was originally sold at $20 per Share.
The number of Shares of common stock outstanding as of March 29, 2000
was 43,495,919.
DOCUMENTS INCORPORATED BY REFERENCE:
Registrant incorporates by reference portions of the CNL American
Properties Fund, Inc. Definitive Proxy Statement for the 2000 Annual Meeting of
Stockholders (Items 10, 11, 12 and 13 of Part III) to be filed no later than
April 29, 2000.
<PAGE>
PART I
Item 1. Business
CNL American Properties Fund, Inc. is a real estate investment trust,
or REIT. The term "Company" includes, unless the context otherwise requires, CNL
American Properties Fund, Inc. and its direct and indirect subsidiaries. These
subsidiaries include CNL APF Partners, LP, a Delaware limited partnership formed
in May 1998, and CNL APF GP Corp. and CNL APF LP Corp., the general and limited
partner, respectively, of CNL APF Partners, LP. As a result of the merger on
September 1, 1999 (see "Mergers"), subsidiaries also include CNL Fund Advisors,
Inc., CNL Financial GP Holding Corp., CNL Financial LP Holding, LP, CNL
Financial Services GP Corp. and CNL Financial Services, LP.
The Company provides a complete range of financial, development and
other real estate services to operators of national and regional restaurant
chains. The Company's ability to offer complete "turn-key," build-to-suit
development services, from site selection to construction management, together
with its ability to provide its customers with financing options, such as
triple-net leasing, mortgage loans and secured equipment financing, makes the
Company a preferred provider for all of the real estate related business needs
of operators of national and regional restaurant chains.
The Company was formed in May 1994, at which time it received initial
capital contributions of $200,000 for 10,000 Shares of common stock ("Shares").
Since inception, the Company has completed three separate public offerings of
Shares of common stock. The Company received the final proceeds of $210,736 from
its third public offering of common stock in January 1999, at which point the
Company had received aggregate subscription proceeds from its three offerings of
$747,464,420 (37,373,221 Shares), including $5,572,261 (278,613 Shares) issued
through the Company's reinvestment plan. Net proceeds to the Company from its
three offerings and the initial capital contributions, after deduction of stock
issuance costs, totaled $670,351,200, all of which have been invested in
Properties or Mortgage Loans.
On May 27, 1999, the stockholders approved a one-for-two reverse split
of common stock that was effective on June 3, 1999 with the filing of the
amended Articles of Incorporation with the Maryland Department of Assessments
and Taxation. In connection with the reverse split of common stock, the Company
elected to retire 2,545 fractional Shares ($50,891). All share and per share
amounts have been restated herein to reflect the one-for-two reverse stock
split.
As of December 31, 1999, the Company had total assets of over $1.1
billion and a portfolio consisting of investments in 661 restaurant properties.
Generally, the real estate (the "Properties") owned by the Company consist of
land and buildings subject to long-term (generally, 15 to 20 years, plus renewal
options for an additional 10 to 20 years), triple-net leases. Triple-net leases
generally provide that the tenants bear responsibility for all of the costs and
expenses associated with the ongoing maintenance and operations of the leased
restaurant properties, including utilities, property taxes, insurance and
structural repairs. The Company structures the leases of its Properties to
provide for payment of base annual rent with (i) automatic increases in base
rent and/or (ii) percentage rent based on gross sales above a certain level.
Mortgage financing (the "Mortgage Loans") involves lending money at a specified
interest rate to owners of restaurant properties and securing that loan with a
mortgage lien on the restaurant property. Management believes that the economic
effects of the Mortgage Loans are similar to those of its leases (generally with
full repayment in 15 to 20 years). Securitizing mortgages involves bundling a
group of mortgages into an investment entity, usually a trust, and selling
securities of that entity to the public.
As of March 11, 2000, the Company owned a portfolio of 672 Properties
located across the United States which are leased to operators of certain
national and regional fast food, family-style and casual dining restaurant
chains, as described below in Item 2. Properties.
Currently, the Company's primary investment objectives are to preserve,
protect, and enhance the Company's assets, while (i) providing quarterly
distributions, (ii) providing fixed income through the receipt of base rent, as
well as increase the Company's income (and distributions) and protection against
inflation through automatic increases in base rent and receipt of percentage
rent, and fixed income through the receipt of payments from Mortgage Loans and
secured equipment leases, (iii) qualifying as a REIT for federal income tax
purposes and (iv) providing stockholders of the Company with liquidity of their
investment (although liquidity cannot be assured thereby) through listing the
Shares of the Company on the New York Stock Exchange or other national exchange
or over-the-counter market ("Listing").
The Company intends, to the extent consistent with the Company's
objective of qualifying as a REIT, to reinvest in additional Properties or
Mortgage Loans any proceeds of the sale of a Property or a Mortgage Loan that
are not required to be distributed to stockholders in order to preserve the
Company's REIT status for federal income tax purposes. Similarly, and to the
extent consistent with REIT qualification, the Company plans to use the proceeds
of the sale of a Secured Equipment Lease to fund additional Secured Equipment
Leases, or to reduce its outstanding indebtedness. The Company intends to
provide stockholders of the Company with liquidity of their investment, either
in whole or in part, through Listing of the Shares of the Company. If Listing
occurs, the Company intends to reinvest in additional Properties, Mortgage Loans
and Secured Equipment Leases any net sales proceeds not required to be
distributed to stockholders in order to preserve the Company's status as a REIT.
If Listing does not occur by December 31, 2005, the Company will undertake the
orderly liquidation of the Company and the sale of the Company's assets and will
distribute any net sales proceeds to stockholders. In addition, the Company will
not sell any assets if such sale would not be consistent with the Company's
objective of qualifying as a REIT.
In deciding the precise timing and terms of Property sales, the
Company, subject to the approval of the Board of Directors, will consider
factors such as national and local market conditions, potential capital
appreciation, cash flows, and federal income tax considerations. The terms of
certain leases, however, may require the Company to sell a Property at an
earlier time if the tenant exercises its option to purchase a Property after a
specified portion of the lease term has elapsed. The Company will have no
obligation to sell all or any portion of a Property at any particular time,
except as may be required under property or joint venture purchase options
granted to certain tenants. In connection with sales of Properties by the
Company, purchase money obligations may be taken by the Company as part payment
of the sales price. The terms of payment will be affected by custom in the area
in which the Property is located and prevailing economic conditions. When a
purchase money obligation is accepted in lieu of cash upon the sale of a
Property, the Company will continue to have a mortgage on the Property and the
proceeds of the sale will be realized over a period of years rather than at
closing of the sale.
The Company does not anticipate selling the Secured Equipment Leases
prior to expiration of the lease term, except in the event that the Company
undertakes orderly liquidation of its assets.
Mergers
The Company's goal is to be a leading provider of financial,
development, advisory and other real estate services to operators of national
restaurant chains. In furtherance of this goal, on September 1, 1999, the
Company became internally advised and gained complete acquisition, development
and in-house management functions by acquiring its external advisor, CNL Fund
Advisors, Inc. (the "Advisor"), through the exchange of 100% of the outstanding
Shares of common stock of the Advisor for 3.8 million Shares ($76,000,000) of
the Company's common stock. Because prior to September 1, 1999, the Company has
had no employees since its inception, the Advisor provided these functions on
behalf of the Company and was responsible for the day-to-day operations of the
Company, including raising capital, investment analysis, acquisitions, due
diligence, asset management and accounting services. The acquisition of the
Advisor also provides the Company with restaurant development capabilities
including site selection, construction management and build-to-suit development.
In addition, to increase its financing capabilities and expand its
mortgage loan portfolio, the Company acquired CNL Financial Corporation and CNL
Financial Services, Inc. which are referred to, together, as the CNL Restaurant
Financial Services Group, at the same time that it acquired the Advisor. The CNL
Restaurant Financial Services Group makes and services mortgage loans, and
securitizes a portion of such loans, to operators of national and regional
restaurant chains comparable to the restaurant chain operators that currently
are tenants of the Company. The Company acquired CNL Restaurant Financial
Services Group through the exchange of 100% of the outstanding Shares of common
stock of these entities for 2.35 million Shares ($47,000,000) of the Company's
common stock.
Upon consummation of the mergers on September 1, 1999, all employees of
the acquired entities became employees of the Company, and any obligations for
the Company to pay fees to the Advisor (such as acquisition fees and asset
management fees) under the advisory agreement between the Company and the
Advisor terminated.
Leases
As of December 31, 1999, the Company had acquired, either directly or
indirectly through joint venture arrangements, 661 Properties, which are
generally subject to long-term, triple-net leases. Although there are variations
in the specific terms of the leases, the following is a summarized description
of the general structure of the Company's leases. The leases of the Properties
owned by the Company and the joint ventures in which the Company is a
co-venturer, generally provide for initial terms ranging from 15 to 20 years and
expire between 2005 and 2024. The leases are on a triple-net basis which means
the lessee is responsible for all repairs and maintenance, property taxes,
insurance and utilities. The leases of the Properties provide for minimum base
annual rental payments (payable in monthly installments) ranging from
approximately $41,000 to $328,000. In addition, certain leases provide for
percentage rent based on sales in excess of a specified amount. In addition, the
majority of the leases provide that, commencing in specified lease years
(generally the sixth lease year), the annual base rent required under the terms
of the lease will increase.
Generally, the leases of the Properties provide for two to five
five-year or ten-year renewal options subject to the same terms and conditions
as the initial lease. Lessees of 569 of the Company's 661 Properties also have
been granted options to purchase the Property at the Property's then fair market
value after a specified portion of the lease term has elapsed. Fair market value
will be determined through an appraisal by an independent appraisal firm. The
option purchase price may equal the Company's original cost to purchase the
Property (including acquisition costs), plus a specified percentage from the
date of the lease or a specified percentage of the Company's purchase price, if
that amount is greater than the Property's fair market value at the time the
purchase option is exercised.
The leases also generally provide that, in the event the Company wishes
to sell the Property subject to that lease, the Company first must offer the
lessee the right to purchase the Property on the same terms and conditions, and
for the same price, as any offer which the Company has received for the sale of
the Property.
In connection with the acquisition of 28 Properties acquired during
1999 that are building only, the tenant under the ground lease assigned its
leasehold interest in the premises to the Company, and in connection therewith,
the tenant, landlord under the ground lease, and Company entered into a Landlord
Estoppel and Consent Agreement pursuant to which the tenant is responsible for
all obligations under the ground lease and the Company is provided certain
rights to help protect its interest in the building in the event of a default by
the tenant under the terms of the ground lease.
During the period January 1, 2000 through March 11, 2000, the Company
acquired 11 additional Properties (seven of which are under construction). The
leases for these Properties are substantially the same as those described above.
Major Tenants
During 1999, no single lessee, borrower or restaurant chain contributed
more than ten percent of the Company's total rental, earned, investment income
and interest income relating to its Properties, Mortgage Loans, Secured
Equipment Leases and certificates. Because the Company has not completed its
investment in Properties, Mortgage Loans and Secured Equipment Leases, it is not
possible to determine which lessees, borrowers or restaurant chains will
contribute more than ten percent of the Company's rental, earned, investment
income and interest income during 2000 and subsequent years. In the event that
certain lessees, borrowers or restaurant chains contribute more than ten percent
of the Company's rental, earned, investment income and interest income in future
years, any failure of such lessees, borrowers or restaurant chains could
materially affect the Company's income. As of December 31, 1999, no single
lessee or borrower, or group of affiliated lessees or borrowers leased
Properties or was the borrower under Mortgage Loans with an aggregate carrying
value, in excess of 20 percent of total assets of the Company.
<PAGE>
Mortgage Loans Held for Sale
The Mortgage Loans represent first mortgage loans on the land and/or
building comprising approximately $52.4 million in fixed-rate loans and
approximately $1.5 million in variable-rate loans. Variable rate construction
loans totaled approximately $9.6 million at December 31, 1999. The fixed-rate
loans carry a weighted average interest rate of 9.97%. The variable-rate loans
carry interest rates that adjust monthly based on a 30-day LIBOR plus a margin
(average interest rate was 10.5% at December 31, 1999). The Mortgage Loans are
being collected in monthly installments with maturity dates ranging from 2000 to
2019.
Secured Equipment Loans
The Company entered into several promissory notes with several
borrowers for equipment and other financing for a total of $26,470,671. The
promissory notes are collateralized by restaurant equipment. The promissory
notes bear interest at rates ranging from ten percent to 11 percent per annum
and are being collected in monthly installments with maturity dates ranging from
2000 to 2006.
Other Investments
In August 1998, the Company acquired an investment in certain franchise
loan certificates ("the 1998 Certificates") issued in connection with a mortgage
loan securitization transaction sponsored by CNL Financial Corporation, which
was an affiliate prior to its acquisition by the Company in 1999. (see
"Mergers"). In 1998, the Company classified these investments as available for
sale for accounting purposes and as of December 31, 1998 their carrying value of
$16,201,014 approximated fair value. During 1999, the Company reassessed the
classification of the 1998 Certificates and transferred the certificates from
the available for sale category to the held to maturity category.
In connection with the merger on September 1, 1999 with CNL Restaurant
Financial Services Group (see "Mergers"), the Company acquired investments in an
interest only certificate and other residual interests which are classified as
available for sale and are carried at fair market value.
In August 1999, the Company created a $500 million loan sale facility
syndicated with two third parties. This facility permits the Company to sell
loans on a regular basis to a trust at an agreed upon advance rate. The Company
retained a residual interest from loans sold as of December 31, 1999, which is
included in the accompanying consolidated balance sheet as other investments and
is classified as a trading security and carried at its estimated fair market
value.
Certain Mortgage Loans originated or purchased by the Company were
securitized in November 1999 and Franchise Loan Trust Certificates were sold to
investors. The Company retained certain subordinated investment securities,
("the 1999 Certificates"). The 1999 Certificates were recorded by allocating the
previous carrying amount of the mortgages between the assets sold and the
retained interests based on their relative fair values. Approximately $7.7
million of the 1999 Certificates are classified as available for sale and are
carried at fair market value based on estimated discounted cash flows. The
remaining balance of approximately $13.4 million of the 1999 Certificates have a
weighted average remaining term of approximately 18 years and are classified as
held to maturity.
Borrowing
Credit Facility
At December 31, 1998, the Company had a revolving $35,000,000 unsecured
line of credit with a bank which enabled the Company to receive advances to
purchase and develop Properties, to fund Mortgage Loans and to provide equipment
financing. In June 1999, the Company obtained a new unsecured revolving credit
facility in an amount up to $300,000,000 (the "Credit Facility"), which replaced
the line of credit. Interest on advances under the Credit Facility is determined
according to (i) a tiered rate structure up to a maximum rate of 200 basis
points above LIBOR (based upon the Company's overall leverage ratio) or (ii) the
lenders' prime rate plus 0.25%, whichever the Company selects at the time of
each advance. The principal balance, together with all unpaid interest, is due
in full upon termination of the facility on June 9, 2002.
Note Payable
In October 1999, the Company entered into a secured credit facility
(the "Secured Credit Facility") in the amount of $147,000,000 which will expire
in October 2002. The proceeds of the Secured Credit Facility are intended to be
used for Property acquisitions. Borrowings under the Secured Credit Facility
bear interest at the rate of commercial paper plus 56 basis points per annum.
The Secured Credit Facility is collateralized by mortgages on Properties and an
assignment of rents.
Mortgage Warehouse Facility
At December 31, 1999, the Company had a one year $300 million mortgage
warehouse facility ("Warehouse Facility"). The Warehouse Facility provides the
Company the ability to provide mortgage financing to restaurant franchisees and
periodically securitize the loans through the securitization market. The
facility bears interest at a rate of LIBOR plus 95 basis points per annum.
Competition
The fast-food, family-style and casual dining restaurant business is
characterized by intense competition. The operators of the restaurants located
on the Company's Properties compete with independently owned restaurants,
restaurants which are part of local or regional chains, and restaurants in other
well-known national chains, including those offering different types of food and
service.
Many successful fast-food, family-style and casual dining restaurants
are located in "eating islands", which are areas to which people tend to return
frequently and within which they can diversify their eating habits, because in
many cases local competition may enhance the restaurant's success instead of
detracting from it. Fast-food, family-style and casual dining restaurants
frequently experience better operating results when there are other restaurants
in the same area.
The Company will be competing with other persons and entities both to
locate suitable Properties to acquire and to locate purchasers for its
Properties. The Company also will compete with other financing sources such as
banks, mortgage lenders and sale/leaseback companies for suitable tenants for
its Properties, borrowers for its Mortgage Loans and lessees and borrowers for
its Secured Equipment Leases.
Employees
As of December 31, 1999, the Company had 133 associates.
Item 2. Properties
As of December 31, 1999, the Company owned, either directly or
indirectly through joint venture arrangements, 661 Properties, located in 40
states. Reference is made to the Schedule of Real Estate and Accumulated
Depreciation filed with this report for a listing of the Properties and their
respective costs, including acquisition fees and certain acquisition expenses.
As of December 31, 1999, the Company owned 613 of the 661 Properties in
fee simple and three properties through joint venture arrangements.
As of December 31, 1999, 45 of the 661 Properties owned by the Company
consisted of building only. The Company does not own the underlying land. In
connection with the acquisition of each of these Properties, the Company entered
into either a tri-party agreement with the tenant and the owner of the land or
an assignment of interest in the ground lease with the landlord, as described in
Item 1. Business-Leases.
As of December 31, 1999 the Company had pledged 130 Properties as
collateral related to the Secured Credit Facility.
During the period January 1, 2000 through March 11, 2000, the Company
acquired 11 additional Properties (seven of which were under construction), for
cash at a total cost of approximately $10,500,000, excluding development costs
and certain acquisition expenses. The leases of these Properties are
substantially the same as the leases described in Item 1. Business -- Leases.
The Company currently is negotiating to acquire additional properties,
but as of March 11, 2000, had not acquired any such properties.
Description of Properties
Land. The Company's Property lot sizes range from approximately 4,000
to 199,000 square feet depending upon building size and local demographic
factors. Sites purchased by the Company are in locations zoned for commercial
use which have been reviewed for traffic patterns and volume.
The following table lists the Properties owned by the Company as of
December 31, 1999 by state. More detailed information regarding the location of
the Properties is contained in the Schedule of Real Estate and Accumulated
Depreciation filed with this report.
<TABLE>
<CAPTION>
Total Number of
State Restaurant Properties
<S> <C>
Alabama 22
Arizona 20
California 36
Colorado 12
Connecticut 1
Delaware 1
Florida 80
Georgia 23
Idaho 3
Illinois 25
Indiana 10
Iowa 6
Kansas 13
Kentucky 9
Louisiana 10
Maryland 9
Michigan 16
Minnesota 11
Mississippi 8
Missouri 32
Nebraska 3
Nevada 4
New Hampshire 2
New Jersey 7
New Mexico 4
New York 4
North Carolina 22
Ohio 55
Oklahoma 10
Oregon 7
Pennsylvania 9
Rhode Island 1
South Carolina 13
Tennessee 38
Texas 83
Utah 4
Virginia 20
Washington 13
West Virginia 12
Wisconsin 3
=======
TOTAL PROPERTIES 661
=======
</TABLE>
Buildings. The buildings generally are rectangular and are constructed
from various combinations of stucco, steel, wood, brick and tile. Building sizes
range from approximately 1,300 to 12,700 square feet. Generally, buildings on
Properties owned by the Company are freestanding and are surrounded by paved
parking areas. Buildings are suitable for conversion to various uses, although
modifications may be required prior to use for other than restaurant operations.
As of December 31, 1999, 45 of the Company's Properties were under construction
or renovation. As of December 31, 1999, the Company had no plans for renovations
of its remaining 616 Properties. Depreciation expense is computed for buildings
and improvements using the straight-line method using a depreciable life of 39
years for federal income tax purposes. As of December 31, 1999, the aggregate
cost basis of the Properties owned by the Company (including Properties owned
through joint ventures) for federal income tax purposes was $452,349,747.
The following table lists the Properties owned by the Company as of
December 31, 1999 by restaurant chain.
<TABLE>
<CAPTION>
Restaurant Chain Number of Properties
<S> <C>
Golden Corral 48
Jack in the Box 65
Bennigan's 27
IHOP 46
Steak & Ale 20
Boston Market 23
Darryl's 15
Applebee's 16
Black-Eyed Pea 26
Pollo Tropical 11
Arby's 38
Chevy's Fresh Mex 26
Ground Round 13
Burger King 36
Big Boy 29
Denny's 15
Other 207
=====
TOTAL: 661
=====
</TABLE>
Management considers the Properties to be well-maintained and
sufficient for the Company's operations.
Management believes that the Properties are adequately covered by
insurance. In addition, the Company has obtained contingent liability and
property coverage. This insurance is intended to reduce the Company's exposure
in the unlikely event a tenant's insurance policy lapses or is insufficient to
cover a claim relating to the Property.
Leases. The Company leases the Properties to operators of selected
national and regional fast-food restaurant chains. The leases are generally on a
long-term "triple net" basis, meaning that the tenant is responsible for
repairs, maintenance, property taxes, utilities and insurance. Generally, a
lessee is required, under the terms of its lease agreement, to make such capital
expenditures as may be reasonably necessary to refurbish restaurant buildings,
premises, signs and equipment so as to comply with the lessee's obligations, if
applicable, under the franchise agreement to reflect the current commercial
image of its restaurant chain. These capital expenditures are required to be
paid by the lessee during the term of the lease. The terms of the leases of the
Properties owned by the Company are described in Item 1. Business - Leases.
<PAGE>
At December 31, 1999, 1998, 1997, 1996 and 1995, the Properties were
97%, 99%, 100%, 100% and 100% occupied, respectively. The following is a
schedule of the average rent per Property for the years ended December 31:
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
-------------- -------------- --------------- ------------- -------------
<S> <C>
Rental Revenues (1) $61,907,812 $33,129,661 $15,490,615 $ 4,357,298 $ 539,776
Properties (2) 642 408 244 94 18
Average Rent Per Property $ 96,430 $ 81,200 $ 63,486 $ 46,354 $ 29,988
</TABLE>
(1) Rental income includes the Company's share of rental income from the
Properties owned through joint venture arrangements. Rental revenues have
been adjusted, as applicable, for any amounts for which the Company has
established an allowance for doubtful accounts. Rents do not include
Properties under construction at December 31, 1999.
(2) Excludes Properties that were vacant at December 31 and that did not
generate rental revenues during the year.
The following table lists Properties owned by the Company as of
December 31, 1999 by tenant and includes average age of buildings, annualized
total rental revenue and percent of total revenue. To calculate annualized total
rental revenue the Company used, for each restaurant Property owned and leased
at December 31, 1999, the monthly rental revenue, for that Property and
multiplied that number by 12 to present the annualized rental revenues for a 12
month period. The Company has not included any contingent rental income in the
calculation of annualized total rental revenue.
<TABLE>
<CAPTION>
Total Number
of
Restaurant Average Age Annualized Percent of
Properties of Buildings Total Rental Total Rental
Tenant (1) (years) Revenue(2) Revenue
-------------- -------------- ------------- --------------
<S> <C>
S&A Properties Corporation 42 17.4 7,838,068 10.6%
Jack in the Box Inc. (formerly Foodmaker, Inc.) 57 1.8 7,367,459 10.0%
Golden Corral Corporation 40 1.6 5,743,081 7.8%
IHOP Corp. 46 2.5 5,490,191 7.4%
Houlihan's Restaurants, Inc 20 19.4 3,221,535 4.4%
Woodland Group, Inc. 10 4.4 1,607,326 2.2%
Chevy's, Inc. 26 1.4 6,386,685 8.6%
Phoenix Restaurant Group 32 5.8 3,658,424 4.9%
Boston Chicken, Inc 16 2.4 2,021,114 2.7%
Carrols Corporation 14 6.5 2,127,135 2.9%
RTM, Inc. 26 2.5 2,023,786 2.7%
Vicorp Restaurants, Inc. 14 18.1 2,086,908 2.8%
Burger King Corporation 14 18.1 1,463,217 2.0%
Other 285 6.9 $22,989,674 31.0%
----- ------------- ----------
Total 642 $74,024,603 100.0%
===== ============= ==========
</TABLE>
(1) Excludes Properties that were vacant at December 31, 1999 and that did not
generate rental revenues during the year.
(2) The Company has straight-lined the contractual increases in rental income
over the life of each of the leases in order to calculate rental revenue in
accordance with generally accepted accounting principles.
<PAGE>
The following table shows the aggregate number of leases in the
Company's Property portfolio which expire each calendar year through the year
2014, as well as the number of leases which expire after December 31, 2014. The
table does not reflect the exercise of any of the renewal options provided to
the tenant under the terms of such leases.
<TABLE>
<CAPTION>
Base Rent
--------------------------------------------
Year Number (3) Amount(1) Percent
---- ------------------ ------------------ -------------------
<S> <C>
2000 -- $ -- --
2001 -- -- --
2002 2 209,635 0.3%
2003 1 63,663 0.1%
2004 1 67,225 0.1%
2005 8 892,500 1.2%
2006 7 621,115 0.8%
2007 -- -- --
2008 2 140,190 0.2%
2009 2 56,633 0.1%
2010 9 943,940 1.3%
2011 23 3,199,740 4.3%
2012 39 5,281,189 7.1%
2013 47 5,501,891 7.4%
2014 109 11,948,792 16.1%
Thereafter 406 45,098,090 61.0%
--------- --------------- ----------
Total (2) 656 $74,024,603 100.0%
========= =============== ==========
</TABLE>
(1) The Company has straight-lined the contractual increases in rental income
over the life of each of the leases in order to calculate rental revenue in
accordance with generally accepted accounting principles.
(2) The number of leases and base rent exclude leases of five Properties with
aggregate original base rental income of $459,295 for which the leases have
been terminated. Base rent also excludes base rental income attributable to
45 Properties under construction at December 31, 1999.
(3) Includes 14 Properties for which the Company did not receive rental
payments during the year ended December 31, 1999.
Item 3. Legal Proceedings
On May 11, 1999, four limited partners in several CNL Income Funds
served a derivative and purported class action lawsuit filed April 22, 1999
against the general partners of the CNL Income Funds and APF in the Circuit
Court of the Ninth Judicial Circuit of Orange County, Florida, alleging that the
general partners breached their fiduciary duties and violated provisions of
certain of the CNL Income Fund partnership agreements in connection with the
proposed merger with the Income Funds. The plaintiffs are seeking unspecified
damages and equitable relief. On July 8, 1999, the plaintiffs filed an amended
complaint which, in addition to naming three additional plaintiffs, includes
allegations of aiding and abetting and conspiring to breach fiduciary duties,
negligence and breach of duty of good faith against certain of the defendants
and seeks additional equitable relief. As amended, the caption of the case is
Jon Hale, Mary J. Hewitt, Charles A. Hewitt, Gretchen M. Hewitt, Bernard J.
Schulte, Edward M. and Margaret Berol Trust, and Vicky Berol v. James M. Seneff,
Jr., Robert A. Bourne, CNL Realty Corporation, and CNL American Properties Fund,
Inc., Case No. CIO-99-0003561.
On June 22, 1999, a limited partner of several CNL Income Funds served
a purported class action lawsuit filed April 29, 1999 against the general
partners and APF, Ira Gaines, individually and on behalf of a class of persons
similarly situated, v. CNL American Properties Fund, Inc., James M. Seneff, Jr.,
Robert A. Bourne, CNL Realty Corporation, CNL Fund Advisors, Inc., CNL Financial
Corporation a/k/a CNL Financial Corp., CNL Financial Services, Inc. and CNL
Group, Inc., Case No. CIO-99-3796, in the Circuit Court of the Ninth Judicial
Circuit of Orange County, Florida, alleging that the general partners breached
their fiduciary duties and that APF aided and abetted their breach of fiduciary
duties in connection with the proposed merger with the Income Funds. The
plaintiff is seeking unspecified damages and equitable relief.
On September 23, 1999, Judge Lawrence Kirkwood entered an order
consolidating the two cases under the caption In re: CNL Income Funds
Litigation, Case No. 99-3561. Pursuant to this order, the plaintiffs in these
cases filed a consolidated and amended complaint on November 8, 1999. On
December 22, 1999, the General Partners and CNL Group, Inc. filed motions to
dismiss and motions to strike. On December 28, 1999, APF and CNL Fund Advisors,
Inc. filed motions to dismiss. On March 6, 2000, all of the defendants filed a
Joint Notice of Filing Form 8-K Reports and Suggestion of Mootness.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
As of March 11, 2000, there were 32,270 stockholders of record of
common stock. There is no public trading market for the Shares, and even though
the Company intends to list the Shares on the New York Stock Exchange or other
national securities exchange or over-the-counter market no later than December
31, 2005, there is no assurance that listing will occur and if listing occurs
there is no assurance that a public market for the Shares will develop. In
October 1998, the Board of Directors elected to implement the Company's
redemption plan. Under the redemption plan, the Company elected to redeem
Shares, subject to certain conditions and limitations. As of December 31, 1999,
the redemption plan was terminated. During the year ended December 31, 1998,
34,757 Shares were redeemed at $18.40 per Share ($639,528) and retired from
Shares outstanding of common stock. As of December 31, 1999, the capital
contribution per Share was $20.
The Company expects to make distributions to the stockholders pursuant
to the provisions of the Articles of Incorporation. For the years ended December
31, 1999 and 1998, the Company declared cash distributions of $60,078,825 and
$39,449,149, respectively, to stockholders. For federal income tax purposes, 97
percent and 85 percent of distributions paid in 1999 and 1998, respectively,
were considered to be ordinary income and three percent and 15 percent,
respectively, were considered to be a return of capital. No amounts distributed
to stockholders for the years ended December 31, 1999 and 1998, are required to
be or have been treated by the Company as a return of capital for purposes of
calculating the stockholders' return on their invested capital. The following
table presents total distributions and distributions per Share:
<PAGE>
<TABLE>
<CAPTION>
First Second Third Fourth Year
-------------- --------------- -------------- --------------- ---------------
<S> <C>
1999 Quarter
Total distributions
declared $14,237,405 $14,238,745 $15,020,274 $16,582,401 $60,078,825
Distributions per
Share 0.38 0.38 0.38 0.38 1.52
1998 Quarter
Total distributions
declared $7,281,343 $8,711,463 $10,467,640 $12,988,703 $39,449,149
Distributions per
Share 0.38 0.38 0.38 0.38 1.52
</TABLE>
In each of January, February and March 2000, the Company declared
distributions to stockholders of $5,527,461 ($0.12708 per Share) payable in
March 2000.
The Company intends to continue to declare distributions of cash to the
stockholders. The Company expects that future distributions will be declared on
a quarterly basis.
Item 6. Selected Financial Data
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
---------------- ---------------- -------------- -------------- --------------
<S> <C>
Year ended December 31:
Revenues $ 75,500,597 $ 42,187,037 $19,457,933 $ 6,206,684 $ 659,131
Net earnings/(loss) (49,837,334 ) 32,152,408 15,564,456 4,745,962 368,779
Cash distributions declared 60,078,825 39,449,149 16,854,297 5,436,072 638,618
Funds from operations (1) 44,384,300 37,348,119 17,732,888 5,355,464 471,670
Earnings/(loss) per Share (2) (1.26 ) 1.21 1.33 1.18 0.39
Cash distributions declared
per Share (2) 1.52 1.52 1.49 1.41 0.62
Weighted average number of
Shares outstanding (2)(3) 39,402,941 26,648,219 11,711,934 4,035,835 949,175
At December 31:
Total assets $1,138,192,793 $680,352,013 $339,077,762 $134,825,048 $ 33,603,084
Total stockholders' equity 672,214,104 660,810,286 321,638,101 122,867,427 31,980,648
</TABLE>
(1) Funds from operations ("FFO"), based on the revised definition adopted
by the Board of Governors of the National Association of Real Estate
Investment Trusts ("NAREIT") and as used herein, means net earnings
determined in accordance with generally accepted accounting principles
("GAAP"), excluding gains or losses from debt restructuring and sales
of assets, plus depreciation and amortization of real estate assets,
plus amortization of direct financing leases and after adjustments for
unconsolidated partnerships and joint ventures, plus an addback for
non-recurring charges such as the advisor acquisition expense and
transaction costs. (Net earnings determined in accordance with GAAP
include the noncash effect of straight-lining rent increases throughout
the lease term and/or rental payments during the construction of a
property prior to the date it is placed in service. This
straight-lining is a GAAP convention requiring real estate companies to
report rental revenue based on the average rent per year over the life
of the lease. During the years ended December 31, 1999, 1998, 1997,
1996 and 1995, net earnings included $5,143,552, $2,734,767,
$1,941,054, $517,067 and $39,142, respectively, of these amounts.) FFO
was restated by the Company for the years ended December 31, 1997, 1996
and 1995 to add back the amortization of direct financing leases. FFO
was developed by NAREIT as a relative measure of performance and
liquidity of an equity REIT in order to recognize that income-producing
real estate historically has not depreciated on the basis determined
under GAAP. However, FFO (i) does not represent cash generated from
operating activities determined in accordance with GAAP (which, unlike
FFO, generally reflects all cash effects of transactions and other
events that enter into the determination of net earnings), (ii) is not
necessarily indicative of cash flow available to fund cash needs and
(iii) should not be considered as an alternative to net earnings
determined in accordance with GAAP as an indication of the Company's
operating performance, or to cash flow from operating activities
determined in accordance with GAAP as a measure of either liquidity or
the Company's ability to make distributions. Accordingly, the Company
believes that in order to facilitate a clear understanding of the
consolidated historical operating results of the Company, FFO should be
considered in conjunction with the Company's net earnings and cash
flows as reported in the accompanying consolidated financial statements
and notes thereto. However, the Company's measure of FFO may not be
comparable to similarly titled measures of other REITS because these
REITS may not apply the definition of FFO in the same manner as the
Company.
(2) All Share and per Share amounts have been restated herein to reflect
the one-for-two reverse stock split.
(3) The weighted average number of Shares outstanding for 1995 is based
upon the period the Company was operational.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The Company
CNL American Properties Fund, Inc. is a real estate investment trust,
or REIT. The term "Company" includes, unless the context otherwise requires, CNL
American Properties Fund, Inc. and its direct and indirect subsidiaries. These
subsidiaries include CNL APF Partners, LP, a Delaware limited partnership formed
in May 1998, and CNL APF GP Corp. and CNL APF LP Corp., the general and limited
partner, respectively, of CNL APF Partners, LP. As a result of the merger on
September 1, 1999 (see "Mergers"), subsidiaries also include CNL Fund Advisors,
Inc., CNL Financial GP Holding Corp., CNL Financial LP Holding, LP, CNL
Financial Services GP Corp. and CNL Financial Services, LP.
The Company provides a complete range of financial, development and
other real estate services to operators of national and regional restaurant
chains. The Company's ability to offer complete "turn-key," build-to-suit
development services, from site selection to construction management, together
with its ability to provide its customers with financing options, such as
triple-net leasing, mortgage loans and secured equipment financing, makes the
Company a preferred provider for all of the real estate related business needs
of operators of national and regional restaurant chains.
As of December 31, 1999, the Company had total assets of over $1.1
billion and a portfolio consisting of investments in 661 restaurant properties.
Generally, the real estate (the "Properties") owned by the Company consists of
land and buildings subject to triple-net leases. Triple-net leases generally
provide that the tenants bear responsibility for all of the costs and expenses
associated with the ongoing maintenance and operations of the leased restaurant
properties, including utilities, property taxes, insurance and structural
repairs. Mortgage financing (the "Mortgage Loans") involves lending money at a
specified interest rate to owners of restaurant properties and securing that
loan with a mortgage lien on the restaurant property. Securitizing mortgages
involves bundling a group of mortgages into an investment entity, usually a
trust, and selling securities of that entity to the public.
Liquidity and Capital Resources
Common Share Offerings
The Company was formed in May 1994, at which time it received initial
capital contributions of $200,000 for 10,000 Shares of common stock. Since
inception, the Company has completed three separate public offerings of Shares
of common stock. The Company received the final proceeds of $210,736 from its
third public offering of common stock in January 1999, at which point the
Company had received aggregate subscription proceeds from its three offerings of
$747,464,420 (37,373,221 Shares), including $5,572,261 (278,613 Shares) issued
through the Company's reinvestment plan. Net proceeds to the Company from its
three offerings and the initial capital contributions, after deduction of stock
issuance costs, totaled $670,351,200, all of which have been invested in
Properties or Mortgage Loans.
On May 27, 1999, the stockholders approved a one-for-two reverse split
of common stock that was effective on June 3, 1999 with the filing of the
amended Articles of Incorporation with the Maryland Department of Assessments
and Taxation. All share and per share amounts have been restated herein to
reflect the one-for-two reverse stock split.
Debt Financing
Line of Credit
At December 31, 1998, the Company had a revolving $35,000,000 unsecured
line of credit with a bank which enabled the Company to receive advances to
provide equipment financing, to purchase and develop Properties and to fund
Mortgage Loans. In June 1999, the Company obtained a new unsecured revolving
credit facility in an amount up to $300,000,000 (the "Credit Facility"). In
connection with obtaining the amended Credit Facility, the Company incurred
commitment fees, legal fees and closing costs. Interest on advances under the
Credit Facility is determined according to (i) a tiered rate structure up to a
maximum rate of 200 basis points above LIBOR (based upon the Company's overall
leverage ratio) or (ii) the lenders' prime rate plus 0.25%, whichever the
Company selects at the time of each advance. As of December 31, 1999, the
weighted average interest rate for interest paid over the prior year was 6.99%.
The principal balance, together with all unpaid interest, is due in full upon
termination of the facility on June 9, 2002. The terms of the agreement for the
amended Credit Facility include financial covenants which provide for the
maintenance of certain financial ratios. The Company was in compliance with all
such covenants as of December 31, 1999.
The Company believes, based on current terms, that the carrying value
of its Credit Facility at December 31, 1999 and 1998 approximates fair value.
In June 1999, in connection with the amended Credit Facility, the
Company entered into an interest rate swap agreement. The purpose of the
interest rate swap agreement is to reduce the impact of changes in interest
rates on its floating rate Credit Facility. The agreement effectively changes
the Company's interest rate on $75,000,000 of the outstanding floating rate
Credit Facility to a fixed rate of 6.17% plus the spread above LIBOR on related
debt per annum, as of December 31, 1999. The Company is exposed to credit loss
in the event of nonperformance by the other party to the interest rate swap
agreement; however, the Company does not anticipate nonperformance by the
counterparty as they maintain long-term credit ratings of "A" or better, as
rated by Moody's or Standard & Poors.
The effective interest rate for the outstanding balance of $248,000,000
relating to the amended Credit Facility, as of December 31, 1999, as a result of
the impact of the interest rate swap in the amount of $75,000,000 was 7.17% per
annum.
Note Payable
In October 1999, the Company entered into a secured credit facility
(the "Secured Credit Facility") in the amount of $147,000,000 which will expire
in October 2002. The proceeds of the Secured Credit Facility are intended to be
used for property acquisitions. Borrowings under the Secured Credit Facility
bear interest at the rate of commercial paper plus 56 basis points per annum. As
of December 31, 1999, the interest rate was 6.96%. The Secured Credit Facility
is collateralized by mortgages on Properties and an assignment of rents. Under
the terms of the Secured Credit Facility, the Company is required to maintain
certain financial ratios and other financial covenants. The Company was in
compliance with all such covenants as of December 31, 1999.
Mortgage Warehouse Facility
At December 31, 1999, the Company had a one year $300 million mortgage
warehouse facility ("Warehouse Facility"). The Warehouse Facility provides the
Company the ability to provide mortgage financing to restaurant franchisees and
periodically securitize the loans through the securitization market. The
facility bears an interest rate of LIBOR plus 95 basis points per annum. As of
December 31, 1999 the interest rate was 6.77%. As of December 31, 1999, the
Company had approximately $31 million outstanding under this Warehouse Facility.
The Company believes, based on current terms, that the carrying value at
December 31, 1999 approximates fair value.
For the years ended December 31, 1999, 1998 and 1997, the Company
incurred interest costs (including amortization of loan costs) of $14,094,524,
$402,292 and $544,788, respectively, $3,889,327, $402,292 and $544,788,
respectively, of which were capitalized as part of the cost of buildings under
construction. For the years ended December 31, 1999, 1998 and 1997, the Company
paid interest of $10,937,309, $338,569 and $502,680, respectively.
Interest Rate Risk
As of December 31, 1999, the Company had $248,000,000, $140,504,000 and
$30,749,540 outstanding under its Credit Facility, Secured Credit Facility and
Warehouse Facility, respectively. The Company has exposure to interest rate risk
associated with the Credit Facility, Secured Credit Facility and Warehouse
Facility due to the variable interest rates. The Company believes this risk has
been mitigated with the interest rate swap agreements to reduce the impact of
changes in interest rates on its floating rate debt (see "Debt Financing").
The Company invests in certain financial instruments that are subject
to various forms of market risk such as interest rate fluctuations, credit risk
and prepayment risk. The Company's primary exposure is the risk of loss that may
result from the potential change in the value of its mortgage loans held for
sale and investments held for sale as a result of changes in interest rates.
Generally, from the time the fixed-rate mortgage loans are originated until the
time they are sold through a securitization transaction, the Company hedges
against fluctuations in interest rates through the use of derivative financial
instruments (primarily interest rate swap contracts). The Company terminates
certain of these contracts upon securitization of the related fixed-rate
mortgage loans and, at that time, both the gain or loss on the sale of the loans
and the gain or loss on the termination of the interest rate swap contracts will
be measured and recognized in the consolidated statement of operations. Under
interest rate swaps, the Company agrees with other parties to exchange, at
specified intervals, the difference between fixed-rate and floating-rate
interest amounts calculated by reference to an agreed upon notional principal
amount.
The Company estimates that a hypothetical one percentage point increase
in long-term interest rates at December 31, 1999 would impact the financial
instruments described above and result in a change to net earnings of
approximately $3 million. This sensitivity analysis contains certain simplifying
assumptions (for example, it does not consider the impact of changes in
prepayment risk or credit spread risk). Therefore, although it gives an
indication of the Company's exposure to interest rate changes at December 31,
1999, it is not intended to predict future results and the Company's actual
results will likely vary.
Acquisitions and Investments
During the year ended December 31, 1999, the Company used the remaining
net offering proceeds from its public offering of common stock, proceeds from
its Credit Facility and Secured Credit Facility, the net sales proceeds from the
sale of Properties and cash collected from the prepayment of Secured Equipment
Leases to acquire 258 Properties (including 45 Properties on which a restaurant
was being constructed or renovated as of December 31, 1999), to fund Mortgage
Loans and to provide equipment financing. In connection with the purchase of
each Property, the Company, as lessor, entered into a long-term, triple-net
lease agreement. The buildings under construction or renovation are expected to
be operational by June 2000.
Since the merger on September 1, 1999 with CNL Restaurant Financial
Services Group, described below, the Company also originated approximately $29
million in new mortgage loans through the Warehouse Facility and approximately
$79 million through the off-balance sheet loan sale facility. The $29 million in
originations was funded through the Mortgage Warehouse Facility and certain
mortgages were subsequently securitized in November 1999 (see "Securitization").
During the years ended December 31, 1999 and 1998, the Company incurred
$6,185,005 and $17,317,297, respectively, in acquisition fees, based on the
amount of offering proceeds received during the period and advances obtained
from the Credit Facility, payable to CNL Fund Advisors, Inc. in connection with
the acquisition of Properties, construction and renovation of Properties and
investment in Mortgage Loans. As a result of the acquisition of the CNL Fund
Advisors, Inc. on September 1, 1999, the Company ceased to incur such
acquisition fees, although, it will continue to incur acquisition expenses.
Mergers
The Company's goal is to be a leading provider of financial,
development, advisory and other real estate services to operators of national
restaurant chains. In furtherance of this goal, on September 1, 1999, the
Company became internally advised and gained complete acquisition, development
and in-house management functions by acquiring its external advisor, CNL Fund
Advisors, Inc. (the "Advisor"). Because the Company has had no employees since
its inception, the Advisor provided these functions on behalf of the Company and
was responsible for the day-to-day operations of the Company, including raising
capital, investment analysis, acquisitions, due diligence, asset management and
accounting services. The acquisition of the Advisor also provides the Company
with restaurant development capabilities including site selection, construction
management and build-to-suit development.
On September 1, 1999, the Company acquired the Advisor through the
exchange of 100% of the outstanding Shares of common stock of the Advisor for
3.8 million Shares ($76,000,000) of the Company's common stock. The acquisition
of the Advisor was recorded under the purchase method of accounting. The Company
expensed the excess purchase price (plus costs incurred related to the
acquisition) over the fair value of the net assets acquired of $76,333,516.
In addition, to increase its financing capabilities and expand its
mortgage loan portfolio, the Company acquired CNL Financial Corporation and CNL
Financial Services, Inc. which are referred to, together, as the CNL Restaurant
Financial Services Group, at the same time that it acquired the Advisor. The CNL
Restaurant Financial Services Group makes and services mortgage loans, and
securitizes a portion of such loans, to operators of national and regional
restaurant chains comparable to the restaurant chain operators that currently
are tenants of the Company. The Company acquired CNL Restaurant Financial
Services Group through the exchange of 100% of the outstanding Shares of common
stock of these entities for 2.35 million Shares ($47,000,000) of the Company's
common stock. The acquisition was recorded under the purchase method of
accounting. The Company recognized the excess purchase price (plus costs
incurred related to the acquisition) over the fair value of the net assets
acquired, of $45,703,072 as goodwill. The Company recorded amortization expense
relating to goodwill of $689,516 as of and for the year ended December 31, 1999.
Upon consummation of the mergers on September 1, 1999, all employees of
the acquired entities became employees of the Company, and any obligations for
the Company to pay fees to the Advisor (such as acquisition fees and asset
management fees) under the advisory agreement terminated.
As consideration in its acquisition of the Advisor and CNL Restaurant
Financial Services Group, the Company paid 6.15 million Shares. Of the 6.15
million Shares issued, 1.0 million are being held in escrow. The Shares held in
escrow will be released to the former stockholders of the Advisor and the CNL
Restaurant Financial Services Group based on the value of the restaurant
Properties acquired, Mortgage Loans made and development projects completed by
the Company during the "escrow term". The "escrow term" began on September 1,
1999. If the Company fails, during the escrow term, to acquire restaurant
Properties, make Mortgage Loans and complete development projects of at least
$750 million in the aggregate, any Shares remaining in escrow at the end of the
escrow term will be returned to the Company, and the former stockholders of the
Advisor and CNL Restaurant Financial Services Group will no longer have any
rights to such Company Shares. The Company's Board of Directors may, in its
reasonable discretion, extend the escrow term for an additional six months
following the escrow term if it reasonably believes that it is in the Company's
best interest to do so. Management believes that the total number Shares will be
released from escrow during the term beyond a reasonable doubt, and therefore,
the Shares have been included in the acquisition price and included in issued
and outstanding for financial reporting purposes, even though the unearned
Shares are held in escrow at December 31, 1999. As of December 31, 1999,
approximately 229,841 Shares have been released from escrow.
<PAGE>
Securitization
Several factors affect the Company's ability to complete
securitizations of its loans, including conditions in the securities markets,
the credit quality of the Company's loans and compliance of the Company's loans
with the eligibility requirements established by the securitization documents.
Adverse changes in any of these factors could impair the Company's ability to
originate and sell loans on a favorable or timely basis. The Company's inability
to securitize loans may adversely affect the Company's financial performance and
growth prospects. Accordingly, the cost of raising debt or equity capital may be
higher in the future, which could adversely impact the Company's results of
operations.
As described above in "Mergers," in September 1999, APF expanded its
financing capabilities by acquiring the CNL Restaurant Financial Services Group,
which made and serviced mortgage loans to operators of national and regional
restaurant chains comparable to the operators of national and regional
restaurant chains that currently are tenants of the Company. As a result of this
acquisition, the Company also "securitizes" mortgage loans. A mortgage loan
securitization involves raising capital by combining a group of mortgage loans
into a pool, creating securities that are backed by the combined pool and then
issuing those securities to investors. The Company makes loans and securitizes
them by selling them to a special purpose entity formed for the purpose of
issuing certificates representing beneficial interest in the pool of mortgage
loans. The Company receives the following from its securitizations: (i) the net
proceeds from the sale of the certificates; (ii) income in the form of the
"spread" or difference between the interest that is earned on the securitized
mortgage loans, less transaction fees and expenses and any portfolio losses, and
the interest earned on the certificates sold to third parties; and (iii) fees
for servicing mortgage loans that were securitized.
Additionally, the Company generally retains a subordinated interest in
the mortgage loans, which because it is subordinated, generally bears interest
at a higher rate than the mortgage loans as a whole. The acquisition of the CNL
Restaurant Financial Services Group has provided a platform for the expansion of
the Company's existing financing opportunities and, ultimately, is intended to
increase cash available to be distributed to its stockholders. The Company
believes securitization transactions may permit it to obtain additional capital
with greater ease and at a lower cost at times when market conditions are not
suitable for raising funds on economically attractive terms through the issuance
of the Company's equity or debt securities.
In November 1999, certain mortgage loans aggregating approximately
$278.27 million were securitized and Franchise Loan Trust Certificates were sold
to investors through a trust. This transaction is backed by fee simple
mortgages, space leasehold mortgages, ground lease mortgages, and mortgages
secured by equipment. The majority of the securitized loan pool was sold to
third parties, while the Company retained subordinated investment securities
approximating $21 million of the total mortgage loan pool balance (see "Other
Investments"). The Company also retained the servicing rights on the mortgage
loans sold. The Company received gross proceeds of approximately $278 million
from the securitization transaction. The transaction resulted in a financial
statement loss of approximately $1 million.
Other Investments
In August, 1998 the Company acquired an investment in certain franchise
loan certificates ("the 1998 Certificates") issued in connection with a mortgage
loan securitization transaction sponsored by CNL Financial Corporation, which
was an affiliate prior to its acquisition by the Company in 1999 (see
"Mergers"). Certain of the 1998 Certificates bear interest at an 8.4% pass
through rate with an effective yield of 11.46%. Other 1998 Certificates bear
interest at adjustable pass through rates which generated an effective yield of
10.65% in 1999. In 1998, the Company classified these investments as available
for sale for accounting purposes and as of December 31, 1998 their carrying
value of $16,201,014 approximated fair value. During 1999, the Company
reassessed the classification of the 1998 Certificates and transferred the
certificates from the available for sale category to the held to maturity
category. The estimated fair value of the 1998 Certificates at the transfer date
of $16,199,792 approximated the carrying value resulting in no gains or losses
at the time of transfer. At December 31, 1999 the carrying value of this
investment was $16,201,732 which approximated its fair value and its weighted
average remaining term range from approximately 14 to 16.5 years.
In connection with the merger on September 1, 1999 (see "Mergers") the
Company acquired investments in an interest only certificate and other residual
interests with a fair market value of $5,965,941. The interest only certificate
and the other residual interest are classified as available for sale and are
carried at fair market value based on estimated discounted cash flows. The
unrealized loss at December 31, 1999 was $177,119 and is shown as accumulated
other comprehensive loss on the consolidated balance sheet.
In August 1999 the Company created a $500 million loan sale facility
syndicated with two third parties. The Company intends to use the proceeds from
subsequent securitizations of mortgage loans to payoff this facility. This
facility permits the Company to sell loans on a regular basis to a trust at an
agreed upon advance rate. As of December 31, 1999 the Company had sold loans
with an approximate principal balance of $300 million to the trust. The Company
retained a residual interest which is included in the accompanying consolidated
balance sheet as of December 31, 1999 as other investments and is classified as
a trading security and carried at its estimated fair market value of
$32,496,222.
Certain mortgage loans originated or purchased by the Company were
securitized in November 1999 and Franchise Loan Trust Certificates were sold to
investors. The Company retained certain subordinated investment securities,
("the 1999 Certificates"). The 1999 Certificates totaling $21,142,843 at
December 31, 1999 were recorded by allocating the previous carrying amount of
the mortgages between the assets sold and the retained interests based on their
relative fair values. Approximately $7.7 million of the 1999 Certificates are
classified as available for sale and are carried at fair market value based on
estimated discounted cash flows. The remaining balance of approximately $13.4
million of the 1999 Certificates have a weighted average remaining term of
approximately 18 years and are classified as held to maturity. Their carrying
amounts approximated their fair value at December 31, 1999.
The Company is subject to market risk in the event the value of the
underlying mortgages decline.
Dispositions
During 1999 and 1998, the Company sold six and three Properties,
respectively. The Company received net proceeds of approximately $5,302,433 and
$2,386,000, respectively, which resulted in a loss of $781,192 for financial
reporting purposes in 1999. The net sales proceeds received in 1998 approximated
the carrying value of the Properties, resulting in no gain or loss. The Company
reinvested the proceeds from the sale of Properties in additional Properties.
During 1999, the Company received proceeds from various borrowers for
the prepayment of nine Secured Equipment Leases. The Company collected
$2,252,766 which was approximately equal to the net investment in the direct
financing leases at the time of the prepayment. As a result, no gain or loss was
recognized for financial reporting purposes.
Capital Commitments
In connection with the acquisition of the 45 Properties under
construction or renovation at December 31, 1999, the Company entered into
development agreements with tenants which provide terms and specifications for
the construction or renovation of buildings the tenants have agreed to lease or
equipment financing the Company has agreed to provide. The agreements provide a
maximum amount of development costs (including the purchase price of the land
and closing costs) to be paid by the Company. In addition, the Company, as a
result of the acquisition of the Advisor, has unfunded letters of commitment to
develop Properties for specific tenants. The aggregate maximum development costs
and unfunded letters of commitment the Company had agreed to pay as of December
31, 1999 were approximately $214,022,000, of which approximately $60,201,000 had
been incurred as of December 31, 1999.
In the ordinary course of business, the Company has outstanding
commitments to qualified borrowers that are not reflected in the accompanying
consolidated financial statements. These commitments, if accepted by the
potential borrowers, obligate the Company to provide funding. The accepted and
unfunded commitment totaled approximately $108,165,000 at December 31, 1999
which includes both the Warehouse Facility and the off-balance sheet loan sale
facility.
Cash and Cash Equivalents
At December 31, 1999 and 1998, the Company had $46,011,592 and
$125,207,377, (including certificates of deposit of $2,007,540 at December 31,
1998), respectively, invested in short-term, highly-liquid investments such as
demand deposits at commercial banks and money markets with less than a 30-day
maturity date. The decrease in the amount invested in short-term investments was
primarily attributable to the Company investing in Properties, Mortgage Loans,
and Secured Equipment Leases during 1999.
Liquidity Requirements
The Company expects to meet its short-term liquidity requirements,
other than for acquisition and development of Properties and investment in
Mortgage Loans and Secured Equipment Leases, through cash flow provided by
operating activities. The Company believes that cash flow provided by operating
activities will be sufficient to fund normal recurring operating expenses,
regular debt service requirements and distributions to stockholders. To the
extent that the Company's cash flow provided by operating activities is not
sufficient to meet such short-term liquidity requirements as a result, for
example, of unforeseen expenses due to tenants defaulting under the terms of
their lease agreements, the Company will use borrowings under its Credit
Facility.
Due to the fact that the Company generally leases its Properties on a
triple-net basis, meaning that tenants are generally required to pay all repairs
and maintenance, property taxes, insurance and utilities, management does not
believe that working capital reserves are necessary at this time. Management
believes that the Properties are adequately covered by insurance. The Company
has obtained contingent liability and property coverage; this insurance policy
is intended to reduce the Company's exposure in the unlikely event a tenant's
insurance policy lapses or is insufficient to cover a claim relating to a
Property.
The Company expects to meet its other short-term liquidity
requirements, including Property acquisition and development and investment in
Secured Equipment Leases, with additional advances under its Credit Facility and
Secured Credit Facility. The Company also intends to meet short-term liquidity
requirements through the use of its Warehouse Facility to fund the acquisition
of Mortgage Loans, and use the proceeds from the subsequent securitizations of
these Mortgage Loans to repay the Warehouse Facility.
The Company expects to meet its long-term liquidity requirements
through short or long-term, unsecured or secured debt financing or equity
financing. As of March 11, 2000, the Company's only long-term liquidity
requirements were the maturities of its Mortgage Warehouse Facility in 2000,
Credit Facility in June 2002 and the Secured Credit Facility in October 2002.
In addition, the management of APF has been in discussions with Bank of
America regarding a potential strategic alliance. Assuming an agreement can be
reached, management of APF believes that this strategic alliance will provide
APF with an additional source of capital on favorable terms. It is management's
desire to grow its ability to make triple-net lease and mortgage financings and
to expand the financial services offered to the restaurant industry.
Distributions
During the years ended December 31, 1999, 1998 and 1997, the Company
generated cash from operations (which includes cash received from tenants and
interest and other income received, less cash paid for operating expenses) of
$307,261,214, $39,116,275 and $17,076,214, respectively. Based primarily on cash
from operations, the Company declared and paid distributions to its stockholders
of $60,078,825, $39,449,149 and $16,854,297 during the years ended December 31,
1999, 1998 and 1997, respectively. In addition, on each of January 1, February 1
and March 1, 2000, the Company declared distributions to its stockholders of
$5,527,461, payable in March 2000. For the years ended December 31, 1999, 1998
and 1997, approximately 97 percent, 85 percent and 93 percent, respectively, of
the distributions received by stockholders were considered to be ordinary income
and approximately three percent, 15 percent and seven percent, respectively,
were considered a return of capital for federal income tax purposes. However, no
amounts distributed or to be distributed to the stockholders as of March 11,
2000, are required to be or have been treated by the Company as a return of
capital for purposes of calculating the stockholders' return on their invested
capital.
Amounts Due To Related Parties
During the years ended December 31, 1999, 1998 and 1997, and prior to
the acquisition of the Advisor (see "Mergers") the Advisor and its affiliates
incurred on behalf of the Company $124,031, $4,228,480 and $2,351,244,
respectively, for certain offering expenses, $579,206, $1,113,580 and $514,908,
respectively, for certain acquisition expenses, and $4,438,798, $924,683 and
$368,516, respectively, for certain operating expenses. As of December 31, 1999
and 1998, the Company owed its affiliates $1,809,237 and $1,608,670,
respectively, for such amounts, unpaid fees and administrative expenses
(including services for accounting; financial, tax and regulatory compliance and
reporting; lease and loan compliance; stockholder distributions and reporting;
due diligence and marketing; and investor relations) and for soliciting dealer
servicing fees. As of March 11, 2000, the Company had reimbursed all such
amounts. In addition, as of December 31, 1999, the Company held an obligation
under a capital lease with an affiliate of $8,817,692 relating to office space
occupied by the Company.
Terminated Mergers
On March 11, 1999, the Company entered into agreements to acquire the
18 CNL Income Funds whose Properties are substantially the same type as the
Company's. In connection with these agreements, the Company agreed to issue up
to 30.5 million Shares of common stock, after restatement for the one-for-two
reverse stock split. On June 3, 1999, the general partners, on behalf of CNL
Income Funds XVII and XVIII, and the Company agreed that it would be in the best
interests of CNL Income Funds XVII and XVIII and the Company that the Company
not attempt to acquire CNL Income Funds XVII and XVIII in the acquisition.
Therefore, in June 1999, the Company entered into termination agreements with
CNL Income Funds XVII and XVIII.
On March 1, 2000, the Company announced that it had entered into
termination agreements with the remaining 16 CNL Income Funds. This decision was
based on a number of factors including, concern of the general partners of the
CNL Income Funds that, in light of the market conditions relating to publicly
traded real estate investment trusts generally ("REITS"), the potential value of
the transaction had diminished. As a result of such diminishment, the general
partners' ability to unequivocally recommend voting for the transaction, in the
exercise of their fiduciary duties, had become questionable. Due to the general
partners' reluctance to recommend the transaction to the limited partners of the
CNL Income Funds, the Company believed that pursuing the transaction without an
unequivocal recommendation of the CNL Income Funds' general partners would not
result in a favorable vote, and that therefore the continued pursuit of the
acquisition by the Company would not be in the best interests of its
stockholders. Furthermore, a primary objective of the Company for acquiring the
CNL Income Funds was to significantly increase its asset base for the purpose of
listing its Shares on the New York Stock Exchange and potentially, by virtue of
size, create an institutional investor following. In light of the current market
conditions relating to publicly traded REITS, the Company believes that
increasing its size would not provide it with such following and would not
provide the Company with access to capital on favorable terms. Therefore, being
forced to list at this time, which is a condition to closing the acquisition of
the CNL Income Funds, would not, in the opinion of the Company, produce the
results the Company had initially envisioned at the time the merger agreements
were executed.
On May 11, 1999, four limited partners in several CNL Income Funds
served a lawsuit against the general partners of the CNL Income Funds and the
Company in connection with the proposed merger with the CNL Income Funds. On
July 8, 1999, the plaintiffs amended the complaint to add three additional
limited partners as plaintiffs. Additionally, on June 22, 1999 a limited partner
in certain of the CNL Income Funds served a lawsuit against the Company, the
Advisor, certain of its affiliates and the CNL Income Funds in connection with
the proposed merger.
On September 23, 1999, the judge assigned to the two cases entered an
order consolidating the two cases. Pursuant to this order the plaintiffs in
these cases filed a consolidated and amended complaint on November 8, 1999.
Various defendants, including the Company, filed a motion to dismiss the
consolidated complaint on December 28, 1999. The Company and the general
partners of the CNL Income Funds believe that the lawsuits are without merit and
intend to defend vigorously against the claims.
Results of Operations
Revenues
During the years ended December 31, 1999, 1998 and 1997, the Company
earned $61,907,812, $33,129,661 and $15,490,615, respectively, in rental income
from operating leases and earned income from direct financing leases from 661,
409 and 244 Properties, respectively, and 74, 35 and 29 Secured Equipment Leases
structured as leases, respectively. The increase during 1999 and 1998, each as
compared to the previous year, was attributable to the Company investing in
additional Properties and Secured Equipment Leases during 1999 and 1998. The
increase in rental and earned income was slightly offset by the fact that the
leases of 12 Boston Market Properties were rejected in 1998 in connection with
the tenants filing for bankruptcy, as described below.
During 1998, Boston Chicken, Inc. and its affiliates, which at that
time leased 31 Boston Market Properties from the Company, filed a voluntary
petition for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code.
As a result of these bankruptcy filings, the tenants had the legal right to
either reject or affirm one or more of their leases with the Company. As of
March 11, 2000, of the 28 Properties remaining in the Company's portfolio
relating to these tenants (excluding Properties sold), the Company had re-leased
five Properties to new tenants, had ceased receiving rental payments for six
Properties, the leases of which had been rejected and which remained vacant, and
continued to receive rental payments for 17 Properties. While the tenants have
not rejected or affirmed the remaining 17 leases, there can be no assurance that
some or all of these leases will not be rejected in the future. The lost
revenues that would result from the six vacant Properties remaining in the
portfolio whose leases were rejected and in the event the remaining 17 leases
are rejected could have an adverse effect on the liquidity and results of
operations of the Company, if the Company is unable to re-lease or sell the
Properties in a timely manner. Currently, the Company is actively marketing the
six Properties with rejected leases to existing and prospective clients and
local and regional restaurant operators. The Company recorded provisions for
losses relating to some of these vacant Properties, as described below in
"Provisions for Losses on Assets."
The Company earned $6,651,774, $3,085,518 and $2,010,500 in interest
income from Mortgage Loans and Secured Equipment Leases structured as loans
during the years ended December 31, 1999, 1998 and 1997, respectively. The
increase in interest income from Mortgage Loans and Secured Equipment Leases
during the years ended December 31, 1999 and 1998, each as compared to the
previous year, was attributable to the Company investing in additional loans in
1999 and 1998.
During the years ended December 31, 1999, 1998 and 1997, the Company
earned $6,683,372, $5,899,028 and $1,931,331, respectively, in investment and
interest income from investments in franchise loan certificates, residual
interests in loan sales, money market accounts or other short-term, highly
liquid investments. The increase in investment and interest income during the
years ended December 31, 1999 and 1998, each as compared to the previous year,
was primarily attributable to the acquisition of certain investment securities
and residual interests in securitizations during 1999 and 1998.
Because the Company expects to continue to acquire Properties and
invest in Mortgage Loans and Secured Equipment Leases, and because certain
Properties were under construction as of December 31, 1999, revenues for the
year ended December 31, 1999 represent only a portion of revenues which the
Company is expected to earn in future periods.
Expenses
Operating expenses, including depreciation and amortization expense,
were $115,762,527, $9,408,957 and $3,862,024 for the years ended December 31,
1999, 1998 and 1997, respectively . Total operating expenses increased primarily
as a result of a $76,333,516 charge related to the cost incurred in acquiring
the Advisor from a related party during 1999 (see "Liquidity and Capital
Resources - Mergers"). On September 1, the Company acquired the Advisor and
became internally managed. Effective September 1, 1999, the advisory fee,
acquisition fees and other fees previously paid to the Advisor were replaced
with the actual personnel and other operating costs associated with being
internally managed. Costs relating to acquisitions and development activities
have been capitalized in accordance with generally accepted accounting
principles.
The increase in operating expenses for the years ended December 31,
1999 and 1998 was also partially due to the fact that the Company incurred
$6,798,803 and $157,054 in transaction costs during the years ended December 31,
1999 and 1998, respectively, related to the mergers as described above in
"Liquidity and Capital Resources - Terminated Mergers." In addition, the Company
invested in additional Properties, Mortgage Loans and Secured Equipment Leases
during 1999 and 1998, which resulted in increased depreciation expense.
Depreciation expense is expected to increase as the Company invests in
additional Properties and Mortgage Loans. In addition, the increase in operating
expenses during 1999 as compared to 1998 and 1997, is a result of the increase
in the level of borrowings during 1999 to invest in Properties and Mortgage
Loans, which resulted in incurring approximately $11 million in interest
expense. During 1998 and 1997, all interest costs were capitalized.
Loss on Sale of Assets
As a result of the sale of certain assets, as described above in
"Liquidity and Capital Resources" the Company recognized a loss of $1,851,838
during 1999. No gains or losses were recorded for financial reporting purposes
relating to the sale of assets during the years ended December 31, 1998 and
1997.
Provisions for Losses on Assets
During the years ended December 31, 1999 and 1998, the Company recorded
provisions for losses on land, buildings and direct financing leases totaling
$7,779,195 and $611,534, respectively, for financial reporting purposes. The
tenants of these Properties experienced financial difficulties and ceased
payment of rents under the terms of their lease agreements. The allowances
represent the difference between the carrying value of the Properties at
December 31, 1999 and 1998 and the estimated net realizable value for these
Properties. No provisions were recorded at December 31, 1997.
Summary of New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities." The Statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts (collectively, referred to as
derivatives), and for hedging activities. The Statement requires the recognition
of all derivatives as either assets or liabilities in the balance sheet and
measurement of those instruments at fair value. In June 1999, the Financial
Accounting Standards Board issued Statement of Financial Accounting Standards
No. 137, "Accounting for Derivative Instruments and Hedging Activities --
Deferral of the Effective Date of FASB Statement No. 133, an Amendment of FASB
Statement No. 133." Statement No. 137 defers the effective date of Statement No.
133, "Accounting for Derivative Instruments and Hedging Activities" for one
year. Statement No. 133, as amended is now effective for all fiscal quarters of
all fiscal years beginning after June 15, 2000. The Company will adopt this
statement in the third quarter of 2000. The Company does not expect the adoption
of this statement to have a material impact on the financial statements.
Overview of Year 2000 Problem
The year 2000 problem concerned the inability of information and
non-information technology systems to properly recognize and process
date-sensitive information beyond January 1, 2000. The failure to accurately
recognize the year 2000 could have resulted in a variety of problems from data
miscalculations to the failure of entire systems.
Status
Prior to the acquisition of CNL Fund Advisors, Inc. (the "Advisor") by
the Company in September 1999, the Company had no information and
non-information technology systems. Upon the acquisition of the Advisor, the
Company acquired the information and non-information technology systems of the
Advisor. In early 1998, the Advisor and its affiliates formed a year 2000
committee ("the Y2K Team") that assessed the readiness of any systems that were
date sensitive and completed upgrades for the hardware equipment and software
that were not year 2000 compliant, as necessary. The cost for these upgrades was
approximately $5,000. The Company does not expect to incur any additional costs
in connection with the year 2000 remedial measures. In addition, the Y2K Team
requested and received certifications of compliance from other companies with
which the Company and its affiliates have material third party relationships.
In assessing the risks presented by the year 2000 problem, the Y2K Team
identified potential worst case scenarios involving the future of the
information and non-information technology systems used by the Company's
transfer agent, financial institutions and tenants. As of January 14, 2000, the
Company and its affiliates had tested the information and non-information
technology systems used by the Company and have not experienced material
disruption or other significant problems. In addition, as of March 11, 2000, the
Company was not aware of any material year 2000 problems relating to information
and non-information technology systems of third parties with which the Company
maintains material relationships, including those of the Company's transfer
agent, financial institutions and tenants. In addition, in the Company's
interactions with its transfer agent, financial institutions and tenants, the
systems of these third parties have functioned normally. Until the Company's
first distribution in 2000 and the delivery of the information by the transfer
agent to stockholders in early 2000, the Company will continue to monitor the
year 2000 compliance of the transfer agent. In addition, the Company will
continue to monitor the systems used by and to maintain contact with third
parties with which the Company has material relationships with respect to year
2000 compliance and any year 2000 issues that may arise at a later date. The
Company will develop contingency plans relating to ongoing year 2000 issues at
the time that such issues are identified and such plans are deemed necessary.
Based on the information provided to the Y2K Team, the upgrades and
remedial measures by the Company and its affiliates, and the normal functioning
to date of information and non-information technology systems used by the
Company and those third parties, the Company does not foresee significant risks
associated with its year 2000 compliance at this time. However, there can be no
assurance that the Company and its affiliates or any third parties will not have
ongoing year 2000 issues that may have adverse effects on the Company.
Quantitative and Qualitative Disclosures About Market Risk
The Company has provided fixed rate Mortgage Loans and equipment
financing to borrowers. The Company has also invested in Certificates with fixed
and adjustable rates. Management believes that the estimated fair value of the
Mortgage Loans, equipment financing and Certificates at December 31, 1999
approximated the outstanding principal amounts. The Company is exposed to equity
loss in the event of changes in interest rates.
Additional information related to this item is incorporated by reference
from "Interest Rate Risk."
Forward Looking Statements
The information in this Management's Discussion and Analysis of
Financial Conditions and Results of Operations, including, without limitation,
the Overview Year 2000 Problem disclosure and the Quantitative and Qualitative
Disclosures About Market Risk that are not historical facts, may be
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These
statements generally are characterized by the use of terms such as "believe,"
"expect" and "may." Although the Company believes that the expectations
reflected in such forward-looking statements are based upon reasonable
assumptions, the Company's actual results could differ materially from those set
forth in the forward-looking statements. Factors that might cause such a
difference include: changes in general economic conditions, changes in real
estate conditions, availability of capital from borrowings under the Company's
credit facilities, the availability of other debt and equity financing
alternatives, increases in interest rates under the Company's Credit Facility,
Mortgage Warehouse Facility, Secured Credit Facility and under any additional
variable rate debt arrangements that the Company may enter into the future, the
ability of the Company to refinance amounts outstanding under its credit
facility at maturity on terms favorable to the Company, the ability of the
Company to locate suitable tenants for its restaurant properties and borrowers
for its mortgage loans, the ability of tenants and borrowers to make payments
under their respective leases, secured equipment leases or mortgage loans, the
ability of the Company to re-lease properties that are currently vacant or that
become vacant, and the ability of the Company to securitize mortgage loans on a
favorable and timely basis. Given these uncertainties, readers are cautioned not
to place undue reliance on such statements.
Item 7a. Quantitative and Qualitative Disclosures About Market Risk
This information is described above in Item 7. Management's Discussion
and Analysis of Financial Condition and Results of Operations.
<PAGE>
Report of Independent Certified Public Accountants
To the Board of Directors and Stockholders of
CNL American Properties Fund, Inc.
In our opinion, the consolidated financial statements listed in the accompanying
index appearing under item 14(a)1 present fairly, in all material respects, the
financial position of CNL American Properties Fund, Inc. (a Maryland
corporation) and its subsidiaries at December 31, 1999 and 1998, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1999 in conformity with accounting principles
generally accepted in the United States. In addition, in our opinion, the
financial statement schedules listed in the accompanying index appearing under
item 14(a)2 present fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated financial
statements. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
Orlando, Florida
February 12 except for Note 16 for which the date is March 1, 2000
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
1999 1998
--------------- ---------------
<S> <C>
ASSETS
Land, buildings and equipment on operating leases, less
accumulated depreciation and allowance for loss $ 681,210,344 $ 393,339,334
Net investment in direct financing leases, less allowance for 145,743,195 91,675,650
loss
Mortgage loans held for sale 63,466,474 --
Mortgage notes receivable -- 19,631,693
Equipment and other notes receivables 42,748,420 19,377,380
Other investments 75,806,738 18,208,554
Cash and cash equivalents 46,011,592 123,199,837
Receivables, less allowance for doubtful accounts
of $2,660,069 and $1,069,024, respectively 3,329,557 526,650
Accrued rental income 8,116,794 3,959,913
Due from related parties 1,315,721 --
Goodwill, less accumulated amortization 45,013,556 --
Intangibles and other assets 25,430,402 10,433,002
---------------- -----------------
$1,138,192,793 $ 680,352,013
================ =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Line of credit $ 248,000,000 $ 10,143,044
Note payable 140,504,000 --
Mortgage warehouse facility 30,749,540 --
Accrued construction costs payable 17,566,758 4,170,410
Accounts payable and accrued expenses 8,833,695 1,035,436
Due to related parties 10,626,929 1,608,670
Other payables 8,700,414 2,302,350
---------------- -----------------
Total liabilities 464,981,336 19,259,910
---------------- -----------------
Minority interests 997,353 281,817
---------------- -----------------
Commitments and Contingencies (Note 15)
Stockholders' equity:
Preferred stock, without par value. Authorized
and unissued 3,000,000 Shares -- --
Excess Shares, $0.01 par value per share.
Authorized and unissued 78,000,000 Shares -- --
Common stock, $0.01 par value per share. Authorized
62,500,000 Shares, issued 43,533,221 and 37,372,684
Shares, respectively, outstanding 43,495,919 and
37,337,927 Shares, respectively 434,958 373,379
Capital in excess of par value 791,418,955 669,983,438
Accumulated other comprehensive loss (177,119 ) --
Accumulated distributions in excess of net earnings (119,462,690 ) (9,546,531 )
---------------- -----------------
Total stockholders' equity 672,214,104 660,810,286
---------------- -----------------
$1,138,192,793 $ 680,352,013
================ =================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997
-------------- -------------- -------------
<S> <C>
Revenues:
Rental income from operating leases $ 49,755,374 $ 26,688,864 $ 12,457,200
Earned income from direct financing leases 12,152,438 6,440,797 3,033,415
Interest income from mortgage loans,
equipment and other notes receivables 6,651,774 3,085,518 2,010,500
Investment and interest income 6,683,372 5,899,028 1,931,331
Other income 257,639 72,830 25,487
--------------- --------------- --------------
75,500,597 42,187,037 19,457,933
--------------- --------------- --------------
Expenses:
General operating and administrative 8,829,861 2,798,481 1,010,725
Interest expense 10,205,197 -- --
Asset management fees to related party 2,343,307 1,851,004 804,879
State and other taxes 905,700 548,320 251,358
Depreciation and amortization 10,346,143 4,054,098 1,795,062
Transaction costs 6,798,803 157,054 --
Advisor acquisition expense 76,333,516 -- --
--------------- --------------- --------------
115,762,527 9,408,957 3,862,024
--------------- --------------- --------------
Earnings/(Losses) Before Minority Interest in Income
of Consolidated Joint Ventures, Equity in Earnings
of Unconsolidated Joint Venture, Loss on
Sale of Assets and Provision for Losses on Assets (40,261,930 ) 32,778,080 15,595,909
Minority Interest in Income of
Consolidated Joint Ventures (41,678 ) (30,156 ) (31,453 )
Equity in Earnings of Unconsolidated Joint Venture 97,307 16,018 --
Loss on Sale of Assets (1,851,838 ) -- --
Provision for Losses on Assets (7,779,195 ) (611,534 ) --
--------------- --------------- --------------
Net Earnings/(Loss) $ (49,837,334 ) $ 32,152,408 $ 15,564,456
=============== =============== ==============
Earnings/(Loss) Per Share of Common
Stock (Basic and Diluted) $ (1.26 ) $ 1.21 $ 1.33
=============== =============== ==============
Weighted Average Number of Shares
of Common Stock Outstanding 39,402,941 26,648,219 11,711,934
=============== =============== ==============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME (LOSS)
Years Ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
Accumulated Accumulated
distributions other
Common stock Capital in in excess compre-
Number Par excess of of net hensive Comprehensive
of Shares value par value earnings income (loss) Total income (loss)
----------- ---------- -------------- ------------- ------------- ------------- -------------
<S> <C>
Balance at December 31, 1996 6,972,358 $ 69,723 $123,757,653 $ (959,949 ) $ -- $122,867,427 $ --
Subscriptions received for com-
mon stock through public
offerings and distribution 11,124,128 111,242 222,371,318 -- -- 222,482,560 --
reinvestment plan
Stock issuance costs -- -- (22,422,045 ) -- -- (22,422,045 ) --
Net earnings -- -- -- 15,564,456 -- 15,564,456 --
Distributions declared and
paid ($1.49 per share) -- -- -- (16,854,297 ) -- (16,854,297 ) --
----------- ---------- -------------- ------------- ------------- ------------- -------------
Balance at December 31, 1997 18,096,486 180,965 323,706,926 (2,249,790 ) -- 321,638,101 --
Subscriptions received for com-
mon stock through public
offerings and distribution 19,276,198 192,762 385,331,204 -- -- 385,523,966 --
reinvestment plan
Retirement of common stock (34,757 ) (348 ) (639,180 ) -- -- (639,528 ) --
Stock issuance costs -- -- (38,415,512 ) -- -- (38,415,512 ) --
Net earnings -- -- -- 32,152,408 -- 32,152,408 --
Distributions declared and
paid ($1.52 per share) -- -- -- (39,449,149 ) -- (39,449,149 ) --
----------- ---------- -------------- ------------- ------------- ------------- -------------
Balance at December 31, 1998 37,337,927 373,379 669,983,438 (9,546,531 ) -- 660,810,286 --
Subscriptions received for
common stock through
public offering 10,537 105 210,631 -- -- 210,736 --
Stock issuance costs -- -- (1,662,749 ) -- -- (1,662,749 ) --
Common stock issued
through merger 6,150,000 61,500 122,938,500 -- -- 123,000,000 --
Net loss -- -- -- (49,837,334 ) -- (49,837,334 ) (49,837,334)
Other comprehensive loss,
market revaluation on
available for sale
securities -- -- -- -- (177,119 ) (177,119 ) (177,119)
Retirement of common stock (2,545 ) (26 ) (50,865 ) -- -- (50,891 ) --
Distributions declared and
paid ($1.52 per share) -- -- -- (60,078,825 ) -- (60,078,825 ) --
----------- ---------- -------------- ------------- ------------- ------------- -------------
Balance at December 31, 1999 43,495,919 $ 434,958 $791,418,955 $(119,462,690) $ (177,119 ) $672,214,104 $(50,014,453)
=========== ========== ============== ============= ============= ============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997
-------------- ------------- --------------
<S> <C>
Cash Flows from Operating Activities:
Net earnings/(Loss) $ (49,837,334 ) $32,152,408 $15,564,456
--------------- -------------- --------------
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation 8,670,140 4,042,290 1,784,268
Amortization 1,676,003 11,808 10,794
Advisor acquisition expense 76,333,516 -- --
Provision for losses on assets 7,779,195 611,534 --
Provision for uncollectible mortgage notes 988,561 636,614 --
Provision for uncollectible equipment
notes receivable 1,000,000 -- --
Valuation allowance 551,011 -- --
Loss on sale of assets 1,851,837 -- --
Equity in earnings of joint venture,
net of distributions 28,503 (15,440 ) --
Proceeds from sale of loans 294,227,564 -- --
Proceeds from securitization transaction 257,812,474 -- --
Purchase of other investments (31,247,213 ) -- --
Investment in mortgage notes receivable (266,302,331 ) -- --
Collection on mortgage notes receivable 2,072,604 -- --
Decrease (increase) in receivables (5,296,996 ) 262,958 (905,339 )
Decrease in net investment in direct financing leases 3,529,960 1,971,634 1,130,095
Increase in accrued rental income (4,156,881 ) (2,187,652 ) (1,350,185 )
Increase in intangibles and other assets (859,829 ) (29,477 ) (6,869 )
Increase in accounts payable and accrued expenses 5,805,586 404,161 153,223
Increase in due to related parties, excluding
reimbursement of acquisition and stockstock issuance
issuance costs paid on behalf of the Company 958,461 31,255 15,466
Increase in rents paid in advance 203,974 436,843 398,528
Increase in deferred rental income 2,865,041 693,372 221,727
Increase (decrease) in other payables (1,434,310 ) 63,811 28,597
Increase in minority interest 41,678 30,156 31,453
--------------- -------------- --------------
Total adjustments 357,098,548 6,963,867 1,511,758
--------------- -------------- --------------
Net Cash Provided by Operating Activities 307,261,214 39,116,275 17,076,214
--------------- -------------- --------------
Cash Flows from Investing Activities:
Additions to land and buildings on operating leases (286,411,210 ) (200,101,667 ) (143,542,667 )
Investment in direct financing leases (63,663,720 ) (47,115,435 ) (39,155,974 )
Proceeds from sale of assets 7,555,199 2,385,941 7,251,510
Investment in mortgage notes receivable (4,041,427 ) (2,886,648 ) (4,401,982 )
Collection on mortgage notes receivable 393,468 291,990 250,732
Investment in equipment notes receivable (26,963,918 ) (7,837,750 ) (12,521,401 )
Collection on equipment notes receivable 3,500,599 1,263,633 --
Investment in joint venture (187,452 ) (974,696 ) --
Purchase of other investments -- (16,083,055 ) --
Redemption of (investment in) certificates of deposit 2,000,000 -- (2,000,000 )
Increase in intangibles and other assets (1,862,036 ) (6,281,069 ) --
--------------- -------------- --------------
Net cash used in investing activities (369,680,497 ) (277,338,756 ) (194,119,782 )
--------------- -------------- --------------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997
-------------- ------------- --------------
<S> <C>
Cash Flows from Financing Activities:
Reimbursement of acquisition and stock
issuance costs paid by related parties on
behalf of the Company (1,492,310 ) (4,574,925 ) (2,857,352 )
Proceeds from borrowings on line of credit and note 439,941,245 7,692,040 19,721,804
payable
Payment on line of credit (61,580,289 ) (8,039 ) (20,784,577 )
Proceeds from borrowings on mortgage warehouse facility 27,101,067 -- --
Payments on mortgage warehouse facility (352,808,966 ) -- --
Contribution from minority interest of
consolidated joint venture 740,621 -- --
Subscriptions received from stockholders 210,736 385,523,966 222,482,560
Retirement of Shares of common stock (50,891 ) (639,528 ) --
Distributions to minority interest (66,763 ) (34,073 ) (34,020 )
Distributions to stockholders (60,078,825 ) (39,449,149 ) (16,854,297 )
Payment of stock issuance costs (737,190 ) (34,579,650 ) (19,542,862 )
Payment of loan costs (5,947,397 ) -- --
Other -- (95,101 ) 49,001
--------------- -------------- --------------
Net cash provided by/used for financing activities (14,768,962 ) 313,835,541 182,180,257
--------------- -------------- --------------
Net Increase (Decrease) in Cash and Cash Equivalents (77,188,245 ) 75,613,060 5,136,689
Cash and Cash Equivalents at Beginning of Year 123,199,837 47,586,777 42,450,088
--------------- -------------- --------------
Cash and Cash Equivalents at End of Year $ 46,011,592 $ 123,199,837 $47,586,777
=============== ============== ==============
Supplemental Schedule of Non-Cash Investing
and Financing Activities:
Related parties paid certain acquisition and stock
issuance costs on behalf of the Company as follows:
Acquisition costs $ 579,206 $ 1,113,580 $ 514,908
Stock issuance costs 124,031 4,228,480 2,351,244
--------------- -------------- --------------
$ 703,237 $ 5,342,060 $ 2,866,152
=============== ============== ==============
Capital lease obligation incurred for the lease
of the Company's office space and furniture $ 10,056,645 $ -- $ --
=============== ============== ==============
</TABLE>
Detail of Acquisitions:
During the year ended December 31, 1999, the Company issued 3,800,000
Shares of common stock ($76,000,000) to acquire the net assets of CNL
Fund Advisors, Inc. and its subsidiary. During the year ended December
31, 1999, the Company also issued 2,350,000 Shares of common stock
($47,000,000) to acquire the net assets of CNL Financial Services, Inc.
and CNL Financial Corporation and its subsidiaries.
See accompanying notes to consolidated financial statements.
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1999, 1998 and 1997
1. Significant Accounting Policies:
CNL American Properties Fund, Inc. was organized in Maryland on May 2,
1994 and is a self-administered real estate investment trust ("REIT").
The term "Company" includes, unless the context otherwise requires, CNL
American Properties Fund, Inc. and its direct and indirect
subsidiaries. These subsidiaries include CNL APF Partners, LP, a
Delaware limited partnership formed in May 1998, and CNL APF GP Corp.
and CNL APF LP Corp., the general and limited partner, respectively, of
CNL APF Partners, LP. As a result of the merger on September 1, 1999
(see Note 12), the Company's subsidiaries also include CNL Fund
Advisors, Inc., CNL Financial GP Holding Corp., CNL Financial LP
Holding, LP, CNL Financial Services GP Corp. and CNL Financial
Services, LP. The Company offers financial, development, advisory and
other real estate services to operators of selected national and
regional fast food, family-style and casual dining restaurant chains.
Principles of Consolidation - The Company accounts for its 85.47% and
73.43% interests in CNL/Corral South Joint Venture and CNL/Chevys
Annapolis Joint Venture, respectively, using the consolidation method.
Minority interests represent the minority joint venture partners'
proportionate share of the equity in the Company's consolidated joint
ventures. All significant intercompany balances and transactions have
been eliminated. The Company accounts for its 59.22% interest in
CNL/Lee Vista Joint Venture using the equity method because it Shares
control with the other joint venture partner.
At December 31, 1999 and 1998, the difference between the Company's
carrying amount of its investment in joint venture and the underlying
equity in net assets of the joint venture was $75,954 and $104,698,
respectively, less accumulated amortization of $2,899 and $1,013,
respectively. This amount is being amortized on a straight-line basis
over 30 years, the term of the joint venture agreement.
Real Estate and Lease Accounting - The Company records the acquisition
of land, buildings and equipment at cost, including acquisition and
closing costs. In addition, interest costs incurred during construction
are capitalized. Land and buildings are leased to unrelated third
parties generally on a triple-net basis, which means that the tenant is
responsible for all operating expenses relating to the Property,
including property taxes, insurance, maintenance and repairs. In
addition, the Company offers equipment financing through leases or
loans. The property leases and secured equipment leases are accounted
for using either the direct financing or the operating method. Such
methods are described below:
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998 and 1997
1. Significant Accounting Policies - Continued:
Direct financing method - The leases accounted for using the
direct financing method are recorded at their net investment
(which at the inception of the lease generally represents the
cost of the asset) (see Note 3). Unearned income is deferred
and amortized to income over the lease terms so as to produce
a constant periodic rate of return on the Company's net
investment in the leases.
Operating method - Land, building and secured equipment leases
accounted for using the operating method are recorded at cost,
revenue is recognized as rentals are earned and depreciation
is charged to operations as incurred. Buildings and equipment
are depreciated on the straight-line method over their
estimated useful lives of 30 and seven years, respectively.
When scheduled rentals (including rental payments, if any,
required during the construction of a Property) vary during
the lease term, income is recognized on a straight-line basis
so as to produce a constant periodic rent over the lease term
commencing on the date the property is placed in service.
Accrued rental income represents the aggregate amount of
income recognized on a straight-line basis in excess of
scheduled rental payments to date. In contrast, deferred
rental income represents the aggregate amount of rental
payments to date (including rental payments due during
construction and prior to the property being placed in
service) in excess of income recognized on a straight-line
basis over the lease term commencing on the date the property
is placed in service.
When the properties or equipment are sold, the related cost and
accumulated depreciation for operating leases and the net investment
for direct financing leases, plus any accrued rental income or deferred
rental income, will be removed from the accounts and any gains or
losses from sales will be reflected in operations. Management reviews
its properties for impairment whenever events or changes in
circumstances indicate that the carrying amount of the assets may not
be recoverable through operations. Management determines whether an
impairment in value has occurred by comparing the estimated future
undiscounted cash flows, including the residual value of the property,
with the carrying cost of the individual property. If an impairment is
indicated, the assets are adjusted to their fair value.
Mortgage Loan Origination Fees and Costs - The Company accounts for
loan origination fees and costs incurred in connection with mortgage
loans, equipment and other notes receivable in accordance with
Statement of Financial Accounting Standards No. 91, "Accounting for
Nonrefundable Fees and Costs Associated with Originating or Acquiring
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998 and 1997
1. Significant Accounting Policies - Continued:
Loans and Initial Direct Costs of Leases." This statement requires the
deferral of loan origination fees and the capitalization of direct loan
costs. The costs capitalized, net of the fees deferred, are amortized
to interest income as an adjustment of yield over the life of the
loans. Loan origination fees and costs related to mortgage loans held
for sale are deferred until the related loan is sold.
The unpaid principal and accrued interest on the mortgage loans, plus
the unamortized balance of such fees and costs are included in mortgage
loans held for sale (see Note 4). The valuation allowance on mortgage
notes is established whenever it appears that future collection of
principal on specific mortgage notes appears doubtful. The valuation
allowance on mortgage notes represents the difference between the
carrying value at December 31 and the net realizable value management
expects to receive relating to the mortgage loan.
Other Investments - The Company determines the appropriate
classification of other investments at the time of purchase and
re-evaluates such designation at each balance sheet date. Investments
classified as held to maturity are carried at their amortized cost
(which approximates market value). Investments classified as available
for sale securities are stated at fair market value. The market value
adjustment is included in the accumulated other comprehensive loss.
Investments classified as trading securities are recorded at the lower
of cost or market, using the aggregate loan basis. The Company
recognizes interest income using the effective interest method.
Cash and Cash Equivalents - The Company considers all highly liquid
investments with a maturity of three months or less when purchased to
be cash equivalents. Cash and cash equivalents consist of demand
deposits at commercial banks, money market funds (some of which are
backed by government securities) and certificates of deposit (with
maturities of three months or less when purchased). Cash equivalents
are stated at cost plus accrued interest, which approximates market
value.
Cash accounts maintained on behalf of the Company in demand deposits at
commercial banks, money market funds and certificates of deposit may
exceed federally insured levels; however, the Company has not
experienced any losses in such accounts. The Company limits investment
of cash to financial institutions with high credit standing; therefore,
management believes it is not exposed to any significant credit risk on
cash and cash equivalents.
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998 and 1997
1. Significant Accounting Policies - Continued:
Derivative Financial Instruments - The Company uses derivative
financial instruments to manage interest rate exposures that exist as a
part of its ongoing business operations. The portfolio of fixed-rate
mortgage loans held for sale through securitization is funded on an
interim basis by the Company's variable rate mortgage warehouse
facility. The Company hedges against fluctuations in interest rates.
The Company does not hold or issue derivative financial instruments for
speculative trading purposes. The instruments used are interest rate
contracts. The Company intends to terminate these contracts upon
securitization of the fixed-rate mortgage loans. At this time, both the
gain or loss on the sale of the loans and the gain or loss on the
termination of the interest rate contracts will be measured and
recognized in the statement of operations.
The Company would be exposed to credit loss in the event of
nonperformance by the counterparties to the interest rate contracts.
The Company minimizes its credit risk on these transactions by only
dealing with leading, creditworthy financial institutions and,
therefore, does not anticipate nonperformance.
Servicing Rights - The Company securitizes its mortgage notes
receivable. Concurrent with these securitizations, the servicing rights
related to these securitized mortgage notes receivable were granted to
CNL Financial Services, LP (CFS), a subsidiary of the Company. CFS
receives a percentage, based on monthly maximum outstanding balances,
annually in exchange for servicing the securitized mortgage notes
receivable. The outstanding principal balance of the serviced
securitized mortgage notes receivable was $533,416,784 as of December
31, 1999.
CFS also has servicing rights to loans sold through its loan sale
facility. CFS receives a percentage, based on either aggregate or
maximum monthly outstanding balances, annually in exchange for
servicing the loan sale facility. The outstanding principal balance of
the loan sale facility was $169,185,574 as of December 31, 1999.
Goodwill - Goodwill represents the excess purchase price and related
costs over the fair value assigned to the net assets/liabilities of CNL
Financial Services, Inc. and CNL Financial Corporation and its
subsidiaries acquired on September 1, 1999 (see Note 14). Goodwill is
amortized on a straight-line basis over 20 years. The Company reviews
goodwill for impairment in accordance with Statement of Financial
Accounting Standards No. 121 "Accounting for the Impairment of
Long-Lived Assets and for Long-
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998 and 1997
1. Significant Accounting Policies - Continued:
Lived Assets to be Disposed Of." The measurement of possible impairment
is based primarily on the ability to recover the balance of the
goodwill from expected future operating cash flows on an undiscounted
basis. In management's opinion, no material impairment exists at
December 31, 1999.
Loan Costs - Intangibles and other assets include loan costs incurred
in connection with the Company's line of credit that have been
capitalized and are being amortized over the term of the loan
commitment using the straight-line method which approximates the
effective interest method. Income or expense associated with interest
rate swap agreements related to the line of credit is recognized on the
accrual basis as earned or incurred through an adjustment to interest
expense. Loan costs are included in intangibles and other assets in the
financial statements. As of December 31, 1999 and 1998, the Company had
aggregate gross loan costs of $6,048,031 and $100,634, respectively. As
of December 31, 1999 and 1998, accumulated amortization totaled
$977,789 and $88,000, respectively.
Income Taxes - The Company has made an election to be taxed as a REIT
under Sections 856 through 860 of the Internal Revenue Code of 1986, as
amended, and related regulations. The Company generally will not be
subject to federal corporate income taxes on amounts distributed to
stockholders, providing it distributes at least 95 percent of its REIT
taxable income and meets certain other requirements for qualifying as a
REIT.
Accordingly, no provision for federal income taxes has been made in the
accompanying consolidated financial statements. Notwithstanding the
Company's qualification for taxation as a REIT, the Company is subject
to certain state taxes on its income and property.
Earnings Per Share - Basic earnings per share are calculated based upon
net earnings (income available to common stockholders) divided by the
weighted average number of Shares of common stock outstanding during
the reporting period. The Company does not have any potentially
dilutive common Shares.
Change in Method of Reporting - The Company changed the method of
reporting cash flows from the direct to the indirect method for the
fiscal year ended December 31, 1999. The financial statements for the
prior periods presented have been restated to conform to this
presentation.
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998 and 1997
1. Significant Accounting Policies - Continued:
Use of Estimates - Management of the Company has made a number of
estimates and assumptions relating to the reporting of assets and
liabilities and the disclosure of contingent assets and liabilities to
prepare these financial statements in conformity with generally
accepted accounting principles. Actual results could differ from those
estimates.
Reclassification - Certain items in the prior years' financial
statements have been reclassified to conform with the 1999
presentation. These reclassifications had no effect on stockholders'
equity or net earnings.
New Accounting Standards - In June 1998, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No.
133, "Accounting for Derivative Instruments and Hedging Activities."
The Statement establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments
embedded in other contracts (collectively referred to as derivatives),
and for hedging activities. The statement requires the recognition of
all derivatives as either assets or liabilities in the balance sheet
and measurement of those instruments at fair value. In June 1999, the
Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 137, "Accounting for Derivative Instruments
and Hedging Activities -- Deferral of the Effective Date of FASB
Statement No. 133, an Amendment of FASB Statement No. 133." Statement
No. 137 defers the effective date of Statement No. 133, "Accounting for
Derivative Instruments and Hedging Activities" for one year. Statement
No. 133, as amended is now effective for all fiscal quarters of all
fiscal years beginning after June 15, 2000. The Company will adopt this
statement in the third quarter of 2000. The Company does not expect the
adoption of this statement to have a material impact on the financial
statements.
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998 and 1997
2. Land, Buildings and Equipment on Operating Leases:
Land, buildings and equipment on operating leases consisted of the
following at December 31:
<TABLE>
<CAPTION>
1999 1998
------------------ -----------------
<S> <C>
Land $330,002,516 $210,451,742
Buildings 336,439,361 169,708,652
Equipment 2,345,719 --
------------------ -----------------
668,787,596 380,160,394
Less accumulated depreciation (14,742,596 ) (6,242,782 )
------------------ -----------------
654,045,000 373,917,612
Construction in progress 31,822,051 20,033,256
------------------ -----------------
685,867,051 393,950,868
Less allowance for loss on
land and buildings (4,656,707 ) (611,534 )
------------------ -----------------
$681,210,344 $393,339,334
================== =================
</TABLE>
Substantially all property leases have initial terms of 13 to 20 years
(expiring between 2006 and 2019) and provide for minimum rentals. In
addition, the majority of the property leases provide for contingent
rentals and/or scheduled rent increases over the terms of the leases.
Most leases also allow the tenant to purchase the property at the
greater of the Company's purchase price plus a specified percentage of
such purchase price or fair market value after a specified portion of
the lease has elapsed.
Some leases also provide for scheduled rent increases throughout the
lease term and/or rental payments during the construction of a property
prior to the date it is placed in service. Such amounts are recognized
on a straight-line basis over the terms of the leases commencing on the
date the property is placed in service. For the years ended December
31, 1999, 1998 and 1997, the Company recognized $5,143,552 (net of
$601,876 in reserves and $547,457 in reversals), $2,734,767 (net of
$351,177 in reserves and $666,596 in reversals) and $1,941,054,
respectively, of such rental income.
During 1999 and 1998, the Company sold five and three properties,
respectively, that were subject to operating leases, and received net
proceeds of approximately $4,327,873 and $2,386,000, respectively. The
sales in 1999 resulted in a loss of $781,192 for financial reporting
purposes. The net sales proceeds received in 1998 approximated the
carrying value of the Properties, resulting in no gain or loss. The
Company reinvested the proceeds from the sale of Properties in
additional Properties.
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998 and 1997
2. Land, Buildings and Equipment on Operating Leases - Continued:
In 1999 and 1998, the Company recorded provisions for losses on land
and buildings totaling $4,045,173 and $611,534, respectively, for
financial reporting purposes relating to several Properties. The
tenants of these Properties experienced financial difficulties and
ceased payment of rents under the terms of their lease agreements. The
allowances represent the difference between the carrying value of the
properties at December 31, 1999 and 1998, and the estimated net
realizable value for these properties.
The following is a schedule of future minimum lease payments to be
received on the noncancellable operating leases at December 31, 1999:
2000 $54,736,625
2001 54,995,527
2002 55,832,397
2003 57,109,004
2004 59,002,716
Thereafter 695,342,944
------------------
$977,019,213
==================
These amounts also do not include minimum lease payments that will
become due when properties under development are completed (see Note
15).
3. Net Investment in Direct Financing Leases:
The following lists the components of net investment in direct
financing leases at December 31:
<TABLE>
<CAPTION>
1999 1998
------------------ ------------------
<S> <C>
Minimum lease payments
receivable $302,703,373 $186,515,403
Estimated residual values 33,029,911 17,680,858
Interest receivable from
secured equipment leases 167,502 81,690
Less unearned income (186,423,569 ) (112,602,301 )
Less allowance for loss on
direct financing leases (3,734,022 ) --
------------------ ------------------
Net investment in direct
financing leases $145,743,195 $91,675,650
================== ==================
</TABLE>
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998 and 1997
3. Net Investment in Direct Financing Leases - Continued:
The secured equipment leases recorded as direct financing leases as of
December 31, 1999, provide for minimum rentals payable monthly and
generally have lease terms ranging from four to seven years. The
secured equipment leases generally include an option for the lessee to
acquire the equipment at the end of the lease term for a nominal fee.
The following is a schedule of future minimum lease payments to be
received on direct financing leases at December 31, 1999:
2000 $18,754,366
2001 18,609,410
2002 18,562,042
2003 18,459,385
2004 17,906,394
Thereafter 210,411,776
------------------
$302,703,373
==================
During 1999, the Company sold one property, that was subject to a
direct financing lease. The Company received net sale proceeds of
$974,560. The net sale proceeds approximated the carrying value of the
property, therefore, resulting in no gain or loss. The Company
reinvested the proceeds from the sale in an additional Property.
During the year ended December 31, 1999 the Company received proceeds
from various borrowers for the prepayment of 11 secured equipment
leases. The Company collected $2,252,766 which was approximately equal
to the net investment in the direct financing leases at the time of the
prepayment. As a result, no gain or loss was recognized for financial
reporting purposes.
The Company recorded provisions for losses on direct financing leases
totaling $3,734,022 at December 31, 1999 for financial reporting
purposes relating to several properties. The tenants of these
properties experienced financial difficulties and ceased payment of
rents under the terms of their lease agreements. The allowances
represent the difference between the carrying value of the properties
at December 31, 1999 and the estimated net realizable value for these
properties.
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998 and 1997
4. Mortgage Loans Held for Sale:
The loans represent first mortgage loans on the land and/or building
comprising approximately $52.4 million in fixed-rate loans and
approximately $1.5 million in variable-rate loans. Variable rate
construction loans totaled approximately $9.6 million at December 31,
1999. The fixed-rate loans carry a weighted average interest rate of
9.97%. The variable-rate loans carry interest rates that adjust monthly
based on a 30-day LIBOR plus a margin (average interest rate was 10.5%
at December 31, 1999). The mortgage loans are being collected in
monthly installments with maturity dates ranging from 2000 to 2019. The
fixed-rate mortgage loans generally prohibit prepayment for certain
periods or require a prepayment penalty from the borrower. The
variable-rate mortgage loans generally have no prepayment restrictions.
Mortgage loans held for sale consisted of the following at December 31,
1999:
Outstanding principal $63,544,138
Accrued interest income 425,136
Deferred financing income (106,911 )
Unamortized loan costs 1,143,683
Valuation allowance (551,011 )
Provision for uncollectible
mortgage notes (988,561 )
----------------
$63,466,474
================
As of December 31, 1998, the Company had $19,631,693 in mortgage notes
receivable. During the third quarter of 1999, the Company transferred
all outstanding balances to mortgage loans held for sale.
Statement of Financial Accounting Standards No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities," establishes standards for the recognition and
derecognition of assets and liabilities subsequent to a transfer of
financial assets and extinguishment of the related liabilities. The
Company has applied this statement in accounting for the recent
securitization.
The Company believes, based on current terms, that the carrying values
of the mortgage notes held for sale at December 31, 1999 and the
mortgage notes receivable at December 31, 1998 approximates fair value,
net of the valuation allowance and provision for uncollectible mortgage
notes. Mortgage loans held for sale are stated at lower of cost or fair
market value, determined in the aggregate. The fair value of the
mortgage notes held for sale is estimated based on one of the following
methods: (i) quoted market prices or (ii) present value of the expected
cash flows.
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998 and 1997
5. Equipment and Other Notes Receivable:
In 1999 and 1998, the Company entered into several promissory notes
with several borrowers for equipment and other financing for a total of
$26,470,671 and $5,887,512, respectively. The promissory notes are
collateralized by restaurant equipment. The promissory notes bear
interest at rates ranging from ten percent to 11 percent per annum and
are due in monthly installments with maturity dates ranging from 2000
to 2006.
Equipment and other notes receivable consisted of the following at
December 31:
<TABLE>
<CAPTION>
1999 1998
--------------- ----------------
<S> <C>
Outstanding principal $42,563,436 $19,100,118
Accrued interest income 1,120,767 119,113
Deferred financing income (24,365 ) (4,344 )
Unamortized loan costs 88,582 162,493
Provision for uncollectible notes
receivable (1,000,000 ) --
--------------- ----------------
$42,748,420 $19,377,380
=============== ================
</TABLE>
Management believes that the estimated fair value of equipment and
other notes receivable at December 31, 1999 and 1998 approximates the
outstanding principal amount, net of the provision for uncollectible
notes receivable, based on estimated current rates at which similar
loans would be made to borrowers with similar credit and for similar
maturities.
6. Other Investments:
In August 1998 the Company acquired an investment in certain franchise
loan certificates ("the 1998 Certificates") issued in connection with a
mortgage loan securitization transaction sponsored by CNL Financial
Corporation, which was an affiliate prior to its acquisition by the
Company in 1999 (See Note 12). Certain of the 1998 Certificates bear
interest at an 8.4% pass through rate with an effective yield of
11.46%. Other 1998 Certificates bear interest at adjustable pass
through rates which generated an effective yield of 10.65% in 1999. In
1998, the Company classified these investments as available for sale
for accounting purposes and as of December 31, 1998 their carrying
value of $16,201,014 approximated fair value. During 1999, the Company
reassessed the classification of the 1998 Certificates and transferred
the certificates from the available for sale category to the held to
maturity category. The estimated fair value of the 1998 Certificates at
the transfer date of $16,199,792 approximated the carrying value
resulting
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998 and 1997
6. Other Investments - Continued:
in no gains or losses at the time of transfer. At December 31, 1999 the
carrying value of this investment was $16,201,732 which approximated
its fair value and its weighted average remaining term range from
approximately 14 to 16.5 years.
In connection with the merger on September 1, 1999 of the Company and
CNL Restaurant Financial Services Group (See Note 12), the Company
acquired investments in an interest only certificate and other residual
interests with a fair market value of $5,965,941. The interest only
certificate and the other residual interests are classified as
available for sale and are carried at fair market value based on
estimated discounted cash flows. The unrealized loss at December 31,
1999 was $177,119 and is shown as accumulated other comprehensive loss
on the consolidated balance sheet.
In August 1999 the Company created a $500 million loan sale facility
syndicated with two third parties. This facility permits the Company to
sell loans on a regular basis to a trust at an agreed upon advance
rate. As of December 31, 1999 the Company had sold loans with an
approximate principal balance of $300 million to the trust. The Company
retained a residual interest which is included in the accompanying
consolidated balance sheet as of December 31, 1999 as other investments
and is classified as a trading security and carried at its estimated
fair market value of $32,496,222.
Certain mortgage loans originated or purchased by the Company were
securitized in November 1999 and Franchise Loan Trust Certificates were
sold to investors. The securitization resulted in a loss of
approximately $1 million. The Company retained certain subordinated
investment securities, ("the 1999 Certificates"). The 1999 Certificates
totaling $21,142,843 at December 31, 1999 were recorded by allocating
the previous carrying amount of the mortgages between the assets sold
and the retained interests based on their relative fair values.
Approximately $7.7 million of the 1999 Certificates are classified as
available for sale and are carried at fair market value based on
estimated discounted cash flows. The remaining balance of approximately
$13.4 million of the 1999 Certificates have a weighted average
remaining term of approximately 18 years and are classified as held to
maturity. Their carrying amounts approximated their fair value at
December 31, 1999.
7. Line of Credit:
For the years ended December 31, 1999, 1998 and 1997, the Company
incurred interest costs (including amortization of loan costs) of
$14,094,524, $402,292 and $544,788, respectively, $3,889,327, $402,292
and $544,788, respectively, of which were capitalized as part of the
cost of buildings under construction. For the years ended December 31,
1999, 1998 and 1997, the Company paid interest of $10,937,309, $338,569
and $502,680, respectively.
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998 and 1997
7. Line of Credit - Continued:
At December 31, 1998, the Company had a revolving $35,000,000 unsecured
line of credit with a bank which enabled the Company to receive
advances to provide equipment financing, to purchase and develop
properties and to fund mortgage loans. In June 1999, the Company
obtained a new unsecured revolving credit facility in an amount up to
$300,000,000 (the "Credit Facility"). In connection with obtaining the
amended Credit Facility, the Company incurred commitment fees, legal
fees and closing costs of $3,548,744. Interest on advances under the
Credit Facility is determined according to (i) a tiered rate structure
up to a maximum rate of 200 basis points above LIBOR (based upon the
Company's overall leverage ratio) or (ii) the lenders' prime rate plus
0.25%, whichever the Company selects at the time of each advance. As of
December 31, 1999, the weighted average interest rate on the interest
paid over the year was 6.99%. The principal balance, together with all
unpaid interest, is due in full upon termination of the facility on
June 9, 2002. The terms of the agreement for the amended Credit
Facility include financial covenants which provide for the maintenance
of certain financial ratios. The Company was in compliance with all
such covenants as of December 31, 1999.
The Company believes, based on current terms, that the carrying value
of its Credit Facility at December 31, 1999 and 1998 approximates fair
value.
In June 1999, in connection with the amended Credit Facility, the
Company entered into an interest rate swap agreement. The purpose of
the interest rate swap agreement is to reduce the impact of changes in
interest rates on its floating rate Credit Facility. The agreement
effectively changes the Company's interest rate on $75,000,000 of the
outstanding floating rate Credit Facility to a fixed rate of 6.17% plus
the spread above LIBOR on related debt per annum, as of December 31,
1999. The Company is exposed to credit loss in the event of
nonperformance by the other party to the interest rate swap agreement;
however, the Company does not anticipate nonperformance by the
counterparty as they maintain long-term credit ratings of "A" or
better, as rated by Moody's or Standard & Poors.
The effective interest rate for the outstanding balance of $248,000,000
relating to the amended Credit Facility, as of December 31, 1999, as a
result of the impact of the interest rate swap in the amount of
$75,000,000 was 7.17% per annum. Management does not believe the impact
of any payments of a termination penalty, in the event the Company
determines to terminate the swap agreements prior to the end of the
respective terms, would be material to the Company's financial position
or results of operations.
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998 and 1997
8. Note Payable:
In October 1999, the Company entered into a secured credit facility
(the "Secured Credit Facility") in the amount of $147,000,000, which
will expire in October 2002. The proceeds of the Secured Credit
Facility are intended to be used for property acquisitions. Borrowings
under the Secured Credit Facility bear interest at the rate of the
lender's commercial paper plus 56 basis points per annum. As of
December 31, 1999, the interest rate was 6.96%. The Secured Credit
Facility is collateralized by mortgages on properties and an assignment
of rents. As of December 31, 1999, 43 properties and assignment of
rents collateralize the Secured Credit Facility. Under the terms of the
Secured Credit Facility, the Company is required to maintain certain
financial ratios and other financial covenants. The Company was in
compliance with all such covenants as of December 31, 1999. The Company
believes, based on current terms, that the carrying value of its
Secured Credit Facility at December 31, 1999 approximates fair value.
The Company has initiated several interest rate swap agreements with
which it hedges the majority of the outstanding balance at December 31,
1999 against fluctuations in interest rates. The Company believes that
its interest rate risk related to the Secured Credit Facility has been
mitigated by the use of interest rate swaps.
Management does not believe the impact of any payments of a termination
penalty, in the event the Company determines to terminate the swap
agreement prior to the end of the respective terms, would be material
to the Company's financial position or results of operations.
9. Mortgage Warehouse Facility:
At December 31, 1999, the Company had a $300 million mortgage warehouse
facility ("Warehouse Facility"). The Warehouse Facility provides the
Company the ability to provide mortgage financing to restaurant
franchisees and periodically securitize the loans through the
securitization market. The facility bears interest at a rate of LIBOR
plus 95 basis points per annum. As of December 31, 1999, the interest
was 6.77%. As of December 31, 1999, the Company had $30,749,540
outstanding under this Warehouse Facility. The principal balance,
together with all unpaid interest, is due in full upon termination of
the facility on September 19, 2000. The Company believes, based on
current terms, that the carrying value at December 31, 1999
approximates fair value. Management does not believe the impact of any
payments of a termination penalty, in the event the Company determines
to terminate the swap agreements prior to the end of the respective
terms, would be material to the company's financial position or results
of operations.
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998 and 1997
10. Stockholders' Equity:
On May 27, 1999, the stockholders approved a one-for-two reverse split
of common stock that was effective on June 3, 1999 with the filing of
the amended Articles of Incorporation with the Maryland Department of
Assessments and Taxation. All share and per share amounts have been
restated herein to reflect the one-for-two reverse stock split.
11. Distributions:
For the years ended December 31, 1999, 1998 and 1997, approximately 97
percent, 85 percent and 93 percent, respectively, of the distributions
received by stockholders were considered to be ordinary income and
approximately three percent, 15 percent and seven percent,
respectively, were considered a return of capital for federal income
tax purposes. No amounts distributed to stockholders for the years
ended December 31, 1999, 1998 and 1997 are required to be or have been
treated by the Company as a return of capital for purposes of
calculating the stockholders' return on their invested capital.
12. Mergers:
On September 1, 1999, the Company acquired CNL Fund Advisors, Inc. (the
"Advisor") through the exchange of 100% of the outstanding Shares of
common stock of the Advisor for 3.8 million Shares ($76,000,000) of the
Company's common stock. The acquisition of the Advisor was recorded
under the purchase method of accounting. The Company expensed the
excess purchase price (plus costs incurred related to the acquisition)
over the fair value of the net assets acquired of $76,333,516.
In addition, on September 1, 1999, the Company acquired CNL Financial
Services, Inc. and CNL Financial Corporation and its subsidiaries
(collectively, "CNL Restaurant Financial Services Group") through the
exchange of 100% of the outstanding Shares of common stock of those
entities for 2.35 million Shares ($47,000,000) of the Company's common
stock. The acquisition was recorded under the purchase method of
accounting. The Company recognized the excess purchase price (plus
costs incurred related to the acquisition) over the fair value of the
net assets acquired, of $45,703,072 as goodwill. This amount is being
amortized over 20 years. The Company recorded amortization expense
relating to goodwill of $689,516 as of December 31, 1999.
Upon consummation of the mergers on September 1, 1999, all employees of
the acquired entities became employees of the Company, and any
obligations for the Company to pay fees to the Advisor (such as
acquisition fees and asset management fees) under the Company's
advisory agreement terminated.
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998 and 1997
12. Mergers - Continued:
As described above, as consideration in its acquisitions of the Advisor
and CNL Restaurant Financial Services Group, the Company paid 6.15
million Shares. Of the 6.15 million Shares issued, 1.0 million are
being held in escrow. The Shares held in escrow will be released to the
former stockholders of the Advisor and the CNL Restaurant Financial
Services Group based on the value of the restaurant properties
acquired, mortgage loans made and development projects completed by the
Company during the "escrow term." The "escrow term" began on September
1, 1999. If the Company fails, during the escrow term, to acquire
restaurant properties, make mortgage loans and complete development
projects of at least $750 million in the aggregate, any Shares
remaining in escrow at the end of the escrow term will be returned to
the Company, and the former stockholders of the Advisor and the CNL
Restaurant Financial Services Group will no longer have any rights to
such Company Shares. The Company's Board of Directors may, in its
reasonable discretion, extend the escrow term for an additional six
months following the escrow term if it reasonably believes that it is
in the Company's best interest to do so. Management believes that the
total number of Shares will be released from escrow during the term
beyond a reasonable doubt, and therefore, the Shares have been included
in the acquisition price and included in issued and outstanding for
financial reporting purposes, even though the unearned Shares are held
in escrow at December 31, 1999. As of December 31, 1999, approximately
229,841 Shares had been released from escrow.
The following unaudited pro forma financial information presents the
combined results of operations of the Company, the Advisor and the CNL
Restaurant Financial Services Group as if the acquisition had occurred
as of the beginning of each of the periods presented, after giving
effect to certain adjustments, including amortization of goodwill and
loan origination fees, elimination of certain intercompany expenses,
and related income tax effects. The pro forma financial information
does not necessarily reflect the results of operations that would have
occurred had the Company, the Advisor and the CNL Restaurant Financial
Services Group constituted a single entity during such periods.
<TABLE>
<CAPTION>
Year Ended December 31:
1999 1998
------------------- ------------------
<S> <C>
(unaudited)
Total Revenues $ 99,547,207 $ 92,212,557
==================== ====================
Net Earnings $ 18,029,746 $ 45,793,421
==================== ====================
Earnings per Share (Basic and
Diluted) $ .46 $ 1.13
==================== ====================
</TABLE>
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998 and 1997
13. Related Party Transactions:
Prior to becoming self-advised on September 1, 1999, certain directors
and officers of the Company held similar positions with the Advisor,
and the managing dealer of the Company's common stock offerings, CNL
Securities Corp.
During the years ended December 31, 1999, 1998 and 1997, the Company
incurred $15,805, $28,914,297 and $16,686,192, respectively, in selling
commissions due to CNL Securities Corp. for services in connection with
public offerings of the Company's Shares. A substantial portion of
these amounts ($14,751, $26,033,000 and $15,563,500) was paid by CNL
Securities Corp. as commissions to other broker-dealers during the
years ended December 31, 1999, 1998 and 1997, respectively.
In addition, CNL Securities Corp. received a marketing support and due
diligence expense reimbursement fee equal to 0.5% of the total amount
raised from the sale of Shares, a portion of which was re-allowed to
other broker-dealers. During the years ended December 31, 1999, 1998
and 1997, the Company incurred $1,054, $1,927,620 and $1,112,413,
respectively, of such fees, the majority of which was re-allowed to
other broker-dealers and from which all bona fide due diligence
expenses were paid.
CNL Securities Corp. is also entitled to receive, in connection with
each common stock offering, a soliciting dealer servicing fee payable
annually by the Company beginning on December 31 of the year following
the year in which each offering terminated in the amount of 0.20% of
the stockholders' investment in the Company in connection with such
offering. CNL Securities Corp. in turn may reallow all or a portion of
such fee to broker-dealers whose clients purchased Shares in such
offering and held Shares on such date. During 1999 and 1998, the
Company incurred $1,493,437 and $300,206, respectively, of such fees.
No such fees were incurred during the year ended December 31, 1997.
In connection with the acquisition of properties, subject to approval
by the Company's Board of Directors, the Company will incur advisory
fees payable to affiliates of the Company. Such fees are included in
the purchase price of the properties and are therefore included in the
basis on which the Company charges rent on the properties. During the
years ended December 31, 1999 and 1998, the Company incurred $539,976
and $67,389, respectively, of such fees relating to 25 and three
properties, respectively. No such fees were incurred for the year ended
December 31, 1997.
The Advisor, prior to its acquisition by the Company, served as the
Company's advisor. The Advisor was entitled, until the merger,
effective September 1, 1999 (see Note 12), to receive certain fees
related to the operations and business acquisitions of the Company. The
fees paid to the Advisor described below for 1999 were for the period
January 1, 1997 through August 31, 1999.
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998 and 1997
13. Related Party Transactions - Continued:
Prior to the merger, the Advisor was entitled to receive acquisition
fees for services in identifying the properties and structuring the
terms of the acquisition and leases of these properties and structuring
the terms of mortgage loans and other investments equal to 4.5% of the
total amount raised from the sale of Shares through the Company's
public offerings. To the extent the Company used proceeds from its
Credit Facility to acquire properties or make mortgage loans, the
Company also paid the Advisor an acquisition fee equal to 4.5% of the
purchase price paid by the Company for each property or the amount of
each mortgage loan. During the years ended December 31, 1999, 1998 and
1997, the Company incurred $6,185,005, $17,317,297 and $10,011,715,
respectively, of such fees. Such fees are included in land and
buildings on operating leases, net investment in direct financing
leases, mortgage loans held for sale, investment in joint venture and
other assets.
Prior to the merger, in connection with the acquisition of properties,
subject to approval by the Company's Board of Directors, the Company
incurred development or construction management fees payable to a
subsidiary of the Advisor. Such fees were included in the purchase
price of the properties and were therefore included in the basis on
which the Company charges rent on the properties. During the years
ended December 31, 1999, 1998 and 1997, the Company incurred $56,352,
$229,153 and $387,728, respectively, of such fees.
Prior to the merger, for negotiating secured equipment leases and
supervising the secured equipment lease program, the Advisor was
entitled to receive a one-time secured equipment lease servicing fee of
two percent of the purchase price of the equipment that is the subject
of each secured equipment lease. During the years ended December 31,
1999, 1998 and 1997, the Company incurred $77,317, $54,998 and $87,665,
respectively, in secured equipment lease servicing fees.
The Company and the Advisor entered into an advisory agreement pursuant
to which the Advisor, prior to the merger, received a monthly asset
management fee of one-twelfth of 0.60% of the Company's real estate
asset value and the outstanding principal balance of the mortgage loans
as of the end of the preceding month. The management fee could not
exceed competitive fees which were for similar services in the same
geographic area.
During the years ended December 31, 1999, 1998 and 1997, the Company
incurred $2,685,887, $1,911,128 and $881,668, respectively, of such
fees, of which $342,580, $60,124 and $76,789, respectively, was
capitalized as part of the cost of the buildings for properties under
construction.
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998 and 1997
13. Related Party Transactions - Continued:
Prior to the merger, the Advisor and its affiliates provided
administrative services (including services for accounting; financial,
tax and regulatory compliance and reporting; lease and loan compliance;
stockholder distributions and reporting; due diligence and marketing;
and investor relations) to the Company on a day-to-day basis as well as
services in connection with the offering of Shares and services in
connection with the mergers referred to in Notes 12 and the terminated
mergers referred to in Note 16. The costs incurred for these services
were classified as follows for the years ended December 31:
<TABLE>
<CAPTION>
1999 1998 1997
---------------- ---------------- ---------------
<S> <C>
General operating and
administrative expenses $1,683,313 $1,189,471 $ 556,240
Stock issuance costs 28,421 3,103,046 1,676,226
Transaction costs 503,970 -- --
---------------- ---------------- ---------------
$2,215,704 $4,292,517 $2,232,466
================ ================ ===============
</TABLE>
In connection with becoming self-advised, effective September 1, 1999,
an affiliate of a member of the board of directors performed certain
services relating to human resources and information technology. The
Company incurred expenses related to these services of approximately
$655,000 for the fiscal year 1999.
During the years ended December 31, 1999, 1998 and 1997, the Company
acquired 41, five and five Properties, respectively, for approximately
$39,700,000, $8,770,000 and $5,450,000, respectively, from affiliates
of the Company. Each Property was acquired at a cost no greater than
the lesser of the cost of the Property to the affiliate, including
carrying costs, or the Property's appraised value. Of the 41 Properties
acquired from affiliates in 1999, 38 were acquired for a total purchase
price of approximately $36,800,000 from Commercial Net Lease Realty,
Inc. ("NNN"), a publicly traded real estate investment trust. James M.
Seneff, Jr., the Chairman of the Board of the Company, is the Chairman
of the Board and Chief Executive Officer of NNN and Robert A. Bourne,
Vice Chairman of the Board of the Company, is also Vice Chairman of the
Board of NNN. This transaction was approved by the Company's
independent directors.
As of December 31, 1999, the Company was in the process of finalizing a
lease agreement for its office space (the "Lease") with an affiliate of
James M. Seneff, Jr., the Company's Chairman of the Board. The Lease
provides for rent in the amount of approximately $857,000 per year,
with a three percent increase annually, expiring in October 2014.
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998 and 1997
13. Related Party Transactions - Continued:
The due to related parties consisted of the following at December 31:
<TABLE>
<CAPTION>
1999 1998
------------------ -------------------
<S> <C>
Due to the Advisor:
Expenditures incurred on behalf of the
Company and accounting and
administrative services $ -- $ 1,238,148
Acquisition fees -- 39,788
------------------ -------------------
-- 1,277,936
Due to CNL Securities Corp:
Commissions 30,528
--
Soliciting dealer servicing fee 1,493,437 300,206
------------------ -------------------
1,493,437 330,734
Due to affiliate as obligation under
capital lease 8,817,692 --
Due to other affiliates 315,800 --
------------------ -------------------
$ 10,626,929 $ 1,608,670
================== ===================
</TABLE>
The Company, through the acquisition of the Advisor on September 1,
1999, provides certain services relating to management of related
parties and their properties pursuant to management agreements. Under
these agreements, the Company is responsible for collecting rental
payments, inspecting the properties and the tenants' books and records,
assisting in responding to tenant inquiries and notices and providing
information to the related parties about the status of the leases and
the properties. For these services, the related parties have agreed to
pay the Company an annual fee.
The due from related parties consisted of the following at December 31:
<TABLE>
<CAPTION>
1999 1998
-------------------- -------------------
<S> <C>
Management fees $ 69,143 $ --
Expenditures incurred on
behalf of the related parties
and accounting and
administrative services and
costs associated with the
Proposed Merger (see Note 6) 1,246,578 --
-------------------- -------------------
$ 1,315,721 $ --
==================== ===================
</TABLE>
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998 and 1997
13. Related Party Transactions - Continued:
In connection with the Mergers (see Note 12), the Company issued 6.15
million Shares to directors and officers of the Company and affiliates
of the Company.
14. Concentration of Credit Risk:
The following schedule presents rental, earned, investment and interest
income from individual lessees or borrowers, or affiliated groups of
lessees or borrowers, each representing more than ten percent of the
Company's total rental, earned, investment and interest income from its
properties, mortgage loans held for sale, secured equipment leases and
Certificates for at least one of each of the years ended December 31:
<TABLE>
<CAPTION>
1999 1998 1997
-------------- -------------- -------------
<S> <C>
Jack in the Box, Inc. (formerly
Foodmaker, Inc.) N/A $4,101,214 $1,980,338
Houlihan's Restaurants, Inc. N/A N/A 1,847,574
Castle Hill Holdings V, L.L.C.,
Castle Hill Holdings VI, L.L.C.
and Castle Hill Holdings VII,
L.L.C. N/A N/A 2,636,004
</TABLE>
In addition, the following schedule presents total rental, earned,
investment and interest income from individual restaurant chains, each
representing more than ten percent of the Company's total rental,
earned, investment and interest income from its properties, mortgage
loans held for sale, secured equipment leases and Certificates for at
least one of each of the years ended December 31:
<TABLE>
<CAPTION>
1999 1998 1997
-------------- --------------- --------------
<S> <C>
Golden Corral Family
Steakhouse Restaurants N/A $4,373,687 $2,531,941
Jack in the Box N/A 4,101,214 1,980,338
Pizza Hut N/A N/A 2,636,004
Boston Market N/A N/A 2,338,949
</TABLE>
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998 and 1997
14. Concentration of Credit Risk - Continued:
The information denoted by N/A indicates that for the applicable period
presented, the tenant or borrower, chain, or group of affiliated
tenants, borrowers or chains, did not represent more than ten percent
of the Company's total rental, earned, investment and interest income.
Although the Company's properties are geographically diverse throughout
the United States and the Company's lessees and borrowers operate a
variety of restaurant concepts, failure of any one of these restaurant
chains or any one of these lessees or borrowers that contributes more
than ten percent of the Company's rental, earned, investment and
interest income could significantly impact the results of operations of
the Company if the Company is not able to re-lease the properties in a
timely manner.
15. Commitments and Contingencies:
On May 11, 1999, four limited partners in several CNL Income Funds
served a lawsuit against the general partners of the CNL Income Funds
and the Company in connection with the proposed merger with the CNL
Income Funds. On June 22, 1999, a limited partner in certain of the CNL
Income Funds served a lawsuit against the Company, the Advisor, certain
of its affiliates and the CNL Income Funds in connection with the
proposed merger with the CNL Income Funds.
On July 8, 1999, the plaintiffs in the lawsuit served on May 11, 1999
served and amended the complaint, naming three additional plaintiffs
and adding allegations of aiding and abetting and conspiring to breach
fiduciary duties and seeking additional equitable relief.
On September 23, 1999, the judge assigned to the two cases entered an
order consolidating the two cases. Pursuant to this order the
plaintiffs filed a consolidated and amended complaint on November 8,
1999. The various defendants, including the Company, filed a motion to
dismiss the consolidated complaint on December 28, 1999. The Company
and the general partners of the CNL Income Funds believe that the
lawsuits are without merit and intend to defend vigorously against the
claims.
The Company has entered into various development agreements with
tenants which provide terms and specifications for the construction or
renovation of buildings the tenants have agreed to lease or equipment
financing the Company has agreed to provide. The agreements provide a
maximum amount of development costs (including the purchase price of
the land and closing costs) to be paid by the Company. In addition,
through the acquisition of the Advisor, the Company has unfunded
letters of commitment to develop properties for specific tenants. The
aggregate maximum development costs and unfunded letters of commitment
the Company has agreed to pay are approximately
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998 and 1997
15. Commitments and Contingencies - Continued:
$214,022,000, of which approximately $60,201,000 in land and other
costs had been incurred as of December 31, 1999. The buildings
currently under construction or renovation are expected to be
operational by June 2000. In connection with the purchase of each
property, the Company, as lessor, entered into a long-term lease
agreement.
In the ordinary course of business, the Company has outstanding loan
commitments to qualified borrowers that are not reflected in the
accompanying condensed consolidated financial statements. These
commitments, if accepted by the potential borrower, obligate the
Company to provide funding. The accepted and unfunded commitments
totaled approximately $108,165,000 at December 31, 1999 which includes
both the Warehouse Facility and the off-balance sheet loan sale
facility.
16. Subsequent Events:
On March 11, 1999, the Company entered into agreements to acquire the
18 CNL Income Funds whose Properties are substantially the same type as
the Company's. In connection with these agreements, the Company agreed
to issue up to 30.5 million Shares of common stock, after restatement
for the one-for-two reverse stock split. On June 3, 1999, the general
partners, on behalf of CNL Income Funds XVII and XVIII, and the Company
agreed that it would be in the best interests of CNL Income Funds XVII
and XVIII and the Company that the Company not attempt to acquire CNL
Income Funds XVII and XVIII in the acquisition. Therefore, in June
1999, the Company entered into termination agreements with CNL Income
Funds XVII and XVIII.
On March 1, 2000, the Company announced that it had entered into
termination agreements with the remaining 16 CNL Income Funds. This
decision was based on a number of factors including, concern of the
general partners of the CNL Income Funds that, in light of the market
conditions relating to publicly traded real estate investment trusts
generally ("REITS"), the potential value of the transaction had
diminished. As a result of such diminishment, the general partners'
ability to unequivocally recommend voting for the transaction, in the
exercise of their fiduciary duties, had become questionable. Due to the
general partners' reluctance to recommend the transaction to the
limited partners of the CNL Income Funds, the Company believed that
pursuing the transaction without an unequivocal recommendation of the
CNL income Funds' general partners would not result in a favorable
vote, and that therefore the continued pursuit of the acquisition by
the Company would not be in the best interests of its stockholders.
Furthermore, a primary objective of the Company for acquiring the CNL
Income Funds was to significantly increase its asset base for the
purpose of listing its Shares on the New York Stock Exchange and
potentially, by virtue of size, create an institutional investor
following. In light of the current market conditions relating to
publicly traded REITS, the Company believes that increasing its size
would not provide it with such following and
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998 and 1997
16. Subsequent Events - Continued:
would not provide the Company with access to capital on favorable
terms. Therefore, being forced to list at this time, which is a
condition to closing the acquisition of the CNL Income Funds, would
not, in the opinion of the Company, produce the results the Company had
initially envisioned at the time the merger agreements were executed.
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The information required by this Item is incorporated by reference to
the Company's Definitive Proxy Statement to be filed with the Commission for its
annual stockholders' meeting to be held on June 15, 2000.
Item 11. Executive Compensation
The information required by this Item is incorporated by reference to
the Company's Definitive Proxy Statement to be filed with the Commission for its
annual stockholders' meeting to be held on June 15, 2000.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required by this Item is incorporated by reference to
the Company's Definitive Proxy Statement to be filed with the Commission for its
annual stockholders' meeting to be held on June 15, 2000.
Item 13. Certain Relationships and Related Transactions
The information required by this Item is incorporated by reference to
the Company's Definitive Proxy Statement to be filed with the Commission for its
annual stockholders' meeting to be held on June 15, 2000.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) The following documents are filed as part of this report.
1. Consolidated Financial Statements
Report of Independent Certified Public Accountants
Consolidated Balance Sheets at December 31, 1999 and 1998
Consolidated Statements of Operations for the years ended
December 31, 1999, 1998 and 1997.
Consolidated Statements of Stockholders' Equity and
Comprehensive Income (Loss) for the years ended December 31,
1999, 1998 and 1997.
Consolidated Statements of Cash Flows for the years ended
December 31, 1999, 1998 and 1997.
Notes to Consolidated Financial Statements
<PAGE>
2. Financial Statement Schedules
Schedule II - Valuation and Qualifying Accounts for the years
ended December 31, 1999, 1998 and 1997
Schedule III - Real Estate and Accumulated Depreciation at
December 31, 1999
Notes to Schedule III - Real Estate and Accumulated
Depreciation at December 31, 1999
Schedule IV - Mortgage Loans on Real Estate at December 31,
1999
All other Schedules are omitted as the required information is
inapplicable or is presented in the financial statements or
notes thereto.
3. Exhibits
2.1 Agreement and Plan of Merger, by and among the
Registrant, CFA Acquisition Corp., CNL Fund Advisors,
Inc. and CNL Group, Inc., dated March 11, 1999
(Included as Exhibit 10.38 to the Registrant's
Registration Statement No. 333-74329 on Form S-4 (the
"Form S-4") as originally filed and incorporated
herein by reference.)
2.2 Agreement and Plan of Merger, by and among the
Registrant, CFC Acquisition Corp., CFS Acquisition
Corp., CNL Financial Corp., CNL Financial Services,
Inc., CNL Group, Inc., Five Arrows Realty Securities
L.L.C., Robert A. Bourne, Curtis B. McWilliams and
Brian Fluck, dated March 11, 1999 (Included as
Exhibit 10.39 to the Form S-4 as originally filed and
incorporated herein by reference.)
3.1 CNL American Properties Fund, Inc. Amended and
Restated Articles of Incorporation, as amended
(Included as Exhibit 3.1 to the Registrant's Form
10-Q for the quarter ended June 30, 1999 and
incorporated herein by reference.)
3.2 CNL American Properties Fund, Inc. Amended and
Restated Bylaws (Included as Exhibit 3.2 to the
Registrant's Registration Statement No. 333-37657 on
Form S-11 and incorporated herein by reference.)
4.1 Form of Stock Certificate (Included as Exhibit 4.5 to
the Registrant's Registration Statement No. 33-78790
on Form S-11 and incorporated herein by reference.)
10.1 Form of Indemnification Agreement dated as of April
18, 1995, between CNL American Properties Fund, Inc.
and each of James M. Seneff, Jr., Robert A. Bourne,
G. Richard Hostetter, J. Joseph Kruse, Richard C.
Huseman, John T. Walker, Jeanne A. Wall, Lynn E. Rose
and Edgar J. McDougall, dated as of January 27, 1997
between CNL American Properties Fund, Inc. and Steven
D. Shackelford, and dated as of February 18, 1998,
between CNL American Properties Fund, Inc. and Curtis
B. McWilliams (Included as Exhibit 10.9 to the
Registrant's Registration Statement No. 333-15411 on
Form S-11 and incorporated herein by reference.)
10.2 Amended and Restated Agreement of Limited Partnership
of CNL APF Partners, LP (Included as Exhibit 10.50 to
Amendment No. 2 to the Form S-4 and incorporated
herein by reference.)
10.3 Amended and Restated Credit Agreement by and among
CNL APF Partners, LP, Registrant, First Union
National Bank, First Union Capital Markets Group,
Banc of America Securities LLC, NationsBank, N.A.,
The Chase Manhattan Bank and other financial
institutions, dated June 9, 1999 (Included as Exhibit
10.51 to Amendment No. 1 to the Form S-4 and
incorporated herein by reference.)
10.4 First Amendment to Amended and Restated Credit
Agreement dated as of December 31, 1999 between CNL
APF Partners, LP and First Union National Bank, as
Agent (filed herewith.)
10.5 Franchise Receivable Funding and servicing Agreement
dated as of October 14, 1999 between CNL APF
Partners, LP and Neptune Funding Corporation (filed
herewith.)
10.6 Interim Wholesale Mortgage Warehouse and Security
Agreement dated as of September 18, 1998, and Amended
Agreement dated as of August 30, 1999 between CNL APF
Partners, LP and Prudential Securities Credit
Corporation (filed herewith.)
10.7 1999 Performance Incentive Plan (Included as Exhibit
10.1 to Amendment No. 1 to the Form S-4 and
incorporated herein by reference.)
10.8 Registration Rights Agreement by and among the
Registrant, Robert A. Bourne, Curtis B. McWilliams,
John T. Walker, Howard Singer, Steven D. Shackelford
and CNL Group, Inc., dated as of March 11, 1999
(Included as Exhibit 10.40 to Amendment No. 1 to the
Form S-4 and incorporated herein by reference.)
10.9 Registration Rights Agreement by and among the
Registrant, Five Arrows Realty Securities L.L.C.,
James M. Seneff, Jr., Robert A. Bourne, Curtis B.
McWilliams and CNL Group, Inc., dated as of March 11,
1999 (Included as Exhibit 10.41 to Amendment No. 1 to
the Form S-4 and incorporated herein by reference.)
10.10 Employment Agreement by and between Curtis B.
McWilliams and the Registrant, dated September 15,
1999 (Included as Exhibit 10.42 to Amendment No. 2 to
the Form S-4 and incorporated herein by reference.)
10.11 Employment Agreement by and between Steven D.
Shackelford and the Registrant, dated September 15,
1999 (Included as Exhibit 10.43 to Amendment No. 2 to
the Form S-4 and incorporated herein by reference.)
10.12 Employment Agreement by and between John T. Walker
and the Registrant, dated September 15, 1999
(Included as Exhibit 10.44 to Amendment No. 2 to the
Form S-4 and incorporated herein by reference.)
10.13 Employment Agreement by and between Howard J. Singer
and the Registrant, dated September 15, 1999
(Included as Exhibit 10.45 to Amendment No. 2 to the
Form S-4 and incorporated herein by reference.)
10.14 Employment Agreement by and between Barry L. Goff and
the Registrant, dated September 15, 1999 (Included as
Exhibit 10.46 to Amendment No. 2 to the Form S-4 and
incorporated herein by reference.)
10.15 Employment Agreement by and between Robert W. Chapin
and the Registrant, dated September 15, 1999
(Included as Exhibit 10.47 to Amendment No. 2 to the
Form S-4 and incorporated herein by reference.)
10.16 Employment Agreement by and between Timothy J.
Neville and the Registrant, dated September 15, 1999
(Included as Exhibit 10.48 to Amendment No. 2 to the
Form S-4 and incorporated herein by reference.)
10.17 Holdback Agreement by and among the Registrant and
Stockholders, dated August 31, 1999 (Included as
Exhibit 10.56 to Amendment No. 2 to the Form S-4 and
incorporated herein by reference.)
21 Subsidiaries of the Registrant (Filed herewith.)
27 Financial Data Schedule (Filed herewith.)
(b) The Registrant filed no reports on Form 8-K during the period October
1, 1999 through December 31, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on the 28th day of
March, 2000.
CNL AMERICAN PROPERTIES FUND, INC.
By: CURTIS B. McWILLIAMS
Chief Executive Officer
/s/ Curtis B. McWilliams
------------------------------
CURTIS B. McWILLIAMS
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C>
/s/ James M. Seneff, Jr. Chairman of the Board March 28, 2000
- --------------------------------------
James M. Seneff, Jr.
/s/ Robert A. Bourne Vice Chairman of the Board March 28, 2000
- --------------------------------------
Robert A. Bourne
/s/ Curtis B. McWilliams Chief Executive Officer (Principal March 28, 2000
- ------------------------
Curtis B. McWilliams Executive Officer)
/s/ Steven D. Shackelford Senior Vice President and Chief March 28, 2000
- -------------------------------------
Steven D. Shackelford Financial Officer (Principal
Financial and Accounting Officer)
/s/ G. Richard Hostetter Independent Director March 28, 2000
- --------------------------------------
G. Richard Hostetter
/s/ J. Joseph Kruse Independent Director March 28, 2000
- ---------------------------------------
J. Joseph Kruse
/s/ Richard C. Huseman Independent Director March 28, 2000
- ------------------------------------
Richard C. Huseman
</TABLE>
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
Additions Deductions
---------------------------- --------------------------
Balance at Charged to Charged to Deemed Balance
Beginning Costs and Other Uncollec- at End
Year Description of Year Expenses Accounts tible Collected of Year
-------- ---------------- ------------ ------------ -------------- ----------- ---------- ------------
<S> <C>
1997 Allowance for
doubtful
accounts (a) $ 2,857 $ -- $ 97,745 (b) $ -- $ 638 $ 99,964
============ ============ ============== =========== ========== ============
1998 Allowance for
doubtful
accounts (a) $ 99,964 $ 636,614 $ 1,324,980 (b) $ -- $ 4,743 $ 2,056,815
============ ============ ============== =========== ========== ============
1999 Allowance for
doubtful
accounts (a) $2,056,815 $1,036,928 $ 3,057,049 $ 572,483 (c) $389,093 $ 5,189,216
============ ============ ============== =========== ========== ============
(a) Deducted from receivables and accrued rental income on the balance
sheet.
(b) Reduction of rental, earned and other income.
(c) Amounts written off as uncollectible.
</TABLE>
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC. AND SUBSIDIARIES
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1999
<TABLE>
<CAPTION>
Costs Capitalized
Subsequent To
Initial Cost Acquisition
---------------------------------------------------------------------
Encum- Buildings and Improve- Carrying
brances Land Improvements ments Costs
------------ ----------------- ------------------ --------------- ------------
<S> <C>
Properties the Company
has invested in Under
Operating Leases:
Applebee's Restaurants:
Antioch, Tennessee - 609,696 770,331 - -
Clarksville, Tennessee - 556,070 983,010 - -
Columbia, Tennessee - 625,868 936,068 - -
Cookeville, Tennessee - 489,867 1,003,630 - -
Hendersonville, Tennessee - 549,651 966,628 - -
Hermitage, Tennessee - 735,272 827,474 - -
Hopkinsville, Kentucky - 390,058 943,019 - -
Lebanon, Tennessee - 568,168 925,046 - -
Madison, Tennessee - 740,165 835,996 - -
Montclair, California - 874,094 - 880,494 -
Moscow, Idaho - 537,410 - - -
Rockford, Illinois - 603,828 - - -
Salem, Oregon - 778,775 - 1,131,575 -
Salinas, California - 786,475 - - -
Arby's Restaurants:
Allen, Texas - 508,120 - 630,308 -
Arab, Alabama (y) 230,720 455,946 - -
Atlanta, Georgia (y) 648,459 - 683,390 -
Auburndale, Florida - 326,788 391,270 - -
Avon, Indiana - 338,486 497,282 - -
Bartow, Florida - 226,428 - - -
Brooksville, Florida - 266,606 - - -
Brooksville, Florida - 248,277 - - -
Canton, Georgia (y) 586,477 - 606,850 -
Circleville, Ohio - 307,909 - 622,689 -
Columbus, Ohio (y) 441,770 - 621,014 -
Columbus, Ohio (y) 483,868 - 576,483 -
Douglasville, Georgia - 709,624 - 540,955 -
Elfers, Florida - 242,777 - - -
Flower Mound, Texas - 434,000 - 285,499 -
Grand Rapids, Michigan (k) - 312,670 - - -
Greensboro, North Carolina - 363,478 404,650 - -
Greenville, North Carolina - 277,986 490,143 - -
Hudson, Florida - 270,539 - - -
Huntsville, Alabama - - - 595,455 -
Indianapolis, Indiana - 439,935 - 670,560 -
Jonesville, North Carolina - 228,364 539,764 - -
Kendallville, Indiana - 276,567 505,359 - -
Kernersville, North Carolina - 273,325 413,077 - -
Kinston, North Carolina - 268,545 485,160 - -
Lakeland, Florida - 235,996 - - -
Lexington, North Carolina - 320,924 463,347 - -
Newark, Ohio - - - 336,297 -
Orange Park, Florida (y) 463,047 - 621,088 -
Plant City, Florida - 196,251 - - -
Redford, Michigan (y) 412,516 - 673,289 -
Renton, Washington - 583,128 - 444,307 -
Surfside Beach, South Carolina (y) 421,059 - 632,791 -
Tampa, Florida - 322,412 371,694 - -
The Colony, Texas - 504,163 - 485,272 -
Vancouver, Washington (y) 733,180 - 665,895 -
Walker, Michigan - 498,427 - 701,500 -
Whitehall, Ohio (y) 522,786 - 289,350 -
Bakers Square Restaurants:
Alsip, Illinois (y) 449,010 728,259 - -
Burbank, Illinois (y) 679,830 1,041,258 - -
Cherry Valley, Illinois (y) 419,238 848,874 - -
Coon Rapids, Minnesota (y) 543,966 1,131,838 - -
Deerfield, Illinois (y) 573,069 468,307 - -
Lansing, Illinois (y) 647,562 869,687 - -
Mankato, Minnesota - 488,663 1,141,844 - -
Matteson, Illinois (y) 664,403 852,845 - -
Merrillville, Indiana (y) 567,083 1,176,715 - -
Palos Heights, Illinois (y) 375,257 734,314 - -
Saint Charles, Illinois - 614,512 630,952 - -
Westmont, Illinois - 518,276 591,047 - -
Willowbrook, Illinois - 586,045 718,306 - -
Barb Wires Steakhouse & Saloon
Restaurant:
Lawrence, Kansas - 493,489 - - -
Bennigan's Restaurants:
Arvada, Colorado - 714,194 1,302,733 - -
Batavia, Illinois (y) 944,185 - 1,504,357 -
Bedford, Texas - 768,333 - - -
Canton, Ohio - 1,419,261 - 95,308 -
Clearwater, Florida - 900,038 - - -
Colorado Springs, Colorado - 794,255 - - -
Copley, Ohio - 1,419,261 - 95,308 -
Englewood, Colorado - 665,141 - - -
Englewood, New Jersey - 1,460,179 901,042 - -
Florham Park, New Jersey - 1,077,645 - - -
Glenview, Illinois - 1,009,338 - 44,400 -
Grapevine, Texas - 1,028,193 - 1,512,031 -
Houston, Texas - 908,502 - - -
Jacksonville, Florida - 779,387 - - -
Jacksonville, Florida - 832,557 - - -
Lone Tree, Colorado (y) 1,075,230 - 501,111 -
Mount Laurel, New Jersey - 1,305,939 1,030,685 - -
North Richland Hills, Texas - 886,048 - - -
Ocala, Florida - 693,453 - 1,072,916 -
Oklahoma City, Oklahoma - 756,750 - - -
Orlando, Florida - 1,585,461 - 874,143 -
Pensacola, Florida - 692,093 - - -
Saint Louis Park, Minnesota - 885,111 - - -
Tampa, Florida - 734,245 - - -
Woodridge, Illinois - 789,680 - - -
Big Boy Restaurants:
Alton, Illinois (m) - 298,330 - 771,486 -
Arnold, Missouri (m) - 373,239 - 873,481 -
Belleville, Illinois - 289,405 - 434,316 -
Benton Harbor, Michigan - 168,583 - 878,386 -
Blue Springs, Missouri (m) - 251,187 - 737,670 -
Collinsville, Illinois (m) - 346,116 - 829,946 -
Columbia, Missouri - 496,025 - 792,520 -
Crystal City, Missouri - 273,460 - 694,837 -
Fenton, Missouri (m) - 624,303 - 952,724 -
Grandview, Missouri (m) - 395,842 - 631,903 -
Granite City, Illinois (m) - 122,097 - 974,597 -
Guadalupe, Arizona (q) - 623,709 933,059 - -
Independence, Missouri (m) - 515,607 - 838,027 -
Jefferson City, Missouri (m) - 460,466 - 720,050 -
Kansas City, Missouri - 401,115 - 667,600 -
Las Vegas, Nevada (r) - 656,263 1,162,746 - -
Lee's Summit, Missouri (m) - 503,048 - 626,215 -
Mansfield, Ohio (m) - 366,776 - 778,584 -
Merriam, Kansas (m) - 644,889 - 991,991 -
North Kansas City, Missouri (m) - 450,010 - 760,630 -
O'Fallon, Missouri (m) - 369,314 - 704,550 -
Overland Park, Kansas (m) - 466,949 - 630,982 -
Saint Clairsville, Ohio (m) - 437,383 - 770,447 -
Sedalia, Missouri (m) - 318,979 - 1,013,110 -
Saint Joseph, Missouri (m) - 238,400 - 700,519 -
Saint Louis, Missouri (m) - 608,835 - 859,893 -
Saint Peters, Missouri - 376,905 - 692,124 -
Taylor, Michigan - 373,164 869,059 - -
Woodson Terrace, Missouri (m) - 744,126 - - -
Black-eyed Pea Restaurants:
Fort Worth, Texas - 678,779 - 1,049,420 -
Glendale, Arizona - 744,764 - 1,082,896 -
Grapevine, Texas - 883,976 - 1,311,307 -
Herndon, Virginia - 362,141 989,635 - -
Hillsboro, Texas - 404,881 - - -
Killeen, Texas - 514,282 - 989,138 -
McKinney, Texas - 683,537 - 1,124,255 -
Mesa, Arizona - 821,011 - 1,056,003 -
Mesa, Arizona - 784,939 - - -
Norman, Oklahoma - 568,087 - 974,706 -
Black Angus Restaurants:
Dublin, California - 1,023,806 - - -
Orem, Utah (y) 800,046 - 1,192,375 -
Boston Market Restaurants:
Atlanta, Georgia - 774,448 - 507,587 -
Baltimore, Maryland - 585,818 - 866,641 -
Collinsville, Illinois - 507,544 - 328,353 -
Columbus, Ohio - 353,608 606,470 - -
Corvallis, Oregon (m) - 365,784 - 605,763 -
Florissant, Missouri - 705,522 - 626,845 -
Gambrills, Maryland - 667,992 - 661,776 -
Glendale, Arizona - 566,562 403,730 - -
Indianapolis, Indiana - 885,567 - 648,755 -
Jessup, Maryland (m) - 631,336 - 675,111 -
Lansing, Michigan - 515,827 - 572,706 -
Liberty, Missouri (m) - 469,041 - 336,295 -
Newport News, Virginia - 473,596 586,377 - -
Riverdale, Maryland - 526,092 - 504,483 -
Rockwall, Texas - 528,118 - 340,297 -
Saint Joseph, Missouri (m) - 378,786 388,489 - -
San Antonio, Texas - 482,361 - 316,135 -
Stafford, Texas - 448,185 681,598 - -
Upland, California - 788,248 209,449 - -
Vacaville, California - 751,576 - 757,026 -
Waldorf, Maryland - 651,867 - 775,634 -
Warwick, Rhode Island - 234,685 589,367 - -
Buffet Town Restaurant:
Cedar Park, Texas (s) (m) - 569,782 294,878 - -
Burger King Restaurants:
Asheboro, North Carolina - 597,021 962,188 - -
Atlanta, Georgia - 394,712 - - -
Burbank, Illinois (y) 543,095 - 620,617 -
Chadbourn, North Carolina - 217,079 - 833,772 -
Chattanooga, Tennessee (y) 680,192 - 575,426 -
Chattanooga, Tennessee (y) 769,842 - 411,012 -
Chicago, Illinois (y) 917,717 - 784,590 -
Clinton, North Carolina - 349,582 - 385,483 -
Columbus, Ohio - 445,471 434,907 - -
Coon Rapids, Minnesota - 387,913 560,993 - -
Cut Off, Louisiana - 323,106 1,219,165 - -
Highland, Indiana (y) 672,815 - 621,133 -
John's Island, South Carolina - 477,686 719,221 - -
Kent, Ohio - 233,468 689,696 - -
Lacey, Washington - 308,272 - - -
Lake Charles, Louisiana - 360,438 1,062,531 - -
Lancaster, Ohio - 339,900 745,696 - -
Lynnwood, Washington - 448,745 626,866 - -
Manchester, New Hampshire - 775,925 458,838 - -
Montgomery, Alabama - 402,927 - - -
Montgomery, Alabama - 379,798 695,812 - -
Natchez, Mississippi - 273,353 718,493 - -
Oak Lawn, Illinois (y) 1,211,346 - 829,339 -
Ooltewah, Tennessee (y) 546,261 - 714,114 -
Opelousas, Louisiana - 625,123 958,670 - -
Rochester, New Hampshire - 261,321 802,689 - -
Shelton, Washington - 424,416 822,399 - -
Saint Paul, Minnesota - 281,966 581,637 - -
Tampa, Florida - 479,315 - 497,291 -
Tappahannock, Virginia - 363,327 596,839 - -
Warren, Michigan - 375,952 820,967 - -
Wilimington, North Carolina - 348,663 626,806 - -
Charley's Restaurants:
King of Prussia, Pennsylvania - 965,223 549,565 - -
McLean, Virginia - 944,585 689,363 - -
Chevy's Fresh Mex Restaurants:
Annapolis, Maryland - 1,372,077 1,566,797 - -
Arapahoe, Colorado - 986,426 1,680,312 - -
Auburn Hills, Michigan - 1,122,087 2,017,496 - -
Beaverton, Oregon - 938,162 1,681,670 - -
Bloomington, Minnesota - 869,178 1,309,759 - -
Brandon, Florida - 844,185 1,425,740 - -
Clearwater, Florida - 984,259 1,103,690 - -
Greenbelt, Maryland - 945,234 1,475,339 - -
Independence, Missouri - 1,239,264 1,490,392 - -
Kissimmee, Florida - 570,815 1,536,290 - -
Lake Oswego, Oregon - 963,047 1,505,671 - -
Las Vegas, Nevada - 1,156,847 1,188,272 - -
Lilburn, Georgia - 1,089,268 931,637 - -
Merriam, Kansas - 1,032,271 1,074,834 - -
Naperville, Illinois - 960,779 1,365,563 - -
Olathe, Kansas - 470,047 1,541,280 - -
Orlando, Florida - 1,495,716 1,674,517 - -
Tampa, Florida - 878,358 1,449,034 - -
Tampa, Florida - 869,408 1,548,972 - -
Taylor, Michigan - 844,918 1,712,340 - -
Darryl's Restaurants:
Evansville, Indiana (y) 563,479 - - -
Hampton, Virginia (y) 698,367 570,468 - -
Huntsville, Alabama (y) 777,842 663,941 - -
Knoxville, Tennessee (y) 589,574 - - -
Louisville, Kentucky (y) 647,375 - - -
Mobile, Alabama - 495,195 - - -
Montgomery, Alabama (y) 346,380 - - -
Nashville, Tennessee (y) 513,218 - - -
Orlando, Florida - 1,485,631 772,853 - -
Pensacola, Florida (y) 389,394 - - -
Raleigh, North Carolina (y) 840,525 505,176 - -
Raleigh, North Carolina - 1,131,164 719,865 - -
Richmond, Virginia - 618,125 - - -
Richmond, Virginia (y) 311,196 - - -
Winston-Salem, North Carolina - 436,867 - - -
Del Taco Restaurant:
Mesa, Arizona - 641,080 - 629,348 -
Denny's Restaurants:
Duncan, South Carolina - 219,702 - - -
Greensboro, North Carolina - 361,025 572,098 - -
Greenville, South Carolina - 457,851 454,566 - -
Houston, Texas - 392,818 664,851 - -
Landrum, South Carolina - 155,398 - - -
McKinney, Texas - 439,961 - - -
Mooresville, North Carolina - 307,292 - - -
Pasadena, Texas - 466,555 506,094 - -
Santee, South Carolina - 328,506 358,314 - -
Shawnee, Oklahoma - 528,090 625,653 - -
Tampa, Florida - 397,302 - - -
Topeka, Kansas - 414,731 - - -
Winter Springs, Florida - 555,232 - - -
Einstein Brothers' Bagels
Restaurants:
Dearborn, Michigan - 464,957 - 178,078 -
Springfield, Virginia - 628,804 - 36,311 -
Fazoli's Restaurant:
Southaven, Mississippi - 485,013 - - -
Golden Corral Family
Steakhouse Restaurants:
Bellevue, Nebraska - 440,812 - 1,039,283 -
Brunswick, Georgia - 456,629 - 1,170,630 -
Carlsbad, New Mexico - 384,221 - 643,854 -
Cleburne, Texas - 359,455 - 653,853 -
Clovis, New Mexico - 426,349 805,517 - -
Columbia, Missouri - 848,133 1,008,678 - -
Columbia, Tennessee - 442,218 - 930,207 -
Columbus, Ohio - 1,031,098 - 1,092,939 -
Cookeville, Tennessee - 781,046 - 1,277,050 -
Corpus Christi, Texas - 576,548 - 934,918 -
Corsicana, Texas - 349,227 699,756 - -
Council Bluffs, Iowa - 546,078 - 993,149 -
Davenport, Iowa - 601,296 1,344,016 - -
Dover, Delaware - 1,043,108 - 977,508 -
Dublin, Georgia - 324,012 - 1,029,242 -
Dubuque, Iowa - 564,242 - 1,056,315 -
Duncan, Oklahoma - 161,390 - 1,028,945 -
Edmond, Oklahoma - 569,664 - 1,017,781 -
Enid, Oklahoma - 364,536 - 865,147 -
Evansville, Indiana - 587,794 - 1,262,175 -
Evansville, Indiana - 582,807 - 1,387,885 -
Flowood, Mississippi - 579,242 - 1,229,239 -
Fort Dodge, Iowa - 320,880 - 1,155,880 -
Fort Walton Beach, Florida - 590,538 - 1,176,436 -
Fort Wayne, Indiana - 738,839 - 969,481 -
Fort Worth, Texas - 640,320 898,171 - -
Henderson, Kentucky - 380,709 - 1,124,332 -
Hopkinsville, Kentucky - 456,646 - 861,803 -
Jacksonville, Florida - 679,236 - 1,469,954 -
Jacksonville, Florida - 615,554 - 1,184,073 -
Jacksonville, Florida - 541,264 - 1,173,738 -
Liberty, Missouri - 409,153 - 943,712 -
Lufkin, Texas - 479,197 - 954,051 -
Moberly , Missouri - 374,230 - 838,342 -
Mobile, Alabama - 428,841 - 1,031,457 -
Muskogee, Oklahoma - 395,839 - 887,540 -
Olathe, Kansas - 548,821 - 1,099,448 -
Omaha, Nebraska - 570,004 - 1,271,666 -
Palatka, Florida - 322,433 - 987,385 -
Pensacola, Florida - 633,459 - 1,606,040 -
Port Richey, Florida - 626,999 - 1,130,692 -
Rock Hill, South Carolina - 701,125 - 1,254,740 -
Tampa, Florida - 825,650 - 1,161,192 -
Tulsa, Oklahoma - 688,477 - 1,237,344 -
Universal City, Texas - 357,429 - 650,249 -
Waldorf, Maryland - 870,832 - 1,688,719 -
Winchester, Kentucky - 303,633 - 970,489 -
Ground Round Restaurants:
Allentown, Pennsylvania - 405,631 884,954 - -
Cincinnati, Ohio - 282,099 534,632 - -
Crystal, Minnesota - 370,667 431,642 - -
Dubuque, Iowa - 693,733 810,458 - -
Ewing , New Jersey - 371,254 685,847 - -
Gloucester, New Jersey - 422,489 528,849 - -
Janesville, Wisconsin - 451,235 548,178 - -
Kalamazoo, Michigan - 287,331 712,081 - -
Nanuet, New York - 375,116 605,067 - -
Parma, Ohio - 388,699 793,475 - -
Reading, Pennsylvania - 728,574 793,410 - -
Waterloo, Iowa - 436,471 659,089 - -
Wauwatosa, Wisconsin - 627,680 804,399 - -
Guthrie's Restaurant:
Hoover, Alabama (t) - 493,536 619,786 - -
Hardee's Restaurants:
Chalkville, Alabama (y) 201,069 465,165 - -
Columbia, Tennessee (y) 226,300 - - -
Gulf Shores, Alabama (y) 409,444 604,784 - -
Horn Lake, Mississippi (y) 302,787 - - -
Johnson City, Tennessee - 215,567 - - -
Mobile, Alabama - 336,696 - - -
Petal, Mississippi (y) 324,298 420,017 - -
Rock Hill, South Carolina - 256,050 476,149 - -
Tusculum, Tennessee (y) 217,396 522,802 - -
Warrior, Alabama (y) 177,659 - - -
West Point, Mississippi (y) 173,386 - - -
Houlihan's Restaurants:
Bethel Park, Pennsylvania - 846,183 595,601 - -
Langhorne, Pennsylvania - 817,039 648,765 - -
Plymouth Meeting, Pennsylvania - 1,181,460 908,880 - -
International House of Pancakes
Restaurants:
Auburn, Washington - 632,811 1,135,312 - -
Castle Rock, Colorado - 540,896 - 1,196,239 -
Clarksville, Tennessee - 375,987 964,430 - -
Elk Grove, California (y) 584,766 - - -
Fairfax, Virginia (y) 1,096,763 705,345 - -
Fort Worth, Texas - 575,285 802,974 - -
Fort Worth, Texas (y) 565,639 923,669 - -
Greeley, Colorado (y) 416,279 - 867,972 -
Greenville, South Carolina (y) 476,847 961,606 - -
Hollywood, California - 1,407,002 - - -
Homewood, Alabama (y) 545,112 1,029,900 - -
Houston, Texas (y) 645,365 856,532 - -
Kansas City, Missouri (y) 512,481 831,202 - -
Killeen, Texas (y) 380,687 775,713 - -
Lake Jackson, Texas (y) 460,167 802,640 - -
Leesburg, Virginia - 665,015 580,798 - -
Leon Valley, Texas (y) 593,624 918,024 - -
Loveland, Colorado (y) 488,259 - - -
Murfreesboro, Tennessee (y) 647,414 871,268 - -
Phoenix, Arizona - 668,112 941,796 - -
Port Arthur, Texas (y) 382,950 957,912 - -
Poughkeepsie, New York - 504,533 806,624 - -
Pueblo, Colorado (y) 387,562 891,943 - -
Roseville, Michigan - 282,868 843,648 - -
Southaven, Mississippi (y) 579,175 1,176,434 - -
Stockbridge, Georgia (y) 765,743 707,406 - -
Victoria, Texas (y) 319,237 - - -
Jack In the Box Restaurants:
Allen, Texas (y) 711,642 - 726,339 -
Austin, Texas (y) 446,800 - 416,243 -
Avondale, Arizona (y) 605,063 - 649,514 -
Bacliff, Texas - 419,488 - 697,861 -
Carson, California - 457,821 - 708,581 -
Chandler, Arizona (y) 481,456 - 636,588 -
Chandler, Arizona - 604,724 - 600,686 -
Channelview, Texas - 361,238 - 711,595 -
Corinth, Texas (y) 396,864 - 620,042 -
Corning, California (y) 163,533 994,490 - -
Dallas, Texas (y) 369,886 - 513,533 -
Enumclaw, Washington - 124,468 - 773,506 -
Florissant, Missouri - 389,265 - 779,211 -
Folsum, California (y) 635,343 703,067 - -
Fort Worth, Texas (y) 482,309 716,199 - -
Fresno, California - 286,850 - 606,547 -
Fresno, California (y) 462,813 - 573,816 -
Garland, Texas - 382,042 - 613,690 -
Georgetown, Texas - 501,765 - 754,996 -
Granbury, Texas - 405,902 - 658,360 -
Gun Barrel City, Texas (y) 284,046 - 577,029 -
Hillsboro, Oregon - 699,773 892,546 - -
Hollister, California - 537,223 - 592,536 -
Houston, Texas - 370,342 - 548,107 -
Houston, Texas - 420,521 - 543,338 -
Houston, Texas - 545,485 - 527,020 -
Houston, Texas - 403,002 - 610,815 -
Houston, Texas - 375,776 - 643,445 -
Humble, Texas - 372,584 746,622 - -
Humble, Texas - 437,667 - 591,877 -
Humble, Texas (y) 390,509 596,872 - -
Hutchins, Texas (y) 272,937 - 688,400 -
Irvine, California - 899,898 - 733,701 -
Kent, Washington (y) 737,038 - 604,806 -
Kingsburg, California - 415,880 - 649,681 -
Las Vegas, Nevada (y) 730,674 - 600,180 -
Los Angeles, California - 603,354 602,630 - -
Los Angeles, California (y) 911,754 - 581,552 -
Los Angeles, California - 740,616 678,189 - -
Los Angeles, California (y) 853,821 - 635,185 -
Los Angeles, California (y) 1,076,096 - 591,340 -
Lufkin, Texas (y) 418,351 - 651,064 -
Lufkin, Texas (y) 363,967 - 776,605 -
Moscow, Idaho - 217,851 - 751,664 -
Murietta, California - 387,455 - 625,933 -
Nacogdoches, Texas (y) 383,591 - 675,860 -
Ontario, California - 771,241 - 793,229 -
Orange, Texas - 387,533 - 787,843 -
Oxnard, California - 681,663 - 642,924 -
Palmdale, California - 631,275 - 567,912 -
Peoria, Arizona - 496,689 - 721,614 -
Pflugerville, Texas (y) 717,246 - 688,066 -
Saint Louis, Missouri (y) 474,296 - 759,049 -
Salem, Oregon (y) 501,168 699,067 - -
San Antonio, Texas (y) 274,362 - 781,797 -
San Antonio, Texas - 311,466 - 700,979 -
Spring, Texas - 475,748 - 719,239 -
Tacoma, Washington (y) 495,529 - 759,800 -
Tigard, Oregon (y) 353,396 904,688 - -
Tyler, Texas - 289,257 - 699,525 -
Waxahachie, Texas (y) 477,580 - 566,856 -
Weatherford, Texas - 464,986 - 785,149 -
West Sacramento, California - 523,089 - 617,131 -
Woodland, California - 358,130 - 668,383 -
KFC Restaurants:
Baton Rouge, Louisiana - 89,282 - 675,334 -
Gretna, Louisiana (y) 417,451 - 420,493 -
New Orleans, Louisiana (y) 310,574 - 583,883 -
New Orleans, Louisiana (y) 205,363 - 627,202 -
New Orleans, Louisiana (y) 315,037 - 593,560 -
New Orleans, Louisiana (y) 158,829 - 530,826 -
Port Allen, Louisiana - 165,191 858,299 - -
Putnam, Connecticut - 301,723 - - -
Krystal Restaurants:
Brandon, Mississippi - 340,115 687,423 - -
Chattanooga, Tennessee - 445,493 594,649 - -
Montgomery, Alabama - 311,103 506,943 - -
Leeann Chin Chinese Cuisine
Restaurants:
Chanhassen, Minnesota (u) - 376,929 639,875 - -
Golden Valley, Minnesota (v) - 665,422 - 481,311 -
Little Lake Bryan Land:
Orlando, Florida - 4,894,106 - - -
Mister Fables Restaurant:
Grand Rapids, Michigan (w) - 320,594 559,433 - -
Pizza Hut Restaurants:
Adrian, Michigan - 242,239 - - -
Beaver, West Virginia - 212,053 - - -
Beckley, West Virginia - 209,432 - - -
Bedford, Ohio - 174,721 - - -
Belle, West Virginia - 46,737 - - -
Bluefield, West Virginia - 120,449 - - -
Bolivar, Ohio - 190,009 - - -
Bowling Green, Ohio - 200,442 - - -
Bowling Green, Ohio - 135,831 - - -
Carrolton, Ohio - 187,082 - - -
Cleveland, Ohio - 126,494 - - -
Cleveland, Ohio - 116,849 - - -
Cleveland, Ohio - 226,163 - - -
Cross Lanes, West Virginia - 215,881 - - -
Defiance, Ohio - 242,239 - - -
Dover, Ohio - 245,145 - - -
East Cleveland, Ohio - 194,012 - - -
Euclid, Ohio - 202,050 - - -
Fairview Park, Ohio - 142,570 - - -
Huntington, West Virginia - 212,093 - - -
Hurricane, West Virginia - 180,803 - - -
Lambertville, Michigan - 99,166 - - -
Marietta, Ohio - 169,454 - - -
Mayfield Heights, Ohio - 202,552 - - -
Middleburg Heights, Ohio - 216,518 - - -
Millersburg, Ohio - 213,090 - - -
Milton, West Virginia - 99,815 - - -
Monroe, Michigan - 152,215 - - -
New Philadelphia, Ohio - 149,206 - - -
New Philadelphia, Ohio - 223,981 - - -
North Olmstead, Ohio - 259,922 - - -
Norwalk, Ohio - 261,529 - - -
Ronceverte, West Virginia - 99,733 - - -
Sandusky, Ohio - 259,922 - - -
Seven Hills, Ohio - 239,023 - - -
Steubenville, Ohio - 228,199 - - -
Strongsville, Ohio - 186,476 - - -
Toledo, Ohio - 128,604 - - -
Toledo, Ohio - 194,097 - - -
Toledo, Ohio - 208,480 - - -
Toledo, Ohio - 176,170 - - -
Toledo, Ohio - 197,227 - - -
Uhrichsville, Ohio - 279,779 - - -
Weirton, West Virginia - - - 178,187 -
Wellsburg, West Virginia - 167,170 - 168,363 -
Pollo Tropical Restaurants:
Coral Springs, Florida (y) 852,746 1,108,491 - -
Davie, Florida (y) 712,865 873,395 - -
Fort Lauderdale, Florida (y) 397,878 923,975 - -
Lake Worth, Florida (y) 435,465 915,232 - -
Miami, Florida (y) 918,258 764,150 - -
Miami, Florida (y) 654,766 1,195,901 - -
Miami, Florida (y) 683,560 614,256 - -
Miami, Florida (y) 789,680 604,283 - -
Miami, Florida (y) 911,013 1,011,766 - -
Miami, Florida - 1,244,893 918,257 - -
Sunrise, Florida (y) 569,436 968,749 - -
Ponderosa Restaurants:
Appleton, Wisconsin - 181,153 561,582 - -
Blue Springs, Missouri - 691,797 1,136,902 - -
Eureka, Missouri - 379,675 604,449 - -
Indiana, Pennsylvania - 714,789 - 1,317,317 -
Johnstown, Pennsylvania - 599,391 - 1,159,989 -
Kissimmee, Florida - 637,984 824,276 - -
Massena, New York - 129,816 659,340 - -
Middletown, New York - 214,177 853,505 - -
Oneonta, New York - 366,941 524,341 - -
Popeye's Famous Fried
Chicken Restaurants:
Thomasville, Georgia - 113,780 407,429 - -
Valdosta, Georgia - 158,880 378,057 - -
Red Robin Restaurant:
Columbus, Ohio - 723,572 - 1,080,644 -
Rio Bravo Fresh Mex Cantina
Restaurants:
Altamonte Springs, Florida (y) 1,259,828 1,623,073 - -
Atlanta, Georgia (y) 1,463,644 1,874,198 - -
Jacksonville, Florida (y) 1,725,325 1,574,207 - -
Lake Mary, Florida (y) 88,077 2,019,028 - -
Morrow, Georgia (y) 934,922 1,842,623 - -
Nashville, Tennessee (y) 956,799 2,692,320 - -
Roadhouse Grill Restaurants:
Brandon, Florida (y) 914,103 - 691,171 -
Centerville, Ohio - 1,227,360 - 403,031 -
Clearwater, Florida (y) 1,370,391 - 946,608 -
Columbus, Ohio - 884,184 - 270,544 -
Fairfield, Ohio - 1,151,865 - 910,321 -
Grove City, Ohio - 649,962 - 978,307 -
Jacksonville, Florida - 1,307,683 - 1,031,615 -
Jacksonville, Florida (y) 394,025 - 1,442,752 -
Pensacola, Florida (y) 927,463 - 691,228 -
Pineville, North Carolina - 1,202,760 - 1,275,957 -
Rock Hill, South Carolina - 599,193 - 436,441 -
Rubio's Baja Grill Restaurant:
Taylorsville, Utah (x) - 889,562 487,475 - -
Ruby Tuesday's Restaurants:
Bartow, Florida - 416,311 - 963,438 -
Champlin, Minnesota - 508,564 - 776,930 -
Colorado Springs, Colorado - 696,645 - 984,791 -
Coral Springs, Florida - 714,999 - 1,012,478 -
Dillon, Colorado - 557,630 - 1,047,984 -
Draper, Utah - 518,832 - - -
Independence, Missouri - 980,703 - - -
Kansas City, Missouri - 633,990 - 1,058,846 -
Lakeland, Florida - 574,441 742,781 - -
Lakewood, Washington - 430,741 - 689,963 -
London, Kentucky - 354,415 - - -
Orange City, Florida - 719,563 - - -
Orlando, Florida - 649,551 - 127,094 -
Port Saint Lucie, Florida - 436,830 - 259,866 -
Somerset, Kentucky - 545,612 - 868,606 -
Vero Beach, Florida - 537,770 - 1,156,886 -
Ruth's Chris Steak House
Restaurant:
Tampa, Florida - 1,076,442 1,062,751 - -
Ryan's Family Steak House
Restaurant:
Spring Hill, Florida - 591,371 - 1,175,273 -
Shoney's Restaurants:
Indian Harbor Beach, Florida (m) - 309,101 - 420,246 -
Phoenix, Arizona - 469,721 - 85,872 -
Sonny's Real Pit Bar-B-Q
Restaurants:
Athens, Georgia - 628,688 962,524 - -
Conyers, Georgia - 371,021 593,171 - -
Doraville, Georgia - 585,461 812,822 - -
Marietta, Georgia - 527,572 870,710 - -
Norcross, Georgia - 734,105 961,287 - -
Smyrna, Georgia - 634,379 643,323 - -
Thomasville, Georgia - 264,476 - 825,466 -
Venice, Florida - 498,746 - - -
Steak and Ale Restaurants:
Altamonte Springs, Florida - 1,006,396 690,731 - -
Austin, Texas - 705,557 - - -
Birmingham, Alabama - 715,432 - - -
College Park, Georgia - 802,361 - - -
Conroe, Texas - 590,733 - - -
Greenville, South Carolina - 670,594 - - -
Houston, Texas - 776,694 - - -
Houston, Texas - 964,354 - - -
Huntsville, Alabama - 641,125 - - -
Jacksonville, Florida - 670,491 - - -
Maitland, Florida - 684,164 - - -
Memphis, Tennessee - 810,316 798,412 - -
Mesquite, Texas - 592,342 - - -
Miami, Florida - 594,142 - - -
Middletown, New Jersey - 933,759 763,368 - -
Norcorss, Georgia - 740,132 - - -
Orlando, Florida - 922,679 725,256 - -
Palm Harbor, Florida - 487,021 - - -
Pensacola, Florida - 354,419 - - -
Tulsa, Oklahoma - 433,713 - - -
Taco Bell Restaurants:
Colonial Heights, Virginia - 447,458 - 383,785 -
Hayes, Virginia - 299,870 - - -
Livingston, Tennessee - 212,438 - - -
Richmond, Virginia - 474,588 - 478,974 -
Richmond, Virginia - 404,578 - 451,129 -
Richmond, Virginia - 402,947 - - -
Saint Louis, Missouri - 308,915 351,160 - -
Saint Louis, Missouri - 349,637 - - -
Wentzville, Missouri - 336,432 - 229,194 -
Williamsburg, Virginia - 343,906 - - -
Taco Bell/Pizza Hut Restaurants:
Dallas, Texas (o) (y) 335,196 - 694,908 -
Texas Roadhouse Restaurants:
Ammon, Idaho - 504,934 - 826,842 -
Aurora, Colorado - 656,917 - 483,589 -
Cedar Rapids, Iowa - 581,600 - 104,177 -
Gastonia, North Carolina - 237,777 - 1,152,076 -
Hickory, North Carolina (y) 554,901 1,032,705 -
Shively, Kentucky (y) 713,534 995,529 - -
TGI Friday's Restaurants:
El Paso, Texas - 599,160 - - -
Goodyear, Arizona - 971,812 - 1,461,969 -
Henderson, Nevada - 1,387,007 - 1,996,405 -
Independence, Missouri - 856,278 - - -
Lakeland, Florida - 571,236 - 1,296,199 -
Leawood, Kansas - 2,437,336 - 9,243 -
Mesa, Arizona - 914,342 - - -
Shawnee, Kansas - 886,592 - 1,624,138 -
Temecula, California - 1,239,033 - 1,479,124 -
Union City, California - 1,203,257 - 1,892,964 -
TropiGrill Restaurants:
Altamonte Springs, Florida (y) 548,886 700,856 - -
Orlando, Florida (y) 618,372 631,370 - -
Tumbleweed Southwest Mesquite
Bar & Grill Restaurants:
Clarksville, Tennessee - 608,678 - - -
Cookeville, Tennessee - 511,084 - - -
Hermitage, Tennessee - 551,646 - - -
Murfreesboro, Tennessee - 514,900 - - -
Nashville, Tennessee - 420,176 - - -
Village Inn Restaurant:
Omaha, Nebraska - 511,811 756,304 - -
Wendy's Old Fashioned
Hamburgers Restaurants:
Camarillo, California - 640,066 - 688,918 -
Knoxville, Tennessee - 358,027 - 444,622 -
Knoxville, Tennessee (y) 555,813 - 442,025 -
Paso Robles, California (y) 488,270 - 783,849 -
Santa Maria, California - - - 302,359 -
Westlake Village, California - 841,374 - 699,082 -
-----------------
================= ================= ================= ============
$330,002,516 $175,829,231 $192,432,181 -
================= ================= ================= ============
Property of Joint Venture in Which the
Company has a 59.22% Interest and has
Invested in Under an Operating Lease:
Bennigan's Restaurant:
Orlando, Florida - $708,297 - $1,008,108 -
================= ================= ================= ============
Properties the Company
has Invested in Under
Direct Financing Leases:
Applebee's Restaurants:
Freeport, Illinois - 197,631 1,008,908 - -
Moscow, Idaho - - - 1,238,460 -
Rockford, Illinois - - 1,096,139 - -
Salinas, California - - - 794,058 -
Tullahoma, Tennessee - 324,362 1,009,364 - -
Arby's Restaurants:
Bartow, Florida - - - 419,771 -
Brooksville, Florida - - 373,970 - -
Brooksville, Florida - - 427,500 - -
Elfers, Florida - - 403,422 - -
Grand Rapids, Michigan (k) - - - 938,296 -
Hudson, Florida - - 495,426 - -
Lakeland, Florida - - 458,110 - -
Plant City, Florida - - 449,949 - -
Barb Wires Steakhouse
Restaurants:
Lawrence, Kansas - - 1,022,607 - -
Bennigan's Restaurants:
Bedford, Texas - - 954,774 - -
Clearwater, Florida - - 1,043,049 - -
Colorado Springs, Colorado - - 902,872 - -
Englewood, Colorado - - 1,131,082 - -
Florham Park, New Jersey - - 1,092,401 - -
Houston, Texas - - 985,394 - -
Jacksonville, Florida - - 819,356 - -
Jacksonville, Florida - - 1,061,339 - -
North Richland Hills, Texas - - 983,252 - -
Oklahoma City, Oklahoma - - 1,015,084 - -
Pensacola, Florida - - 980,438 - -
Saint Louis Park, Minnesota - - 1,280,033 - -
Tampa, Florida - - 1,312,146 - -
Winston-Salem, North Carolina - 247,828 992,552 - -
Woodridge, Illinois - - 991,688 - -
Big Boy Restaurants:
Bridgeton, Missouri (m) - - - 677,631 -
Woodson Terrace, Missouri (m) - - - 1,246,946 -
Black Angus Restaurant:
Dublin, California - - - 1,247,473 -
Black-eyed Pea Restaurants:
Albuquerque, New Mexico (m) - - 705,746 - -
Albuquerque, New Mexico (m) - - 704,757 - -
Bedford, Texas - - 655,028 - -
Dallas, Texas - - - 655,011 -
Dallas, Texas - - 698,827 - -
Forestville, Maryland - - 681,034 - -
Fort Worth, Texas - - 655,014 - -
Hillsboro, Texas - - - 716,364 -
Houston, Texas - - 685,977 - -
Mesa, Arizona - - 906,740 - -
Oklahoma City, Oklahoma - - 651,523 - -
Phoenix, Arizona - - 677,681 - -
Phoenix, Arizona - - 677,805 - -
Phoenix, Arizona - - 682,141 - -
Scottsdale, Arizona - - - 823,188 -
Tucson, Arizona (m) - - 678,333 - -
Waco, Texas (m) - - 699,815 - -
Wichita, Kansas (m) - - 698,827 - -
Burger King Restaurants:
Atlanta, Georgia - - - 582,222 -
Lacey, Washington - - 840,711 - -
Montgomery, Alabama - - 966,175 - -
Olympia, Washington - - 920,058 - -
Port Angeles, Washington - - 696,026 - -
Prattville, Alabama - 262,664 812,946 - -
Tuskegee, Alabama - 127,618 899,076 - -
Darryl's Restaurants:
Evansville, Indiana (y) - 974,401 - -
Knoxville, Tennessee (y) - 709,047 - -
Louisville, Kentucky (y) - 915,201 - -
Mobile, Alabama - - 1,009,042 - -
Montgomery, Alabama (y) - 952,382 - -
Nashville, Tennessee (y) - 736,400 - -
Pensacola, Florida (y) - 725,709 - -
Richmond, Virginia - - 775,617 - -
Richmond, Virginia (y) - 650,175 - -
Winston-Salem, North Carolina - - 812,752 - -
Denny's Restaurants:
Akron, Ohio - 137,424 938,202 - -
Duncan, South Carolina - - 826,770 - -
Landrum, South Carolina - - 492,869 - -
McMcKinney,eTexas - - 655,052 - '
Mooresville, North Carolina - - 736,649 - -
TaTampa,lFlorida - - - 715,957 -
Topeka, Kansas - - 700,166 - -
Winter Springs, Florida - - 886,915 - -
Fazoli's Restaurant:
Southaven, Mississippi - - - 609,277 -
Golden Corral Family
Steakhouse Restaurants:
Eastlake, Ohio - 256,332 1,473,307 - -
Hardee's Restaurants:
Aynor, South Carolina (y) 44,871 557,446 - -
Biscoe, North Carolina (y) 60,301 519,290 - -
Columbia, Tennessee (y) - 644,519 - -
Horn Lake, Mississippi (y) - 622,268 - -
Iuka, Mississippi (y) 130,258 546,459 - -
Johnson City, Tennessee - - 618,318 - -
Mobile, Alabama - - 540,173 - -
Warrior, Alabama (y) - 518,434 - -
West Point, Mississippi (y) - 569,388 - -
International House of
Pancakes Restaurants:
Alexandria, Virginia - - 852,645 - -
Anderson, South Carolina - - 957,414 - -
Blue Bell, Pennsylvania - - 829,834 - -
Chesapeake, Virginia - - 1,059,499 - -
Corpus Christi, Texas - - 864,457 - -
Crestwood, Illinois - - 935,262 - -
Elk Grove, California (y) - 1,039,584 - -
Flagstaff, Arizona - 293,762 1,121,276 - -
Fredericksburg, Virginia - - 972,595 - -
Hickory, North Carolina - - 1,202,183 - -
Hollywood, California - - 994,845 - -
Houston, Texas - - 1,017,365 - -
Loveland, Colorado (y) - 963,597 - -
Maryville, Tennessee (y) 243,825 963,231 - -
Montgomery, Alabama - - 843,378 - -
Pittsburg, California - - 1,014,264 - -
Plano, Texas - - 982,443 - -
Salem, New Hampshire - - 779,153 - -
San Antonio, Texas - - 1,081,335 - -
Tuscaloosa, Alabama - - 930,720 - -
Victoria, Texas (y) - 814,015 - -
Virginia Beach, Virginia - - 1,013,830 - -
Warner Robins, Georgia - - 833,493 - -
KFC Restaurant:
Putnam, Connecticut - - 530,846 - -
On the Border Restaurant:
San Antonio, Texas - - - 1,305,217 -
Popeye's Famous Fried
Chicken Restaurant:
Starke, Florida - 208,910 - 427,066 -
Ruby Tuesday's Restaurants:
Draper, Utah - - - 1,036,077 -
Independence, Missouri - - - 554,092 -
London, Kentucky - - - 845,249 -
Louisville, Kentucky - - - 1,072,199 -
Orange City, Florida - - - 1,047,180 -
Puyallup, Washington - - - 934,118 -
Sebring, Florida - 230,828 - 775,603 -
Saint George, Utah - - - 895,583 -
Sonny's Real Pit Bar-B-Q
Restaurant:
Venice, Florida - - 1,004,407 - -
Steak and Ale Restaurants:
Austin, Texas - - 745,609 - -
Birmingham, Alabama - - 681,623 - -
College Park, Georgia - - 909,525 - -
Conroe, Texas - - 1,032,606 - -
Greenville, South Carolina - - 1,180,342 - -
Houston, Texas - - 1,092,606 - -
Houston, Texas - - 978,733 - -
Huntsville, Alabama - - 810,041 - -
Jacksonville, Florida - - 879,060 - -
Maitland, Florida - - 791,599 - -
Mesquite, Texas - - 908,017 - -
Miami, Florida - - 1,176,774 - -
Norcorss, Georgia - - 966,814 - -
Palm Harbor, Florida - - 816,569 - -
Pensacola, Florida - - 826,191 - -
Tulsa, Oklahoma - - 1,067,543 - -
Taco Bell Restaurants:
Hayes, Virginia - - - 443,302 -
Livingston, Tennessee - - - 436,198 -
Richmond, Virginia - - - 575,079 -
Saint Louis, Missouri - - 471,686 - -
Williamsburg, Virginia - - - 438,410 -
Texas Roadhouse Restaurant:
Fayetteville, North Carolina - - 944,114 - -
TGI Friday's Restaurants:
El Paso, Texas - - - 1,089,566 -
Independence, Missouri - - - 1,664,913 -
Mesa, Arizona - - - 1,440,217 -
TGI Friday's/Redfish Looziana
Roadhouse Restaurants:
San Diego, California (n) - 2,399,895 - 3,646,084 -
Tumbleweed Southwest Mesquite
Bar & Grill Restaurants:
Clarksville, Tennessee - - - 934,598 -
Cookeville, Tennessee - - 1,029,717 - -
Hendersonville, Tennessee - - 782,282 - -
Hermitage, Tennessee - - - 965,664 -
Murfreesboro, Tennessee - - 976,699 - -
Nashville, Tennessee - - - 949,367 -
-
Wendy's Old Fashioned -
Hamburgers Restaurants: -
Carmel Mountain, California - - 594,856 - -
Knoxville, Tennessee - - - 463,995 -
San Diego, California - - - 590,058 -
Sevierville, Tennessee - - - 531,726 -
Seymour, Tennessee - - - 472,670 -
================= ================= ================= ============
$5,166,509 $101,256,723 $34,198,885 -
================= ================= ================= ============
Gross Amount at Which Life on Which
Carried at Close of Period (b) (m) Depreciation in
- ----------------------------------------------------- Date Latest Income
Buildings and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
- ------------------ ------------------------------------ ---------------------------------------------------------
609,696 770,331 1,380,027 34,770 1991 08/98 (e)
556,070 983,010 1,539,080 44,370 1995 08/98 (e)
625,868 936,068 1,561,936 42,251 1996 08/98 (e)
489,867 1,003,630 1,493,497 45,301 1993 08/98 (e)
549,651 966,628 1,516,279 43,631 1994 08/98 (e)
735,272 827,474 1,562,746 37,350 1992 08/98 (e)
390,058 943,019 1,333,077 42,565 1997 08/98 (e)
568,168 925,046 1,493,214 41,754 1998 08/98 (e)
740,165 835,996 1,576,161 37,734 1995 08/98 (e)
874,094 880,494 1,754,588 60,724 1997 12/96 (e)
537,410 (g) 537,410 (h) 1999 08/99 (h)
603,828 (g) 603,828 (h) 1996 01/99 (h)
778,775 1,131,575 1,910,350 8,474 1999 10/99 (e)
786,475 (g) 786,475 (h) 1997 02/97 (h)
508,120 630,308 1,138,428 5,178 1999 12/99 (e)
230,720 455,946 686,666 24,171 1988 05/98 (e)
648,459 683,390 1,331,849 32,094 1998 08/98 (e)
326,788 391,270 718,058 12,354 1995 01/99 (e)
338,486 497,282 835,768 54,497 1996 09/96 (e)
226,428 (g) 226,428 (h) 1995 01/99 (h)
266,606 (g) 266,606 (h) 1994 01/99 (h)
248,277 (g) 248,277 (h) 1984 01/99 (h)
586,477 606,850 1,193,327 21,170 1998 12/98 (e)
307,909 622,689 930,598 5,189 1999 12/99 (e)
441,770 621,014 1,062,784 30,243 1998 07/98 (e)
483,868 576,483 1,060,351 20,009 1999 12/98 (e)
709,624 540,955 1,250,579 247 1999 12/99 (e)
242,777 (g) 242,777 (h) 1992 01/99 (h)
434,000 285,499 719,499 (c) (d) 10/99 (c)
312,670 (g) 312,670 (h) 1995 08/95 (h)
363,478 404,650 768,128 32,492 1990 08/97 (e)
277,986 490,143 768,129 39,357 1995 08/97 (e)
270,539 (g) 270,539 (h) 1993 01/99 (h)
- 595,455 595,455 (c) (d) 11/99 (c)
439,935 670,560 1,110,495 5,588 1999 12/99 (e)
228,364 539,764 768,128 43,341 1995 08/97 (e)
276,567 505,359 781,926 58,612 1995 07/96 (e)
273,325 413,077 686,402 33,169 1994 08/97 (e)
268,545 485,160 753,705 38,957 1995 08/97 (e)
235,996 (g) 235,996 (h) 1990 01/99 (h)
320,924 463,347 784,271 38,052 1992 07/97 (e)
- 336,297 336,297 (c) (d) 12/99 (c)
463,047 621,088 1,084,135 33,030 1998 05/98 (e)
196,251 (g) 196,251 (h) 1991 01/99 (h)
412,516 673,289 1,085,805 20,829 1998 01/99 (e)
583,128 444,307 1,027,435 (c) (d) 09/99 (c)
421,059 632,791 1,053,850 9,376 1999 07/99 (e)
322,412 371,694 694,106 11,736 1992 01/99 (e)
504,163 485,272 989,435 (c) (d) 09/99 (c)
733,180 665,895 1,399,075 17,560 1999 03/99 (e)
498,427 701,500 1,199,927 5,846 1999 09/99 (e)
522,786 289,350 812,136 10,465 1998 12/98 (e)
449,010 728,259 1,177,269 4,323 1978 10/99 (e)
679,830 1,041,258 1,721,088 6,181 1987 10/99 (e)
419,238 848,874 1,268,112 5,039 1979 10/99 (e)
543,966 1,131,838 1,675,804 6,719 1991 10/99 (e)
573,069 468,307 1,041,376 2,780 1980 10/99 (e)
647,562 869,687 1,517,248 5,163 1977 10/99 (e)
488,663 1,141,844 1,630,506 6,778 1992 10/99 (e)
664,403 852,845 1,517,248 5,063 1970 10/99 (e)
567,083 1,176,715 1,743,798 6,985 1978 10/99 (e)
375,257 734,314 1,109,571 4,359 1977 10/99 (e)
614,512 630,952 1,245,464 3,745 1977 10/99 (e)
518,276 591,047 1,109,323 3,508 1980 10/99 (e)
586,045 718,306 1,304,351 4,264 1977 10/99 (e)
493,489 (g) 493,489 (h) 1994 08/97 (h)
714,194 1,302,733 2,016,927 119,387 1997 04/97 (e)
944,185 1,504,357 2,448,542 (c) (d) 10/99 (c)
768,333 (g) 768,333 (h) 1986 06/98 (h)
1,419,261 95,308 1,514,569 (c) (d) 12/99 (c)
900,038 (g) 900,038 (h) 1979 06/98 (h)
794,255 (g) 794,255 (h) 1979 06/98 (h)
1,419,261 95,308 1,514,569 (c) (d) 12/99 (c)
665,141 (g) 665,141 (h) 1984 06/98 (h)
1,460,179 901,042 2,361,221 46,348 1982 06/98 (e)
1,077,645 (g) 1,077,645 (h) 1983 06/98 (h)
1,009,338 44,400 1,053,738 (c) (d) 12/99 (c)
1,028,193 1,512,031 2,540,224 (c) (d) 08/99 (c)
908,502 (g) 908,502 (h) 1979 06/98 (h)
779,387 (g) 779,387 (h) 1983 06/98 (h)
832,557 (g) 832,557 (h) 1981 06/98 (h)
1,075,230 501,111 1,576,342 (c) (d) 10/99 (c)
1,305,939 1,030,685 2,336,624 53,017 1982 06/98 (e)
886,048 (g) 886,048 (h) 1979 06/98 (h)
693,453 1,072,916 1,766,369 8,941 1998 12/98 (e)
756,750 (g) 756,750 (h) 1986 06/98 (h)
1,585,461 874,143 2,459,604 44,964 1978 06/98 (e)
692,093 (g) 692,093 (h) 1983 06/98 (h)
885,111 (g) 885,111 (h) 1976 06/98 (h)
734,245 (g) 734,245 (h) 1980 06/98 (h)
789,680 (g) 789,680 (h) 1987 12/98 (h)
298,330 771,486 1,069,816 19,992 1986 03/99 (e)
373,239 873,481 1,246,720 14,558 1999 06/99 (e)
289,405 434,316 723,721 (c) (d) 02/99 (c)
168,583 878,386 1,046,969 27,094 1992 01/99 (e)
251,187 737,670 988,857 13,581 1982 06/99 (e)
346,116 829,946 1,176,062 22,265 1987 03/99 (e)
496,025 792,520 1,288,545 (c) (d) 01/99 (c)
273,460 694,837 968,297 9,339 1999 08/99 (e)
624,303 952,724 1,577,027 24,688 1986 03/99 (e)
395,842 631,903 1,027,745 13,564 1978 04/99 (e)
122,097 974,597 1,096,694 25,166 1990 03/99 (e)
623,709 933,059 1,556,768 7,917 1997 04/97 (e)
515,607 838,027 1,353,634 17,258 1981 05/99 (e)
460,466 720,050 1,180,516 17,590 1982 04/99 (e)
401,115 667,600 1,068,715 12,377 1997 06/99 (e)
656,263 1,162,746 1,819,009 9,690 1997 08/97 (e)
503,048 626,215 1,129,263 12,671 1979 05/99 (e)
366,776 778,584 1,145,360 24,086 1999 01/99 (e)
644,889 991,991 1,636,880 20,444 1981 05/99 (e)
450,010 760,630 1,210,640 15,489 1979 05/99 (e)
369,314 704,550 1,073,864 19,801 1984 02/99 (e)
466,949 630,982 1,097,931 14,797 1984 04/99 (e)
437,383 770,447 1,207,830 23,061 1991 02/99 (e)
318,979 1,013,110 1,332,089 21,511 1999 05/99 (e)
238,400 700,519 938,919 15,927 1987 04/99 (e)
608,835 859,893 1,468,728 12,921 1992 07/99 (e)
376,905 692,124 1,069,029 18,946 1981 03/99 (e)
373,164 869,059 1,242,223 10,655 1993 08/99 (e)
744,126 (g) 744,126 (h) 1994 05/99 (h)
678,779 1,049,420 1,728,199 4,888 1999 11/99 (e)
744,764 1,082,896 1,827,660 25,052 1998 04/99 (e)
883,976 1,311,307 2,195,283 10,928 1999 09/99 (e)
362,141 989,635 1,351,776 48,375 1996 07/98 (e)
404,881 (g) 404,881 (h) 1996 10/97 (h)
514,282 989,138 1,503,420 8,243 1999 09/99 (e)
683,537 1,124,255 1,807,792 16,658 1999 07/99 (e)
821,011 1,056,003 1,877,014 8,197 1999 10/99 (e)
784,939 (g) 784,939 (h) 1994 09/97 (h)
568,087 974,706 1,542,793 25,412 1998 03/99 (e)
1,023,806 (g) 1,023,806 (h) 1999 09/99 (h)
800,046 1,192,375 1,992,421 8,929 1999 10/99 (e)
774,448 507,587 1,282,035 45,822 1997 04/97 (e)
585,818 866,641 1,452,459 68,401 1997 08/97 (e)
507,544 328,353 835,897 27,025 1997 07/97 (e)
353,608 606,470 960,078 36,416 1997 05/98 (e)
365,784 605,763 971,547 65,389 1996 10/96 (e)
705,522 626,845 1,332,367 62,856 1996 12/96 (e)
667,992 661,776 1,329,768 51,809 1997 08/97 (e)
566,562 403,730 970,292 25,279 1997 04/98 (e)
885,567 648,755 1,534,322 50,375 1997 09/97 (e)
631,336 675,111 1,306,447 55,566 1997 07/97 (e)
515,827 572,706 1,088,533 42,940 1997 10/97 (e)
469,041 336,295 805,336 26,555 1997 08/97 (e)
473,596 586,377 1,059,973 48,102 1997 07/97 (e)
526,092 504,483 1,030,575 37,594 1997 10/97 (e)
528,118 340,297 868,415 36,081 1996 10/96 (e)
378,786 388,489 767,275 39,381 1996 12/96 (e)
482,361 316,135 798,496 23,883 1997 09/97 (e)
448,185 681,598 1,129,783 56,784 1997 07/97 (e)
788,248 209,449 997,697 23,601 1996 07/96 (e)
751,576 757,026 1,508,602 62,308 1997 07/97 (e)
651,867 775,634 1,427,501 63,839 1997 07/97 (e)
234,685 589,367 824,052 36,788 1994 04/98 (e)
569,782 294,878 864,660 23,896 1997 04/97 (e)
597,021 962,188 1,559,210 30,123 1982 03/99 (e)
394,712 (g) 394,712 (h) 1998 06/98 (h)
543,095 620,617 1,163,712 70,337 1996 08/96 (e)
217,079 833,772 1,050,851 14,505 1999 06/99 (e)
680,192 575,426 1,255,618 50,765 1997 05/97 (e)
769,842 411,012 1,180,854 35,512 1997 05/97 (e)
917,717 784,590 1,702,307 74,214 1996 02/97 (e)
349,582 385,483 735,065 (c) (d) 09/99 (c)
445,471 434,907 880,378 11,508 1971 03/99 (e)
387,913 560,993 948,906 14,845 1991 03/99 (e)
323,106 1,219,165 1,542,270 36,923 1991 03/99 (e)
672,815 621,133 1,293,948 69,885 1996 08/96 (e)
477,686 719,221 1,196,907 19,031 1989 03/99 (e)
233,468 689,696 923,164 66,812 1970 02/97 (e)
308,272 (g) 308,272 (h) 1993 01/99 (h)
360,438 1,062,531 1,422,969 32,778 1988 03/99 (e)
339,900 745,696 1,085,597 19,732 1987 03/99 (e)
448,745 626,866 1,075,610 19,278 1988 01/99 (e)
775,925 458,838 1,234,763 12,141 1971 03/99 (e)
402,927 (g) 402,927 (h) 1988 01/99 (h)
379,798 695,812 1,075,610 21,399 1990 01/99 (e)
273,353 718,493 991,846 19,012 1973 03/99 (e)
1,211,346 829,339 2,040,685 90,886 1996 09/96 (e)
546,261 714,114 1,260,375 57,711 1997 07/97 (e)
625,123 958,670 1,583,793 30,031 1974 03/99 (e)
261,321 802,689 1,064,010 21,240 1975 03/99 (e)
424,416 822,399 1,246,814 25,292 1995 01/99 (e)
281,966 581,637 863,603 15,391 1967 03/99 (e)
479,315 497,291 976,606 (c) (d) 08/99 (c)
363,327 596,839 960,166 15,793 1987 03/99 (e)
375,952 820,967 1,196,919 21,724 1987 03/99 (e)
348,663 626,806 975,469 11,019 1999 06/99 (e)
965,223 549,565 1,514,788 46,801 1977 06/97 (e)
944,585 689,363 1,633,948 58,706 1971 06/97 (e)
1,372,077 1,566,797 2,938,874 3,434 1999 06/99 (e)
986,426 1,680,312 2,666,738 112,174 1994 12/97 (e)
1,122,087 2,017,496 3,139,583 48,365 1999 04/99 (e)
938,162 1,681,670 2,619,832 112,265 1995 12/97 (e)
869,178 1,309,759 2,178,937 31,398 1999 04/99 (e)
844,185 1,425,740 2,269,926 34,179 1999 04/99 (e)
984,259 1,103,690 2,087,949 26,458 1999 04/99 (e)
945,234 1,475,339 2,420,573 98,491 1994 12/97 (e)
1,239,264 1,490,392 2,729,656 35,729 1999 04/99 (e)
570,815 1,536,290 2,107,105 36,829 1999 04/99 (e)
963,047 1,505,671 2,468,718 100,516 1995 12/97 (e)
1,156,847 1,188,272 2,345,119 39,935 1997 12/98 (e)
1,089,268 931,637 2,020,905 22,334 1999 04/99 (e)
1,032,271 1,074,834 2,107,105 25,767 1999 04/99 (e)
960,779 1,365,563 2,326,342 74,139 1990 05/98 (e)
470,047 1,541,280 2,011,327 36,948 1999 04/99 (e)
1,495,716 1,674,517 3,170,232 40,143 1999 04/99 (e)
878,358 1,449,034 2,327,392 34,737 1999 04/99 (e)
869,408 1,548,972 2,418,380 37,133 1999 04/99 (e)
844,918 1,712,340 2,557,257 41,049 1999 04/99 (e)
563,479 (g) 563,479 (h) 1983 06/97 (h)
698,367 570,468 1,268,835 48,581 1983 06/97 (e)
777,842 663,941 1,441,783 56,541 1981 06/97 (e)
589,574 (g) 589,574 (h) 1983 06/97 (h)
647,375 (g) 647,375 (h) 1983 06/97 (h)
495,195 (g) 495,195 (h) 1983 06/97 (h)
346,380 (g) 346,380 (h) 1984 06/97 (h)
513,218 (g) 513,218 (h) 1981 06/97 (h)
1,485,631 772,853 2,258,484 65,816 1983 06/97 (e)
389,394 (g) 389,394 (h) 1983 06/97 (h)
840,525 505,176 1,345,701 43,021 1980 06/97 (e)
1,131,164 719,865 1,851,029 61,304 1972 06/97 (e)
618,125 (g) 618,125 (h) 1982 06/97 (h)
311,196 (g) 311,196 (h) 1982 06/97 (h)
436,867 (g) 436,867 (h) 1978 06/97 (h)
641,080 629,348 1,270,428 4,311 1999 10/99 (e)
219,702 (g) 219,702 (h) 1992 03/99 (h)
361,025 572,098 933,123 15,138 1992 03/99 (e)
457,851 454,566 912,417 12,028 1985 03/99 (e)
392,818 664,851 1,057,669 17,593 1985 03/99 (e)
155,398 (g) 155,398 (h) 1992 03/99 (h)
439,961 (g) 439,961 (h) 1996 06/96 (h)
307,292 (g) 307,292 (h) 1992 03/99 (h)
466,555 506,094 972,649 72,870 1981 09/95 (e)
328,506 358,314 686,819 9,481 1992 03/99 (e)
528,090 625,653 1,153,743 90,080 1987 09/95 (e)
397,302 (g) 397,302 (h) 1997 08/97 (h)
414,731 (g) 414,731 (h) 1989 03/99 (h)
555,232 (g) 555,232 (h) 1994 03/99 (h)
464,957 178,078 643,035 14,673 1997 07/97 (e)
628,804 36,311 665,115 3,009 1997 07/97 (e)
485,013 (g) 485,013 (h) 1999 02/99 (h)
440,812 1,039,283 1,480,095 24,914 1999 04/99 (e)
456,629 1,170,630 1,627,259 49,738 1998 09/98 (e)
384,221 643,854 1,028,075 93,339 1995 09/95 (e)
359,455 653,853 1,013,308 91,986 1995 10/95 (e)
426,349 805,517 1,231,866 39,301 1997 07/98 (e)
848,133 1,008,678 1,856,811 33,231 1999 01/99 (e)
442,218 930,207 1,372,425 64,152 1996 12/96 (e)
1,031,098 1,092,939 2,124,037 149,284 1995 11/95 (e)
781,046 1,277,050 2,058,096 18,692 1999 07/99 (e)
576,548 934,918 1,511,466 70,719 1997 09/97 (e)
349,227 699,756 1,048,983 102,534 1995 08/95 (e)
546,078 993,149 1,539,227 44,828 1998 08/98 (e)
601,296 1,344,016 1,945,312 31,851 1998 04/99 (e)
1,043,108 977,508 2,020,616 139,205 1995 12/95 (e)
324,012 1,029,242 1,353,254 35,906 1998 12/98 (e)
564,242 1,056,315 1,620,557 49,608 1998 08/98 (e)
161,390 1,028,945 1,190,335 71,499 1997 12/97 (e)
569,664 1,017,781 1,587,445 49,193 1998 07/98 (e)
364,536 865,147 1,229,683 60,669 1997 11/97 (e)
587,794 1,262,175 1,849,969 346 1999 12/99 (e)
582,807 1,387,885 1,970,692 9,597 1999 07/99 (e)
579,242 1,229,239 1,808,481 (c) (d) 07/99 (c)
320,880 1,155,880 1,476,760 36,392 1999 01/99 (e)
590,538 1,176,436 1,766,974 77,539 1997 01/98 (e)
738,839 969,481 1,708,320 266 1999 12/99 (e)
640,320 898,171 1,538,491 130,850 1995 08/95 (e)
380,709 1,124,332 1,505,041 25,516 1999 04/99 (e)
456,646 861,803 1,318,449 59,435 1996 02/97 (e)
679,236 1,469,954 2,149,190 1,208 1999 12/99 (e)
615,554 1,184,073 1,799,627 89,551 1997 09/97 (e)
541,264 1,173,738 1,715,002 91,029 1997 09/97 (e)
409,153 943,712 1,352,865 68,945 1997 10/97 (e)
479,197 954,051 1,433,248 95,845 1997 12/96 (e)
374,230 838,342 1,212,572 74,000 1997 05/97 (e)
428,841 1,031,457 1,460,298 68,950 1997 12/97 (e)
395,839 887,540 1,283,379 49,645 1997 04/98 (e)
548,821 1,099,448 1,648,269 62,202 1997 04/98 (e)
570,004 1,271,666 1,841,670 42,505 1998 12/98 (e)
322,433 987,385 1,309,818 66,269 1997 12/97 (e)
633,459 1,606,040 2,239,499 41,471 1999 03/99 (e)
626,999 1,130,692 1,757,691 123,705 1996 09/96 (e)
701,125 1,254,740 1,955,865 9,740 1999 10/99 (e)
825,650 1,161,192 1,986,842 150,876 1995 02/96 (e)
688,477 1,237,344 1,925,821 12,382 1999 09/99 (e)
357,429 650,249 1,007,678 93,603 1995 09/95 (e)
870,832 1,688,719 2,559,551 (c) (d) 04/99 (c)
303,633 970,489 1,274,122 83,180 1997 06/97 (e)
405,631 884,954 1,290,585 64,897 1983 10/97 (e)
282,099 534,632 816,731 39,206 1981 10/97 (e)
370,667 431,642 802,309 31,654 1981 10/97 (e)
693,733 810,458 1,504,191 59,434 1982 10/97 (e)
371,254 685,847 1,057,101 48,479 1979 11/97 (e)
422,489 528,849 951,338 38,782 1981 10/97 (e)
451,235 548,178 999,413 40,200 1982 10/97 (e)
287,331 712,081 999,412 52,219 1980 10/97 (e)
375,116 605,067 980,183 41,996 1982 12/97 (e)
388,699 793,475 1,182,174 58,188 1977 10/97 (e)
728,574 793,410 1,521,984 58,183 1982 10/97 (e)
436,471 659,089 1,095,560 48,333 1982 10/97 (e)
627,680 804,399 1,432,079 58,989 1977 10/97 (e)
493,536 619,786 1,113,322 47,956 1997 09/97 (e)
201,069 465,165 666,234 12,309 1992 03/99 (e)
226,300 (g) 226,300 (h) 1993 03/99 (h)
409,444 604,784 1,014,229 16,003 1993 03/99 (e)
302,787 (g) 302,787 (h) 1993 03/99 (h)
215,567 (g) 215,567 (h) 1993 03/99 (h)
336,696 (g) 336,696 (h) 1993 03/99 (h)
324,298 420,017 744,315 11,114 1993 03/99 (e)
256,050 476,149 732,198 12,599 1993 03/99 (e)
217,396 522,802 740,199 13,834 1993 03/99 (e)
177,659 (g) 177,659 (h) 1992 03/99 (h)
173,386 (g) 173,386 (h) 1993 03/99 (h)
846,183 595,601 1,441,784 50,721 1972 06/97 (e)
817,039 648,765 1,465,804 55,249 1976 06/97 (e)
1,181,460 908,880 2,090,340 77,400 1974 06/97 (e)
632,811 1,135,312 1,768,123 25,454 1997 04/99 (e)
540,896 1,196,239 1,737,135 6,992 1999 10/99 (e)
375,987 964,430 1,340,417 33,381 1997 12/98 (e)
584,766 (g) 584,766 (h) 1997 08/97 (h)
1,096,763 705,345 1,802,108 59,616 1995 06/97 (e)
575,285 802,974 1,378,259 33,971 1997 09/98 (e)
565,639 923,669 1,489,308 21,299 1998 04/99 (e)
416,279 867,972 1,284,251 30,280 1998 12/98 (e)
476,847 961,606 1,438,453 32,317 1998 12/98 (e)
1,407,002 (g) 1,407,002 (h) 1996 06/98 (h)
545,112 1,029,900 1,575,012 35,647 1996 12/98 (e)
645,365 856,532 1,501,897 71,358 1996 07/97 (e)
512,481 831,202 1,343,683 35,165 1998 09/98 (e)
380,687 775,713 1,156,400 32,817 1997 09/98 (e)
460,167 802,640 1,262,807 63,277 1997 08/97 (e)
665,015 580,798 1,245,813 50,574 1994 05/97 (e)
593,624 918,024 1,511,648 30,936 1997 12/98 (e)
488,259 (g) 488,259 (h) 1997 08/97 (h)
647,414 871,268 1,518,682 29,758 1998 12/98 (e)
668,112 941,796 1,609,907 21,717 1998 04/99 (e)
382,950 957,912 1,340,862 32,193 1997 12/98 (e)
504,533 806,624 1,311,157 38,987 1996 07/98 (e)
387,562 891,943 1,279,505 30,953 1997 12/98 (e)
282,868 843,648 1,126,516 28,815 1997 12/98 (e)
579,175 1,176,434 1,755,609 39,537 1997 12/98 (e)
765,743 707,406 1,473,149 58,934 1997 07/97 (e)
319,237 (g) 319,237 (h) 1997 08/97 (h)
711,642 726,339 1,437,981 19,750 1999 03/99 (e)
446,800 416,243 863,043 (c) (d) 10/99 (c)
605,063 649,514 1,254,577 30,148 1998 08/98 (e)
419,488 697,861 1,117,349 56,100 1997 08/97 (e)
457,821 708,581 1,166,402 4,400 1999 10/99 (e)
481,456 636,588 1,118,044 26,757 1998 09/98 (e)
604,724 600,686 1,205,410 15,182 1999 03/99 (e)
361,238 711,595 1,072,833 54,019 1997 09/97 (e)
396,864 620,042 1,016,906 47,353 1997 09/97 (e)
163,533 994,490 1,158,024 9,559 1999 09/99 (e)
369,886 513,533 883,419 48,762 1997 02/97 (e)
124,468 773,506 897,974 62,393 1997 07/97 (e)
389,265 779,211 1,168,476 48,229 1997 02/98 (e)
635,343 703,067 1,338,410 51,751 1997 10/97 (e)
482,309 716,199 1,198,508 8,323 1999 08/99 (e)
286,850 606,547 893,397 47,208 1997 08/97 (e)
462,813 573,816 1,036,629 26,267 1998 08/98 (e)
382,042 613,690 995,732 46,251 1997 09/97 (e)
501,765 754,996 893,036 2,137 1999 12/99 (e)
405,902 658,360 1,064,262 661 1999 12/99 (e)
284,046 577,029 861,075 30,959 1998 05/98 (e)
699,773 892,546 1,592,319 7,438 1999 09/99 (e)
537,223 592,536 1,129,759 53,923 1997 04/97 (e)
370,342 548,107 918,449 50,080 1997 05/97 (e)
420,521 543,338 963,859 46,171 1997 06/97 (e)
545,485 527,020 1,072,505 67,333 1996 03/96 (e)
403,002 610,815 1,013,817 66,651 1996 09/96 (e)
375,776 643,445 1,019,221 70,103 1996 09/96 (e)
372,584 746,622 1,119,206 3,955 1999 11/99 (e)
437,667 591,877 1,029,544 65,188 1996 09/96 (e)
390,509 596,872 987,381 57,817 1997 02/97 (e)
272,937 688,400 961,337 38,695 1998 04/98 (e)
899,898 733,701 1,633,599 17,857 1999 04/99 (e)
737,038 604,806 1,341,844 54,709 1997 04/97 (e)
415,880 649,681 1,065,561 59,005 1997 04/97 (e)
730,674 600,180 1,330,854 56,297 1997 04/97 (e)
603,354 602,630 1,205,984 90,447 1986 06/95 (e)
911,754 581,552 1,493,306 51,490 1997 05/97 (e)
740,616 678,189 1,418,805 45,336 1997 12/97 (e)
853,821 635,185 1,489,006 33,928 1998 05/98 (e)
1,076,096 591,340 1,667,436 19,482 1999 01/99 (e)
418,351 651,064 1,069,415 27,365 1998 09/98 (e)
363,967 776,605 1,140,572 22,323 1999 02/99 (e)
217,851 751,664 969,515 68,268 1992 04/97 (e)
387,455 625,933 1,013,388 56,677 1997 04/97 (e)
383,591 675,860 1,059,451 36,817 1998 05/98 (e)
771,241 793,229 1,564,470 19,740 1999 04/99 (e)
387,533 787,843 1,175,376 19,174 1999 04/99 (e)
681,663 642,924 1,324,587 53,504 1997 07/97 (e)
631,275 567,912 1,199,187 49,556 1997 05/97 (e)
496,689 721,614 1,218,303 17,365 1999 04/99 (e)
717,246 688,066 1,405,312 34,466 1998 06/98 (e)
474,296 759,049 1,233,345 32,805 1998 09/98 (e)
501,168 699,067 1,200,235 5,826 1999 06/99 (e)
274,362 781,797 1,056,159 21,258 1999 03/99 (e)
311,466 700,979 1,012,445 16,868 1999 03/99 (e)
475,748 719,239 1,194,987 6,059 1999 09/99 (e)
495,529 759,800 1,255,329 17,729 1999 04/99 (e)
353,396 904,688 1,258,084 31,210 1999 12/98 (e)
289,257 699,525 988,782 15,364 1999 05/99 (e)
477,580 566,856 1,044,436 31,967 1998 04/98 (e)
464,986 785,149 1,250,136 20,131 1999 03/99 (e)
523,089 617,131 1,140,220 46,454 1997 09/97 (e)
358,130 668,383 1,026,513 49,686 1997 10/97 (e)
89,282 675,334 764,616 (c) (d) 06/99 (c)
417,451 420,493 837,944 (c) (d) 05/99 (c)
310,574 583,883 894,457 (c) (d) 05/99 (c)
205,363 627,202 832,566 (c) (d) 05/99 (c)
315,037 593,560 908,597 (c) (d) 05/99 (c)
158,829 530,826 689,654 (c) (d) 05/99 (c)
165,191 858,299 1,023,491 18,303 1996 05/99 (e)
301,723 (g) 301,723 (h) 1997 07/97 (h)
340,115 687,423 1,027,537 5,729 1999 12/99 (e)
445,493 594,649 1,040,141 14,921 1994 03/99 (e)
311,103 506,943 818,045 4,225 1999 12/99 (e)
376,929 639,875 1,016,804 88,531 1995 11/95 (e)
665,422 481,311 1,146,733 52,219 1996 09/96 (e)
4,894,106 - 4,894,106 (p) (p) 09/98 (p)
320,594 559,433 880,027 52,009 1967 03/96 (e)
242,239 - 242,239 (f) 1989 01/96 (f)
212,053 - 212,053 (f) 1986 05/96 (f)
209,432 - 209,432 (f) 1978 05/96 (f)
174,721 - 174,721 (f) 1975 01/96 (f)
46,737 - 46,737 (f) 1980 05/96 (f)
120,449 - 120,449 (f) 1986 05/96 (f)
190,009 - 190,009 (f) 1996 03/97 (f)
200,442 - 200,442 (f) 1985 01/96 (f)
135,831 - 135,831 (f) 1992 12/96 (f)
187,082 - 187,082 (f) 1990 03/97 (f)
126,494 - 126,494 (f) 1986 01/96 (f)
116,849 - 116,849 (f) 1978 01/96 (f)
226,163 - 226,163 (f) 1987 01/96 (f)
215,881 - 215,881 (f) 1990 05/96 (f)
242,239 - 242,239 (f) 1977 01/96 (f)
245,145 - 245,145 (f) 1975 05/97 (f)
194,012 - 194,012 (f) 1986 01/96 (f)
202,050 - 202,050 (f) 1983 01/96 (f)
142,570 - 142,570 (f) 1996 01/96 (f)
212,093 - 212,093 (f) 1978 05/96 (f)
180,803 - 180,803 (f) 1978 05/96 (f)
99,166 - 99,166 (f) 1994 01/96 (f)
169,454 - 169,454 (f) 1986 05/96 (f)
202,552 - 202,552 (f) 1980 04/96 (f)
216,518 - 216,518 (f) 1975 01/96 (f)
213,090 - 213,090 (f) 1989 03/97 (f)
99,815 - 99,815 (f) 1986 05/96 (f)
152,215 - 152,215 (f) 1994 01/96 (f)
149,206 - 149,206 (f) 1975 03/97 (f)
223,981 - 223,981 (f) 1983 03/97 (f)
259,922 - 259,922 (f) 1976 01/96 (f)
261,529 - 261,529 (f) 1993 01/96 (f)
99,733 - 99,733 (f) 1991 05/96 (f)
259,922 - 259,922 (f) 1978 01/96 (f)
239,023 - 239,023 (f) 1983 01/96 (f)
228,199 - 228,199 (f) 1983 03/97 (f)
186,476 - 186,476 (f) 1976 04/96 (f)
128,604 - 128,604 (f) 1988 04/96 (f)
194,097 - 194,097 (f) 1993 12/96 (f)
208,480 - 208,480 (f) 1975 01/96 (f)
176,170 - 176,170 (f) 1985 01/96 (f)
197,227 - 197,227 (f) 1978 01/96 (f)
279,779 - 279,779 (f) 1983 03/97 (f)
- 178,187 178,187 3,425 1979 06/99 (e)
167,170 168,363 335,533 3,237 1980 06/99 (e)
852,746 1,108,491 1,961,237 46,288 1994 09/98 (e)
712,865 873,395 1,586,260 36,471 1993 09/98 (e)
397,878 923,975 1,321,853 38,583 1996 09/98 (e)
435,465 915,232 1,350,697 38,218 1994 09/98 (e)
918,258 764,150 1,682,408 32,468 1995 09/98 (e)
654,766 1,195,901 1,850,667 50,812 1994 09/98 (e)
683,560 614,256 1,297,816 26,099 1995 09/98 (e)
789,680 604,283 1,393,963 25,675 1995 09/98 (e)
911,013 1,011,766 1,922,779 42,989 1993 09/98 (e)
1,244,893 918,257 2,163,150 31,363 1994 12/98 (e)
569,436 968,749 1,538,185 40,453 1994 09/98 (e)
181,153 561,582 742,735 4,000 1980 10/99 (e)
691,797 1,136,902 1,828,699 55,573 1997 07/98 (e)
379,675 604,449 984,124 4,306 1989 10/99 (e)
714,789 1,317,317 2,032,106 (c) (d) 10/99 (c)
599,391 1,159,989 1,759,380 42,798 1998 06/98 (e)
637,984 824,276 1,462,260 5,872 1980 10/99 (e)
129,816 659,340 789,156 4,697 1988 10/99 (e)
214,177 853,505 1,067,682 6,080 1979 10/99 (e)
366,941 524,341 891,282 3,735 1989 10/99 (e)
113,780 407,429 521,209 17,013 1998 09/98 (e)
158,880 378,057 536,937 16,305 1998 09/98 (e)
723,572 1,080,644 1,804,216 (c) (d) 08/99 (c)
1,259,828 1,623,073 2,882,901 38,909 1999 04/99 (e)
1,463,644 1,874,198 3,337,842 44,929 1999 04/99 (e)
1,725,325 1,574,207 3,299,532 37,738 1999 04/99 (e)
88,077 2,019,028 2,107,105 48,401 1999 04/99 (e)
934,922 1,842,623 2,777,545 44,172 1999 04/99 (e)
956,799 2,692,320 3,649,119 64,542 1999 04/99 (e)
914,103 691,171 1,605,274 19,678 1999 02/99 (e)
1,227,360 403,031 1,630,391 (c) (d) 10/99 (c)
1,370,391 946,608 2,316,999 21,922 1999 04/99 (e)
884,184 270,544 1,154,728 (c) (d) 11/99 (c)
1,151,865 910,321 2,062,186 7,233 1999 10/99 (e)
649,962 978,307 1,628,269 7,147 1999 10/99 (e)
1,307,683 1,031,615 2,339,298 (c) (d) 07/99 (c)
394,025 1,442,752 1,836,777 51,122 1998 12/98 (e)
927,463 691,228 1,618,691 19,616 1978 02/99 (e)
1,202,760 1,275,957 2,478,717 (c) (d) 04/99 (c)
599,193 436,441 1,035,635 (c) (d) 10/99 (c)
889,562 487,475 1,377,037 41,635 1997 04/97 (e)
416,311 963,438 1,379,749 5,191 1999 11/99 (e)
508,564 776,930 1,285,495 (c) (d) 06/99 (c)
696,645 984,791 1,681,436 14,232 1999 07/99 (e)
714,999 1,012,478 1,254,763 16,297 1999 07/99 (e)
557,630 1,047,984 1,605,614 5,072 1999 11/99 (e)
518,832 (g) 518,832 (h) 1999 05/99 (h)
980,703 (g) 980,703 (h) 1999 03/99 (h)
633,990 1,058,846 1,692,836 (c) (d) 05/99 (c)
574,441 742,781 1,317,222 27,744 1998 11/98 (e)
430,741 689,963 1,120,704 (c) (d) 09/99 (c)
354,415 (g) 354,415 (h) 1997 11/97 (h)
719,563 (g) 719,563 (h) 1999 04/99 (h)
649,551 127,094 776,645 (c) (d) 12/99 (c)
436,830 259,866 696,696 (c) (d) 11/99 (c)
545,612 868,606 1,414,218 43,014 1998 07/98 (e)
537,770 1,156,886 1,694,656 (c) (d) 07/99 (c)
1,076,442 1,062,751 2,139,193 91,086 1996 06/97 (e)
591,371 1,175,273 1,766,644 116,856 1996 01/97 (e)
309,101 420,246 729,347 39,328 1997 03/97 (e)
469,721 85,872 555,593 (c) (d) 03/98 (c)
628,688 962,524 1,591,212 50,675 1981 06/98 (e)
371,021 593,171 964,192 31,229 1994 06/98 (e)
585,461 812,822 1,398,283 42,794 1990 06/98 (e)
527,572 870,710 1,398,282 45,842 1988 06/98 (e)
734,105 961,287 1,695,392 50,610 1986 06/98 (e)
634,379 643,323 1,277,702 33,870 1981 06/98 (e)
264,476 825,466 1,089,942 302 1999 12/99 (e)
498,746 (g) 498,746 (h) 1978 07/99 (h)
1,006,396 690,731 1,697,127 35,530 1979 06/98 (e)
705,557 (g) 705,557 (h) 1969 06/98 (h)
715,432 (g) 715,432 (h) 1993 06/98 (h)
802,361 (g) 802,361 (h) 1973 06/98 (h)
590,733 (g) 590,733 (h) 1993 06/98 (h)
670,594 (g) 670,594 (h) 1976 06/98 (h)
776,694 (g) 776,694 (h) 1972 06/98 (h)
964,354 (g) 964,354 (h) 1973 06/98 (h)
641,125 (g) 641,125 (h) 1974 06/98 (h)
670,491 (g) 670,491 (h) 1977 06/98 (h)
684,164 (g) 684,164 (h) 1969 06/98 (h)
810,316 798,412 1,608,728 27,635 1979 12/98 (e)
592,342 (g) 592,342 (h) 1988 06/98 (h)
594,142 (g) 594,142 (h) 1974 06/98 (h)
933,759 763,368 1,697,127 39,266 1985 06/98 (e)
740,132 (g) 740,132 (h) 1984 12/98 (h)
922,679 725,256 1,647,935 37,306 1978 06/98 (e)
487,021 (g) 487,021 (h) 1983 06/98 (h)
354,419 (g) 354,419 (h) 1978 06/98 (h)
433,713 (g) 433,713 (h) 1969 06/98 (h)
447,458 383,785 831,243 10,891 1994 02/99 (e)
299,870 (g) 299,870 (h) 1994 02/99 (h)
212,438 (g) 212,438 (h) 1998 10/98 (h)
474,588 478,974 953,562 13,593 1994 02/99 (e)
404,578 451,129 855,707 12,803 1994 02/99 (e)
402,947 (g) 402,947 (h) 1994 02/99 (h)
308,915 351,160 660,075 14,046 1991 10/98 (e)
349,637 (g) 349,637 (h) 1991 10/98 (h)
336,432 229,194 565,626 (c) (d) 10/99 (c)
343,906 (g) 343,906 (h) 1994 02/99 (h)
335,196 694,908 1,030,104 10,297 1997 07/99 (e)
504,934 826,842 1,331,776 1,435 1999 12/99 (e)
656,917 483,589 1,140,506 (c) (d) 10/99 (c)
581,600 104,177 685,776 (c) (d) 12/99 (c)
237,777 1,152,076 1,389,853 1,999 1999 12/99 (e)
554,901 1,032,705 1,587,606 8,606 1999 09/99 (e)
713,534 995,529 1,709,064 4,728 1998 11/99 (e)
599,160 (g) 599,160 (h) 1992 08/98 (h)
971,812 1,461,969 2,433,781 (c) (d) 07/99 (c)
1,387,007 1,996,405 3,383,412 14,950 1999 10/99 (e)
856,278 (g) 856,278 (h) 1999 03/99 (h)
571,236 1,296,199 1,867,435 (c) (d) 07/99 (c)
2,437,336 9,243 2,446,579 (c) (d) 11/99 (c)
914,342 (g) 914,342 (h) 1997 05/98 (h)
886,592 1,624,138 2,365,716 (c) (d) 08/99 (c)
1,239,033 1,479,124 2,718,157 12,326 1999 12/99 (e)
1,203,257 1,892,964 3,096,221 (c) (d) 08/99 (c)
548,886 700,856 1,249,742 29,266 1994 09/98 (e)
618,372 631,370 1,249,742 26,365 1994 09/98 (e)
608,678 (g) 608,678 (h) 1998 10/98 (h)
511,084 (g) 511,084 (h) 1994 08/97 (h)
551,646 (g) 551,646 (h) 1998 01/99 (h)
514,900 (g) 514,900 (h) 1995 08/97 (h)
420,176 (g) 420,176 (h) 1978 05/98 (h)
511,811 756,304 1,268,115 4,489 1989 10/99 (e)
640,066 688,918 1,328,984 78,471 1996 07/96 (e)
358,027 444,622 802,649 47,944 1996 07/96 (e)
555,813 442,025 997,838 19,952 1998 08/98 (e)
488,270 783,849 1,272,119 6,532 1999 09/99 (e)
- 302,359 302,359 (c) (d) 11/99 (c)
841,374 699,082 1,540,456 37,765 1998 05//98 (e)
================== ================= ================= ================
$330,002,516 $368,261,412 $698,263,928 $14,742,596
================== ================= ================= ================
$708,297 $1,008,108 $1,716,405 $38,483 1998 06/98 (e)
================== ================= ================= ================
(g) (g) (g) (i) 1996 02/99 (i)
(g) (g) (g) (h) 1999 08/99 (h)
(g) (g) (g) (h) 1996 01/99 (h)
(g) (g) (g) (h) 1997 02/97 (h)
(g) (g) (g) (i) 1995 08/98 (i)
(g) (g) (g) (h) 1995 01/99 (h)
(g) (g) (g) (h) 1994 01/99 (h)
(g) (g) (g) (h) 1984 01/99 (h)
(g) (g) (g) (h) 1992 01/99 (h)
(g) (g) (g) (h) 1995 09/98 (h)
(g) (g) (g) (h) 1993 01/99 (h)
(g) (g) (g) (h) 1990 01/99 (h)
(g) (g) (g) (h) 1991 01/99 (h)
(g) (g) (g) (h) 1994 08/97 (h)
(g) (g) (g) (h) 1986 06/98 (h)
(g) (g) (g) (h) 1979 06/98 (h)
(g) (g) (g) (h) 1979 06/98 (h)
(g) (g) (g) (h) 1984 06/98 (h)
(g) (g) (g) (h) 1983 06/98 (h)
(g) (g) (g) (h) 1979 06/98 (h)
(g) (g) (g) (h) 1983 06/98 (h)
(g) (g) (g) (h) 1981 06/98 (h)
(g) (g) (g) (h) 1979 06/98 (h)
(g) (g) (g) (h) 1986 06/98 (h)
(g) (g) (g) (h) 1983 06/98 (h)
(g) (g) (g) (h) 1976 06/98 (h)
(g) (g) (g) (h) 1980 06/98 (h)
(g) (g) (g) (i) 1982 06/98 (i)
(g) (g) (g) (h) 1987 12/98 (h)
(j) (g) (g) (h) 1989 03/99 (h)
(g) (g) (g) (h) 1994 05/99 (h)
(g) (g) (g) (h) 1999 09/99 (h)
(j) (g) (g) (h) 1993 10/97 (h)
(j) (g) (g) (h) 1993 10/97 (h)
(j) (g) (g) (h) 1993 03/97 (h)
(j) (g) (g) (h) 1996 08/99 (h)
(j) (g) (g) (h) 1991 10/97 (h)
(j) (g) (g) (h) 1989 10/97 (h)
(j) (g) (g) (h) 1991 03/97 (h)
(g) (g) (g) (h) 1996 10/97 (h)
(j) (g) (g) (h) 1990 03/97 (h)
(g) (g) (g) (h) 1994 09/97 (h)
(j) (g) (g) (h) 1992 03/97 (h)
(j) (g) (g) (h) 1991 09/97 (h)
(j) (g) (g) (h) 1993 09/97 (h)
(j) (g) (g) (h) 1994 09/97 (h)
(j) (g) (g) (h) 1997 09/97 (h)
(j) (g) (g) (h) 1995 09/97 (h)
(j) (g) (g) (h) 1991 10/97 (h)
(j) (g) (g) (h) 1992 10/97 (h)
(g) (g) (g) (h) 1998 06/98 (h)
(g) (g) (g) (h) 1993 01/99 (h)
(g) (g) (g) (h) 1988 01/99 (h)
(j) (g) (g) (h) 1996 01/99 (h)
(j) (g) (g) (h) 1985 01/99 (h)
(g) (g) (g) (i) 1992 01/99 (i)
(g) (g) (g) (i) 1980 01/99 (i)
(g) (g) (g) (h) 1983 06/97 (h)
(g) (g) (g) (h) 1983 06/97 (h)
(g) (g) (g) (h) 1983 06/97 (h)
(g) (g) (g) (h) 1983 06/97 (h)
(g) (g) (g) (h) 1984 06/97 (h)
(g) (g) (g) (h) 1981 06/97 (h)
(g) (g) (g) (h) 1983 06/97 (h)
(g) (g) (g) (h) 1982 06/97 (h)
(g) (g) (g) (h) 1982 06/97 (h)
(g) (g) (g) (h) 1978 06/97 (h)
(g) (g) (g) (i) 1992 03/99 (i)
(g) (g) (g) (h) 1992 03/99 (h)
(g) (g) (g) (h) 1992 03/99 (h)
(g) (g) (g) (h) 1996 06/96 (h)
(g) (g) (g) (h) 1992 03/99 (h)
(g) (g) (g) (h) 1997 08/97 (h)
(g) (g) (g) (h) 1989 03/99 (h)
(g) (g) (g) (h) 1994 03/99 (h)
(g) (g) (g) (h) 1999 02/99 (h)
(g) (g) (g) (i) 1996 12/96 (i)
(g) (g) (g) (i) 1993 03/99 (i)
(g) (g) (g) (i) 1993 03/99 (i)
(g) (g) (g) (h) 1993 03/99 (h)
(g) (g) (g) (h) 1993 03/99 (h)
(g) (g) (g) (i) 1993 03/99 (i)
(g) (g) (g) (h) 1993 03/99 (h)
(g) (g) (g) (h) 1993 03/99 (h)
(g) (g) (g) (h) 1992 03/99 (h)
(g) (g) (g) (h) 1993 03/99 (h)
(j) (g) (g) (h) 1972 05/99 (h)
(j) (g) (g) (h) 1997 10/98 (h)
(j) (g) (g) (h) 1997 10/99 (h)
(j) (g) (g) (h) 1998 12/99 (h)
(j) (g) (g) (h) 1997 08/99 (h)
(j) (g) (g) (h) 1996 11/98 (h)
(g) (g) (g) (h) 1997 08/97 (h)
(g) (g) (g) (i) 1997 05/99 (i)
(j) (g) (g) (h) 1997 09/99 (h)
(j) (g) (g) (h) 1997 03/99 (h)
(g) (g) (g) (h) 1996 06/98 (h)
(g) (g) (g) (h) 1997 07/99 (h)
(g) (g) (g) (h) 1997 08/97 (h)
(g) (g) (g) (i) 1997 12/98 (i)
(j) (g) (g) (h) 1998 11/99 (h)
(j) (g) (g) (h) 1998 04/99 (h)
(j) (g) (g) (h) 1997 09/99 (h)
(j) (g) (g) (h) 1997 04/99 (h)
(j) (g) (g) (h) 1997 06/99 (h)
(j) (g) (g) (h) 1998 08/99 (h)
(g) (g) (g) (h) 1997 08/97 (h)
(j) (g) (g) (h) 1997 04/99 (h)
(j) (g) (g) (h) 1997 08/99 (h)
(g) (g) (g) (h) 1997 07/97 (h)
(j) (g) (g) (h) 1997 01/98 (h)
(g) (g) (g) (i) 1997 08/97 (i)
(g) (g) (g) (h) 1999 05/99 (h)
(g) (g) (g) (h) 1999 03/99 (h)
(g) (g) (g) (h) 1997 11/97 (h)
(j) (g) (g) (h) 1999 10/99 (h)
(g) (g) (g) (h) 1999 04/99 (h)
(j) (g) (g) (h) 1999 06/99 (h)
(g) (g) (g) (i) 1999 07/99 (i)
(j) (g) (g) (h) 1999 09/99 (h)
(g) (g) (g) (h) 1978 07/99 (h)
(g) (g) (g) (h) 1969 06/98 (h)
(g) (g) (g) (h) 1993 06/98 (h)
(g) (g) (g) (h) 1973 06/98 (h)
(g) (g) (g) (h) 1993 06/98 (h)
(g) (g) (g) (h) 1976 06/98 (h)
(g) (g) (g) (h) 1972 06/98 (h)
(g) (g) (g) (h) 1973 06/98 (h)
(g) (g) (g) (h) 1974 06/98 (h)
(g) (g) (g) (h) 1977 06/98 (h)
(g) (g) (g) (h) 1969 06/98 (h)
(g) (g) (g) (h) 1988 06/98 (h)
(g) (g) (g) (h) 1974 06/98 (h)
(g) (g) (g) (h) 1984 12/98 (h)
(g) (g) (g) (h) 1983 06/98 (h)
(g) (g) (g) (h) 1978 06/98 (h)
(g) (g) (g) (h) 1969 06/98 (h)
(g) (g) (g) (h) 1994 02/99 (h)
(g) (g) (g) (h) 1998 10/98 (h)
(g) (g) (g) (h) 1994 02/99 (h)
(g) (g) (g) (h) 1991 10/98 (h)
(g) (g) (g) (h) 1994 02/99 (h)
(j) (g) (g) (h) 1998 02/99 (h)
(g) (g) (g) (h) 1992 08/98 (h)
(g) (g) (g) (h) 1999 03/99 (h)
(g) (g) (g) (h) 1997 05/98 (h)
(g) (g) (g) (i) 1998 03/99 (i)
(g) (g) (g) (h) 1998 10/98 (h)
(g) (g) (g) (h) 1994 08/97 (h)
(j) (g) (g) (h) 1974 08/97 (h)
(g) (g) (g) (h) 1998 01/99 (h)
(g) (g) (g) (h) 1995 08/97 (h)
(g) (g) (g) (h) 1978 05/98 (h)
(g) (g) (g) (h) 1997 10/98 (h)
(g) (g) (g) (h) 1998 09/98 (h)
(j) (g) (g) (h) 1996 12/96 (h)
(j) (g) (g) (h) 1996 06/96 (h)
(j) (g) (g) (h) 1998 10/98 (h)
</TABLE>
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1999
(a) Transactions in real estate and accumulated depreciation during 1999,
1998 and 1997 are summarized as follows:
<TABLE>
<CAPTION>
Cost Accumulated
(b)(m) Depreciation
----------------- ----------------
<S> <C>
Properties the Company has Invested
in Under Operating Leases:
Balance, December 31, 1996 $ 60,854,542 $ 611,396
Acquisitions (l) 146,879,309 --
Depreciation expense (e) -- 1,784,269
----------------- ----------------
Balance, December 31, 1997 207,733,851 2,395,665
Acquisitions (l) 192,459,799 --
Depreciation expense (e) -- 3,847,117
----------------- ----------------
Balance, December 31, 1998 400,193,650 6,242,782
Acquisitions (l) 298,070,278 --
Depreciation expense (e) -- 8,499,814
----------------- ----------------
Balance, December 31, 1999 $ 698,263,928 $ 14,742,596
================= ================
Property of Joint Venture in Which the Company has a 59.22%
Interest and has Invested in Under an Operating Lease:
Balance, December 31, 1997 $ -- $ --
Acquisition 2,215,177 --
Depreciation expense -- 7,303
----------------- ----------------
Balance, December 31, 1998 2,215,177 7,303
Construction Funding Adjustment (498,772 ) --
Depreciation expense -- 31,180
----------------- ----------------
Balance, December 31, 1999 $ 1,716,405 $ 38,483
================= ================
</TABLE>
(b) As of December 31, 1999, 1998 and 1997, the aggregate cost of the
Properties owned by the Company and its subsidiaries for federal income
tax purposes was $757,550,394, $418,427,587 and $248,050,936,
respectively. Substantially, all of the leases are treated as operating
leases for federal income tax purposes.
(c) Property was not placed in service as of December 31, 1999; therefore,
no depreciation was taken.
(d) Scheduled for completion in 2000.
(e) Depreciation expense is computed for buildings and improvements based
upon estimated lives of 30 years.
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
December 31, 1999
(f) The building portion of this Property is owned by the tenant;
therefore, depreciation is not applicable.
(g) For financial reporting purposes, certain components of the lease
relating to land and/or building have been recorded as a direct
financing lease. Accordingly, costs relating to these components of
this lease are not shown.
(h) For financial reporting purposes, the portion of this lease relating to
the building has been recorded as direct financing lease. The cost of
the building has been included in net investment in direct financing
leases; therefore, depreciation is not applicable.
(i) For financial reporting purposes, the lease for the land and building
has been recorded as direct financing lease. The cost of the land and
building has been included in net investment in direct financing
leases; therefore, depreciation is not applicable.
(j) The Company owns the building only relating to this Property. This
Property is subject to a ground lease between the tenant and an
unaffiliated third party. In connection therewith, the Company entered
into either a tri-party agreement with the tenant and the owner of the
land or an assignment of interest in the ground lease with the landlord
of the land. The tri-party agreement or assignment of interest each
provide that the tenant is responsible for all obligations under the
ground lease and provide certain rights to the Company to help protect
its interest in the building in the event of a default by the tenant
under the terms of the ground lease.
(k) The restaurant on the Property in Grand Rapids, Michigan, was converted
from a Kenny Rogers' Roasters restaurant to an Arby's restaurant in
1998.
(l) During the years ended December 31, 1999, 1998 and 1997, the Company
(i) incurred acquisition fees totalling $6,185,005, $17,317,297 and
$10,011,715, respectively, paid to the Advisor, (ii) purchased land and
buildings from affiliates of the Company for an aggregate cost of
approximately $39,700,000, $8,770,000 and $5,450,000, respectively, and
(iii) paid development or construction management fees to affiliates of
the Company totaling $56,352, $229,153 and $387,728, respectively. Such
amounts are included in land and buildings on operating leases, net
investment in direct financing leases and other assets at December 31,
1999, 1998 and 1997. Effective with the acquisition of the Advisor in
September 1999, the Company ceased incurring acquisition fees.
(m) For financial reporting purposes, the undepreciated cost of the
following properties was written down to its net realizable value due
to an anticipated impairment in value. The Company recognized the
impairments by recording an allowance for loss on land, building or
investment in direct financing lease in the amounts listed below for
each Property as of December 31, 1999. The impairments at December 31,
1999 represent the difference between the Properties' carrying values
and the property manager's estimate of the net realizable value of the
Properties based upon anticipated sales prices to interested third
parties. The cost of the Properties presented on this schedule is the
gross amount at which the Properties were carried at December 31, 1999,
excluding the allowances for loss.
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
December 31, 1999
(m) (continued)
The following are a list of Properties and the related impairment at
December 31, 1999:
<TABLE>
<CAPTION>
Total
--------------
<S> <C>
Boston Market - Saint Joseph, Missouri $ 143,132
Shoney's - Indian Harbor Beach, Florida 59,043
Buffet Town - Cedar Park, Texas 13,136
Boston Market - Liberty, Missouri 171,886
Boston Market - Corvallis, Missouri 190,758
Boston Market - Jessup, Maryland 478,133
Black-Eyed Pea - Albuquerque, New Mexico 215,000
Black-Eyed Pea - Albuquerque, New Mexico 215,000
Black-Eyed Pea - Tucson, Arizona 200,000
Black-Eyed Pea - Waco, Texas 215,000
Black-Eyed Pea - Wichita, Kansas 215,000
Big Boy - Mansfield, Ohio 150,000
Big Boy - Saint Clairsville, Ohio 150,000
Big Boy - Alton, Illinois 150,000
Big Boy - Granite City, Illinois 150,000
Big Boy - O'Fallen, Missouri 150,000
Big Boy - Woodson Terrace, Missouri 190,000
Big Boy - Collinsville, Illinois 150,000
Big Boy - Jefferson City, Missouri 150,000
Big Boy - Fenton, Missouri 150,000
Big Boy - Independence, Missouri 184,385
Big Boy - Saint Louis, Missouri 190,000
Big Boy - Sedalia, Missouri 189,914
Big Boy - Saint Joseph, Missouri 143,446
Big Boy - Grandview, Missouri 150,000
Big Boy - Lee's Summit, Missouri 189,769
Big Boy - Merriam, Kansas 183,425
Big Boy - North Kansas City, Kansas 190,000
Big Boy - Overland Park, Kansas 150,000
Big Boy - Blue Springs, Missouri 160,587
Big Boy - Bridgeton, Missouri 150,000
Big Boy - Arnold, Mississippi 190,000
--------------
$ 5,577,614
==============
</TABLE>
(n) The Property in San Diego, California contains two different
restaurants. This is a two story building that has a TGI Friday's
restaurant on the first floor and a Redfish Looziana Roadhouse
restaurant on the second floor.
(o) The Property in Dallas, Texas contains two different concepts, a Taco
Bell and a Pizza Hut, within one restaurant.
(p) The Company owns a parcel of land on which restaurants will be
constructed during 2000.
(q) The restaurant on the Property in Guadalupe, Arizona was converted from
a Shoney's restaurant to a Big Boy restaurant in 1999.
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
December 31, 1999
(r) The restaurant on the Property in Las Vegas, Nevada was converted from
a Shoney's restaurant to a Big Boy restaurant in 1999.
(s) The restaurant on the Property in Cedar Park, Texas was converted from
a Boston Market restaurant to a Buffet Town restaurant in 1999.
(t) The restaurant on the Property in Hoover, Alabama was converted from a
Boston Market restaurant to a Guthrie's restaurant in 1999.
(u) The restaurant on the Property in Chanhassen, Minnesota was converted
from a Boston Market restaurant to a Leeann Chin Chinese Cuisine
restaurant in 1999.
(v) The restaurant on the Property in Golden Valley, Minnesota was
converted from a Boston Market restaurant to a Leeann Chin Chinese
Cuisine restaurant in 1999.
(w) The restaurant on the Property in Grand Rapids, Michigan was converted
from a Denny's restaurant to a Mister Fables restaurant in 1999.
(x) The restaurant on the Property in Taylorsville, Utah was converted from
a Boston Market restaurant to a Rubio's Baja Grill restaurant in 1999.
(y) The Property is encumbered under the Secured Credit Facility at December 31,
1999.
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC. AND SUBSIDIARIES
SCEDULE IV - MORTGAGE LOANS ON REAL ESTATE
December 31, 1999
<TABLE>
<CAPTION>
Final Periodic Face
Interest Maturity Payment Prior Amount of
Description Rate Date Terms Liens Mortgages
- ----------------------------------------------------------------- ----------------- ------------------------------------
<S> <C>
First Mortgages on Properties:
Castle Hill Holdings V, L.L.C. 10.75% 01/01/16 (1) - $8,475,000
Elrod Restaurants, Inc. 10.68% 7/1/11 (2) - 4,300,000
Castle Hill Holdings VI, L.L.C. 10.75% 6/1/16 (1) - 4,200,000
Castle Hill Holdings VII, L.L.C. 10.75% 1/1/17 (1) - 3,888,000
Cambridge, Restaurant Properties, L.L.C. 10.39% 11/1/19 (3) - 3,738,000
The Georgia Bar-B-Q Company LIBOR + 4.89% (4) (4) - 2,499,000
The Georgia Bar-B-Q Company LIBOR + 5.10% (4) (4) - 2,295,000
RMS Family Restaurants, Inc. 9.66% 11/1/12 (5) - 2,200,000
Brick Township Pubs, Inc. LIBOR + 4.91% (4) (4) - 1,950,000
9 loans with Original Loan Amounts
From $1,200,001 to $1,900,000 8.39% - 10.52% 11/1/2000 - 2/01/2020 N/A N/A N/A
9 loans with Original Loan Amounts
From $900,001 to $1,200,000 10.09% - 11.60% 11/1/2002 - 01/01/2015 N/A N/A N/A
15 loans with Original Loan Amounts
From $600,001 to $900,000 8.19% - 10.28% 09/01/2013 - 01/01/2020 N/A N/A N/A
7 loans with Original Loan Amounts
From $300,001 to $600,000 8.00% - 10.75% 09/01/2005 - 01/01/2017 N/A N/A N/A
10 loans with Original Loan Amounts
Up to $300,000 8.00% - 10.50% 08/01/2001 - 01/01/2015 N/A N/A N/A
Principal
Amount of
Loans
Subject to
Carrying Delinquent
Amount of Principal
Description Mortgages or Interest
- ------------------------------------------ ----------------------------
First Mortgages on Properties:
Castle Hill Holdings V, L.L.C. $8,321,853 -
Elrod Restaurants, Inc. 4,121,689 -
Castle Hill Holdings VI, L.L.C. 3,662,653 -
Castle Hill Holdings VII, L.L.C. 3,862,754 -
Cambridge, Restaurant Properties, L.L.C 3,862,898 -
The Georgia Bar-B-Q Company 1,604,007 -
The Georgia Bar-B-Q Company 1,487,094 -
RMS Family Restaurants, Inc. 1,993,821 -
Brick Township Pubs, Inc. 685,000 -
9 loans with Original Loan Amounts
From $1,200,001 to $1,900,000 12,107,996 -
9 loans with Original Loan Amounts
From $900,001 to $1,200,000 7,502,737 -
15 loans with Original Loan Amounts
From $600,001 to $900,000 9,414,783 -
7 loans with Original Loan Amounts
From $300,001 to $600,000 2,985,814 -
10 loans with Original Loan Amounts
Up to $300,000 1,853,375 -
(1) Equal monthly payments of principal and interest at an annual rate of 10.75%.
(2) Equal monthly payments of principal and interest at an annual rate of 10.68%.
(3) Equal monthly payments of principal and interest at an annual rate of 10.39%.
(4) These loans are construction loans requiring interest only payments until
final funding; maturity date and monthly payments to be determined at that time.
(5) Equal monthly payments of principal and interest at an annual rate of 9.66%.
1999 1998 1997 1996
----------------- -------------- --------------- ----------------
Balance at beginning of period $19,631,693 $17,622,010 $13,389,607 -
New mortgage loans 46,738,038 2,901,742 4,200,000 $12,847,000
Accrued interest 346,101 (39,853) 83,601 35,286
Collection of principal (2,466,072) (291,990) (250,732) (133,850)
Deferred financing income (11,336) (10,126) (39,180) (46,268)
Unamortized loan costs 91,007 86,524 238,714 687,439
Valuation allowance (551,011) - -
Provision for uncollectible
mortgage notes (311,946) (636,614) - -
================= ============== =============== ================
Balance at end of period 63,466,474 19,631,693 17,622,010 13,389,607
================= ============== =================================
</TABLE>
<PAGE>
EXHIBITS
<PAGE>
EXHIBIT INDEX
Exhibit Number
2.1 Agreement and Plan of Merger, by and among the Registrant, CFA
Acquisition Corp., CNL Fund Advisors, Inc. and CNL Group,
Inc., dated March 11, 1999 (Included as Exhibit 10.38 to the
Registrant's Registration Statement No. 333-74329 on Form S-4
(the "Form S-4") as originally filed and incorporated herein
by reference.)
2.2 Agreement and Plan of Merger, by and among the Registrant, CFC
Acquisition Corp., CFS Acquisition Corp., CNL Financial Corp.,
CNL Financial Services, Inc., CNL Group, Inc., Five Arrows
Realty Securities L.L.C., Robert A. Bourne, Curtis B.
McWilliams and Brian Fluck, dated March 11, 1999 (Included as
Exhibit 10.39 to the Form S-4 as originally filed and
incorporated herein by reference.)
3.1 CNL American Properties Fund, Inc. Amended and Restated
Articles of Incorporation, as amended (Included as Exhibit 3.1
to the Registrant's Form 10-Q for the quarter ended June 30,
1999 and incorporated herein by reference.)
3.2 CNL American Properties Fund, Inc. Amended and Restated Bylaws
(Included as Exhibit 3.2 to the Registrant's Registration
Statement No. 333-37657 on Form S-11 and incorporated herein
by reference.)
4.1 Form of Stock Certificate (Included as Exhibit 4.5 to the
Registrant's Registration Statement No. 33-78790 on Form S-11
and incorporated herein by reference.)
10.1 Form of Indemnification Agreement dated as of April 18, 1995,
between CNL American Properties Fund, Inc. and each of James
M. Seneff, Jr., Robert A. Bourne, G. Richard Hostetter, J.
Joseph Kruse, Richard C. Huseman, John T. Walker, Jeanne A.
Wall, Lynn E. Rose and Edgar J. McDougall, dated as of January
27, 1997 between CNL American Properties Fund, Inc. and Steven
D. Shackelford, and dated as of February 18, 1998, between CNL
American Properties Fund, Inc. and Curtis B. McWilliams
(Included as Exhibit 10.9 to the Registrant's Registration
Statement No.
333-15411 on Form S-11 and incorporated herein by reference.)
10.2 Amended and Restated Agreement of Limited Partnership of CNL
APF Partners, LP (Included as Exhibit 10.50 to Amendment No. 2
to the Form S-4 and incorporated herein by reference.)
10.3 Amended and Restated Credit Agreement by and among CNL APF
Partners, LP, Registrant, First Union National Bank, First
Union Capital Markets Group, Banc of America Securities LLC,
NationsBank, N.A., The Chase Manhattan Bank and other
financial institutions, dated June 9, 1999 (Included as
Exhibit 10.51 to Amendment No. 1 to the Form S-4 and
incorporated herein by reference.)
10.4 First Amendment to Amended and Restated Credit Agreement dated
as of December 31, 1999 between CNL APF Partners, LP and First
Union National Bank, as Agent (filed herewith.)
10.5 Franchise Receivable Funding and servicing Agreement dated as
of October 14, 1999 between CNL APF Partners, LP and Neptune
Funding Corporation (filed herewith.)
10.6 Interim Wholesale Mortgage Warehouse and Security Agreement
dated as of September 18, 1998, and Amended Agreement dated as
of August 30, 1999 between CNL APF Partners, LP and Prudential
Securities Credit Corporation (filed herewith.)
10.7 1999 Performance Incentive Plan (Included as Exhibit 10.1 to
Amendment No. 1 to the Form S-4 and incorporated herein by
reference.)
10.8 Registration Rights Agreement by and among the Registrant,
Robert A. Bourne, Curtis B. McWilliams, John T. Walker, Howard
Singer, Steven D. Shackelford and CNL Group, Inc., dated as of
March 11, 1999 (Included as Exhibit 10.40 to Amendment No. 1
to the Form S-4 and incorporated herein by reference.)
10.9 Registration Rights Agreement by and among the Registrant,
Five Arrows Realty Securities L.L.C., James M. Seneff, Jr.,
Robert A. Bourne, Curtis B. McWilliams and CNL Group, Inc.,
dated as of March 11, 1999 (Included as Exhibit 10.41 to
Amendment No. 1 to the Form S-4 and incorporated herein by
reference.)
10.10 Employment Agreement by and between Curtis B. McWilliams and
the Registrant, dated September 15, 1999 (Included as Exhibit
10.42 to Amendment No. 2 to the Form S-4 and incorporated
herein by reference.)
10.11 Employment Agreement by and between Steven D. Shackelford and
the Registrant, dated September 15, 1999 (Included as Exhibit
10.43 to Amendment No. 2 to the Form S-4 and incorporated
herein by reference.)
10.12 Employment Agreement by and between John T. Walker and the
Registrant, dated September 15, 1999 (Included as Exhibit
10.44 to Amendment No. 2 to the Form S-4 and incorporated
herein by reference.)
10.13 Employment Agreement by and between Howard J. Singer and the
Registrant, dated September 15, 1999 (Included as Exhibit
10.45 to Amendment No. 2 to the Form S-4 and incorporated
herein by reference.)
10.14 Employment Agreement by and between Barry L. Goff and the
Registrant, dated September 15, 1999 (Included as Exhibit
10.46 to Amendment No. 2 to the Form S-4 and incorporated
herein by reference.)
10.15 Employment Agreement by and between Robert W. Chapin and the
Registrant, dated September 15, 1999 (Included as Exhibit
10.47 to Amendment No. 2 to the Form S-4 and incorporated
herein by reference.)
10.16 Employment Agreement by and between Timothy J. Neville and the
Registrant, dated September 15, 1999 (Included as Exhibit
10.48 to Amendment No. 2 to the Form S-4 and incorporated
herein by reference.)
10.17 Holdback Agreement by and among the Registrant and
Stockholders, dated August 31, 1999 (Included as Exhibit 10.56
to Amendment No. 2 to the Form S-4 and incorporated herein by
reference.)
21 Subsidiaries of the Registrant (Filed herewith.)
27 Financial Data Schedule (Filed herewith.)
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
This FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this
"Amendment") dated as of December 31, 1999 by and among CNL APF Partners, LP, a
limited partnership formed under the laws of the State of Delaware (the
"Borrower"), CNL AMERICAN PROPERTIES FUND, INC., a corporation organized under
the laws of the State of Maryland (the "Parent"), each of the undersigned
Guarantors (as defined in the Credit Agreement referred to below; together with
the Parent, the "Existing Guarantors"), each of the Lenders (as defined in the
Credit Agreement referred to below), and FIRST Union National Bank, as
Administrative Agent.
WHEREAS, the Borrower, the Parent, the Lenders, the Administrative
Agent and certain other parties have entered into that certain Amended and
Restated Credit Agreement dated as of June 9, 1999 (the "Credit Agreement"),
which the parties hereto desire to amend on the terms and conditions contained
herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
hereto hereby agree as follows:
Section 1. Specific Amendments to Credit Agreement. The parties hereto
agree that the Credit Agreement is amended as follows:
(a) The Credit Agreement is amended by deleting from Section 1.1. the
definition of the terms "Contingent Obligations", "Contribution Date", "Excluded
Subsidiary", "Guarantor", "Nonrecourse SPE Financing", "Permitted Financial
Asset Sale", "Permitted On Balance Sheet Warehouse Financing", "Restricted
Payment", "Secured Debt" and "Term Securitization" and substituting in their
respective places the following:
"Contingent Obligation" means, with respect to any Person, any
obligation of such Person to guarantee or intended to guarantee any
Debt, leases, dividends or other obligations ("primary obligations") of
any other Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, (a) the direct
or indirect guaranty, endorsement (other than for collection or deposit
in the ordinary course of business), co-making, discounting with
recourse or sale with recourse by such Person of the obligation of a
primary obligor, (b) the obligation to make take-or-pay or similar
payments, if required, regardless of nonperformance by any other party
or parties to an agreement or (c) any obligation of such Person,
whether or not contingent, (i) to purchase any such primary obligation
or any property constituting direct or indirect security therefor, (ii)
to advance or supply funds (A) for the purchase or payment of any such
primary obligation or (B) to maintain working capital, equity capital,
net worth or other balance sheet condition or any income statement
condition of the primary obligor or otherwise to maintain the solvency
of the primary obligor, (iii) to purchase, lease or otherwise acquire
property, assets, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation or (iv)
otherwise to assure or hold harmless the holder of such primary
obligation against loss in respect thereof. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of
which such Contingent Obligation is made (or, if less, the maximum
amount of such primary obligation for which such Person may be liable
pursuant to the terms of the agreement, instrument or other document
evidencing such Contingent Obligation) or, if not stated or
determinable, the maximum reasonably anticipated liability in respect
thereof (assuming such Person is required to perform thereunder), as
determined by such Person in good faith. Contingent Obligations shall
not include the following obligations or liabilities of the Parent, the
Borrower or any other Subsidiary (including any Special Purpose Entity)
to the extent incurred in connection with a Structured Financing: (a)
reasonable and customary obligations of the Parent, the Borrower or any
other Subsidiary with respect to (i) the servicing of any assets which
are the subject of such Structured Financing, (ii) administrative and
ministerial matters relating to any applicable Special Purpose Entity
and related Excluded Subsidiaries, (iii) maintenance of the corporate
separateness of any such Special Purpose Entity and related Excluded
Subsidiaries from that of the Parent and its other Subsidiaries and
(iv) the guaranty of payment of fees of any Person acting as a trustee
in connection with such Structured Financing and indemnification
obligations owing to any such Person, and (b)(i) reasonable and
customary repurchase obligations and other liabilities resulting from
the breach of representations, warranties and covenants that are not
related to creditworthiness of the obligors on the financial assets the
subject of such Structured Financing and (ii) following the Parent's
acquisition of CNL Financial Services, Inc. and CNL Financial
Corporation in connection with the Consolidation, repurchase
obligations resulting from the conversion of adjustable rate loans to
fixed rate loans, and associated obligations relating to the
acquisition of Hedge Agreements with respect to such loans, for
purposes of this subclause (b)(ii) arising solely in connection with
the transaction contemplated by that certain Wholesale Warehouse
Mortgage Indenture dated as of August 1, 1998 among CNL Funding 98-1
LP, as Issuer, and Norwest Bank Minnesota, National Association, as
Trustee. In addition, the ownership of a Subordinated Interest shall
not be deemed to give rise to any Contingent Obligation on the part of
the owner thereof. Further, Contingent Obligations shall not include
liabilities of the Parent or any Consolidated Subsidiary which result
solely from the Parent or such Consolidated Subsidiary being a general
partner of a Special Purpose Entity that is a limited partnership and
is not a Consolidated Subsidiary.
"Contribution Date" means first to occur of (a) the
consummation of the acquisition by the Parent of substantially all of
the assets of CNL Income Fund, LTD through CNL Income Fund, XVI, LTD
(other than any such Fund whose limited partners do not approve its
acquisition) in connection with the Consolidation or (b) June 30, 2000.
"Excluded Subsidiary" means any Subsidiary of the Parent
(other than the Borrower) (a) which is a Special Purpose Entity or (b)
which satisfies all of the following requirements: (i) such Subsidiary
has no assets other than (x) Equity Interests in other Excluded
Subsidiaries, (y) assets which such Subsidiary is to (and does in fact)
dispose of promptly, and in any event within two Business Days,
following such Subsidiary's acquisition of such assets and (z) cash
distributed to such Subsidiary in connection with a Structured
Financing and cash contributed to such Subsidiary to permit it to
satisfy its obligations under a Structured Financing, so long as the
amount of such cash held by such Subsidiary does not exceed $50,000 in
the aggregate at any time; (ii) such Subsidiary engages in no business
activities other than the ownership of such Equity Interests and its
other assets, and activities incidental to Structured Financings; and
(iii) such Subsidiary has no Debt, liabilities or other obligations
other than those directly incurred in connection with (1) Structured
Financings and (2) if such Subsidiary is a general partner of another
Excluded Subsidiary, such Subsidiary's ownership interest as a general
partner.
"Guarantor" means any Person that is a party to the Guaranty
as a "Guarantor".
"Nonrecourse SPE Financing" means a transaction that the
parties hereto are not treating for any purpose of this Agreement as a
Permitted On Balance Sheet Warehouse Financing and that consists of one
or more transfers by the Parent at any time prior to the Contribution
Date, or by the Borrower or any other Subsidiary, to a Special Purpose
Entity of promissory notes, mortgage loans, chattel paper, leases or
other similar financial assets originated by the Parent, the Borrower
or any other Subsidiary, together with any related title or other
insurance policies, Hedge Agreements and other assets directly related
to such financial assets, which transfers may not be accounted for on
the consolidated balance sheet of the Parent as a sale in conformity
with Financial Accounting Standards Board Statement of Financial
Accounting Standard No. 125, and the incurrence by such Special Purpose
Entity of Debt secured by a Lien encumbering only the assets of such
Special Purpose Entity; provided that (a) all of the Debt, liabilities
and other obligations of such Special Purpose Entity incurred in
connection with such transaction are nonrecourse for the payment or
performance thereof to the Parent, the Borrower or any other Subsidiary
(excluding such Special Purpose Entity or any other Excluded Subsidiary
which directly owns Equity Interests in such Special Purpose Entity)
other than reasonable and customary obligations of the Parent, the
Borrower or any other Subsidiary with respect to (i) the servicing of
any assets which are the subject of such transaction, (ii)
administrative and ministerial matters relating to such Special Purpose
Entity and related Excluded Subsidiaries, (iii) maintenance of the
corporate separateness of such Special Purpose Entity and related
Excluded Subsidiaries from that of the Parent and its other
Subsidiaries, (iv) the guaranty of payment of fees of any Person acting
as a trustee in connection with such transaction and indemnification
obligations owing to any such Person and (v) reasonable and customary
repurchase obligations and other liabilities resulting from the breach
of representations, warranties and covenants that are not related to
creditworthiness of the obligors on the financial assets the subject of
such transactions; and (b) the stated maturity date of such Debt is
after the Termination Date and is also at least one year after the date
such Debt was incurred.
"Permitted Financial Asset Sale" means a transaction
consisting of one or more limited recourse or nonrecourse transfers by
the Parent at any time prior to the Contribution Date, or by the
Borrower or any other Subsidiary, to a Special Purpose Entity of
promissory notes, mortgage loans, chattel paper, leases or other
similar financial assets originated by the Parent, the Borrower or any
other Subsidiary, together with any related title or other insurance
policies, Hedge Agreements and other assets directly related to such
financial assets, which transfers may properly be, and are, accounted
for on the consolidated balance sheet of the Parent as a sale in
conformity with Financial Accounting Standards Board Statement of
Financial Accounting Standard No. 125 in connection with either (x)
limited recourse or nonrecourse sales of such financial assets (or
interests therein) by such Special Purpose Entity to one or more
Persons the accounts of which would not be required to be consolidated
with those of the Parent in its consolidated financial statements in
accordance with GAAP (provided that Subordinated Interests in such
financial assets and I/O Strips may be issued or sold to any Person) or
(y) the incurrence by such Special Purpose Entity of Debt secured by a
Lien encumbering only the assets of such Special Purpose Entity;
provided that all of the Debt, liabilities and other obligations of
such Special Purpose Entity incurred in connection with such
transactions are nonrecourse for the payment or performance thereof to
the Parent, the Borrower or any other Subsidiary (excluding such
Special Purpose Entity or any other Excluded Subsidiary which directly
owns Equity Interests in such Special Purpose Entity) other than the
following: (a) reasonable and customary obligations of the Parent, the
Borrower or any other Subsidiary with respect to (i) the servicing of
any assets which are the subject of such transaction, (ii)
administrative and ministerial matters relating to such Special Purpose
Entity and related Excluded Subsidiaries, (iii) maintenance of the
corporate separateness of such Special Purpose Entity and related
Excluded Subsidiaries from that of the Parent and its other
Subsidiaries, and (iv) the guaranty of payment of fees of any Person
acting as a trustee in connection with such transaction and
indemnification obligations owing to any such Person; (b)(i) reasonable
and customary repurchase obligations and other liabilities resulting
from the breach of representations, warranties and covenants that are
not related to creditworthiness of the obligors on the financial assets
the subject of such transactions and (ii) following the Parent's
acquisition of CNL Financial Services, Inc. and CNL Financial
Corporation in connection with the Consolidation, repurchase
obligations resulting from the conversion of adjustable rate loans to
fixed rate loans, and associated obligations relating to the
acquisition of Hedge Agreements with respect to such loans, for
purposes of this subclause (b)(ii) only arising solely in connection
with the transaction contemplated by that certain Wholesale Warehouse
Mortgage Indenture dated as of August 1, 1998 among CNL Funding 98-1
LP, as Issuer, and Norwest Bank Minnesota, National Association, as
Trustee, and (c) limited recourse provisions giving rise to Debt solely
to the extent permitted under Section 9.2.(b). For purposes of this
definition, whether an obligation or liability is "reasonable and
customary" shall be determined with reference to terms of similar
transactions prevailing as of the date hereof.
"Permitted On Balance Sheet Warehouse Financing" means a
transaction consisting of one or more transfers by the Parent at any
time prior to the Contribution Date, or by the Borrower or any other
Subsidiary, to a Special Purpose Entity of promissory notes, mortgage
loans, chattel paper, leases or other similar financial assets
originated by the Parent, the Borrower or any other Subsidiary,
together with any related title or other insurance policies, Hedge
Agreements and other assets directly related to such financial assets,
which transfers may not be accounted for on the consolidated balance
sheet of the Parent as a sale in conformity with Financial Accounting
Standards Board Statement of Financial Accounting Standard No. 125, and
the incurrence by such Special Purpose Entity of Debt secured by a Lien
encumbering only the assets of such Special Purpose Entity; provided
that (a) except as otherwise permitted under the immediately following
clause (b), all of the Debt, liabilities and other obligations of such
Special Purpose Entity incurred in connection with such transaction are
nonrecourse for the payment or performance thereof to the Parent, the
Borrower or any other Subsidiary (excluding such Special Purpose Entity
or any other Excluded Subsidiary which directly owns Equity Interests
in such Special Purpose Entity) other than reasonable and customary
obligations of the Parent, the Borrower or any other Subsidiary with
respect to (i) the servicing of any assets which are the subject of
such transaction, (ii) administrative and ministerial matters relating
to such Special Purpose Entity and related Excluded Subsidiaries, (iii)
maintenance of the corporate separateness of such Special Purpose
Entity and related Excluded Subsidiaries from that of the Parent and
its other Subsidiaries, and (iv) the guaranty of payment of fees of any
Person acting as a trustee in connection with such transaction and
indemnification obligations owing to any such Person; (b) all of the
provisions of such Debt regarding the liability of, or recourse to, the
Parent, the Borrower or any other Subsidiary (excluding such Special
Purpose Entity or any other Excluded Subsidiary which directly owns
Equity Interests in such Special Purpose Entity) other than liabilities
and obligations referred to in subclauses (i) through (iv) of the
immediately preceding clause (a), have been approved of by the
Administrative Agent in writing in its sole discretion and (c) all of
the other terms and conditions of such Debt have been approved of by
the Administrative Agent in writing in its reasonable judgment. For
purposes of this definition, whether an obligation is reasonable and
customary shall be determined with reference to terms of similar
transactions prevailing as of the date hereof. For the two Business Day
period commencing on the date of the Parent's acquisition of CNL
Financial Services, Inc. and CNL Financial Corporation in connection
with the Consolidation, both of the following credit facilities shall
be deemed to be Permitted On Balance Sheet Warehouse Facilities: (x)
the credit facility evidenced by that certain Franchise Loan
Warehousing Agreement dated as of November 12, 1996 by and among CNL
Financial I, Inc., First Union National Bank of Florida and Norwest
Bank Minnesota, National Association and (y) the credit facility
evidenced by that certain Franchise Loan Funding and Servicing Facility
and Wholesale Warehouse Mortgage Agreement dated as of April 6, 1998 by
and among CNL Financial IV, LP, Variable Funding Capital Corporation,
First Union Capital Markets Corp., First Union National Bank and CNL
Financial Services, Inc. Thereafter such credit facilities shall be
Permitted On Balance Sheet Warehouse Facilities only if they satisfy
the above conditions.
"Restricted Payment" means: (a) any dividend or other
distribution, direct or indirect, on account of any shares of any
Equity Interest of the Parent, the Borrower or any other Subsidiary now
or hereafter outstanding, except a dividend or distribution payable
solely in shares of that class of Equity Interest to the holders of
that class; (b) any redemption, conversion, exchange, retirement,
sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any Equity Interest of the
Parent, the Borrower or any other Subsidiary now or hereafter
outstanding; (c) any payment or prepayment of principal of, premium, if
any, or interest on, redemption, conversion, exchange, purchase,
retirement, defeasance, sinking fund or similar payment with respect
to, any outstanding Debt which is subordinate in right of repayment to
any of the Obligations; and (d) any payment made to retire, or to
obtain the surrender of, any outstanding warrants, options or other
rights to acquire shares of any Equity Interest of the Parent, the
Borrower or any other Subsidiary now or hereafter outstanding.
"Secured Debt" means, with respect to any Person, any Debt
that is (a) secured in any manner by any Lien or (b) entitled to the
benefit of a Negative Pledge. Debt in respect of Capitalized Lease
Obligations shall not be deemed to be Secured Debt.
"Term Securitization" means a Permitted Financial Asset Sale
(a) involving only a single transfer (or series of related and
substantially contemporaneous transfers) to a Special Purpose Entity of
financial assets, and any related title or other insurance policies,
Hedge Agreements and other assets directly related to such financial
assets, by the Parent, the Borrower or any other Subsidiary other than
any transfer of such assets (i) being substituted for asset previously
transferred pursuant to reasonable and customary repurchase and
substitution obligations resulting from the breach of representations,
warranties and covenants that are not related to the creditworthiness
of the obligor on the financial assets or (ii) being substituted for
cash collateral or a cash deposit (including in connection with
reasonable and customary "pre-funding" arrangements) and (b) under
which the Persons acquiring such financial assets (or interests
therein) from the applicable Special Purpose Entity or making advances
to such Special Purpose Entity secured directly or indirectly by such
financial assets, are neither required nor permitted to acquire
additional financial assets (or interests therein) from, or otherwise
make additional advances to, such Special Purpose Entity, except as
otherwise permitted under the immediately preceding clause (a).
(b) The Credit Agreement is amended by adding to Section 1.1. the
following new definition in the appropriate alphabetical location:
"Income Fund Note" means a promissory note issued by the
Borrower to a Person who was a limited partner of any of CNL Income
Fund, LTD through CNL Income Fund, XVI, LTD (each a "Fund") at the time
of the Borrower's acquisition of substantially all of the assets of
such Fund in connection with the Consolidation, which promissory note
was issued to such Person because such Person elected not to receive
common shares of the Parent in exchange for such Person's limited
partnership interest in the applicable Fund. Any such promissory note
shall only be considered to be an Income Fund Note if (a) the
applicable interest rate (excluding any interest rate applicable upon a
default) is not in excess of seven percent per annum, (b) accrued
interest is scheduled to be paid no more frequently than semiannually
and no principal is scheduled to be paid until the stated maturity date
of such promissory note; and (c) the stated maturity date of such
promissory note is at least five years following its date of issuance.
(c) The Credit Agreement is amended by deleting Section 7.3. in its
entirety and substituting in its place the following:
Section 7.3. Maintenance of Property.
In addition to the requirements of any of the other Loan
Documents, the Borrower and the Parent shall (a) protect and preserve,
and cause each other Subsidiary, or with respect to any material Real
Property Asset leased by the Borrower, any Subsidiary or the Parent to
a lessee, use its best efforts to cause such lessee, to protect and
preserve, all of its material properties (or any such Real Property
Asset in the case of any such lessee), and maintain, or use its best
efforts to cause such lessee to maintain, in good repair, working order
and condition all tangible properties necessary to their respective
operations (or any such Real Property Asset in the case of any such
lessee), ordinary wear and tear excepted, and (b) from time to time
make, or use its best efforts to cause to be made, all needed and
appropriate repairs, renewals, replacements and additions to such
properties (or any such Real Property Asset in the case of any such
lessee), so that the business carried on in connection therewith may be
properly and advantageously conducted at all times.
(d) The Credit Agreement is amended by deleting Sections 7.5. and 7.6.
in their entirety and substituting in their respective places the following:
Section 7.5. Insurance.
In addition to the requirements of any of the other Loan
Documents, the Parent and the Borrower shall maintain, and cause each
other Subsidiary, or with respect to any Real Property Asset leased by
the Borrower, any Subsidiary or the Parent to a lessee, use its best
efforts to cause such lessee, to maintain, insurance with financially
sound and reputable insurance companies against such risks and in such
amounts as is customarily maintained by Persons engaged in similar
businesses or as may be required by Applicable Law, and the Borrower
will from time to time deliver to the Administrative Agent upon its
request, or to any Lender upon request through the Administrative
Agent, a detailed list, together with copies of all policies of the
insurance then in effect, stating the names of the insurance companies,
the amounts and rates of the insurance, the dates of the expiration
thereof and the properties and risks covered thereby. Not in limitation
of the foregoing, the Parent and the Borrower shall, and shall cause
its other Subsidiaries to, or with respect to any Real Property Asset
leased by the Borrower, any Subsidiary or the Parent to a lessee, use
its best efforts to cause such lessee to, maintain builder's risk
insurance during any period of construction and, upon completion, "all
risk" insurance in an amount equal to (A) 100% of the replacement cost
of the improvements, if any, on at least 85% (determined by number of
parcels) of its Real Property Assets and (B) 90% of such replacement
cost on no more than 15% (determined by number of parcels) of its Real
Property Assets, in all cases with insurers having an A.M. Best
policyholder's rating of not less than A- and financial size category
of not less than X, which insurance shall in any event not provide for
materially less coverage than the insurance in effect on the Agreement
Date. The Borrower will deliver to the Lenders (i) upon request of any
Lender through the Administrative Agent from time to time full
information as to the insurance carried, (ii) within 10 days of receipt
of notice from any insurer a copy of any notice of cancellation or
material change in coverage from that existing on the Agreement Date
and (iii) promptly upon receipt, notice of any cancellation or
nonrenewal of coverage by the Parent, the Borrower or any other
Subsidiary.
Section 7.6. Payment of Taxes and Claims.
The Parent and the Borrower shall pay or discharge, and cause
each other Subsidiary, or with respect to any Real Property Asset
leased by the Borrower, any Subsidiary or the Parent to a lessee, use
its best efforts to cause such lessee, to pay or discharge, when due
(a) all taxes, assessments and governmental charges or levies imposed
upon it or upon its respective income or profits or upon any properties
belonging to it (or in the case of any such lessee, such lessee or such
Real Property Asset), and (b) all lawful claims of materialmen,
mechanics, carriers, warehousemen and landlords for labor, materials,
supplies and rentals which, if unpaid, might become a Lien on any
properties of such Person (or in the case of any such lessee, such
lessee or such Real Property Asset); provided, however, that this
Section shall not require the payment or discharge of any such tax,
assessment, charge, levy or claim which is being contested in good
faith by appropriate proceedings and for which adequate reserves have
been established on the books of the Parent, the Borrower or such other
Subsidiary, as applicable, in accordance with GAAP.
(e) The Credit Agreement is amended by deleting Section 7.13. in its
entirety and substituting in its place the following:
Section 7.13. Exchange Listing.
At all times on and after June 30, 2000, the Parent shall
maintain at least one class of common shares of the Parent having
trading privileges on the New York Stock Exchange or the American Stock
Exchange or which is subject to price quotations on The NASDAQ Stock
Market's National Market System.
(f) The Credit Agreement is amended by deleting Section 7.15. in its
entirety and substituting in its place the following:
Section 7.15. New Subsidiaries.
Upon the acquisition, incorporation or other creation of any
Wholly Owned Subsidiary (other than an Excluded Subsidiary) after the
Effective Date, the Parent shall cause such Subsidiary to execute and
deliver to the Administrative Agent within 10 Business Days of such
acquisition, incorporation or creation, an Accession Agreement to the
Guaranty executed and delivered by such Subsidiary, together with each
of the items that would have been required to be delivered with respect
to such Subsidiary under subsections (iv), (v), and (x) through (xiii)
of Section 5.1. if such Subsidiary were a Guarantor on the Effective
Date. In addition, any Subsidiary that is not a Wholly Owned Subsidiary
may execute and deliver to the Administrative Agent an Accession
Agreement to the Guaranty, and if a Subsidiary does so, it shall also
deliver to the Administrative Agent each of the items that would have
been required to be delivered with respect to such Subsidiary under
subsections (iv), (v), and (x) through (xiii) of Section 5.1. if such
Subsidiary were a Guarantor on the Effective Date.
(g) The Credit Agreement is amended by deleting Section 9.1.(d) in its
entirety and substituting in its place the following:
(d) Maximum Unencumbered Asset Ratio. The ratio of (i)
Unsecured Debt to (ii) the Unencumbered Asset Value, to be greater than
(x) 0.50 to 1.00 prior to the Contribution Date and (y) 0.40 to 1.00 on
and after the Contribution Date.
(h) The Credit Agreement is amended by deleting Sections 9.2.(h) and
(i) in their entirety and substituting in their respective places the following:
(h) Secured Debt that is Nonrecourse Debt, and Debt incurred
in connection with Nonrecourse SPE Financings; provided, however, until
the acquisition by the Parent of substantially all of the assets of CNL
Income Fund, LTD through CNL Income Fund, XVI, LTD (other than any such
Fund whose limited partners do not approve its acquisition) has been
approved of by the shareholders of the Parent and by the limited
partners of the Funds being acquired, the Parent and the Borrower shall
not, and shall not permit any other Subsidiary to, (i) create, incur or
assume any additional Secured Debt except pursuant to existing
commitments to extend to the Parent, the Borrower or any other
Subsidiary Secured Debt; (ii) permit any existing commitment to extend
to the Parent, the Borrower or any other Subsidiary any additional
Secured Debt to be increased; or (iii) permit any additional
commitments to extend any such Secured Debt to be incurred by any
Person.
(i) Unsecured Debt incurred after the Agreement Date which (x)
was incurred in connection with an offering of Debt securities (A) made
pursuant to an effective registration statement filed with the
Securities and Exchange Commission or (B) exempt from the registration
requirements of the Securities Act pursuant to Rule 144A thereof so
long as such Debt securities are required to be exchanged for Debt
securities referred to in the preceding clause (A); (y) in the case of
Debt evidenced by the Income Fund Notes, does not exceed $81,074,006 in
aggregate outstanding principal amount at any time; or (z) in the case
of any other Unsecured Debt, does not exceed $20,000,000 in aggregate
outstanding principal amount at any time; and
(i) The Credit Agreement is amended by deleting Section 9.4.(b) in its
entirety and substituting in its place the following:
(b) Investments in general and limited partnerships, joint
ventures and other Persons which are not corporations (excluding
Investments subject to the limitations of the immediately following
clause (e)) and which Investments are accounted for on an equity basis
in accordance with GAAP, such that the aggregate book value of such
Investments, together with the aggregate book value of all Investments
of the Parent, the Borrower and other Consolidated Subsidiaries in
Subsidiaries (excluding Excluded Subsidiaries) that are not Guarantors,
exceeds 10.0% of Total Assets;
(j) The Credit Agreement is amended by deleting Section 9.4.(f) in its
entirety and substituting in its place the following:
(f) (i) Leases of equipment and Investments in promissory
notes secured by a Lien in equipment, such that the aggregate amount of
such leases and Investments (determined in accordance with GAAP)
exceeds 5.0% of Total Assets and (ii) commitments to lease equipment
and make Investments of the types described in the immediately
preceding clause (i).
(k) The Credit Agreement is amended by deleting Section 9.5.(g) in its
entirety and substituting in its place the following:
(g) Investments in Subordinate Interests (excluding any
Subordinate Interest issued in connection with a Term Securitization),
so long as the value (determined on the basis of lower of cost or Fair
Value) of such Investments, together with the aggregate outstanding
amount of Debt permitted under Section 9.2.(b), does not exceed
$100,000,000 in the aggregate at any time;
(l) The Credit Agreement is amended by deleting Section 9.7.(d) in its
entirety and substituting in its place the following:
(d) the Parent may declare or make cash distributions to its
shareholders during any fiscal year in an aggregate amount not to
exceed (i) $60,500,000 for the fiscal year ending December 31, 1999;
(ii) 95% of Funds From Operations for the fiscal year ending December
31, 2000 and (iii) 90% of Funds From Operations for any fiscal year
thereafter;
(m) The Credit Agreement is amended by deleting Section 9.9.(a)(B) in
its entirety and substituting in its place the following:
(B) the Parent and each Subsidiary (other than the Borrower)
may sell, transfer, dispose of or contribute its assets to the Parent,
the Borrower or any Wholly Owned Subsidiary;
(n) The Credit Agreement is amended by deleting Section 9.9.(a)(G) in
its entirety and substituting in its place the following:
(G) the Parent, the Borrower and the other Subsidiaries may
sell, transfer, dispose of or contribute assets to a Special Purpose
Entity, directly or indirectly through the Parent or other Subsidiary,
in connection with a Structured Financing, and Special Purpose Entities
may sell and assign assets (or interests therein) pursuant to Permitted
Financial Asset Sales; and
(o) The Credit Agreement is amended by deleting Section 9.10. in its
entirety and substituting in its place the following:
Section 9.10. Dispositions of Assets.
The Parent and the Borrower shall not sell, lease, transfer or
otherwise dispose of, and shall not permit any other Subsidiary to
sell, lease, transfer or otherwise dispose of, assets (including
without limitation capital stock or similar ownership interests) during
any fiscal year which have an aggregate book value in excess of 15% of
Total Assets as of the end of the immediately preceding fiscal year;
provided, however, that the limitations of this Section shall not apply
to (i) the sale, lease, transfer, disposition or contribution of assets
(x) among the Parent, the Borrower and any other Wholly-Owned
Subsidiary that is a Guarantor or (y) from any Subsidiary to the
Parent, the Borrower or any Wholly-Owned Subsidiary that is a
Guarantor, (ii) any lease or sublease, as lessor or sublessor (as the
case may be) by the Parent, the Borrower or any Subsidiary of its
assets in the ordinary course of their business or (iii) any sale,
assignment, disposition or contribution of assets in connection with a
Structured Financing to the extent permitted under clause (a)(G) of
Section 9.9.
(p) The Credit Agreement is amended by deleting Section 9.12. in its
entirety and substituting in its place the following:
Section 9.12. Modifications to Material Contracts.
The Parent and the Borrower shall not enter into, or permit
any other Subsidiary to enter into, without the prior written consent
of the Requisite Lenders, any amendment or modification to any Material
Contract or default in the performance of any of its respective
obligations under any Material Contract or cancel or terminate any
Material Contract prior to its stated maturity; provided, however, this
Section shall not apply at any time following the consummation of the
acquisition by the Parent of substantially all of the assets of CNL
Income Fund, LTD through CNL Income Fund, XVI, LTD (other than any such
Fund whose limited partners do not approve its acquisition) in
connection with the Consolidation.
(q) The Credit Agreement is amended by deleting the references to "CNL
Income Fund, XVIII, LTD" contained in the definitions of "Consolidation" and
"Joint Venture" and replacing such references with references to "CNL Income
Fund, XVI, LTD".
(r) The Credit Agreement is amended by deleting (i) from Section 1.1.
the definition of the term "Joint Ventures" and (ii) Schedule 1.1. thereto.
Section 2. Conditions Precedent. The effectiveness of this Amendment is
subject to receipt by the Administrative Agent of each of the following, each in
form and substance satisfactory to the Administrative Agent:
(a) A counterpart of this Amendment duly executed by the Borrower, the
Existing Guarantors and each of the Lenders;
(b) Evidenced of payment of the fees payable under Section 7 below; and
(c) Such other documents, instruments and agreements as the
Administrative Agent may reasonably request.
Section 3. Representations. The Borrower represents and warrants to the
Administrative Agent and the Lenders that:
(a) Authorization. The Borrower and the Existing Guarantors each has
the right and power, and has taken all necessary action to authorize it, to
execute and deliver this Amendment and to perform its obligations hereunder and,
in the case of the Borrower, under the Credit Agreement, as amended by this
Amendment, in accordance with their respective terms. This Amendment has been
duly executed and delivered by a duly authorized officers of the Borrower and
the Existing Guarantors and each of this Amendment and the Credit Agreement, as
amended by this Amendment, is a legal, valid and binding obligation of the
Borrower enforceable against the Borrower in accordance with its respective
terms, except as the same may be limited by bankruptcy, insolvency, and other
similar laws affecting the rights of creditors generally and the availability of
equitable remedies for the enforcement of certain obligations contained herein
or therein may be limited by equitable principles generally.
(b) Compliance with Laws, etc. The execution and delivery by the
Borrower of this Amendment and the performance by the Borrower of this Amendment
and the Credit Agreement, as amended by this Amendment, in accordance with their
respective terms, do not and will not, by the passage of time, the giving of
notice or otherwise: (i) require any Governmental Approval or violate any
Applicable Law (including all Environmental Laws) relating to the Borrower, the
Parent or any other Subsidiary; (ii) conflict with, result in a breach of or
constitute a default under the organizational documents of the Borrower, the
Parent or any other Subsidiary, or any indenture, agreement or other instrument
to which the Borrower, the Parent or any other Subsidiary is a party or by which
it or any of its respective properties may be bound; or (iii) result in or
require the creation or imposition of any Lien upon or with respect to any
property now owned or hereafter acquired by the Borrower, the Parent or any
other Subsidiary other than in favor of the Administrative Agent for the benefit
of the Lenders.
(c) No Default. No Default or Event of Default has occurred and is
continuing as of the date hereof nor will exist immediately after giving effect
to this Amendment.
Section 4. Reaffirmation of Representations. The Borrower hereby
repeats and reaffirms all representations and warranties made by the Borrower to
the Administrative Agent and the Lenders in the Credit Agreement and the other
Loan Documents to which it is a party on and as of the date hereof (or, if any
representation and warranty expressly relates to an earlier date, on and as of
such earlier date) with the same force and effect as if such representations and
warranties were set forth in this Amendment in full.
Section 5. Reaffirmation of Guaranty. Each of the Existing Guarantors
hereby reaffirms its continuing obligations to the Administrative Agent and the
Lenders under the Guaranty and agrees that the transactions contemplated by this
Amendment shall not in any way affect the validity and enforceability of the
Guaranty or reduce, impair or discharge the obligations of such Existing
Guarantor thereunder.
Section 6. Certain References. Each reference to the Credit Agreement
in any of the Loan Documents shall be deemed to be a reference to the Credit
Agreement as amended by this Amendment.
Section 7. Amendment Fee. In consideration of the Lenders amending of
the Credit Agreement as provided herein, the Borrower agrees to pay to the
Administrative Agent for the account of the Lenders an amendment fee in the
amount of $10,000 for each Lender.
Section 8. Expenses. The Borrower shall reimburse the Administrative
Agent upon demand for all reasonable costs and expenses (including reasonable
attorneys' fees) incurred by the Administrative Agent in connection with the
preparation, negotiation and execution of this Amendment and the other
agreements and documents executed and delivered in connection herewith.
Section 9. Benefits. This Amendment shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns.
Section 10. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.
Section 11. Effect. Except as expressly herein amended, the terms and
conditions of the Credit Agreement and the other Loan Documents remain in full
force and effect. The amendments contained herein shall be deemed to have
prospective application only, unless otherwise specifically stated herein.
Section 12. Counterparts. This Amendment may be executed in any number
of counterparts, each of which shall be deemed to be an original and shall be
binding upon all parties, their successors and assigns.
Section 13. Definitions. All capitalized terms not otherwise defined
herein are used herein with the respective definitions given them in the Credit
Agreement. The interpretive provisions set forth in Section 1.2 of the Credit
Agreement shall apply to this Amendment as though set forth herein.
[Signatures on Following Page]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to Amended and Restated Credit Agreement to be executed as of the date first
above written.
<TABLE>
<CAPTION>
CNL APF Partners, LP
<S> <C>
By: CNL APF GP Corp., its sole general partner
By:_____________________________________________
Name:______________________________________
Title:_____________________________________
CNL AMERICAN PROPERTIES FUND, INC.
CNL APF GP CORP.
CNL APF LP CORP.
CNL FINANCIAL SERVICES, LP
By: CNL Financial Services GP Corp., its general partner
CNL FINANCIAL SERVICES GP CORP.
CNL FINANCIAL LP HOLDING, LP
By: CNL Financial GP Holding Corp., its general partner
CNL FINANCIAL GP HOLDING CORP.
CNL FUND ADVISORS, INC.
CNL RESTAURANT DEVELOPMENT, INC.
By:__________________________________________________
Name:___________________________________________
Title:__________________________________________
First Union National Bank, as Administrative Agent and Lender
By:______________________________________________
Name:_______________________________________
Title:______________________________________
BANK OF AMERICA, N.A.
By:______________________________________________
Name:_______________________________________
Title:______________________________________
[Signatures Continued on Following Page]
</TABLE>
<PAGE>
[Signature Page to First Amendment to Amended and Restated
Credit Agreement dated as of December ___, 1999
with CNL APF Partners, LP]
<TABLE>
<CAPTION>
AMSOUTH BANK
<S> <C>
By:______________________________________________
Name:_______________________________________
Title:______________________________________
BANK AUSTRIA CREDITANSTALT CORPORATE FINANCE, INC.
By:______________________________________________
Name:_______________________________________
Title:______________________________________
By:______________________________________________
Name:_______________________________________
Title:______________________________________
THE CHASE MANHATTAN BANK
By:______________________________________________
Name:_______________________________________
Title:______________________________________
SUNTRUST BANK, CENTRAL FLORIDA, N.A.
By:______________________________________________
Name:_______________________________________
Title:______________________________________
[Signatures Continued on Following Page]
</TABLE>
<PAGE>
[Signature Page to First Amendment to Amended and Restated
Credit Agreement dated as of December ___, 1999
with CNL APF Partners, LP]
<TABLE>
<CAPTION>
CITIZENS BANK OF RHODE ISLAND
<S> <C>
By:______________________________________________
Name:_______________________________________
Title:______________________________________
COMPASS BANK
By:______________________________________________
Name:_______________________________________
Title:______________________________________
THE HUNTINGTON NATIONAL BANK
By:______________________________________________
Name:_______________________________________
Title:______________________________________
COOPERATIEVE CENTRALE RAIFFEISEN- BOERENLEENBANK B.A., "RABOBANK
INTERNATIONAL", NEW YORK BRANCH
By:______________________________________________
Name:_______________________________________
Title:______________________________________
By:______________________________________________
Name:_______________________________________
Title:______________________________________
SOUTHTRUST BANK, NATIONAL ASSOCIATION
By:______________________________________________
Name:_______________________________________
Title:______________________________________
</TABLE>
EXECUTION COPY
FRANCHISE RECEIVABLE FUNDING AND SERVICING AGREEMENT
Dated as of October 14, 1999
by and among
CNL APF PARTNERS, LP,
as Borrower,
NEPTUNE FUNDING CORPORATION,
as Lender,
CNL FINANCIAL SERVICES, LP, as Servicer,
and
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK, B.A.,
"RABOBANK INTERNATIONAL", NEW YORK BRANCH,
as the Collateral Agent and as the Deal Agent
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I DEFINITIONS............................................................................................1
SECTION 1.1. Certain Defined Terms............................................................................1
SECTION 1.2. Terms............................................................................................1
SECTION 1.3. Incorporation....................................................................................1
SECTION 1.4. Interpretation...................................................................................1
ARTICLE II ADVANCES..............................................................................................1
SECTION 2.1. Advances.........................................................................................1
SECTION 2.2. Procedures for Advances..........................................................................1
SECTION 2.3. Reduction of the Program Amount..................................................................1
SECTION 2.4. Liquidity Advances...............................................................................1
SECTION 2.5. Note.............................................................................................1
SECTION 2.6. Repayments.......................................................................................1
SECTION 2.7. Interest.........................................................................................1
SECTION 2.8. Fees.............................................................................................1
SECTION 2.9. Time and Method of Payments......................................................................1
SECTION 2.10. Additional Costs; Capital Requirements..........................................................1
SECTION 2.11. Breakage Costs..................................................................................1
SECTION 2.12. Taxes...........................................................................................1
ARTICLE III CONDITIONS TO LENDING................................................................................1
SECTION 3.1. Conditions Precedent to Effectiveness of Agreement...............................................1
SECTION 3.2. Conditions Precedent to All Advances.............................................................1
ARTICLE IV REPRESENTATIONS AND WARRANTIES........................................................................1
SECTION 4.1. Representations and Warranties of the Borrower...................................................1
SECTION 4.2. Representations and Warranties of the Servicer...................................................1
ARTICLE V GENERAL COVENANTS OF THE BORROWER......................................................................1
SECTION 5.1. Affirmative Covenants of the Borrower............................................................1
SECTION 5.2. Negative Covenants of the Borrower...............................................................1
SECTION 5.3. Borrower Hedging Instruments.....................................................................1
ARTICLE VI COLLECTIONS AND DISBURSEMENTS; FEES...................................................................1
SECTION 6.1. Establishment of Accounts........................................................................1
SECTION 6.2. Funding of Collection Account....................................................................1
SECTION 6.3. Borrowing Excess.................................................................................1
SECTION 6.4. Disbursements From the Collection Account -- Payment Date Procedures.............................1
SECTION 6.5. Notification by Servicer.........................................................................1
SECTION 6.6. Investment of Collections........................................................................1
SECTION 6.7. Termination Procedure............................................................................1
ARTICLE VII APPOINTMENT OF THE SERVICER..........................................................................1
SECTION 7.1. Appointment of the Servicer......................................................................1
SECTION 7.2. Duties and Responsibilities of the Servicer......................................................1
SECTION 7.3. Authorization of the Servicer....................................................................1
SECTION 7.4. Servicing Fees...................................................................................1
SECTION 7.5. Negative Covenants of the Servicer...............................................................1
SECTION 7.6. Reporting........................................................................................1
SECTION 7.7. Limited Partnership Existence....................................................................1
SECTION 7.8. No Recourse......................................................................................1
SECTION 7.9. Cooperation With Requests for Information or Documents...........................................1
SECTION 7.10. Successor Servicer..............................................................................1
SECTION 7.11. Transfer of Servicing...........................................................................1
ARTICLE VIII GRANT OF SECURITY INTERESTS.........................................................................1
SECTION 8.1. Borrower's Grant of Security Interest............................................................1
SECTION 8.2. Delivery of Collateral...........................................................................1
SECTION 8.3. Borrower Remains Liable..........................................................................1
SECTION 8.4. Covenants of the Borrower and Servicer Regarding the Collateral..................................1
SECTION 8.5. Limited Recourse.................................................................................1
SECTION 8.6. Release of Collateral............................................................................1
SECTION 8.7. Substitution.....................................................................................1
ARTICLE IX TERMINATION EVENTS....................................................................................1
SECTION 9.1. Termination Events...............................................................................1
SECTION 9.2. Servicer Event of Default........................................................................1
SECTION 9.3. Control of Lockbox Account.......................................................................1
ARTICLE X REMEDIES...............................................................................................1
SECTION 10.1. Actions Upon Termination Event..................................................................1
SECTION 10.2. Application of Proceeds.........................................................................1
SECTION 10.3. Exercise of Remedies............................................................................1
SECTION 10.4. Waiver of Certain Laws..........................................................................1
SECTION 10.5. Power of Attorney...............................................................................1
ARTICLE XI INDEMNIFICATION.......................................................................................1
SECTION 11.1. Indemnities by the Borrower.....................................................................1
SECTION 11.2. Indemnities by the Servicer.....................................................................1
ARTICLE XII MISCELLANEOUS........................................................................................1
SECTION 12.1. Notices, etc....................................................................................1
SECTION 12.2. Binding Effect; Assignability; Termination......................................................1
SECTION 12.3. Costs, Expenses and Taxes.......................................................................1
SECTION 12.4. The Deal Agent..................................................................................1
SECTION 12.5. Confidentiality.................................................................................1
SECTION 12.6. No Proceedings..................................................................................1
SECTION 12.7. Amendments; Waivers; Consents...................................................................1
SECTION 12.8. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL....................................1
SECTION 12.9. Execution in Counterparts; Severability.........................................................1
SECTION 12.10. Descriptive Headings...........................................................................1
SECTION 12.11. Recourse Against Certain Parties...............................................................1
SECTION 12.12. Signed, sealed and delivered in the............................................................1
ARTICLE XIII WARRANTY DEED.......................................................................................1
SCHEDULES
SCHEDULE 1........List of Pledged Receivables
SCHEDULE 2........Concentration Limits and Tiers
SCHEDULE 3........Approved Concepts
SCHEDULE 4 List of Lockbox Account Banks, Lockboxes and Lockbox Accounts
SCHEDULE 5 Licenses and Permits of Borrower and Servicer Applied for but not Obtained
SCHEDULE 6 Trade Names and Former Names
SCHEDULE 7 Addresses for Notice / UCC Locations
EXHIBITS
EXHIBIT A..................Forms of Borrower's Notice
- Funding Request
- Repayment of Advance
- Reduction of Program Amount
- Termination of Program Amount
EXHIBIT A-1...........Form of Final Transaction Summary
EXHIBIT B Settlement Agent's Letter
- Loan
- Lease
EXHIBIT C Form of Note
EXHIBIT D List of Litigation Matters
EXHIBIT E Form of Officer's Certificate as to Insolvency
EXHIBIT F Form of Monthly Report
EXHIBIT G Copy of Servicer's Credit and Collection Policies
EXHIBIT H Form of Estoppel Letter
EXHIBIT I Successor Servicer
EXHIBIT J The Deal Agent
EXHIBIT K Form of Obligor Note
EXHIBIT L Required Lease Provisions
EXHIBIT M Approved Environmental Assessment Firms
EXHIBIT N [Reserved.]
EXHIBIT O Form of Opinion (Counsel to Borrower - Mortgages
EXHIBIT P-1 Form of Franchise Receivable Assignment - Loan
EXHIBIT P-2 Form of Franchise Receivable Assignment - Lease
EXHIBIT Q Form of Pledged Receivable Supplement
</TABLE>
<PAGE>
FRANCHISE RECEIVABLE FUNDING AND SERVICING AGREEMENT, dated as
of October 14, 1999 (the "Agreement") by and among CNL APF PARTNERS, LP, a
Delaware limited partnership (the "Borrower"), NEPTUNE FUNDING CORPORATION, a
Delaware corporation ("Neptune" or the "Lender"), COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK, B.A., "RABOBANK INTERNATIONAL", NEW YORK BRANCH
("Rabobank"), as collateral agent (in such capacity, the "Collateral Agent") and
as deal agent (in such capacity, the "Deal Agent"), and CNL FINANCIAL SERVICES,
LP, a Delaware limited partnership, as servicer (the "Servicer").
W I T N E S S E T H:
WHEREAS, the Borrower is engaged in the business of, among
other things, making secured Franchise Loans to, and entering into Franchises
Leases with, Obligors owning or operating specified properties under Approved
Concepts, and acquiring such Franchise Loans, and the properties subject to
Franchise Leases, from its affiliates;
WHEREAS, the Borrower and the Lender intend that the Lender
will make Advances to the Borrower from time to time, such Advances to be
secured by the Collateral;
WHEREAS, the Deal Agent has been requested and is willing to
act as agent on behalf of the Lender in connection with the making and financing
of such Advances;
WHEREAS, in order to effectuate the purposes of this
Agreement, the Borrower, the Lender and the Deal Agent desire that a servicer be
appointed to perform certain servicing, administrative and collection functions
in respect of the Collateral;
WHEREAS, the Servicer has been requested and is willing to
perform such servicing, administrative and collection functions in respect of
the Collateral; and
WHEREAS, in order to secure the Advances made to the Borrower
by the Lender and the other Borrower Secured Obligations, the Borrower intends
to grant to the Collateral Agent a security interest in the Franchise
Receivables and the other Collateral.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1.......Certain Defined Terms.
As used herein, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and the
plural forms of the terms defined):
Additional Amounts: Any amounts payable to any Affected Party
under Sections 2.10 and 2.11.
Additional Costs: As defined in Section 2.10(b).
Advance: As defined in Section 2.1.
Adverse Claim: With respect to any Person, any claim of
ownership or any lien, security interest, title retention, trust or other charge
or encumbrance, or other type of preferential arrangement having the effect or
purpose of creating a lien or security interest in any property of such Person.
Affected Party: The Lender, the Deal Agent, any Liquidity
Lender, any letter of credit provider to the Lender, or any affiliate of the
foregoing persons.
Affiliate: As to any Person, any other Person that, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person. For the purposes of this definition, the terms "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or to cause the direction of
management and policies of such Person, whether through the ownership of voting
securities or by contract or otherwise.
Aggregate Eligible Investment Value: As of the date of any
calculation, an amount equal to the sum of the Eligible Investment Values of all
Eligible Investments which are owned by the Borrower on such date and were
acquired with Collections on account of principal payments on Franchise Loans or
rental payments on Franchise Leases deposited in the Collection Account, reduced
by the sum of all amounts received by the Borrower in respect of the principal
of such Eligible Investments through such date of calculation.
Aggregate Eligible Receivable Value: As of the date of any
calculation, an amount equal to (i) the aggregate Receivable Basis of all
Eligible Receivables, minus (ii) an amount equal to the sum of (x) the aggregate
Receivable Basis of all Eligible Receivables which are Defaulted Receivables,
(y) 50% of the aggregate Receivable Basis of all Eligible Receivables which are
Delinquent Receivables and (z) the aggregate Excess Concentration Amounts (as
defined in Schedule 2).
Aggregate Unpaids: At any time, an amount equal to the
aggregate outstanding principal balance of the Advances, all accrued and unpaid
Yield and all other unpaid Borrower Secured Obligations at such time.
Agreement: This Franchise Receivable Funding and Servicing
Agreement, dated as of October 14, 1999, as amended, modified, supplemented or
restated from time to time.Applicable Margin: Has the meaning given to such term
in the Fee Letter.
Appraised Value: With respect to any property which secures a
Franchise Loan or is the subject of a Franchise Lease, the fair market thereof
as disclosed in a report prepared by an Approved Valuation Company using market
standard valuation methods for valuing property of the relevant type and
otherwise satisfactory to the Deal Agent.
Approved Valuation Company: Valuation Associates or such other
accounting, investment banking or valuation firm as shall have been approved in
writing by the Deal Agent.
Approved Concept: The restaurant concepts set forth in
Schedule 3, as revised from time to time by the Borrower, with the written
approval of the Deal Agent.
Basic Documents: This Agreement, the Note, the Fee Letter, the
Franchise Receivable Assignments, the Custodial Agreement, the Liquidity
Agreement and all agreements, instruments, guarantees, certificates, financing
statements or other documents (including, without limitation, all Mortgages,
Mortgage Assignments and Hedging Instruments, but not including Pledged
Receivables) executed and/or delivered in connection herewith or therewith.
Borrower: CNL APF Partners, LP, a Delaware partnership, and
any successor thereto.
Borrower Account Collateral: As defined in Section 8.1(c).
Borrower Assigned Agreements: As defined in Section 8.1(b).
Borrower Notice: A written notice, in the form of Exhibit A,
to be used for each borrowing, repayment of each Advance, or termination or
reduction of the Program Amount and Optional Prepayments of Advances.
Borrower Secured Obligations: All obligations of every nature
of the Borrower to the Lender or any other Secured Party, now or hereafter
existing, under this Agreement or any other Basic Document, and all amendments,
extensions or renewals hereof or thereof, whether for principal, interest, fees,
expenses or otherwise, whether now existing or hereafter arising, voluntary or
involuntary, whether or not jointly owned with others, direct or indirect,
absolute or contingent, liquidated or unliquidated, and whether or not from time
to time decreased or extinguished and later increased, created or incurred and
all or any portion of such obligations that are paid, to the extent all or any
part of such payment is avoided or recovered directly or indirectly from the
Lender or any such Secured Party as a preference, fraudulent transfer or
otherwise.
Borrowing Base: At any time, the sum of (i) 85% of the
Aggregate Eligible Receivable Value as of such date, plus (ii) the Aggregate
Eligible Investment Value as of such date, plus (iii) the aggregate amount of
Collections on account of principal payments on Franchise Loans and rental
payments on Franchise Leases on deposit in the Collection Account on such day
(excluding any such Collections invested in Eligible Investments).
Borrowing Excess: For any date, as disclosed in the most
recently submitted Borrower Notice or Monthly Report, the amount, if any, by
which the aggregate outstanding principal balance of the Advances as of such
date exceeds the lesser of (i) the Program Amount and (ii) the Borrowing Base.
Breakage Costs: As defined in Section 2.11.
Business Day: Any day of the year other than a Saturday,
Sunday or any day on which banks generally are required, or authorized, to close
in New York, New York.
Cash Flow: As to any calculation at the level of an Obligor
(which shall be deemed to include its consolidated Affiliates), an amount equal
to (a) the sum of (i) net income, (ii) income tax, (iii) interest expense, (iv)
all non-cash amounts in respect of depreciation and amortization, (v) all
non-recurring expenses, (vi) the amount of any management fees paid by such
Obligor in excess of 2% of annual sales and (vii) all operating lease or rent
expense, less (b) all non-recurring income.
As to any calculation at the Unit level, an amount equal to
(a) the sum of (i) net income, (ii) income tax, (iii) interest expense, (iv) all
non-cash amounts in respect of depreciation and amortization, (v) all
non-recurring expenses, (vi) the amount of any management fees paid with respect
to such Unit in excess of the greater of 2% of annual sales or $20,000 and (vii)
all operating lease or rent expense, less (b) all non-recurring income.
Closing Date: October 14, 1999.
Collateral: As defined in Section 8.1.
Collateral Agent: Rabobank in its capacity as Collateral agent
for the Lender and the other Secured Parties, and any successor thereto in such
capacity.
Collection Account: The account maintained with the Depositary
described in Section 6.1(b).
Collection Account Deficiency: For any Payment Date, any
deficiency in the amounts on deposit in the Collection Account necessary to make
the payments required under Sections 6.4(a)(i) through (v).
Collection Period: Each calendar month, except that the first
Collection Period shall be the period from and including the Closing Date to and
including the last day of the calendar month in which the Closing Date occurs.
Collections: All cash collections and other Proceeds of the
Collateral including, without limitation, (i) all payments of principal and
interest in respect of Franchise Loans, (ii) all basic rent and percentage rent
payments in respect of Franchise Leases, (iii) all late charges, penalties, fees
and interest arising in connection with any Franchise Receivable and recoveries
with respect to Franchise Receivables that have been written off as
uncollectible, (iv) all payments made to or for the benefit of the Borrower
under any Obligor Document or Basic Document and (v) all cash proceeds from the
sale, re-lease or other disposition of any of the Collateral; provided, however,
that "Collections" shall not include any payments made in respect of Franchise
Leases (including without limitation payments for insurance, real estate tax and
sales tax) except as described in items (ii) and (v).
Commitment: The commitment of the Lender to make Advances to
the Borrower, on the terms and conditions set forth herein, in an aggregate
principal amount not to exceed at any one time outstanding the Program Amount.
Commitment Termination Date: The earlier of (i) the
Termination Date and (ii) the Scheduled Commitment Termination Date.
Company Obligor: A franchisor of an Approved Concept.
Concentration Limits: The Concentration Limits set forth in
Schedule 2, as revised from time to time by the Borrower with the prior written
approval of the Deal Agent.
Covered Taxes: As defined in Section 2.12.
CP Rate: For any day during any Yield Period, a rate
equivalent to the sum of (i) the per annum rate equivalent to the weighted
average of the per annum rates paid or payable by the Lender from time to time
as interest on commercial paper notes or otherwise (by means of interest rate
hedges or otherwise and taking into consideration any incremental carrying costs
associated with short-term promissory notes issued by the Lender maturing on
dates other than those certain dates on which the Lender is to receive funds) in
respect of the promissory notes issued by the Lender that are allocated, in
whole or in part, by the Deal Agent (on behalf of the Lender) to fund or
maintain the Advances during such period, as determined by the Deal Agent (on
behalf of the Lender) and reported to the Borrower and the Servicer, which rates
shall reflect and give effect to (A) the commissions of placement agents and
dealers in respect of such promissory notes, to the extent such commissions are
allocated, in whole or in part, to such promissory notes by the Deal Agent (on
behalf of the Lender) and (B) other borrowings by the Lender, including, without
limitation, borrowings to fund small or odd dollar amounts that are not easily
accommodated in the commercial paper market; provided, however, that if any
component of such rate is a discount rate, in calculating the CP Rate, the Deal
Agent shall for such component use the rate resulting from converting such
discount rate to an interest bearing equivalent rate per annum, plus (ii) the
Applicable Margin.
Credit and Collection Policies: The credit, collection,
customer relations and service policies and procedures of the Servicer in effect
on the Closing Date, a description of which is attached as Exhibit G and as such
policies and procedures may hereafter be amended, modified or supplemented from
time to time in accordance with Section 7.5(e).
Custodian: U.S. Bank National Association or such other
custodian as the Collateral Agent may appoint.
Custodial Agreement: That certain Custodial Agreement dated as
of the date hereof among the Custodian, Collateral Agent, Deal Agent, Servicer
and Borrower.
DCR: Duff & Phelps Credit Rating Co. and any successor
thereto.
Deal Agent: Rabobank, in its capacity as agent for the Lender
hereunder, and any successor thereto in such capacity.
Debt: As to any Person at any date, all liabilities,
obligations and indebtedness (actual or contingent) of such Person (a) for
borrowed money, (b) evidenced by promissory notes, bonds, debentures, notes or
other similar instruments, (c) to pay the deferred purchase price of property or
services, (d) as lessee under leases which have been or should be, in accordance
with GAAP, recorded as capital leases, (e) secured by any lien or other charge
upon a property or asset owned by such Person, even though such Person has not
assumed or become liable for the payment of such obligations, (f) under any
interest rate swap, interest rate cap, interest rate floor, interest rate
collar, or other hedging instrument or agreement, (g) under reimbursement
agreements or similar agreements with respect to the issuance of letters of
credit (other than obligations in respect of letters of credit opened to provide
for payment of goods and services purchased in the ordinary course of business),
(h) under direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or otherwise to
assure a creditor against loss in respect of, indebtedness or obligations of
others of the kinds referred to in clauses (a) through (g) above, or (i) for
liabilities in respect of unfunded vested benefits under plans covered by ERISA.
For the purposes hereof, all liabilities, obligations and indebtedness shall be
without duplication and the term "guarantee" shall include any agreement,
whether such agreement is on a contingency or otherwise, to purchase, repurchase
or otherwise acquire Debt of any other Person, or to purchase, sell or lease, as
lessee or lessor, property or services, in any such case primarily for the
purpose of enabling another person to make payment of Debt, or to make any
payment (whether as an advance, capital contribution, purchase of an equity
interest or otherwise) to assure a minimum equity, asset base, working capital
or other balance sheet or financial condition, in connection with the Debt of
another Person, or to supply funds to or in any manner invest in another Person
in connection with the Debt of such Person.
Defaulted Receivable: With respect to any Collection Period,
any Franchise Receivable (i) that is more than 90 days past due in the payment
of principal or interest or rent as of the end of such Collection Period, (ii)
as to which the Obligor thereunder has become the subject of an Event of
Bankruptcy, or (iii) that has been, or should be, considered defaulted or has
been, or should be, placed on non-accrual status in accordance with the Credit
and Collection Policies.
Delinquency Ratio: With respect to any Collection Period, the
ratio, expressed as a percentage, the numerator of which is the aggregate
Receivable Basis of all Eligible Receivables greater than 60 days past due in
the payment of interest or principal or rent that are not Defaulted Receivables,
and the denominator of which is the Aggregate Eligible Receivable Value, in each
case as of the last day of such Collection Period.
Delinquent Receivable: With respect to any Collection Period,
any Franchise Receivable that is greater than 60 days past due in the payment of
principal or interest or rent as of the end of such Collection Period.
Depositary: Rabobank.
Determination Date: With respect to any Payment Date, the last
day of the immediately preceding calendar month.
Dollar and $: Lawful currency of the United States of America.
Effective Date: The date on which the conditions specified in
Section 3.1 shall have been satisfied.
Eligible Assignee: (a) A Person whose short-term unsecured and
unguaranteed obligations are rated at least A-1 by S&P and D-1 by DCR, or whose
obligations under the Liquidity Agreement are guaranteed by a Person whose
short-term ratings are at least A-1 by S&P and D-1 by DCR, or (b) such other
Person satisfactory to the Lender, the Deal Agent and each of the rating
agencies rating any of the short-term commercial paper notes issued by the
Lender.
Eligible Investments: One or more of the following types of
investments:
(a)......marketable obligations of the United States, the full
and timely payment of which are backed by the full faith and credit of the
United States which have a maturity of not more than 270 days from the date of
acquisition;
(b)......marketable obligations, the full and timely payment
of which are directly and fully guaranteed by the full faith and credit of the
United States and which have a maturity of not more than 270 days from the date
of acquisition;
(c)......bankers' acceptances and certificates of deposit and
other interest-bearing obligations (in each case having a maturity of not more
than 270 days from the date of acquisition) denominated in Dollars and issued by
any bank with capital, surplus and undivided profits aggregating at least
$100,000,000, the short-term securities of which are rated at least A-1 by S&P
and, if rated by DCR, at least D-1 by DCR and, if rated by Moody's, at least P-1
by Moody's;
(d) .....repurchase obligations with a term of not more than
ten days for underlying securities of the types described in clauses (a), (b)
and (c) above entered into with any bank of the type described in clause (c)
above;
(e)......commercial paper rated at least A-1 by S&P and, if
rated by DCR, at least D-1 by DCR and, if rated by Moody's, at least P-1 by
Moody's; and
(f)......demand deposits, time deposits or certificates of
deposits (having original maturities of no more than 365 days) of depositary
institutions or trust companies incorporated under the laws of the United States
or any state thereof (or domestic branches of any foreign bank) and subject to
supervision and examination by federal or state banking or depository
institution authorities; providedthat at the same time such investment, or the
commitment to make such investment, is entered into, the short-term debt rating
of such depository institution or trust company shall be rated at least A-1 by
S&P and, if rated by DCR, at least D-1 by DCR and, if rated by Moody's, at least
P-1 by Moody's.
Eligible Investment Value: As of the date of any calculation,
for any Eligible Investment, the cash purchase price paid (which may include
accrued interest through the date of such purchase) to acquire such Eligible
Investment for the Collection Account; provided, however, if such Eligible
Investment was not acquired for cash, then the Eligible Investment Value for
such Eligible Investment shall be the amount agreed upon by the Borrower and the
Deal Agent at the time such Eligible Investment was acquired.
Eligible Obligor: Any Obligor liable, or any group of Obligors
who together are jointly and severally liable, for a Franchise Receivable, and
which Obligor individually, or group of Obligors collectively, satisfies each of
the following requirements at the time such Franchise Receivable is added to the
Pledged Receivables hereunder and, to the extent provided below, at all other
times:
(a)......at all times, the Obligor is a franchisee under an
Approved Concept, or is a Company Obligor that is operating restaurants within
an Approved Concept;
(b)......at all times, the Obligor is a U.S. Person as defined
under the IRC, unless otherwise approved by the Deal Agent in its sole
discretion;
(c)......the Obligor (i) is a Company Obligor or has entered
into a franchise agreement with respect to the Approved Concept and is in
compliance with all material terms and conditions of such franchise agreement,
or (ii) if the Obligor is not a Company Obligor and is seeking funding with
respect to construction of all or part of a restaurant and such restaurant
remains uncompleted at the time such Franchise Receivable is added to the
Pledged Receivables hereunder, the Obligor shall have executed a franchise
agreement with an Approved Concept within seven (7) months after the time such
Franchise Receivable is added to the Pledged Receivables hereunder;
(d)......the Obligor is not an Affiliate of the Borrower, or
if it is an Affiliate of the Borrower, the Lender, in its sole discretion, shall
have given its prior written consent to such Person qualifying as an "Eligible
Obligor";
(e)......the Obligor is not delinquent in the payment of (to
the extent liable therefor) any ground rent, taxes or other assessment
attachable to the collateral securing the Franchise Receivable (or, in the case
of a Franchise Lease, any of the Real Property which is the subject of such
Franchise Lease), unless the proceeds of such Franchise Receivable are used to
cure such delinquency;
(f)......the Obligor is a Company Obligor or the term of the
Obligor's franchise agreement is at least equal to the remaining term of the
related Franchise Receivable or allows for renewal periods or successor
franchise agreements the cumulative term of which will be greater than or equal
to the term of such Franchise Receivable;
(g)......to the knowledge of the Borrower and the Servicer,
(i) the Obligor is not in default in any material respect under any existing
Franchise Receivable or other lease or loan agreement with any lender or
landlord (unless such default will be cured by virtue of the funding under the
Franchise Receivable), (ii) the Obligor, if a franchisee, is not in default
under any franchise agreement and (iii) no Event of Bankruptcy has occurred with
respect to such Obligor during the preceding five (5) years;
(h)......the Obligor or Affiliates thereof operate and manage
at least four (4) additional casual dining restaurants or at least four (4)
additional quick service restaurants under Approved Concepts; and
(i)......the Obligor or Affiliates thereof have operated or
managed one or more Approved Concepts for at least three (3) years.
Eligible Receivable: A Franchise Receivable (i) which is a
Pledged Receivable, and (ii) which, unless otherwise agreed to in writing by the
Deal Agent, satisfies each of the following requirements at the time such
Franchise Receivable is added to the Pledged Receivables hereunder and, to the
extent provided below, at all other times:
(a)......at all times such Franchise Receivable is either (i)
a Fee Simple Loan, a Ground Lease Loan or an Enterprise Loan or (ii) a Franchise
Lease consisting of a triple-net lease on Real Property, fee title of which Real
Property is vested in the Borrower free and clear of any Adverse Claim or
Restrictions on Transferability (other than Permitted Liens);
(b)......such Franchise Receivable was originated, documented
and closed in accordance with the terms of the Credit and Collection Policies
(excluding for these purposes policies relating to minimum LTV Ratios) and in
the ordinary course of business of the Borrower or a Transferring Affiliate;
(c)......such Franchise Receivable was originated pursuant to
a commitment letter issued in the name of the Borrower or a Transferring
Affiliate in connection with one or more Units to be operated under an Approved
Concept;
(d)......at all times such Franchise Receivable has an
amortization schedule and final maturity (in the case of a Franchise Loan) or an
original lease term (in the case of a Franchise Lease) of no more than 20 years;
(e)......such Franchise Receivable on the date of its
origination and the related Funding Date is not a Defaulted Receivable or a
Delinquent Receivable;
(f)......such Franchise Receivable at all times is evidenced
by (i) in the case of a Franchise Loan, one or more notes (provided that there
shall not be more than one note per Unit site) in substantially the form
attached hereto as Exhibit K, each of which is duly endorsed in blank or (ii) in
the case of a Franchise Lease, one or more leases (provided that there shall not
be more than one lease per Unit site) which satisfies each of the requirements
specified in Exhibit L;
(g)......payment on the Franchise Receivable is, at all times,
due monthly; and such Franchise Receivable either has a fixed Receivable Yield
equal to or greater than the equivalent yield to maturity on a ten (10) year
U.S. Treasury Security (the "Treasury Rate") plus 250 basis points, or a
floating Receivable Yield equal to or greater than LIBOR plus 250 basis points;
(h)......at all times, each Obligor in respect of such
Franchise Receivable has been instructed, or has received coupon books
instructing it, to remit all payments to a Lockbox;
(i)......such Franchise Receivable was originated in
accordance with and, together with the related Obligor Documents, satisfies any
and all requirements of, all applicable federal, state, and other applicable
laws and regulations (including, without limitation, all such laws and
regulations relating to truth in lending, fair credit billing, fair credit
reporting, equal credit opportunity and usury);
(j)......at all times, such Franchise Receivable has an LTV
Ratio that is no greater than (i) 70% if such Franchise Receivable is a Fee
Simple Loan, (ii) 60% if such Franchise Receivable is an Enterprise Loan or a
Ground Lease Loan and (iii) 94% if such Franchise Receivable is a Franchise
Lease;
(k)......the consolidated FCCR at the Obligor level in respect
of such Franchise Receivable equals or exceeds 1.20x and the FCCR at the Unit
level for each Unit related to such Franchise Receivable equals or exceeds
1.10x; provided, that if such Franchise Receivable is a Franchise Lease whose
Obligor operates and manages (or has Affiliates which operate or manage) at
least 10 separate Units under Approved Concepts, the FCCR at the Unit level for
each Unit related to such Franchise Receivable need not equal or exceed 1.10x;
(l)......at all times, such Franchise Receivable, if a Ground
Lease Loan or an Enterprise Loan, is supported by a lease term on the premises
at least as long as such Franchise Receivable's final maturity, or is subject to
renewals or options to renew that, if exercised, will cause such lease term to
exceed the Franchise Receivable's final maturity;
(m)......at all times, the Borrower shall be the owner of such
Franchise Receivable free and clear of any Adverse Claims other than Permitted
Liens, and all filings (including, without limitation, all Mortgages, Mortgage
Assignments and financing statements described in the definition of "Obligor
Documents") required in order to cause (i) the Borrower to have a first priority
perfected security interest in, and lien on, the collateral securing such
Franchise Receivable, (ii) in the case of a Franchise Lease, the legal and
beneficial ownership of the Real Property which is the subject of such Franchise
Lease to be vested in the Borrower, free and clear of any Adverse Claims and
Restrictions on Transferability (other than Permitted Liens) and (iii) the
Collateral Agent to have a first priority perfected security interest in, and
lien on, all Collateral relating to such Franchise Receivable (including,
without limitation, any Real Property securing any Franchise Loan or the subject
of any Franchise Lease) have, in each case of clauses (i), (ii) and (iii), been
duly filed and recorded with all appropriate Governmental Authorities or have
been released to the title insurer or local recording office for timely filing
and recording in the ordinary course and all fees in respect of such filings
have been paid in full;
(n)......at all times, the property which secures such
Franchise Receivable (and, in the case of a Franchise Lease, all property which
is the subject of such Franchise Lease) is insured against loss or damage by all
hazards (except for earthquake and flood hazards) included in standard extended
coverage and the Collateral Agent is named as an additional insured and loss
payee;
(o)......at all times such Franchise Receivable, if a
Franchise Lease or a fixed rate Franchise Loan, is covered by a Hedging
Instrument (either individually or on a portfolio basis) acceptable to the Deal
Agent and (i) in the case of a fixed rate Franchise Loan, has a prepayment
penalty sufficient to cover any swap breakage costs associated with early
termination (in whole or in part) of such Hedging Instrument to the extent such
Franchise Loan is prepayable and (ii) in the case of a Franchise Lease, is
non-cancelable for five (5) years (subject to certain exceptions relating to
casualty and condemnation and substitution of leases as set forth in the lease
provisions attached hereto as Exhibit L) and, to the extent the Obligor or any
of its Affiliates has any option or obligation to purchase the property which is
the subject of such Franchise Lease, such Franchise Lease or the relevant
agreement under which such option or obligation arises provides that such
purchase shall be made at a purchase price equal to at least 115% of the Rent
Cost Basis of such property, provided that such minimum purchase price
requirement shall not apply with respect to a Franchise Lease if (i) the Deal
Agent shall have agreed in writing that such Franchise Receivable may be treated
as an Eligible Receivable hereunder notwithstanding its failure to satisfy such
requirement and (ii) after giving effect to such treatment, no more than 20% of
the Maximum Funded Collateral Amount would consist of Franchise Leases which
fail to satisfy such requirement
(p)......all Real Property securing or supporting payments on
such Franchise Receivable (including, in the case of a Franchise Lease, all Real
Property subject to such Franchise Lease) is in compliance with all
Environmental Laws, as confirmed by (i) in the case of an Enterprise Loan or a
Ground Lease Loan, an environmental questionnaire and other environmental due
diligence obtained and completed in accordance with the Credit and Collection
Policy with respect to such Real Property no more than six months prior to
originating such Franchise Loan and (ii) in the case of a Franchise Lease or a
Fee Simple Loan, an Environmental Site Assessment obtained and completed in
accordance with the Credit and Collection Policy with respect to such Real
Property no more than six months prior to origination of such Franchise Lease or
Fee Simple Loan;
(q)......a complete set of Obligor Documents has been executed
and delivered with respect to such Franchise Receivable, which Obligor Documents
(i) at all times, together with such Franchise Receivable, are in full force and
effect and constitute the legal, valid and binding obligation of each related
Obligor, enforceable against each such Obligor in accordance with its terms and,
at the time such Franchise Receivable is added to the Pledged Receivables
hereunder, are not subject to any dispute, offset, counterclaim or defense
whatsoever, (ii) if such Franchise Receivable is a Franchise Loan, such
Franchise Loan at all times is substantially in a form that has been approved by
the Deal Agent (such approval not to be unreasonably withheld), or if such
Franchise Receivable is a Franchise Lease, such Franchise Lease at all times
complies with the Required Lease Provisions set forth in Exhibit L and (iii)
have been received by the Custodian within fifteen (15) Business Days of such
Franchise Receivable being included in the Pledged Receivables;
(r)......at all times, the collateral securing such Franchise
Receivable (and, in the case of a Franchise Lease, the Real Property which is
the subject of such Franchise Lease) is located in the United States or a
territory of the United States or in any other country approved by the Deal
Agent (in its sole discretion);
(s)......the Obligor with respect to such Franchise Receivable
is an Eligible Obligor;
(t)......in the case of a Franchise Loan, such Franchise Loan,
if originated at the same time as other Franchise Loans having the same Obligor,
is cross-defaulted with such other Franchise Loans, such that a default under
one such Franchise Loan will constitute a default under the other such Franchise
Loans;
(u)......if such Franchise Receivable was originated by a
Transferring Affiliate, then such Franchise Receivable has been duly assigned to
the Borrower by such Transferring Affiliate in accordance with a Franchise
Receivable Assignment and all consideration required to be paid by the Borrower
to such Transferring Affiliate with respect to such assignment has been paid in
full;
(v)......in the case of a Franchise Lease, if after giving
effect to the inclusion of such Franchise Lease in the Collateral the aggregate
Receivable Basis for all Franchise Leases covering property in the same State
would be equal to or greater than $15,000,000, then the Deal Agent shall have
received an opinion substantially in the form attached hereto as Exhibit O
covering the laws of such State from counsel reasonably satisfactory to the Deal
Agent (it being understood that such opinion need only be delivered once for
each applicable State);
(w)......in the case of a Franchise Loan, the debt obligation
under such Franchise Receivable constitutes an "instrument" or a "general
intangible" within the meaning of the UCC of the jurisdiction which governs
perfection of a security interest in such Franchise Receivable; and
(x)......such Franchise Receivable has not been extended,
amended, forgiven, discharged, waived, canceled or otherwise modified in any
material respect at any time since it was initially included in the Collateral
except as permitted by Section 5.2(b) and Section 7.5(b); provided that the
Borrower may consent to the assignment of any Franchise Lease not subject to
assignment restrictions in the related franchise agreement so long as the
assignee is an Eligible Obligor hereunder.
Enterprise Loan: Any Franchise Loan secured by a first
priority perfected security interest in, or lien on, the Obligor's rights as
lessee to access and operate the related Unit.
Environmental Laws: Any law, statute, ordinance, decree,
requirement, order, judgment, rule, regulation (or interpretation of any of the
foregoing) of, and the terms of any license or permit issued, by the United
States of America, any state of the United States and any political subdivision
of any of the foregoing (and any agency, department, commission, board, bureau,
court or other tribunal having jurisdiction over any Obligor, the Borrower, any
Transferring Affiliate or any of their respective property) relating to
environmental matters in any jurisdiction where any Obligor, any Transferring
Affiliate or the Borrower owns, leases or operates its property or under federal
law .
Environmental Site Assessment: A Phase I environmental site
assessment and testing report prepared according to ASTM standards which
presents a description of the subject real property, its location, surroundings,
use, proposed use and any associated environmental issues and problems, or such
further environmental audit and testing report as shall be recommended in the
Phase I environmental site assessment and testing report from time to time,
conducted by an Environmental Site Assessment Firm.
Environmental Site Assessment Firm: Any of the environmental
audit firms listed on Exhibit M hereto, and any other environmental audit firm
of national standing which specializes in environmental audits and inspections
which firms shall from time to time be approved in writing by the Deal Agent.
ERISA: The Employee Retirement Income Security Act of 1974, as
it may be amended from time to time and the regulations promulgated thereunder.
Eurodollar Disruption Event: With respect to any day occurring
in any Yield Period, any of the following: (a) a determination by any Liquidity
Lender on such day that it would be contrary to law or to the directive of any
central bank or other governmental authority (whether or not having the force of
law) to obtain United States Dollars in the London interbank market to make,
fund or maintain any Liquidity Loan during such Yield Period, (b) a
determination by any Liquidity Lender on such day that the rate at which
deposits of United States Dollars are being offered to such Liquidity Lender in
the London interbank market does not accurately reflect the cost to such
Liquidity Lender of making, funding or maintaining any Liquidity Loan during
such Yield Period or (c) the inability of any Liquidity Leader on such day to
obtain United States Dollars in the London interbank market to make, fund or
maintain any Liquidity Loan to be made by it during such Yield Period.
Event of Bankruptcy: With respect to any specified Person, the
occurrence of any of the following events:
(a)......a case or other proceeding shall be commenced,
without the application or consent of such Person, in any court, seeking the
liquidation, reorganization, debt arrangement, dissolution, winding up, or
composition or readjustment of debts of such Person, the appointment of a
trustee, receiver, custodian, liquidator, assignee, sequestrator or the like for
such Person or any substantial part of its assets, or any similar action with
respect to such Person under any law (foreign or domestic) relating to
bankruptcy, insolvency, reorganization, winding up or composition or adjustment
of debts, and such case or proceeding shall continue undismissed, or unstayed
and in effect, for a period of 60 days or an order for relief in respect of such
Person shall be entered in an involuntary case under the federal bankruptcy laws
or other similar laws (foreign or domestic) now or hereafter in effect; or
(b)......such Person shall commence a voluntary case or other
proceeding under any applicable bankruptcy, insolvency, reorganization, debt
arrangement, dissolution or other similar law now or hereafter in effect, or
shall consent to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or other similar
official) for, such Person or for any substantial part of its property, or shall
make any general assignment for the benefit of creditors, or shall fail to, or
admit in writing its inability to, pay its debts generally as they become due.
Facility Maturity Date: The earliest of (i) the Termination
Date, (ii) the Scheduled Facility Maturity Date, (iii) the third anniversary of
the Scheduled Commitment Termination Date and (iv) the third anniversary of any
borrowing by the Lender under the Liquidity Agreement to fund an Advance to the
Borrower, if such borrowing shall remain outstanding as of such third
anniversary.
FCCR: The "fixed charge coverage ratio" (i) as to any
calculation at the Obligor level is the ratio of (a) the Obligor's Cash Flow for
the trailing twelve months, to (b) the Obligor's Fixed Charges for such period,
and (ii) as to any calculation at the Unit level is the ratio of (x) the Unit's
Cash Flow for the trailing twelve months, to (y) the Unit's Fixed Charges for
such period.
Fee Letter: The fee letter agreement dated as of the date
hereof, among the Borrower, the Servicer, the Lender and the Deal Agent, as the
same may be amended, restated, supplemented or otherwise modified from time to
time.
Fee Simple Loan: Any Franchise Loan secured by a first
priority perfected security interest in, or lien on, the Obligor's (or that of
any Affiliate of the Obligor) fee simple ownership interest in the land and
building on which the related Unit will be located.
Final Transaction Summary: A final transaction summary for
each Franchise Receivable and each that is the subject of a proposed Advance, in
substantially the form of Exhibit A-1.
Fixed Charges: As to any Obligor or Unit, all of such
Obligor's or Unit's annual payments (principal and interest) due on (i) all
loans, (ii) capital lease obligations and (iii) operating leases or rent.
Franchise Lease:
(a)......all obligations of an Obligor under a lease entered
into in connection with a Unit, including the right to payment of any rent,
interest or finance charges and other obligations of such Obligor with respect
thereto;
(b)......the Real Property which is the subject of such lease,
together with all security interests in, or other liens on, any other property
securing or purporting to secure the Obligor's obligations in respect of such
lease;
(c)......all guarantees, indemnities and warranties and
proceeds thereof, proceeds of insurance policies, financing statements and other
agreements or arrangements of whatever character from time to time supporting or
securing payment of such obligations and all other Obligor Documents and Basic
Documents relating to such lease;
(d)......all right, title and interest of the Borrower or any
Affiliate of the Borrower in, to and under any related franchise agreements;
(e)......all Collections with respect to any of the foregoing;
and
(f)......all Proceeds with respect to any of the foregoing;
provided, that no Franchise Lease may relate to more than one Unit.
Franchise Loan:
(a)......indebtedness of an Obligor arising in connection with
one or more Units, including the right to payment of any interest or finance
charges and other obligations of such Obligor with respect thereto;
(b)......all security interests in, or liens on, any property
(whether real or personal) securing or purporting to secure payment by the
Obligor;
(c)......all guarantees, indemnities and warranties and
proceeds thereof, proceeds of insurance policies, financing statements and other
agreements or arrangements of whatever character from time to time supporting or
securing payment of such indebtedness and all other Obligor Documents and Basic
Documents relating to such indebtedness;
(d)......all right, title and interest of the Borrower and any
Affiliate of the Borrower in, to and under any related franchise agreements;
(e)......all Collections with respect to any of the foregoing;
and
(f)......all Proceeds with respect to any of the foregoing;
provided, that any Franchise Loan may relate to one or more Units.
Franchise Receivable: A Franchise Lease or a Franchise Loan.
Franchise Receivable Assignment: The instrument of assignment
of Pledged Receivables from a Transferring Affiliate to the Borrower in
substantially the form of Exhibit P-1 for Franchise Loans and Exhibit P-2 for
Franchise Leases.
Funding Date: Each day on which an Advance is made.
Funding Request: A Borrower Notice requesting an Advance and
including the items required by Section 2.2.
GAAP: Generally accepted accounting principles as in effect in
the United States, consistently applied, as of the date of such application.
Governmental Authority: The United States of America, any
state, local or other political division thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions thereof
or pertaining thereto.
Ground Lease Loan: Any Franchise Loan secured by a first
priority perfected security interest in, or lien on, the Obligor's ownership of
the building in which the related Unit is located and its rights as lessee of
the property on which such building is situated.
Hedge Counterparty: An entity acceptable to the Deal Agent (i)
whose commercial paper or short-term deposit rating is, at the time it enters
into a Hedging Instrument with the Borrower, at least D-1 by DCR (if rated by
DCR) and at least A-1 by S&P and, if rated by Moody's at least P by Moody's (ii)
which shall have, at the time it enters into a Hedging Instrument with the
Borrower, a long-term unsecured debt rating of at least A by S&P, and (iii)
which has entered into a Hedging Instrument.
Hedging Instrument: Any interest rate swap agreement, interest
rate cap agreement, interest rate floor agreement, interest rate collar
agreement or other interest rate hedging instrument or agreement acceptable to
the Deal Agent and entered into by the Borrower with a Hedge Counterparty, with
payment dates to Borrower no less frequently than quarterly.
Income Taxes: Any federal, state, local or foreign taxes based
upon, measured by, or imposed upon gross or net income, gross or net receipts,
capital, net worth, or the privilege of doing business, including without
limitation franchise taxes, and any minimum taxes or withholding taxes based
upon any of the foregoing, including any penalties, interest or additions to tax
imposed with respect thereto.
Indemnified Amounts: As defined in Section 11.1(a).
Indemnified Party: As defined in Section 11.1(a).
Ineligible Receivable: As defined in Section 8.7.
Investments: With respect to any Borrower Account Collateral,
the certificates, instruments or other Eligible Investments in which amounts
credited to the accounts included in the Borrower Account Collateral are
invested from time to time.
IRC: The U.S. Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.
Lender: Neptune, together with its successors and assigns.
Lien: With respect to any item of property, (a) any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind, whether
voluntarily incurred or arising by operation of law or otherwise, in respect of
such property or (b) the interest of a vendor or lessor under any conditional
sale agreement, financing lease or other title retention agreement relating to
such property.
Liquidity Agreement: The Liquidity Agreement dated as of
October 14, 1999, among Neptune, Rabobank, as the Liquidity Agent for the
Liquidity Lenders, and the Liquidity Lenders from time to time parties thereto,
as the same may be amended, restated, supplemented or otherwise modified from
time to time.
Liquidity Lender: Any financial institution from time to time
party to the Liquidity Agreement as a "Lender" thereunder.
Liquidity Loan: An "Advance" under (and as defined in) the
Liquidity Agreement.
Loans: Any indebtedness, including Advances, evidenced by the
Note and issued by the Borrower to an Affected Party.
Lockbox: A post office box to which Collections are remitted.
Lockbox Account: A depository account, lockbox account or
similar account in which any Collections are collected or deposited, which
account shall be in the name of "CNL Financial Services, LP, as servicer."
Lockbox Account Bank: Any bank or other financial institution
at which a Lockbox Account has been established.
Lockbox Agreement: An agreement among a Lockbox Account Bank,
the Servicer and the Deal Agent in form and substance satisfactory to the Deal
Agent and the other parties thereto.
LTV Ratio: With respect to any Franchise Receivable, a
fraction, expressed as a percentage, the numerator of which is the Receivable
Basis of such Franchise Receivable, and the denominator of which is (i) in the
case of a Franchise Lease, the Appraised Value of the Real Property which is the
subject of such Franchise Lease and (ii) in the case of a Franchise Loan, the
Appraised Value of the collateral securing such Franchise Loan. The Appraised
Value of any such property shall be determined as of a date on or about the date
on which the relevant Franchise Receivable was originated.
Material Adverse Effect: A material adverse effect on (i) the
financial condition, business or operations of the Borrower, the Servicer or any
Transferring Affiliate, (ii) the ability of the Borrower, the Servicer or any
Transferring Affiliate to perform its obligations under any Basic Document,
(iii) the legality, validity or enforceability of any Basic Document, (iv) the
Borrower's or the Collateral Agent's interest in the Collateral generally or in
any significant portion of the Collateral or the perfection or validity of any
such interest, (v) the collectibility of the Franchise Receivables included in
the Collateral generally or of any material portion of such Franchise
Receivables or (vi) the value of the Real Property included in the Collateral
generally or any material portion of such Real Property.
Maximum Funded Collateral Amount: $172,900,000.
Maximum Lawful Rate: As defined in Section 2.7(c).
Monthly Report: A report in the form of Exhibit F with blanks
appropriately completed.
Moody's: Moody's Investors Services, Inc. and any successor
thereto.
Mortgage: Any mortgage, deed of trust, security agreement,
assignment of lease or rent, or other Lien or security interest granted in
respect of Real Property executed by (i) an Obligor or guarantor of an Obligor
to secure such Obligor's obligations under or with respect to any Franchise
Receivable or (ii) the Borrower to secure the payment of the Borrower Secured
Obligations.
Mortgage Assignment: A mortgage assignment forming part of the
Obligor Documents pursuant to which the Borrower shall make a collateral
assignment of a Mortgage to the Collateral Agent.
Note: As defined in Section 2.5(a).
Note Interest: For any Yield Period, the aggregate accrued and
unpaid Yield with respect to each Advance that was outstanding at any time
during such Yield Period.
Obligor: With respect to any Franchise Receivable, the Person
or Persons obligated to make payments with respect thereto, including any
guarantor thereof.
Obligor Documents: With respect to:
(a)......any Franchise Loan:
(i) the original promissory note (x) executed in favor of the
Borrower and endorsed by the Borrower in blank, or endorsed to
"COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK, B.A., NEW YORK
BRANCH, as Collateral Agent" and any note given in substitution
therefor or (y) executed in favor of an Affiliate of the Borrower and
endorsed by such Affiliate to the Borrower and endorsed by the Borrower
in blank, or endorsed by the Borrower to "COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK, B.A., NEW YORK BRANCH, as Collateral Agent"
and any note given in substitution therefor;
(ii) an original recorded Mortgage executed by the Obligor in
favor of the Borrower (or, if such Franchise Loan was originated by a
Transferring Affiliate, such Transferring Affiliate) securing the above
note; provided, that, in lieu of a recorded document, the Custodian may
accept a copy certified by the records office or an escrow or title
company, with the original to be delivered to the Custodian within 180
days of the date of delivery of the above note to the Custodian;
provided, further, that if within such 180 day period the original
recorded instrument cannot be delivered solely because of a delay
caused by the recording office to which such instrument was delivered
for recordation, the Borrower or the Servicer on behalf of the Borrower
shall deliver to the Custodian and the Deal Agent an Officer's
Certificate stating that such delay has occurred and shall use all
reasonable efforts to cause the original recorded instrument to be
delivered to the Custodian within one (1) year of the date of delivery
of the above note by the Borrower to the Custodian;
(iii) the original or a copy, certified by the records office
or an escrow or title company, of a Mortgage Assignment by the Borrower
to the Collateral Agent in recordable form, and the original or a copy,
certified by the records office or an escrow or title company, of a
properly recorded assignment or assignments of the related mortgage or
deed of trust from the original holder, through any subsequent
transferees, to the Borrower;
(iv) a copy of the executed franchise agreement(s) and
collateral assignment(s) thereof to the Borrower or the Transferring
Affiliate, as applicable, if permitted by franchisor, the executed
pre-franchise agreement, if any, or such other documentation evidencing
the franchisor's approval of the Obligor;
(v) evidence of the Appraised Value of the property securing
such Franchise Loan; (vi) evidence satisfactory to the Deal
Agent that (A) all legal and beneficial ownership of
such Franchise Loan is vested in the Borrower free and clear of any
Adverse Claims other than Permitted Liens (including, in the case of a
Franchise Loan originated by any Transferring Affiliate, a Franchise
Receivable Assignment duly executed and delivered by such Transferring
Affiliate) and (B) the Borrower has a first priority perfected security
interest in, and lien on, the property securing such Franchise Loan
including, without limitation, title insurance policies in form and
substance, and issued by title insurance companies, satisfactory to the
Deal Agent, and an assignment endorsement naming the Collateral Agent
as the insured and loss payee;
(vii) [Reserved.];
(viii) a copy of any guaranties;
(ix) if any of the above items were executed pursuant
to a power of attorney, a copy of such; and
(x) a list of any other documents in addition to items
(a)(i)-(ix) above relating to such Franchise Loan which are being
delivered to the Custodian;
(b)......any Franchise Lease:
(i) a copy of the original lease executed in favor of
the Borrower or a Transferring Affiliate;
(ii) an original recorded Mortgage in favor of the Collateral
Agent on the Real Property which is the subject of such Franchise
Lease; provided, that, in lieu of a recorded document, the Custodian
may accept a copy certified by the records office or an escrow or
title, with the original to be delivered to the Custodian within 180
days of the date of delivery of the above lease to the Custodian;
provided, further, that if within such 180 day period the original
recorded instrument cannot be delivered solely because of a delay
caused by the recording office to which such instrument was delivered
for recordation, the Borrower or the Servicer on behalf of the Borrower
shall deliver to the Custodian and the Deal Agent an Officer's
Certificate stating that such delay has occurred and shall use all
reasonable efforts to cause the original recorded instrument to be
delivered to the Custodian within one (1) year of the date of delivery
of the above note by the Borrower to the Custodian;
(iii) a copy of the executed franchise agreement(s), if any,
and such other documentation evidencing the franchisor's approval of
the Obligor, in each case in the franchisor's customary form, and any
other document creating a purchase option or right of first refusal in
the Obligor or any Affiliate thereof, together with, if thirty (30) or
more days have expired since the commencement of the term of such
Franchise Lease, a copy of a notice sent to such Obligor requesting an
estoppel letter in the form attached hereto as Exhibit H or such other
form as the Obligor is obligated to provide, if applicable, under the
Franchise Receivable;
(iv) evidence of the Appraised Value of the property which is
the subject of such Franchise Lease;
(v) evidence satisfactory to the Deal Agent that (A) all legal
and beneficial ownership of such Franchise Lease and the fee title to
the Real Property which is the subject of such Franchise Lease is
vested in the Borrower free and clear of any Adverse Claims or
Restrictions on Transferability other than Permitted Liens (including,
if such Franchise Lease was originated by a Transferring Affiliate, a
Franchise Receivable Assignment duly executed and delivered by such
Transferring Affiliate) and (B) that the Collateral Agent has a first
priority perfected security interest in, and lien on, such Real
Property including, without limitation, title insurance policies or
commitments in form and substance, and issued by title insurance
companies, satisfactory to the Deal Agent, naming the Collateral Agent
as the insured;
(vi) a copy of any guaranties;
(vii) if any of the above items were executed pursuant to a
power of attorney, a copy of such; and
(viii) a list of any other documents in addition to items
(a)(i)-(viii) above relating to such Franchise Loan which are being
delivered to the Custodian;
(c)......in the case of any Franchise Receivable secured in
part by personal property, the following, as and to the extent applicable in
accordance with the terms of such Franchise Receivable:
(i) to the extent not covered above a copy of executed
security agreements relating to furnishings, fixtures, equipment and
other property securing such Franchise Receivable;
(ii) copies of all UCC filings with respect to furnishings,
fixtures, equipment and other property securing such Franchise
Receivable, the originals thereof to be delivered promptly to the
Custodian upon their return from filing offices; and
(iii) if any of the above items were executed pursuant to a
power of attorney, a copy of such; and
(d)......in the case of any Ground Lease Loans or Leasehold
Loans, copies of any landlord waivers and estoppel certificates.
Officer's Certificate: With respect to any Person, a
certificate of such Person signed on its behalf by the Chairman of the Board,
Chief Executive Officer, the President, a Vice President, the Treasurer, the
Secretary, or any other duly authorized officer of such Person acceptable to the
Deal Agent.
Optional Prepayment of Advances: The option of the Borrower to
repay an Advance pursuant to a Borrower Notice and in accordance with Section
2.6.
Optional Repayment Amount: The principal amount (not less than
$1,000,000) of any Optional Prepayment of Advances, plus the interest accrued on
such principal amount through the prepayment date, as set forth in any Borrower
Notice.
Other Costs: As defined in Section 12.3(a).
Parent: CNL American Properties Fund, Inc., a Maryland
corporation, and any successor thereto.
Payment Date: The 20th day of each month or, if such day is
not a Business Day, the next succeeding Business Day, commencing the 20th day of
the month after the month in which the Closing Date occurs. The Termination Date
and the Facility Maturity Date shall each be deemed to be a Payment Date whether
or not they occur on the 20th day of a month.
Permitted Liens:
(i) any Lien (A) granted by an Obligor in favor of a
Transferring Affiliate, which Lien shall have been assigned by such
Transferring Affiliate to the Borrower in accordance with a Franchise
Receivable Assignment and further assigned by the Borrower to the
Collateral Agent in accordance with this Agreement, (B) granted by an
Obligor in favor of the Borrower, which Lien shall have been assigned
by the Borrower to the Collateral Agent in accordance with this
Agreement, or (C) granted by the Borrower in favor of the Collateral
Agent or the Custodian in accordance with this Agreement;
(ii) inchoate Liens with respect to the payment of taxes,
assessments or governmental charges or claims either not yet due, or
which are being contested in good faith by appropriate proceedings and
with respect to which adequate reserves or other appropriate provisions
are being maintained, to the extent appropriate;
(iii) Liens of landlords and Liens of suppliers, mechanics,
carriers, materialmen, warehousemen or workmen and other Liens imposed
by law created in the ordinary course of business for amounts either
not yet due, or which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves or other
appropriate provisions are being maintained, to the extent appropriate;
(iv) zoning restrictions, easements, licenses, reservations,
covenants, rights-of-way, utility easements, building restrictions and
other similar charges or encumbrances on the use of Real Property which
do not materially interfere with the ordinary conduct of the business
of the relevant Obligor or the Borrower, as the case may be, and which
do not materially adversely affect the value of such Real Property and
are acceptable to lending institutions generally;
(v) subordinate Liens identified in any title insurance
policies issued with respect to any Real Property securing payment on a
Franchise Loan or which is the subject of a Franchise Lease, so long as
such title insurance policies insure that (A) in the case of a
Franchise Loan, the Mortgage in favor of the Borrower (and its
successors and assigns) is senior to such Lien and (B) in the case of a
Franchise Lease, the Mortgage in favor of the Collateral Agent is
senior to such Lien; and
(vi) any purchase option or right of first refusal which an
Obligor of a Franchise Lease or its Affiliate may have under such
Franchise Lease or another document, or any other rights of the Obligor
under such Franchise Lease.
Person: An individual, partnership, corporation, including a
business trust, limited liability company, joint stock company, trust,
unincorporated association, sole proprietorship, joint venture, Governmental
Authority or any other entity of whatever nature.
Pledged Receivable: Each Franchise Receivable identified on
Schedule 1, together with any other Franchise Receivables identified by the
Borrower in a Pledged Receivable Supplement pursuant to Section 2.2(g);
provided, that no Franchise Loan may constitute a Pledged Receivable hereunder
until the Deal Agent has specifically confirmed in writing to the Borrower,
mentioning this definition of "Pledged Receivable," that it has received
satisfactory evidence that compliance with this Agreement and the other Basic
Documents is sufficient to establish Lender's first priority perfected security
interest in promissory notes evidencing Franchise Loans.
Pledged Receivable Supplement. As defined in Section 2.2(g).
Proceeds: With respect to any Collateral, whatever is
receivable or received upon the sale, lease, license, exchange, collection,
liquidation, or foreclosure or other disposition of such Collateral, whether
such disposition is voluntary or involuntary, and including any and all proceeds
of any insurance, indemnity, warranty or guaranty payable in respect of any such
Collateral.
Program Amount: An amount equal to $147,000,000; provided,
that the Program Amount may be adjusted from time to time pursuant to Section
2.3, further provided, that after the Commitment Termination Date, the Program
Amount shall be zero.
Rabobank: Cooperatieve Centrale Raiffeisen-Boerenleenbank,
B.A., "Rabobank International", New York Branch, and any successor thereto.
Rating Agency: Each of DCR and S&P.
Real Property: Any real property consisting of a land lot
and/or any building and related improvements thereon.
Receivable Basis: At any time (i) with respect to any
Franchise Loan, the outstanding principal amount thereof at such time and (ii)
with respect to any Franchise Lease, the Rent Cost Basis thereof at such time;
provided, that upon the expiration of 30 days after termination of a Franchise
Lease (whether such termination occurs by reason of a default by the Obligor or
for any other reason) the Receivable Basis of such Franchise Lease shall be
equal to zero.
Records: With respect to any Franchise Receivable, all
documents, books, records and other information (including, without limitation,
computer programs, tapes, disks, data processing software and related property
and rights) prepared and maintained by the Servicer, the Borrower or any
Transferring Affiliate with respect to such Franchise Receivable and the related
Obligors, other than the Obligor Documents.
Receivable Yield: With respect to (i) any Franchise Loan, the
rate per annum at which interest accrues on the Receivable Basis thereof, as
specified in the note evidencing such Franchise Loan and (ii) any Franchise
Lease, the annual rent payments payable by the Obligor under such Franchise
Lease, expressed as a percentage of the Receivable Basis of such Franchise
Lease.
Regulatory Change: Any change after the Closing Date in
federal, state or foreign law or regulations (including, without limitation,
Regulation D of the Federal Reserve Board) or the adoption or making after such
date of any interpretation, judgement, directive or request applying to any
Affected Party under any federal, state or foreign law or regulations (whether
or not having the force of law) by any Governmental Authority charged with the
interpretation or administration thereof.
Release Request: As defined in Section 8.6(a).
Rent Cost Basis: With respect to any Franchise Lease, the full
cost incurred by the Borrower (or, if such Franchise Lease was originated by a
Transferring Affiliate of the Borrower, by such Transferring Affiliate) to
acquire fee title to such Real Property, and shown as the "rent cost basis" in
Borrower's internal property records. By way of description and not of
limitation, the term "Rent Cost Basis" may include any or all of the following:
(a) with respect to Real Property which is fully constructed and operating at
the time of Borrower's (or Transferring Affiliate's) acquisition thereof, the
purchase price of such Real Property, or, with respect to Real Property which is
not fully constructed at the time of Borrower's (or Transferring Affiliate's)
acquisition thereof, the total of the actual cost of the land plus Borrower's
approved "hard" construction costs and "soft" costs for the improvements; (b)
all Borrower (or Transferring Affiliate) approved closing costs incurred by
Obligor, including title insurance premiums, transfer taxes or stamps, survey
costs and recording fees; (c) all closing and acquisition costs, which may
include appraisal fees, environmental audits, closing fees, legal fees, travel
and lodging expenses related to the physical inspection of the property by a
Borrower representative, and related miscellaneous out-of-pocket expenses of
Borrower.
Report Date: The 10th day of each month or, if such day is not
a Business Day, the next succeeding Business Day.
Restrictions on Transferability: Any material condition to, or
restriction on, the ability of the holder or an assignee of the holder of any
right, title or interest in any property to sell, assign, transfer or otherwise
liquidate such right, title or interest in a commercially reasonable time and
manner or which would otherwise materially deprive the holder or any assignee of
the holder of the benefits thereof, provided, however, that any restriction
included in a franchisor's customary franchise agreement shall not be deemed a
Restriction on Transferability.
Revolving Period: The period commencing on the Closing Date
and ending on the day immediately prior to the Commitment Termination Date.
S&P: Standard & Poor's, a division of The McGraw-Hill
Companies, Inc., and any successor thereto.
Schedule of Payments: For any Franchise Receivable, the
schedule of payments disclosed in, or required under the terms of, such
Franchise Receivable.
Scheduled Commitment Termination Date: October 10, 2000 as
such date may be extended by the Lender in its sole discretion in accordance
with Section 2.1(b).
Scheduled Facility Maturity Date: The fifth year anniversary
of the Closing Date.
Scheduled Payment: For any Franchise Receivable, the periodic
installment payment or rent amount disclosed in the Schedule of Payments for
such Franchise Receivable.
Secured Parties: The Lender, the Deal Agent, the Collateral
Agent, the Hedge Counterparties, the Custodian, all other Indemnified Parties
and their respective successors and assigns.
Servicer: CNL Financial Services, LP, or any Person designated
as Successor Servicer, and its successors and permitted assigns from time to
time hereunder.
Servicer Event of Default: As defined in Section 9.2.
Servicer Termination Notice: A notice by the Deal Agent to the
Servicer that a Servicer Event of Default has occurred and that the Servicer's
appointment hereunder has been terminated.
Servicing Fee: The Servicing Fee set forth in the Fee Letter.
Servicing Records: All Records prepared and maintained by the
Servicer.
Subordinated Debt: Any debt of the Borrower which is
subordinated in right of payment to the obligations of the Borrower under this
Agreement.
Sub-Servicer: Any Person with whom the Servicer enters into a
Sub-Servicing Agreement.
Sub-Servicing Agreement: Any written contract between the
Servicer and any Sub-Servicer, relating to servicing, administration or
collection of Eligible Receivables as provided in Section 7.1, in such form as
has been approved in writing by the Servicer and the Deal Agent.
Subsidiary: As to any Person, any corporation or other entity
of which securities or other ownership interests having ordinary voting power to
elect a majority of the Board of Directors or other Persons performing similar
functions are at the time directly or indirectly owned or controlled by such
Person.
Successor Servicer: As defined in Exhibit I.
Successor Servicing Fees and Expenses: The fees and expenses
payable by the Borrower to the Successor Servicer, as agreed to by the Borrower,
the Lender and the Deal Agent.
Taxes: Any and all present or future taxes, levies, imposts,
deductions, charges or withholdings (including all liabilities with respect
thereto) that are imposed by any government or other taxing authority.
Termination Date: The date so designated pursuant to Section
9.1 as a result of a Termination Event.
Termination Event: As defined in Section 9.1.
Tier: A classification of Approved Concepts by relative
strength. The strongest Approved Concepts shall be in Tier I and the least
credit-worthy Approved Concepts shall be in Tier IV. The Approved Concepts in
each Tier shall be specified in Schedule 2 hereto as revised from time to time
with the written approval of the Deal Agent.
Transfer Request: As defined in Section 8.5(a).
Transferring Affiliate: An Affiliate of the Borrower that has
been approved in writing by the Deal Agent. CNL American Properties Fund, Inc.
shall be deemed to have been approved as a Transferring Affiliate.
UCC: The Uniform Commercial Code as from time to time in
effect in the specified jurisdiction.
Unit: A restaurant unit which is the subject of a franchise
agreement or is operated by a Company Obligor.
Yield: For each Yield Period and any Advances outstanding
during such Yield Period (or portion thereof), the sum of the products
(determined daily for each Advance which is outstanding on any day during such
Yield Period) of:
<TABLE>
<CAPTION>
YR x C x 1/360
<S> <C>
where:
YR = the Yield Rate on such day applicable to such Advance;
and
C = the amount of such Advance.
</TABLE>
Yield Period: For any Payment Date, the period beginning with
and including the day next following the end of the preceding Yield Period and
ending on and including such Payment Date, except that in the case of the first
Yield Period, such Yield Period shall be the period beginning with and including
the Effective Date and ending on and including the first Payment Date.
Yield Rate: For each day in a Yield Period on which an Advance
is outstanding: (i) to the extent such Advance is funded through the issuance of
commercial paper, a rate equal to the CP Rate for such day, and (ii) to the
extent such Advance is funded through a "LIBO Rate Advance" or a "Base Rate
Advance" under and as such terms are defined in the Liquidity Agreement, the sum
of the Applicable Margin and, with respect to such LIBO Rate Advance, the
Adjusted LIBO Rate (as defined in the Liquidity Agreement) in effect for such
day, or, with respect to such Base Rate Advance, the Base Rate (as defined in
the Liquidity Agreement) in effect for such day. References in this Agreement to
the Liquidity Agreement and the terms contained therein refer specifically to
the Liquidity Agreement as in effect on the date of determination after giving
effect to all amendments and modifications thereto that have been approved by
the Borrower but without regard to any amendments or modifications thereto that
have not been approved by the Borrower.
SECTION 1.2.......Terms.
All accounting terms not specially defined herein shall be
construed in accordance with GAAP. All terms used in Article 9 of the UCC of the
State of New York, and not specifically defined herein, are used herein as
defined in such Article 9. All hourly references herein shall refer to New York
City time.
SECTION 1.3.......Incorporation.
Whenever this Agreement incorporates the provision in any of
the exhibits attached hereto, such provisions shall be deemed to be a part of
this Agreement as fully to all intents and purposes as though such provisions
had been set forth in full in this Agreement.
SECTION 1.4.......Interpretation.
Except as otherwise indicated, all agreements defined in this
Agreement refer to the same as from time to time amended or supplemented or as
the terms of such agreements are waived or modified in accordance with their
terms. The term "including" means "including without limitation"
ARTICLE II
ADVANCES
SECTION 2.1.......Advances.
(a)......The Borrower may from time to time, at its option,
request that the Lender make advances (each, an "Advance") to it during the
Revolving Period and the Lender shall, subject to the terms and conditions
hereinafter set forth, make each such Advance on a Funding Date.
(b)......The Borrower may, within 60 days, but no later than
45 days, prior to the Scheduled Commitment Termination Date, by written notice
to the Deal Agent, make written request for the Lender to extend the Scheduled
Commitment Termination Date. The Deal Agent will give prompt notice to the
Lender of its receipt of such request for extension of the Scheduled Commitment
Termination Date. The Lender shall make a determination, in its sole discretion,
within 30 days of the Deal Agent's receipt of such request for extension as to
whether or not it will agree to extend the Scheduled Commitment Termination
Date; provided, however, that the failure of the Lender to make a timely
response to the Borrower's request for extension of the Commitment Termination
Date shall be deemed to constitute a refusal by the Lender to extend the
Scheduled Commitment Termination Date.
SECTION 2.2.......Procedures for Advances.
(a)......In the case of each borrowing, repayment of an
Advance, termination, increase or reduction of the Program Amount, or Optional
Prepayments of Advances, the Borrower shall give the Deal Agent a Borrower
Notice. Each Borrower Notice shall specify the amount (subject to Section 2.1
hereof) of Advances to be borrowed or repaid and the Funding Date or repayment
date (which shall be a Business Day).
(b)......Subject to the conditions described herein, the
Borrower may request an Advance from the Lender by delivering to the Deal Agent
or the Collateral Agent, as applicable, at certain times the information and
documents set forth in this Section 2.2; provided, however, that such Advance,
when combined with all other Advances then outstanding, shall not exceed the
lesser of the Program Amount and the Borrowing Base.
(c)......No later than 10:00 a.m. (New York City time) three
(3) Business Days prior to the proposed Funding Date, the Borrower shall notify
the Deal Agent of the proposed Funding Date and shall deliver to the Deal Agent
a credit report and transaction summary for each Franchise Receivable to be
funded with the proceeds of the proposed Advance setting forth the credit
underwriting by the Borrower of such Franchise Receivable, including, without
limitation, a description of the Obligor and the terms of such Franchise
Receivable. By 5:00 p.m. (New York City time) on the next Business Day, the Deal
Agent shall use its reasonable efforts to confirm to the Borrower the receipt of
such items and whether it has reviewed such items and found them to be complete
and in proper form. If the Deal Agent makes a determination that the items are
incomplete or not in proper form, it will communicate such determination to the
Borrower. The Borrower will then take such steps as the Deal Agent determines to
be necessary to correct the problem(s). In the event of a delay in the actual
Funding Date due to the need to correct any such problems, the Funding Date
shall, subject to the satisfaction of the conditions set forth in Article III,
be the day that is two (2) Business Days after the day on which the Deal Agent
confirms to the Borrower that items are acceptable as submitted, or that the
problems have been corrected.
(d)......No later than 5:00 p.m. (New York City time) on the
Business Day prior to the proposed Funding Date, the Borrower shall deliver to
the Deal Agent the following:
(i) a Funding Request meeting the requirements set forth in
subsection (e) below; (ii) a Final Transaction Summary for
each Franchise Receivable to be funded with the
proceeds of the proposed Advance;
(iii) a disbursement and authorization form; and
(iv) a settlement agent's letter substantially in the form of
Exhibit B from outside counsel to the Borrower concerning its receipt
of certain documentation, and its transmission of certain documents to
title insurance companies relating to the funding of the Eligible
Receivable(s) related to such Advance.
A copy of item (iv) shall also be delivered to the Custodian.
(e)......Each Funding Request shall specify the aggregate
amount of the requested Advance, which shall be in an amount equal to $400,000
or increments of $1,000 in excess thereof. Each Funding Request shall be
accompanied by a report prepared by the Servicer, containing the same
information as provided in the form of the Monthly Report as of the times both
immediately before and immediately after the making of the requested Advance,
and representing that all conditions precedent for a funding have been met,
including a representation by the Borrower that the requested Advance would not
result in a Borrowing Excess.
(f)......On the Funding Date following the satisfaction of the
applicable conditions set forth in this Section 2.2 and Article III, the Deal
Agent, on behalf of the Lender, shall give the Borrower the confirmation number
of the wire transfer of immediately available funds sent by the Deal Agent to
the Borrower or its designee at the account specified in the Funding Request.
(g)......The Borrower may at any time add a new Franchise
Receivable to the Collateral by delivering a written notice to the Deal Agent in
the form attached hereto as Exhibit Q (a "Pledged Receivable Supplement"),
whereupon Schedule 1 shall automatically be deemed to have been amended to add
such new Franchise Receivable to the list of Pledged Receivables set forth
therein.
SECTION 2.3.......Reduction of the Program Amount.
The Borrower may, upon at least thirty (30) Business Days'
notice to the Deal Agent, terminate in whole or reduce in part the portion of
the Program Amount that exceeds the aggregate outstanding principal amount of
Advances; provided, that each partial reduction of the Program Amount shall not
be less than $5,000,000. Each notice of reduction or termination pursuant to
this Section 2.3 shall be irrevocable.
SECTION 2.4.......Liquidity Advances.
Prior to the occurrence of a Termination Event, the Lender
shall cause any Base Rate Advance under and as defined in the Liquidity
Agreement, the aggregate principal amount of which is at least $5,000,000, to be
converted to a LIBO Rate Advance under and as defined in the Liquidity Agreement
at the earliest available date for such conversion in accordance with the terms
thereof but not later than one month following the date of such Base Rate
Advance, unless a Eurodollar Disruption Event shall have occurred and be
continuing.
SECTION 2.5.......Note.
(a)......The Advances made by the Lender hereunder shall be
evidenced by a duly executed promissory note of the Borrower in substantially
the form of Exhibit C hereto (the "Note"). The Note shall be dated the initial
Funding Date and shall be duly completed. The Note shall be payable to the
Lender in a principal amount up to the Program Amount. The Advances evidenced by
the Note shall be payable as provided in Article VI.
(b)......The Deal Agent as agent for the Lender may, in its
discretion, enter on a schedule attached to the Note a notation (which may be
computer generated) with respect to each Advance made hereunder of: (i) the date
and principal amount thereof and (ii) each payment and repayment of principal
thereof. The failure of the Deal Agent to make any such notation on the schedule
to the Note shall not limit or otherwise affect the obligation of the Borrower
to repay the Advances in accordance with their respective terms as set forth
herein.
SECTION 2.6.......Repayments.
(a)......Notwithstanding any other provision to the contrary
appearing elsewhere in this Agreement, the aggregate outstanding principal
amount of all Advances shall be due and payable on the Facility Maturity Date.
The Advances shall be repaid as and when necessary, as set forth in Sections 6.3
and 6.4, to eliminate any Borrowing Excess.
(b)......Advances, including any Optional Prepayment of
Advances, may be repaid at any time and from time to time, in whole or in part,
upon ten (10) days' prior written notice to the Lender or such shorter period of
time as agreed to in writing by the Borrower and the Lender. No prior written
notice shall be required in the case of a repayment pursuant to Section 6.3. All
repayments of Advances or any portion thereof shall be not less than the
Optional Repayment Amount and shall be made together with payment of (i) all
Note Interest accrued on the amount repaid to (but excluding) the date of such
repayment, (ii) any Breakage Costs payable under Section 2.11, and (iii) any
loss, cost or expense relating to the early termination of any Hedging
Instrument related to any such Advance. Any amounts so repaid may, subject to
the terms and conditions hereof, be reborrowed hereunder during the Revolving
Period.
SECTION 2.7.......Interest.
(a)......The Borrower shall pay to the Lender, as set forth in
Section 6.4, the Note Interest on the unpaid principal amount of each Advance
for the period commencing on and including the Funding Date of such Advance
until but excluding the date such Advance shall be paid in full. Note Interest
shall not be considered paid by any distribution if at any time such
distribution is rescinded or must otherwise be returned for any reason.
(b)......Notwithstanding the foregoing, the Borrower shall pay
interest on the unpaid Note Interest, on any Advance or any installment thereof,
and on any other amount payable by the Borrower hereunder (to the extent
permitted by law) that shall not be paid in full when due (whether at stated
maturity, by acceleration or otherwise) for the period commencing on the due
date thereof to (but excluding) the date the same is paid in full at a rate per
annum equal to the Base Rate (as defined in the Liquidity Agreement) plus 2%.
(c)......Anything in the Basic Documents to the contrary
notwithstanding, if at any time the rate of interest payable by any Person under
the Basic Documents exceeds the highest rate of interest permissible under any
applicable law (the "Maximum Lawful Rate"), then, so long as the Maximum Lawful
Rate would be exceeded, the rate of interest under such Basic Document shall be
equal to the Maximum Lawful Rate. If at any time thereafter the rate of interest
payable under such Basic Document is less than the Maximum Lawful Rate, such
Person shall continue to pay interest under such Basic Document at the Maximum
Lawful Rate until such time as the total Note Interest received from such Person
is equal to the total interest that would have been received had the applicable
law not limited the interest rate payable under such Basic Document. In no event
shall the total interest received by the Lender under the Basic Documents exceed
the amount which the Lender could lawfully have received, had the interest due
under such Basic Documents been calculated since the Closing Date at the Maximum
Lawful Rate.
SECTION 2.8.......Fees.
(a)......On each Payment Date, the Servicing Fee shall be paid
to the Servicer, and the Successor Servicing Fees and Expenses shall be paid to
the Successor Servicer, out of Collections available for such purpose pursuant
to Section 6.4.
(b)......On the Closing Date, the Borrower shall pay the Deal
Agent all fees required to be paid to the Deal Agent pursuant to the terms and
provisions of the Fee Letter.
SECTION 2.9.......Time and Method of Payments.
Subject to the provisions of Sections 6.3 and 6.4, all
payments of principal, Note Interest, fees and other amounts (including
indemnities) payable by the Borrower hereunder shall be made in Dollars, in
immediately available funds, to the Deal Agent not later than 11:00 a.m. (New
York City time) on each Payment Date. On each Payment Date amounts on deposit in
the Collection Account shall be withdrawn to make required payments in
accordance with Section 6.4. Any such payment made on such date but after such
time shall, if the amount paid bears interest, be deemed to have been made on,
and interest shall continue to accrue and be payable thereon until, the next
succeeding Business Day. If any payment of principal or Note Interest becomes
due on a day other than a Business Day, such payment may be made on the next
succeeding Business Day and such extension shall be included in computing
interest in connection with such payment. All payments hereunder and under the
Note shall be made without setoff or counterclaim 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 Note. Upon payment
in full of the Note, following the Facility Maturity Date, the Deal Agent as
agent for the Lender shall mark the Note "paid" and return it to the Borrower.
SECTION 2.10......Additional Costs; Capital Requirements.
(a)......In the event that any existing or future law,
regulation or guideline, or interpretation thereof, by any court or
administrative or governmental authority charged with the administration
thereof, or compliance by any Affected Party with any request or directive
(whether or not having the force of law) of any such authority shall impose,
modify or deem applicable or result in the application of, any capital
maintenance, capital ratio or similar requirement against commitments made by
any Affected Party under this Agreement, the Liquidity Agreement or any of the
program documents relating to the issuance of the Lender's commercial paper
notes funding any Advances, and the result of any event referred to above is to
impose upon any Affected Party or increase any capital requirement applicable as
a result of the making or maintenance of such Affected Party's commitment under
this Agreement, the Liquidity Agreement or such other program document (which
imposition of capital requirements may be determined by each Affected Party's
reasonable allocation of the aggregate of such capital increases or
impositions), then, upon demand made by the Deal Agent on behalf of such
Affected Party as promptly as practicable after it obtains knowledge that such
law, regulation, guideline, interpretation, request or directive exists and
determines to make such demand, the Borrower shall immediately pay to the Deal
Agent for the benefit of such Affected Party from time to time as specified by
the Deal Agent additional amounts which shall be sufficient to compensate such
Affected Party for such imposition of or increase in capital requirements. A
certificate setting forth in reasonable detail the amount necessary to
compensate such Affected Party as a result of an imposition of or increase in
capital requirements submitted by the Deal Agent to the Borrower shall be
conclusive, absent manifest error, as to the amount thereof.
(b)......In the event that any Regulatory Change shall: (i)
change the basis of taxation of any amounts payable to any Affected Party in
respect of any Loans (other than taxes imposed on the net or taxable income of
such Affected Party by the United States of America or the jurisdiction in which
such Affected Party has its principal office); (ii) impose or modify any
reserve, Federal Deposit Insurance Corporation premium or assessment, special
deposit or similar requirements relating to any extensions of credit or other
assets of, or any deposits with or other liabilities of, such Affected Party; or
(iii) impose any other conditions affecting this Agreement in respect of Loans
(or any of such extensions of credit, assets, deposits or liabilities); and the
result of any event referred to in clause (i), (ii) or (iii) above shall be to
increase such Affected Party's costs of making or maintaining any Loans or its
commitments under any of the program documents relating to the issuance of the
Lender's commercial paper notes funding any Advances, or to reduce any amount
receivable by such Affected Party hereunder in respect of any of its Loans or
its commitment (such increases in costs and reductions in amounts receivable are
hereinafter referred to as "Additional Costs") then, upon demand made by the
Deal Agent for the benefit of such Affected Party, the Borrower shall pay to the
Deal Agent on behalf of such Affected Party, from time to time as specified by
the Deal Agent, additional commitment fees or other amounts which shall be
sufficient to compensate such Affected Party for such increased cost or
reduction in amounts receivable by such Affected Party from the date of such
change.
(c)......Determinations by any Affected Party for purposes of
this Section 2.10 of the effect of any Regulatory Change on its costs or on
amounts receivable by it, and of the additional amounts required to compensate
such Affected Party in respect of any Additional Costs, shall be set forth in a
written notice to the Borrower in reasonable detail and shall be conclusive,
absent manifest error.
SECTION 2.11......Breakage Costs.
The Borrower shall pay to the Deal Agent for the account of
the Lender, upon the request of the Deal Agent, such amount or amounts as shall
compensate the Lender for any loss, cost or expense incurred by the Lender (as
reasonably determined by the Deal Agent) as a result of (a) any failure of an
Advance to be made on the date requested by the Borrower in a Funding Request,
whether because the conditions precedent to such Advance shall not have been
satisfied as of such date or for any other reason other than default on the part
of the Lender and (b) any repayment of an Advance (and interest thereon) other
than (i) on a Payment Date or (ii) if such Advance is funded by a Liquidity
Loan, the maturity date of such Liquidity Loan, such compensation to include,
without limitation, any loss (not including loss of anticipated profits), cost
or expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by the Lender to fund or maintain such Advance or any loss
(not including loss of anticipated profits), cost or expense relating to the
Lender's anticipated interest income hereunder and its actual funding costs in
respect of its issued and outstanding commercial paper notes and any funding
obtained pursuant to the Liquidity Agreement (such loss, cost and expense to be
referred to as "Breakage Costs"). The determination by the Lender of the amount
of any such loss or expense shall be set forth in a written notice to the
Borrower in reasonable detail and shall be conclusive, absent manifest error.
SECTION 2.12......Taxes.
(a)......Any and all payments by the Borrower or the Servicer
hereunder shall be made free and clear of, and without deduction or withholding
for, any Taxes unless such deduction or withholding is required by law.
(b)......If any withholding or deduction from any payment to
be made by the Borrower or Servicer hereunder is required in respect of any
Taxes except for: (i) franchise taxes, (ii) any taxes (other than withholding
taxes) that would not be imposed but for a connection between the Deal Agent or
the Lender and the jurisdiction imposing such taxes (other than a connection
arising solely by virtue of the activities of the Deal Agent or the Lender
pursuant to or in respect of this Agreement or any other Basic Document), (iii)
any withholding taxes payable with respect to payments hereunder or under any
other Basic Document under applicable law in effect on the Closing Date, (iv)
any taxes imposed on or measured by the Lender's assets, net income, receipts or
branch profits, (v) any taxes arising after the Closing Date solely as a result
of or attributable to the Lender changing its designated lending office after
the Closing Date and (vi) any interest, fees, additional taxes or penalties
relating to any of the items described in the preceding clauses (i) through (v)
(all such non-excluded Taxes being "Covered Taxes"), then the Borrower will:
(i) pay directly to the relevant Governmental Authority
the full amount required to be so withheld or deducted;
(ii) promptly forward to the Deal Agent an official receipt or
other documentation satisfactory to the Deal Agent evidencing such
payment to such Governmental Authority; and
(iii) pay to the Deal Agent for the account of the Lender such
additional amount or amounts as is necessary to ensure that the net
amount actually received by the Lender will equal the full amount that
the Lender would have received had no such withholding or deduction
been required.
(c)......Tax Indemnification. The Borrower will indemnify the
Lender and the Deal Agent for the full amount of Covered Taxes (including,
without limitation, any Covered Taxes imposed by any jurisdiction on amounts
payable under this section) paid by the Lender or the Deal Agent (as the case
may be) and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto; provided that the Lender or the Deal Agent,
as appropriate, making a demand for indemnity payment shall provide the Borrower
with a certificate from the relevant taxing authority or from a responsible
officer of the Lender or the Deal Agent stating or otherwise evidencing that the
Lender or the Deal Agent has made payment of such Covered Taxes and will provide
a copy of or extract from documentation, if available, furnished by such taxing
authority evidencing assertion or payment of such Covered Taxes. This
indemnification shall be made within ten days from the date the Lender or the
Deal Agent (as the case may be) makes written demand therefor.
(d)......If, in connection with an agreement or other document
providing liquidity support, credit enhancement or other similar support to the
Lender in connection with this Agreement or the funding or maintenance of
Advances hereunder, the Lender is required to compensate any Liquidity Lender
(either directly or through a participation) or any agent thereof in respect of
taxes imposed by any Governmental Authority under circumstances similar to those
described in this Section 2.12, then, provided that such agreement or document
limits the scope of the taxes for which compensation is required in the same
manner as Section 2.12(b) hereof and conditions such compensation on the
provision of forms as described in Section 2.12(e) hereof, thereby eliminating
all United States Federal backup withholding and withholding on payments by the
Lender to such Liquidity Lender, after demand by the Lender, the Borrower shall
pay to the Lender on the following Payment Date such additional amount or
amounts as may be necessary to reimburse the Lender for any amounts paid by it.
Such compensation shall not include any penalties or interest imposed by reason
of the Lender's failure to timely comply with any requirement to withhold taxes.
If payments by the Lender become subject to withholding tax under circumstances
that would require compensation from the Borrower under this section, the Lender
shall use commercially reasonable efforts to avoid or mitigate the burden of
such tax, including efforts to procure a change in the identity or lending
office of the relevant Liquidity Lender.
(e)......Tax Forms: The Deal Agent or the Lender or its
assignee, as applicable, shall:
(i) in the case of the Lender or its assignee, deliver to the
Borrower and the Deal Agent prior to the date the Lender or its
assignee becomes a party hereto, (A) if such Person is a "United States
Person" (as such term is defined in IRC section 7701(a)(30)), a duly
completed United States Internal Revenue Service Form W-9 or successor
applicable form, or (B) if such Person is not a United States Person, a
duly completed United States Internal Revenue Service Form W-8BEN or
W-8ECI, as the case may be, or successor applicable form, thereby
eliminating all United States Federal backup withholding and
withholding on payments by the Borrower or Servicer to the Lender;
(ii) in the case of the Deal Agent or its assignee, deliver to
the Borrower on or before the first date required by the regulations
issued by the United States Treasury Department under IRC section 1441
pursuant to T.D. 8734 (the "New Regulations") or successor regulations,
if such Person is not a United States Person, and if the New
Regulations so require, a duly completed United States Internal Revenue
Service Form W-8IMY or successor applicable form;
(iii) in the case of any such Person, deliver to the Borrower
and the Deal Agent a further copy of such forms or other appropriate
certification of such forms on or before the date that any such form
expires or becomes obsolete and after the occurrence of any event
requiring a change in the most recent form delivered to the Borrower;
and
(iv) in the case of any such Person, renew such forms and
certifications thereof as may reasonably be requested by the Borrower
or the Deal Agent,
unless an event (including, without limitation, any change in treaty, law or
regulation) has occurred prior to the date on which any such delivery otherwise
would be required which renders all such forms inapplicable or which would
prevent such Person from duly completing and delivering any such form and such
Person so advises the Borrower and the Deal Agent.
For any period with respect to which such Person has failed to
provide the Borrower with the appropriate form, certificate or statement
described in this subsection (other than if such failure is due to a change in
law occurring after the date on which such form, certificate or statement
originally was required to be provided under this Agreement), such Person, shall
not be entitled to indemnification under clauses (b), (c) or (d) of this section
with respect to any Taxes until such forms are so provided and then only for
periods for which the Borrower may rely on such forms to reduce or eliminate
United States Federal backup withholding and withholding on payments to the Deal
Agent, the Lender, or assignees of either the Deal Agent or the Lender.
(f)......Without prejudice to the survival of any other
agreement of the Borrower hereunder, the agreements and obligations of the
Borrower contained in this section shall survive the termination of this
Agreement.
ARTICLE III
CONDITIONS TO LENDING
SECTION 3.1.......Conditions Precedent to Effectiveness of Agreement.
The effectiveness of this Agreement is subject to the
conditions precedent that the Deal Agent shall have received on or before the
Closing Date the following, in form and substance satisfactory to the Deal
Agent:
(a)......An executed copy of each Basic Document, each in a
form approved by the Deal Agent and evidence to the effect that all conditions
precedent to the effectiveness thereof shall have been satisfied;
(b)......A certificate from an officer of the Borrower in the
form of Exhibit E to the effect that the performance of this Agreement will not
render the Borrower insolvent and the Borrower will be able to remain
economically viable without further capital investments for the foreseeable
future;
(c)......With respect to the Borrower:
(i) the certificate of limited partnership of the Borrower
certified, as of a date no more than twenty (20) days prior to the
Closing Date, by the Secretary of State of its state of organization;
(ii) a certificate of existence or good standing, dated no
more than twenty (20) days prior to the Closing Date, from the
respective Secretary of State of its state of organization and the
primary state in which the Borrower conducts business and is required
to qualify, or represents that it is qualified, to do business;
(iii) a certificate of the Secretary of the general partner of
the Borrower certifying as of the Closing Date: (A) the names and true
signatures of the persons authorized on behalf of the Borrower to sign
this Agreement, (B) a copy of the Borrower's partnership agreement, and
(C) a copy of the resolutions of the corporate general partner(s) of
the Borrower approving the Basic Documents to which it is a party and
the transactions contemplated hereby and thereby; and
(d)......the Note shall have been duly executed and delivered
by the Borrower to the Deal Agent and shall be in full force and effect;
(e)......With respect to the Servicer:
(i) the certificate of limited partnership of the Servicer
certified, as of a date no more than twenty (20) days prior to the
Closing Date, by the Secretary of State of its state of organization;
(ii) a certificate of existence, dated no more than twenty
(20) days prior to the Closing Date, from the respective Secretary of
State of its state of organization and the primary state in which the
Servicer conducts business and is required to qualify, or represents
that it is qualified, to do business; and
(iii) a certificate of the Secretary of the general partner of
the Servicer certifying as of the Closing Date: (A) the names and true
signatures of the persons authorized on behalf of the Servicer to sign
this Agreement, (B) a copy of the Servicer's partnership agreement, and
(C) a copy of the resolutions of the partners of the Servicer approving
the Basic Documents to which it is a party and the transactions
contemplated hereby and thereby;
(iv) Certified copies of requests for information or copies on
form UCC-11 (or a similar search report certified by a party acceptable
to the Deal Agent), dated a date no more than thirty (30) days prior to
the Closing Date listing all effective financing statements and other
similar instruments and documents which name the Borrower or any
Transferring Affiliate (under its present name and any previous name)
as debtor, together with copies of such financing statements;
(f)......Any necessary third party (including any Governmental
Authority) consents to the closing of the transactions contemplated by this
Agreement on behalf of the Borrower or Servicer hereby, in form and substance
satisfactory to the Deal Agent;
(g)......Executed financing statements (form UCC-1), in
respect of the Collateral (1) with respect to each Transferring Affiliate,
naming such Transferring Affiliate as an assignor, the Borrower as the assignee
and the Collateral Agent as assignee of the Borrower, and (2) pursuant to
Article VIII, naming the Borrower as the debtor, and the Collateral Agent on
behalf of the Lender as secured party, or other, similar instruments or
documents, as may be necessary or, in the opinion of the Deal Agent, desirable
under the UCC of all appropriate jurisdictions or any other applicable law
(including the Assignment of Claims Act) to perfect the Collateral Agent's
interests in all Collateral in which an interest may be assigned hereunder;
(h)......The opinion of counsel to the Borrower, the Servicer
and the Transferring Affiliates in form and substance satisfactory to Deal
Agent;
(i)......Confirmation from S&P and DCR that the Lender's
commercial paper notes will continue to be rated at least A-1 by S&P and at
least D-1 by DCR after giving effect to the transactions contemplated by this
Agreement;
(j)......Fully executed copies of Lockbox Agreements covering
each Lockbox Account; and
(k)......Such other approvals, consents, opinions, documents
and instruments, as the Deal Agent may reasonably request.
SECTION 3.2.......Conditions Precedent to All Advances.
Each Advance (including the initial Advance) shall be subject
to the further conditions precedent that:
(a)......On the related Funding Date, the following statements
shall be true and the Borrower shall have certified in the related Borrower
Notice that such statements are true:
(i) The representations and warranties of the Borrower and the
Servicer set forth in Sections 4.1 and 4.2 are true and correct on and
as of such date, before and after giving effect to such borrowing and
to the application of the proceeds therefrom, as though made on and as
of such date;
(ii) No event has occurred, or would result from such Advance
or from the application of the proceeds therefrom, which constitutes a
Termination Event or which would, after the giving of notice or the
lapse of time, or both, constitute a Termination Event;
(iii) The Borrower is in material compliance with each of its
covenants set forth herein; and (iv) No event has occurred
which constitutes a Servicer Event of Default or which would,
after the giving of notice or the lapse of time, or both, constitute
a Servicer Event of Default; (b)......The Commitment
Termination Date shall not have occurred;
(c)......Before and after giving effect to such borrowing and
to the application of proceeds therefrom, there exists no Borrowing Excess;
(d)......Each Pledged Receivable is an Eligible Receivable;
and
(e)......The Borrower shall have delivered to the Deal Agent
the related Funding Request and such other items required to be delivered to the
Borrower pursuant to Section 2.2, and the Borrower and the Transferring
Affiliates shall have taken such other action, including delivery of approvals,
consents, opinions, documents and instruments to the Lender and the Deal Agent,
as the Deal Agent may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1.......Representations and Warranties of the Borrower.
The Borrower represents and warrants to the Deal Agent and the
Lender as of the date hereof, as of the Closing Date and on each subsequent
Funding Date as follows:
(a)......The Borrower is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has full power and authority and all licenses necessary to own its
properties and assets and to transact the business in which it is presently
engaged except for those licenses applied for but not yet obtained as set forth
on Schedule 5, except to the extent the failure to have any such license would
not have a Material Adverse Effect, and is duly qualified as a limited
partnership or a foreign limited partnership, as applicable, and is in good
standing under the laws of each other jurisdiction in which its business or
activities require such qualification and where a failure to be so qualified
would have a Material Adverse Effect.
(b)......The Borrower has the power and authority to own,
pledge, mortgage, operate and convey all of its properties, to conduct its
business as now conducted and to execute and deliver the Basic Documents and to
perform the transactions contemplated hereby and thereby.
(c)......The execution, delivery and performance by the
Borrower of the Basic Documents to which it is a party and the transactions
contemplated hereby and thereby (i) have been duly authorized by all necessary
partnership or other action on the part of the Borrower, (ii) do not contravene
or cause the Borrower to be in default under (A) the Borrower's certificate of
limited partnership or partnership agreement, (B) any contractual restriction
contained in any indenture, loan or credit agreement, lease, mortgage, security
agreement, bond, note, or other agreement or instrument binding on or affecting
the Borrower or its property or any Affiliate of the Borrower or its property,
or (C) any law, rule, regulation, order, license requirement, writ, judgment,
award, injunction, or decree applicable to, binding on or affecting the Borrower
or its property or any Affiliate of the Borrower or its property, and (iii) do
not result in or require the creation of any Adverse Claim upon or with respect
to any of the property of the Borrower or any Affiliate of the Borrower (other
than in favor of the Lender and the Collateral Agent as contemplated hereunder).
(d)......The Basic Documents to which the Borrower is a party
and that have been executed and delivered prior to the date this representation
is made or deemed to be made have each been duly executed and delivered by the
Borrower.
(e)......All Hedging Instruments required by Section 5.3 have
been entered into by Borrower, and all agreements and related documentation
required in connection with any such Hedging Instruments have been executed and
delivered by Borrower to the applicable Hedge Counterparties.
(f)......No consent of, notice to, filing with or permits,
qualifications or other action by any Governmental Authority or any other party
is required (i) for the due execution, delivery and performance by the Borrower
of the Basic Documents to which the Borrower is a party, (ii) for the perfection
of or the exercise by the Lender, any Hedge Counterparty, the Deal Agent or the
Collateral Agent of any of its rights or remedies hereunder or thereunder, (iii)
for the grant by the Borrower of the security interests granted under Section
8.1 of this Agreement, (iv) for the perfection of or the exercise by the Lender,
any Hedge Counterparty or the Collateral Agent of its rights and remedies
provided for in this Agreement, or (v) to ensure the legality, validity,
enforceability or admissibility into evidence of this Agreement in any
jurisdiction in which any of the Collateral is located, in each case other than
consents, notices, filings and other actions which have been obtained or made,
or have been applied for as disclosed on Schedule 5, but not yet obtained.
(g)......No transaction contemplated by this Agreement
requires compliance with any bulk sales act or similar law.
(h)......Each Basic Document to which the Borrower is a party
is the legal, valid and binding obligation of the Borrower enforceable against
the Borrower in accordance with its respective terms, subject to any applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting the enforceability of creditors'
rights generally and general equitable principles, whether applied in a
proceeding at law or in equity. Each of the Borrower Assigned Agreements to
which the Borrower or any Transferring Affiliate is a party constitutes the
legal, valid and binding obligation of such Person, enforceable against such
Person in accordance with its terms, subject to any applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to or affecting the enforceability of creditors' rights
generally and general equitable principles, whether applied in a proceeding at
law or in equity.
(i)......Except as disclosed to the Deal Agent on Exhibit D
hereto, there is no pending or, to its knowledge, threatened action, suit or
proceeding against or affecting the Borrower, its officers or managers, or the
property of the Borrower, in any court or tribunal, before any arbitrator of any
kind or before or by any Governmental Authority in which an adverse result could
reasonably be expected to produce a Material Adverse Effect on Borrower.
(j)......No injunction, writ, restraining order or other order
of any nature adverse to the Borrower or the conduct of its business or which is
inconsistent with the due consummation of the transactions contemplated by the
Basic Documents has been issued by a Governmental Authority, nor has Borrower
received written notice, except as disclosed in writing to the Deal Agent, that
any such injunction, writ or order has been sought by any Person.
(k)......The principal place of business and chief executive
office of the Borrower, and the office where the Borrower keeps its Records and
the original copies of the Borrower Assigned Agreements, is located at the
address of the Borrower for notices under Section 12.1 and as set forth on
Schedule 7, and there are currently no, and during the four months prior to the
Closing Date there have not been any, other locations where the Borrower is
located (as that term is used in the UCC of the jurisdiction where such
principal place of business is located) or keeps Records.
(l)......The Borrower does not have, and has never conducted
business using, trade names, fictitious names, assumed names or "doing business
as" names other than those set forth on Schedule 6.
(m)......For federal income tax, reporting and accounting
purposes, the Borrower will treat the assignment of each Pledged Receivable from
a Transferring Affiliate to the Borrower pursuant to a Franchise Receivable
Assignment as an absolute assignment of such Transferring Affiliate's full
right, title, and ownership interest in such Pledged Receivable to the Borrower,
and the Borrower has not in any other manner accounted for or treated the
transfers of such Pledged Receivables contemplated in any Franchise Receivable
Assignment.
(n)......The Borrower has complied and will comply in all
material respects with all applicable laws, rules, regulations, judgments,
agreements, decrees and orders with respect to its business and properties and
all Collateral including, without limitation, all Environmental Laws.
(o)......The Borrower has filed all tax returns (including,
without limitation, foreign, federal, state, local and other tax returns)
required to be filed, is not liable for taxes payable by any other Person and
has paid or made adequate provisions for the payment of all taxes, assessments
and, to its knowledge, other governmental, charges due from the Borrower arising
from such returns. No tax lien or similar Adverse Claim has been filed, and, to
its knowledge, no claim is being asserted, with respect to any such tax,
assessment or other governmental charge. Any taxes, fees and other governmental
charges payable by the Borrower or any of its Affiliates in connection with the
execution and delivery of the Basic Documents and the transactions contemplated
hereby or thereby have been paid or shall have been paid if and when due at or
prior to such Funding Date.
(p)......With respect to any Funding Date, the related
Borrower Notice is accurate in all material respects.
(q)......The Collateral and each part thereof is owned by the
Borrower free and clear of any Adverse Claim or Restrictions on Transferability
(other than Permitted Liens) and the Borrower has the full right, limited
partnership power and lawful authority to assign, transfer and pledge the same
and interests therein and all substitutions therefor and additions thereto
pursuant to Section 8.1 of this Agreement, and upon making each Advance, the
Collateral Agent on behalf of the Lender will have acquired a valid and
perfected first priority security interest in, and lien on, the Collateral, free
and clear of any Adverse Claim or Restrictions on Transferability other than
Permitted Liens. No effective financing statement, mortgage, deed of trust or
other instrument similar in effect covering all or any part of the Collateral is
on file in any recording office, except such as may have been filed in favor of
the Collateral Agent pursuant to Article VIII of this Agreement or, with respect
to the Pledged Receivables, in favor of the Borrower pursuant to a Franchise
Receivable Assignment.
(r)......All information heretofore furnished by or on behalf
of the Borrower to the Deal Agent, the Lender or any Hedge Counterparty in
connection with this Agreement or any transaction contemplated hereby is true
and complete in all material respects and does not misstate or omit to state a
material fact necessary to make the statements contained therein not misleading.
(s)......The Borrower is in compliance with ERISA and has not
incurred and does not expect to incur any liabilities (except for premium
payments arising in the ordinary course of business) to the Pension Benefit
Guaranty Corporation ("PBGC") (or any successor thereto) under ERISA.
(t)......(i) The Borrower is not a party to any indenture,
loan or credit agreement or any lease or other agreement or instrument or
subject to any limited restriction that could have, and no provision of
applicable law or governmental regulation is reasonably likely to have, in the
absence of a default thereunder, a Material Adverse Effect; and (ii) the
Borrower is not in default under or with respect to any contract, agreement,
lease or other instrument to which the Borrower is a party, which default is
reasonably likely to have a Material Adverse Effect;
(u)......The consolidated balance sheets of the Borrower and
its consolidated Subsidiaries as at December 31, 1998, and the related
statements of income of the Borrower and its consolidated Subsidiaries for the
fiscal year then ended, certified by the chief financial officer or chief
accounting officer of the Borrower, copies of which have been furnished by the
Borrower to the Deal Agent, fairly present in all material respects the
consolidated financial condition of the Borrower and its consolidated
Subsidiaries for the period ended on such date, all in accordance with GAAP, and
there has been no material adverse change in the condition (financial or
otherwise), business, operations, results of operations, or properties of the
Borrower since December 31, 1998.
(v)......The Borrower is not required to be registered as an
"investment company" or an "affiliated person" of, or "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 by the
Lender, the application of the proceeds and repayment thereof by the Borrower
and the consummation of the transactions contemplated by the Basic Documents to
which the Borrower is a party do not violate, solely with respect to the
Borrower, any provision of such Act or any rule, regulation or order issued by
the Securities and Exchange Commission thereunder.
(w)......Each of the representations and warranties of the
Borrower contained in the Basic Documents and the Hedging Instruments to which
the Borrower is a party and which have been executed and delivered prior to the
date this representation is made or deemed to be made is true and correct in all
material respects and the Borrower hereby makes each such representation and
warranty to, and for the benefit of, the Deal Agent, the Lender and each Hedge
Counterparty as if the same were set forth in full herein.
(x)......All Lockboxes and the Lockbox Accounts are set forth
in Schedule 4. Each such Lockbox and Lockbox Account is subject to a Lockbox
Agreement duly executed and delivered by the Borrower, the Servicer and the
applicable Lockbox Account Bank. Each Lockbox and Lockbox Account is held in the
name of "CNL Financial Services, LP, as servicer."
(y)......Each Pledged Receivable is an Eligible Receivable.
(z)......On the basis of a commercially reasonable review and
assessment undertaken by the Borrower of the Borrower's computer applications
and inquiry made of the Borrower's material suppliers, vendors and customers,
the Borrower reasonably believes that the "Year 2000 problem" (that is, the risk
that computer applications used by any Person may be unable to recognize and
perform properly date-sensitive functions involving certain dates prior to and
any date after December 31, 1999) will not result in a Material Adverse Effect
on Borrower or Servicer.
SECTION 4.2.......Representations and Warranties of the Servicer.
The Servicer represents and warrants to the Lender, the
Collateral Agent and the Deal Agent as follows as of the Closing Date and as of
each Funding Date:
(a)......The Servicer is a limited partnership duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization and is duly qualified to do business, and is in good standing, in
every jurisdiction in which the nature of its business requires it to be so
qualified, and where a failure to be so qualified would have a material adverse
effect upon the Servicer's ability to perform its obligations hereunder.
(b)......The Servicer has the power and authority to execute
and deliver this Agreement and the transactions contemplated hereby.
(c)......The execution, delivery and performance by the
Servicer of each Basic Document to which it is a party and the transactions
contemplated hereby (i) have been duly authorized by all necessary action on the
part of the Servicer; (ii) do not contravene or cause the Servicer to be in
default under (A) its agreement of limited partnership, (B) any contractual
restriction with respect to any Debt of the Servicer or contained in any
indenture, loan or credit agreement, lease, mortgage, security agreement, bond,
note or other agreement or instrument binding on or affecting it or its
property, or (C) any law, rule, regulation, order, writ, judgment, award,
injunction or decree binding on or affecting it or its property; and (iii) do
not result in or require the creation of any Adverse Claim upon or with respect
to any of its properties.
(d)......Each Basic Document to which it is a party has been
duly executed and delivered by the Servicer.
(e)......No consent of, notice to, filing with or permits,
qualifications or other action by any Governmental Authority or any other party
is required for the due execution, delivery and performance by the Servicer of
any Basic Document to which it is a party or any other agreement, document or
instrument to be delivered hereunder where a failure to so obtain or make such
consent, notice, filing, permit, qualification or other action would have a
material adverse effect upon the Servicer's ability to perform its obligations
hereunder, other than any consents, notices, permits, qualifications, filings or
other actions which have been obtained or made.
(f)......Each Basic Document to which it is a party is the
legal, valid and binding obligation of the Servicer enforceable against the
Servicer in accordance with its terms subject to any applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to or affecting the enforceability of creditors' rights
generally and general equitable principles, whether applied in a proceeding at
law or in equity.
(g)......Except as disclosed to the Deal Agent on Exhibit D
hereto, there is no pending or, to its knowledge, threatened action, suit,
investigation or proceeding of a material nature against or affecting the
Servicer, its members or managers, or the property of the Servicer, in any court
or tribunal, before any arbitrator of any kind or before or by any Governmental
Authority asserting the invalidity of any Basic Document to which it is a party
or any document to be delivered by the Servicer hereunder or thereunder, or any
order of any material nature adverse to the Servicer or the conduct of its
business or which is inconsistent with the due consummation of the transactions
contemplated by the Basic Documents and which has been issued by a Governmental
Authority or, to the knowledge of the Servicer, has been sought by any other
Person.
(h)......The Servicer has filed all tax returns (including,
without limitation, foreign, federal, state, local and other tax returns)
required to be filed by it and has paid or has made adequate provision for the
payment of all taxes, fees, assessments and other governmental charges due from
the Servicer arising under such tax returns, no tax lien or other similar
Adverse Claim has been filed, and no claim has been filed, and to its knowledge
no claim is being asserted, with respect to any such tax, fee, assessment or
other governmental charge. Any taxes, fees and other governmental charges
payable by the Servicer in connection with the transactions contemplated by the
Basic Documents and the execution and delivery of the Basic Documents have been
paid or shall have been paid at or prior to the Closing Date.
(i)......Each of the representations and warranties of the
Servicer contained in the Basic Documents is true and correct in all material
respects and the Servicer hereby makes each such representation and warranty
contained in the Basic Documents to, and for the benefit of, the Lender, each
Hedge Counterparty and the Deal Agent.
(j)......The Servicer is in compliance with ERISA and has not
incurred and does not expect to incur any liabilities (except for premium
payments arising in the ordinary course of business) to the PBGC (or any
successor thereof) under ERISA.
(k)......There has been no material adverse change in the
condition (financial or otherwise), business, operations, results of operations
or properties of the Servicer since the date of the consolidated and
consolidating balance sheets of the Servicer required to be delivered to the
Deal Agent pursuant to Section 3.1(j).
(l)......[Reserved.]
(m)......On the basis of a commercially reasonable review and
assessment undertaken by the Servicer of the Servicer's computer applications
and inquiry made of the Servicer's material suppliers, vendors and customers,
the Servicer reasonably believes that the "Year 2000 problem" (that is, the risk
that computer applications used by any Person may be unable to recognize and
perform properly date-sensitive functions involving certain dates prior to and
any date after December 31, 1999) will not result in a material adverse change
(i) in the operations, business, properties, or condition (financial or
otherwise) of the Servicer or (ii) in the Servicer's ability to service the
Collateral in accordance with this Agreement.
ARTICLE V
GENERAL COVENANTS OF THE BORROWER
SECTION 5.1.......Affirmative Covenants of the Borrower.
The Borrower shall, unless the Deal Agent shall otherwise
consent in writing:
(a)......perform each of its obligations under the Basic
Documents and comply in all respects with all of its obligations under the Basic
Documents and comply with all applicable laws, rules, regulations and orders
with respect to the Basic Documents, its business and properties and all
Collateral and related Collections with respect thereto including, without
limitations, all Environmental Laws;
(b)......preserve and maintain its existence, rights,
franchises and privileges in the jurisdiction of its formation and maintain its
qualifications to do business as a foreign limited liability company in any
other state in which it does business and in which it is required to be so
qualified and where the failure to be so qualified would have a Material Adverse
Effect on the assets or business operations of the Borrower, and conduct its
business in accordance with the terms of its partnership agreement;
(c)......instruct all Obligors to remit payments in respect of
the Collateral directly to a Lockbox Account and deposit all Collections it may
receive in respect of Collateral into the Lockbox Account within one Business
Day of receipt;
(d)......use the proceeds of the Advances made hereunder for
the funding of Pledged Receivables or for general corporate purposes;
(e)......provide commercially reasonable cooperation with all
requests of the Deal Agent and the Collateral Agent regarding the information
and any documents necessary or desirable to allow each of the Lender, the Deal
Agent and the Collateral Agent to carry out its responsibilities hereunder;
(f)......permit the Lender, each Hedge Counterparty and the
Deal Agent to make or cause to be made inspections and audits of any books,
records and papers of the Borrower and the Servicer and to make extracts
therefrom and copies thereof, or to make inspections and examinations of any
properties and facilities of the Borrower and the Servicer, on reasonable
notice, at all such reasonable times (but not more often than quarterly) as
required in order to assure that the Borrower is and will be in compliance with
its obligations under the Basic Documents or to evaluate the Lender's investment
in the then outstanding Note;
(g)......pay and discharge, at least thirty (30) days before
nonpayment would otherwise cause a permanent loss of title (or, with respect to
any Real Property leased by the Borrower to a lessee, use commercially
reasonable efforts to cause such lessee to pay and discharge), all obligations
and liabilities that could give or have given rise to a lien on its properties,
including, without limitation, all Taxes, assessments and governmental charges
upon its income and properties;
(h)......mark its Records in a commercially reasonable manner
to show the interests of the Collateral Agent in the Pledged Receivables;
(i)......promptly notify the Deal Agent in writing of any
litigation, legal proceeding or material dispute, whether or not in the ordinary
course of business, adversely and materially affecting the Borrower, whether or
not fully covered by insurance, and regardless of the subject matter thereof;
(j)......cause all information hereafter furnished by or on
behalf of the Borrower to the Deal Agent or the Lender in connection with this
Agreement or any transaction contemplated hereby to be true and complete in all
material respects and not omit to state a material fact necessary to make the
statements contained therein not misleading;
(k)......cause the Borrower's partnership agreement to remain
in full force and effect;
(l)......pay and discharge, within thirty (30) days before
nonpayment would otherwise cause a permanent loss of title (or, with respect to
any Real Property leased by the Borrower to a lessee, use commercially
reasonable efforts to cause such lessee to pay and discharge), all taxes,
assessments and governmental charges or levies imposed upon it or upon its
respective income or profits or upon any properties belonging to it (or in the
case of any such lessee, such lessee or such Real Property);
(m)......with respect to any Real Property included in the
Collateral, maintain (or cause the applicable Obligor to maintain) at all times
insurance covering such Real Property customary for similar businesses in the
area where such Real Property is located; and
(n)......with respect to each Franchise Lease which has been
in effect for thirty (30) days or more at the time such Franchise Lease is
included in the Pledged Receivables, use its commercially reasonable efforts to
obtain an estoppel letter in the form attached hereto as Exhibit H, or such
other form as the Obligor is obligated to provide, duly executed by the relevant
Obligor within 30 days of the date on which such Franchise Lease is first
included in the Collateral and, upon receipt of any such estoppel letter,
deliver a copy of the same to the Collateral Agent.
(o)......Promptly after learning of the occurrence of any of
the following at, or with respect to, the Real Property included in the
Collateral give the Deal Agent oral and written notice thereof, describing the
same and the steps being taken by the Borrower with respect thereto: (a) the
happening of any event involving the use, spill, release, leak, seepage,
discharge or cleanup of any Contaminant; (b) notice that the Borrower's
operations on the Real Property are not in compliance with requirements of
applicable federal, state or local environmental, health and safety statutes and
regulations; (c) notice that the Borrower is subject to federal or state
investigation evaluating whether any remedial action is needed to respond to the
release of any Contaminant or other substance from the Real Property into the
environment; or (d) notice that the Real Property is subject to a lien in favor
of any governmental entity for (i) any liability under federal or state
environmental laws or regulations or (ii) damages arising from or costs incurred
by such governmental entity in response to a release of a Contaminant or other
substance into the environment.
(p)......In the event of the enactment after the date hereof
of any law by the State or any other governmental entity deducting from the
value of the Real Property for the purpose of taxation any lien or security
interest thereon, or changing in any way the laws for the taxation of mortgages,
deeds of trust or other liens or debts secured thereby, or the manner of
collection of such taxes, so as to affect the Mortgage, the Borrower Secured
Obligations, or the Lender, then, and in any such event, the Borrower shall on
demand, pay to the Lender, or reimburse Lender for payment of, all taxes,
assessments, charges or liens for which Lender is or may be liable as a result
thereof, provided that if any such payment or reimbursement shall be unlawful or
would constitute usury or render the Borrower Secured Obligations wholly or
partially usurious under applicable law, then Lender may, at its option, declare
the Borrower Secured Obligations immediately due and payable or require the
Borrower to pay or reimburse the Lender for payment of the lawful and
non-usurious portion thereof.
SECTION 5.2.......Negative Covenants of the Borrower.
The Borrower shall not, without the written consent of the
Deal Agent:
(a)......except in accordance with Section 8.6 or 8.7, (i)
sell, assign (by operation of law or otherwise) or otherwise dispose of any
Collateral, or create or suffer to exist or consent to, cause or permit in the
future (upon the happening of a contingency or otherwise) the creation,
incurrence or existence of, any Adverse Claim or Restriction on Transferability
(and any such purported disposition shall be null and void), upon or with
respect to any Collateral, or upon or with respect to the Lockbox Account, the
Lockboxes, the Collection Account or any other account to which any Collections
of any Collateral are deposited other than Permitted Liens or (ii) assign any
right to receive income in respect thereof;
(b)......extend, amend, forgive, discharge, compromise, waive,
cancel or otherwise make a material modification to the terms of any Basic
Document, the Credit and Collection Policies or any Pledged Receivable, other
than:
(i) any adjustment, settlement or compromise of the account or
payment of a Pledged Receivable pursuant to Section 7.3 and any
deferments in the ordinary course of business which are consistent with
the Credit and Collection Policies; and
(ii) any amendment made in accordance with the Credit and
Collection Policies which does not extend the scheduled maturity date
of, modify the interest rate or rent payable under (except as required
by law), or constitute a cancellation or discharge of any amount
payable under a Pledged Receivable and does not materially and
adversely affect the security afforded by the real property,
furnishings, fixtures or equipment securing or supporting payment of
such Pledged Receivable and which does not cause such Pledged
Receivable to cease to be an Eligible Receivable;
(c)......except as otherwise provided herein or in the
Franchise Receivable Assignments, merge with or into, consolidate with or into,
convey, transfer, lease or otherwise dispose of all or substantially all of its
assets (whether now owned or hereafter acquired) to, or acquire all or
substantially all of the assets or capital stock or other ownership interest of,
any Person (whether in one transaction or in a series of transactions);
provided, however, that the Borrower may merge or consolidate with, or acquire
all or substantially all of the assets or capital stock or other ownership
interest of, any Person if (i) immediately prior to such transaction, and
immediately thereafter and after giving effect thereto, no Termination Event or
event or circumstance which, with the giving of notice or the passage of time,
or both, would constitute a Termination Event shall have occurred and be
continuing, (ii) such transaction would not have a Material Adverse Effect and
(iii) in the case of a merger or consolidation, the Borrower is the survivor;
(d)......prepare any financial statements which shall account
for or treat the transfer by a Transferring Affiliate to Borrower of any
Franchise Receivables in any manner other than as a contribution or absolute
assignment of the Pledged Receivables to the Borrower from such Transferring
Affiliate;
(e)......at any time (i) advance credit to any Person, or (ii)
declare any dividends, or return any capital if, after giving effect to such
action, there would be a Borrowing Excess;
(f)......maintain partners' capital (i.e., partnership assets
less partnership liabilities) in an amount less than $250,000,000; or
(g)......act in a manner that would cause it to be taxed as a
corporation, association taxable as a corporation or taxable mortgage pool (with
respect to any Collateral), all as defined under the IRC.
SECTION 5.3.......Borrower Hedging Instruments.
The Borrower shall have at all times from and after the date
of the initial Advance in effect one or more Hedging Instruments acceptable to
the Deal Agent with a qualified Hedge Counterparty, provided that:
(a)......the form and substance of any such Hedging Instrument
shall be acceptable to the Deal Agent;
(b)......all amounts payable by the Hedge Counterparty
thereunder shall be required to be paid by such counterparty directly to the
Collection Account; and
(c)......such hedging agreement or agreements or other Hedging
Instrument shall provide that the Hedge Counterparty acknowledges (i) that the
Borrower's rights thereunder have been irrevocably assigned to, and a security
interest therein has been granted to, the Collateral Agent for the benefit of
the Lender and the Hedge Counterparties on a pari passu basis, and (ii) the
terms and conditions set forth in this Agreement.
ARTICLE VI
COLLECTIONS AND DISBURSEMENTS; FEES
SECTION 6.1.......Establishment of Accounts.
(a)......Lockbox Account.
(i) The Servicer has established and shall maintain a
segregated account with a Lockbox Account Bank titled "CNL Financial
Services, LP, as Servicer".
(ii) The Borrower, the Servicer and the Transferring
Affiliates, as the case may be, shall instruct (or cause to be
instructed) all Obligors to make all payments on the Pledged
Receivables to the Lockbox Account or Lockbox, as the case may be, by
wire transfer, ACH transfer, check or other means acceptable to the
Lender, and all Collections on Pledged Receivables will, pending
remittance to the Collection Account, be held for the benefit of the
Collateral Agent and immediately after such proceeds have cleared and
become available in accordance with the policies of the Lockbox Account
Bank, shall be transferred to the Collection Account.
(iii) The Borrower and Servicer will deposit or cause to be
deposited in the Lockbox Account all cash, checks, money orders, wire
transfers, Collections or other Proceeds received by the Borrower and
the Servicer (and not the lockbox Account Bank) in respect of Pledged
Receivables immediately upon the receipt thereof in the original form
received (if other than cash). Until so deposited, all such proceeds
shall be held in trust for the Collateral Agent by the Borrower or
Servicer, as the case may be.
(iv) In the event that any Lockbox Agreement terminates for
any reason or any Lockbox Account Bank fails to comply with its
obligations under the Lockbox Agreement for any reason, then the
Borrower shall promptly notify all Obligors to make all future payments
to another existing Lockbox Account or to a new Lockbox Account
established in accordance with the following sentence. The Borrower
shall not establish any new Lockbox Account unless (1) it has received
the prior written consent of the Deal Agent and the Collateral Agent,
(2) such new Lockbox Account is established with a Lockbox Account Bank
satisfactory to the Deal Agent and the Collateral Agent, and (3) the
Deal Agent has received a Lockbox Agreement covering such new account
duly executed and delivered by the Lockbox Account Bank, the Servicer
and the Borrower. The Borrower shall not close any Lockbox Account
without the prior consent of the Deal Agent unless all Obligors have
previously been instructed to remit payments to a different Lockbox
Account and the Lockbox Account Bank has agreed in writing to forward
any payments received to the new Lockbox Account.
(b)......Collection Account.
(i) The Deal Agent, as agent for the Collateral Agent, has
established and shall maintain a segregated deposit account with the
Depositary titled "Neptune Funding Corporation--Collection Account (CNL
APF Partners, LP)." The Borrower agrees that the Collateral Agent shall
have exclusive dominion and control of the Collection Account and all
monies, instruments and other property from time to time in the
Collection Account; provided, that such dominion and control shall be
subject to the Servicer's right to make withdrawals from the Collection
Account for the purpose of applying such amounts to required payments
under this Article VI, which right may be terminated by the Collateral
Agent at any time in its sole discretion, and until such right has been
so terminated, all withdrawals required to be made from the Collection
Account shall be made by the Servicer; further provided, that Borrower
may direct the Collateral Agent in the investment of funds in the
Collection Account into Eligible Investments.
(ii) In the event that the Depositary wishes to resign as
depositary of the Collection Account for any reason or fails to carry
out the instructions of the Deal Agent or the Collateral Agent for any
reason, then the Deal Agent shall promptly notify the Lender and the
Borrower. The Deal Agent shall not close the Collection Account unless
it shall have (A) provided such notice to the Lender and the Borrower,
(B) received the prior written consent of the Collateral Agent, (C)
established a new account with the Depositary or with a new depositary
institution satisfactory to the Deal Agent and the Collateral Agent,
(D) entered into an agreement covering such new account with such new
depositary institution satisfactory in all respects to the Deal Agent,
the Collateral Agent and the Borrower (whereupon such new account shall
become the Collection Account for all purposes of the Basic Documents),
and (E) taken all such action as the Collateral Agent shall require to
grant and perfect a first priority security interest in such new
Collection Account to the Collateral Agent under this Agreement.
SECTION 6.2.......Funding of Collection Account.
No later than 11:30 a.m. (New York City time) on each Business Day:
(i) the Servicer shall instruct each Lockbox Account Bank to
transfer all Collections deposited in any Lockbox Account prior to such
Business Day to the Collection Account immediately after such funds
have cleared and become available in accordance with the policies of
the Lockbox Account Bank;
(ii) the Servicer shall within two Business Days of receipt
transfer to a Lockbox Account or the Collection Account all Collections
received by it or on its behalf with respect to the Collateral;
(iii) if the Deal Agent has notified the Borrower of any
Borrowing Excess, the Borrower shall deposit cash in the amount of such
Borrowing Excess in the Collection Account in accordance with the
provisions of Section 6.3;
(iv) to the extent required pursuant to Section 8.6, the
Borrower shall deposit, or shall cause to be deposited to the
Collection Account, all proceeds in connection with any release of
Collateral. SECTION 6.3.......Borrowing Excess.
If on any Business Day the Deal Agent shall notify the
Borrower of any Borrowing Excess or the Borrower shall notify the Deal Agent of
the same, the Borrower shall deposit the amount of such Borrowing Excess in the
Collection Account by 11:30 a.m. not later than the third (3rd) Business Day
following the date of such notice.
SECTION 6.4.......Disbursements From the Collection Account -- Payment
Date Procedures.
(a)......No later than 11:00 a.m. on each Payment Date during
the Revolving Period, the amounts held in the Collection Account shall be
disbursed in the following priority:
(i) if a Servicer Event of Default has occurred and a
Successor Servicer has been appointed, to the Successor Servicer in an
amount equal to its accrued and unpaid Successor Servicing Fees and
Expenses to the end of the preceding Collection Period and any other
amounts owed to the Successor Servicer (including unpaid costs
associated with the transfer of servicing to such Successor Servicer);
(ii) to each Hedge Counterparty all amounts (including any
termination amounts) owing to such Hedge Counterparty under its
respective Hedging Instruments;
(iii) to the Servicer, unless a Servicer Event of Default
shall have occurred and be continuing, in an amount equal to its
accrued and unpaid Servicing Fee to the end of the preceding Collection
Period, to the extent not paid under (i) above;
(iv) to the Deal Agent for distribution to the Lender (or, if
applicable, any Indemnified Party) in payment of the following
obligations in the following amounts and in the following priority:
(A) an amount equal to the accrued and unpaid Note
Interest through the end of the Yield Period ending on such
Payment Date, plus the amount, if any, of accrued Note
Interest for any prior Yield Period that remains unpaid;
(B) all Additional Amounts incurred and payable to
any Affected Party through the end of the Yield Period ending
on such Payment Date;
(C) all other Borrower Secured Obligations accrued
and payable under this Agreement or any other Basic Document
other than principal of the Advances (including Indemnified
Amounts incurred and payable to any Indemnified Party) through
the Yield Period ending on such Payment Date;
(D) if there is a Borrowing Excess, an amount equal
to such Borrowing Excess, in repayment of the outstanding
principal amount of the Advances; and
(E) if the Revolving Period has expired, an amount
equal to the aggregate outstanding principal balance of the
Advances, to the repayment of such Advances until such
outstanding principal balance has been reduced to zero;
(v) to the Servicer, during the continuance of any Servicer
Event of Default but prior to the appointment of a Successor Servicer,
in an amount equal to its accrued and unpaid Servicing Fee to the end
of the preceding Collection Period; and
(vi) to the extent of any excess Collections remaining in the
Collection Account after the payment of items (i) through (v) above,
that excess, at the election of the Borrower, to be released to an
account previously designated by the Borrower.
(b)......Two Business Days prior to each Payment Date, the
Deal Agent shall determine and notify the Borrower of any Collection Account
Deficiency for the preceding Collection Period, and the Borrower shall deposit
cash in the amount of such Collection Account Deficiency to the Collection
Account.
SECTION 6.5.......Notification by Servicer.
The Servicer shall notify the Borrower and the Deal Agent of
the determinations and disbursements made pursuant to Sections 6.4 and 6.7.
SECTION 6.6.......Investment of Collections.
During the Revolving Period, to the extent there are
uninvested amounts deposited in the Collection Account, the Deal Agent shall, at
the direction of the Borrower, invest all such amounts in Eligible Investments
selected by the Borrower that mature no later than the Business Day before the
immediately succeeding Payment Date. If the Borrower does not so direct the
investment of such amounts, the Deal Agent may, in its discretion, cause such
amounts to be invested in Eligible Investments selected by the Deal Agent that
mature no later than the Business Day before the immediately succeeding Payment
Date. Any earnings thereon shall be deposited into the Collection Account on
such Payment Date. Any investment of such amounts shall be solely at the
discretion of the Deal Agent subject to the restrictions described above. In no
event shall the Deal Agent have any liability to the Borrower for any loss in
respect of any investment or reinvestment made by it pursuant to this Section
6.6.
SECTION 6.7.......Termination Procedure.
(a)......On the earlier of (i) the first Business Day after
the Commitment Termination Date on which the aggregate outstanding principal
balance of the Advances has been reduced to zero or (ii) the Termination Date,
the Borrower shall immediately deposit into the Collection Account an amount
sufficient, when combined with the Collections already on deposit therein and
available for such purpose in accordance with the priority of payments set forth
in Section 6.4, to pay the Aggregate Unpaids in full.
(b)......On the first Business Day after the Commitment
Termination Date on which the Aggregate Unpaids have been reduced to zero, all
amounts held in the Collection Account, if any, shall be disbursed to the
Borrower and all security interests of the Lender and the Collateral Agent in
all of the Collateral owned by the Borrower shall be released by the Lender and
the Collateral Agent. Such disbursement shall constitute the final payment to
which the Borrower is entitled pursuant to the terms of this Agreement.
ARTICLE VII
APPOINTMENT OF THE SERVICER
SECTION 7.1.......Appointment of the Servicer.
The Borrower hereby appoints the Servicer as its agent to
service the Pledged Receivables and enforce its respective rights and interests
in and under each Pledged Receivable and to serve in such capacity until the
termination of its responsibilities pursuant to Sections 7.7, 9.2 or subsection
3(A) of Exhibit I. The Servicer hereby agrees to perform the duties and
obligations with respect thereto set forth herein. The Servicer may, with the
prior consent of the Borrower and the Deal Agent, subcontract with a
Sub-Servicer for collection, servicing or administration of the Pledged
Receivables, provided that (a) the Servicer shall remain liable for the
performance of the duties and obligations of the Sub-Servicer pursuant to the
terms hereof, and (b) any Sub-Servicing Agreement that may be entered into and
any other transactions or services relating to the Pledged Receivables involving
a Sub-Servicer shall be deemed to be between the Sub-Servicer and the Servicer
alone and the Borrower, the Lender, the Deal Agent and the Collateral Agent
shall not be deemed parties thereto and shall have no obligations, duties or
liabilities with respect to the Sub-Servicer.
SECTION 7.2.......Duties and Responsibilities of the Servicer.
(a)......The Servicer shall conduct the servicing,
administration and collection of the Pledged Receivables and shall take, or
cause to be taken, all such actions as may be necessary or advisable to service,
administer and collect Pledged Receivables from time to time on behalf of the
Borrower and for the benefit of the Secured Parties.
(b)......The duties of the Servicer shall include, without
limitation:
(i) preparing and submitting of claims to, and
post-billing liaison with, Obligors on Pledged Receivables;
(ii) maintaining all necessary Servicing Records with respect
to the Pledged Receivables and providing such reports to the Deal Agent
in respect of the servicing of the Pledged Receivables (including
information relating to its performance under this Agreement) as may be
required hereunder or as the Deal Agent may reasonably request;
(iii) maintaining and implementing administrative and
operating procedures (including, without limitation, an ability to
recreate Servicing Records evidencing the Pledged Receivables in the
event of the destruction of the originals thereof) and keeping and
maintaining all documents, books, records and other information
reasonably necessary or advisable for the collection of the Pledged
Receivables (including, without limitation, records adequate to permit
the identification of each new Pledged Receivable and all Collections
of and adjustments to each existing Pledged Receivable);
(iv) promptly delivering to the Deal Agent or the Collateral
Agent, from time to time, such information and Servicing Records with
respect to the Pledged Receivables (including information relating to
its performance under this Agreement) as the Deal Agent or the
Collateral Agent may from time to time reasonably request;
(v) identifying each Pledged Receivable clearly and
unambiguously in its Servicing Records to reflect that such Pledged
Receivable is owned by the Borrower and pledged to the Collateral
Agent;
(vi) complying in all material respects with the Credit and
Collection Policies in regard to each Pledged Receivable;
(vii) complying in all material respects with all applicable
laws, rules, regulations and orders with respect to it, its business
and properties and all Pledged Receivables and Collections with respect
thereto;
(viii) preserving and maintaining its existence, rights,
franchises and privileges as a limited partnership in the jurisdiction
of its organization, and qualifying and remaining qualified in good
standing as a foreign limited partnership and qualifying to and
remaining authorized to perform obligations as Servicer (including
enforcement of collection of Pledged Receivables on behalf of the
Lender, each Hedge Counterparty and the Collateral Agent) in each
jurisdiction where the failure to preserve and maintain such existence,
rights, franchises, privileges and qualification would materially
adversely affect (A) the rights or interests of the Borrower, Lender,
each Hedge Counterparty and the Collateral Agent in the Pledged
Receivables, (B) the collectibility of any Pledged Receivable, or (C)
the ability of the Servicer to perform its obligations hereunder;
(ix) promptly after it obtains actual knowledge thereof,
immediately notifying the Deal Agent of the occurrence of a Termination
Event (including, without limitation, a material adverse change in the
financial condition of any Affiliate of the Borrower);
(x) notifying the Deal Agent promptly after it obtains actual
knowledge thereof, of any material action, suit, proceeding, dispute,
offset, deduction, defense or counterclaim that is or may be (1)
asserted by an Obligor with respect to any Pledged Receivable, or (2)
reasonably expected to have a Material Adverse Effect on the Borrower
or Servicer;
(xi) arranging for the direct remittance of all Collections
with respect to each Pledged Receivable to the Lockbox Account or
Lockbox, as the case may be; and
(xii) notifying the Deal Agent of any proposed change in the
Credit and Collection Policies.
(c)......The Lender, the Deal Agent and the Collateral Agent
shall not have any obligation or liability with respect to any Pledged
Receivables, nor shall any of them be obligated to perform any of the
obligations of the Servicer hereunder.
SECTION 7.3.......Authorization of the Servicer.
(a)......Each of the Borrower and the Deal Agent on behalf of
the Lender and each Hedge Counterparty and the Collateral Agent hereby
authorizes the Servicer (including any successor thereto) to take any and all
reasonable steps in its name and on its behalf necessary or desirable and not
inconsistent with the pledge of the Pledged Receivables to the Collateral Agent,
but subject to Servicer's right to follow customary market practices in
accordance with its reasonable business judgment, in the reasonable
determination of the Servicer, to collect all amounts due under any and all
Pledged Receivables, including, without limitation, endorsing any of their names
on checks and other instruments representing Collections, executing and
delivering any and all instruments of satisfaction or cancellation, or of
partial or full release or discharge, and all other comparable instruments, with
respect to the Pledged Receivables and, after the delinquency of any Pledged
Receivable and to the extent permitted under and in compliance with applicable
law and regulations and the Credit and Collection Policies, to commence
proceedings with respect to enforcing payment of such Pledged Receivables, and
adjusting, settling or compromising the account or payment thereof, to the same
extent as the Borrower could have done. The Borrower, each Transferring
Affiliate and the Deal Agent on behalf of the Lender, Collateral Agent and each
Hedge Counterparty shall furnish the Servicer (and any successors thereto) with
any powers of attorney and other documents necessary or appropriate to enable
the Servicer to carry out its servicing and administrative duties hereunder, and
shall cooperate with the Servicer to the fullest extent in order to ensure the
collectibility of the Pledged Receivables. In no event shall the Servicer be
entitled to make the Lender, the Borrower, any Hedge Counterparty, the
Collateral Agent or the Deal Agent a party to any litigation without such
party's express prior written consent (other than as required for purposes of
any routine foreclosure or similar collection procedure).
(b)......After a Termination Event has occurred and is
continuing, at the Collateral Agent's direction the Servicer shall take such
action as the Collateral Agent may deem necessary or advisable to enforce
collection of the Pledged Receivables and the Borrower Assigned Agreements;
provided, however, that the Collateral Agent may, at any time that a Termination
Event has occurred and is continuing, notify any Obligor with respect to any
Pledged Receivables or obligors under the Borrower Assigned Agreements of the
assignment of such Pledged Receivables and Borrower Assigned Agreements, as the
case may be, to the Borrower and the pledge of such Pledged Receivables and
Borrower Assigned Agreements to the Collateral Agent and direct that payments of
all amounts due or to become due to the Borrower thereunder be made directly to
the Collateral Agent or any servicer, collection agent or lockbox or other
account designated by the Collateral Agent and, upon such notification and at
the expense of the Borrower, the Collateral Agent may enforce collection of any
such Pledged Receivables or the Borrower Assigned Agreements and adjust, settle
or compromise the amount or payment thereof.
SECTION 7.4.......Servicing Fees.
As compensation for its servicing activities and as
reimbursement for its expenses in connection therewith, the Servicer shall be
entitled to receive the Servicing Fees pursuant to, and subject to the priority
of payments set forth in, Section 6.4, payable monthly in arrears on each
Payment Date with respect to the preceding Collection Period. Except as provided
in the following two sentences, the Servicer shall be required to pay for all
expenses incurred by the Servicer in connection with its activities hereunder
(including any payments to accountants, counsel or any other Person) and shall
not be entitled to any payment therefor other than the Servicing Fees. The
Servicer shall be reimbursed for extraordinary expenses incurred by it in
connection with its reasonable efforts to realize upon defaulted Pledged
Receivables to the extent such expenses are recoverable out of the related
Collateral or Proceeds or from the Obligor. The Servicer shall not be required
to expend its own funds in connection with any such realization unless, in the
reasonable judgment of the Servicer, such realization will allow the Servicer to
recover its own funds out of the related Collateral or Proceeds or from the
Obligor.
SECTION 7.5.......Negative Covenants of the Servicer.
The Servicer shall not, without the prior written consent of
the Deal Agent:
(a)......sell, assign (by operation of law or otherwise) or
otherwise dispose of, or create or suffer to exist any Adverse Claim upon or
with respect to (and any such purported disposition shall be null and void) any
Collateral, or upon or with respect to the Collection Account or any other
account to which any Collections of any Collateral are deposited, or assign any
right to receive income in respect thereof;
(b)......extend, amend, waive, or otherwise modify the terms
of any Pledged Receivable, other than:
(i) adjusting, settling or compromising the account or payment
of such Pledged Receivable pursuant to Section 7.3(a) and except for
deferments in the ordinary course of business which are consistent with
the Credit and Collection Policies;
(ii) except in accordance with amendments permitted under
Section 5.2(b), amending such Pledged Receivable in accordance with the
Credit and Collection Policy in a manner which does not extend the
scheduled maturity date of, modify the interest rate or rent payable
under (except as required by law), or constitute a cancellation or
discharge of the outstanding Franchise Loan Balance of, such Pledged
Receivable and does not materially and adversely affect the security
afforded by the real property, furnishings, fixtures or equipment
securing or supporting payments on such Pledged Receivable and which
would not cause such Pledged Receivable to cease to be an Eligible
Receivable;
(c)......make any material change in the character of its
business;
(d)......without 30 days' prior written notice to the Deal
Agent, make any change to its corporate name or use any trade names, fictitious
names, assumed names or "doing business as" names; or
(e)......without the prior written consent of the Lender or
the Deal Agent, agree or consent to or otherwise permit to occur any material
amendment, modification, change, supplement, or rescission of the Credit and
Collection Policies in whole or in part in any manner, except in accordance with
amendments permitted under Section 5.2(b).
SECTION 7.6.......Reporting.
During the term of this Agreement, the Servicer shall keep or
cause to be kept in reasonable detail books and records of the account of the
Servicer's assets and business, including, but not limited to, books and records
relating to the transactions contemplated in the Basic Documents) which shall be
furnished to the Deal Agent upon request at reasonable times and at reasonable
intervals (but not more often than quarterly) so as not to create a commercially
unreasonable burden on the operation of Borrower. The Borrower (or the Servicer,
on behalf of the Borrower) shall furnish to the Deal Agent:
(a)......monthly, as soon as available, and in any event, not
later than the Report Date, a Monthly Report in the form of Exhibit F, which
Monthly Report shall be certified by an officer of the Borrower and shall
contain a representation or warranty by the Borrower that no Borrowing Excess
exists hereunder;
(b)......as soon as available and in any event within 120 days
(or the next succeeding Business Day if the last day of such period is not a
Business Day) after the end of each fiscal year, (i) a copy of the audited
financial statements (if applicable, on a consolidated basis) for such year for
the Parent and any consolidated Subsidiaries of the Parent, certified by
independent public accountants acceptable to the Deal Agent and each other
report or statement sent to shareholders by the Parent and (ii) a copy of the
financial statements (if applicable, on a consolidated basis) for such year for
each of the Servicer and the Borrower and any consolidated Subsidiaries of such
Person, certified by the chief financial officer or chief accounting officer of
such Person and stating the information set forth therein fairly presents the
financial condition of such Person and any consolidated Subsidiaries of such
Person in accordance with GAAP as of and for the fiscal year then ended and
confirming, in the case of the Borrower, that the Borrower is in compliance with
all of its financial covenants in this Agreement, and each other report or
statement sent to partners by the Borrower or the Servicer;
(c)......as soon as available and in any event within 45 days
(or next succeeding Business Day if the last day of such period is not a
Business Day) after the end of each of the first three quarters of each fiscal
year of each of the Borrower, the Servicer and the Parent, a balance sheet (if
applicable, on a consolidated basis) of such Person and any consolidated
Subsidiaries of such Person, as of the end of such quarter and including the
prior comparable period, and statements of income (if applicable, on a
consolidated basis), of such Person and any consolidated Subsidiaries of such
Person, for such quarter and for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter, certified by the
chief financial officer or chief accounting officer of such Person identifying
such documents as being the documents described in this paragraph (c) and
stating the information set forth therein fairly presents the financial
condition of such Person and any consolidated Subsidiaries of such Person in
accordance with GAAP as of and for the periods then ended, subject to year-end
adjustments consisting only of normal, recurring accruals and confirming that
the partners' capital (i.e., partnership assets less partnership liabilities)
for the Borrower is not less than $250,000,000;
(d)......as soon as available and in any event by September 30
of each year (or the next succeeding Business Day if September 30 is not a
Business Day), an Officer's Certificate stating, as to each signer thereof, that
(i) a review of the activities of the Servicer during the year ended on the
preceding June 30 and of its performance under this Agreement has been made
under such officer's supervision, (ii) to the best of such officer's knowledge,
based on such review, the Servicer has fulfilled all its obligations under this
Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof; (iii) the Servicer has complied with
the covenants set forth in Section 7.5; and (iv) the representations and
warranties of the Servicer in Section 4.3 are true and correct as if made on the
date of such Officer's Certificate;
(e)......as soon as possible and in any event within five (5)
Business Days after the occurrence of a Termination Event, the statement of the
chief financial officer or chief accounting officer of the Borrower setting
forth complete details of such Termination Event and the action which the
Borrower has taken, is taking and proposes to take with respect thereto;
(f)......as soon as available and in any event within 90 days
after June 30 of each year, a letter from a firm of independent public
accountants acceptable to the Deal Agent (which may be the same firm that
certifies the audited financial statements referred to in Section 7.6(b)) to the
effect that such firm has examined the Monthly Reports and such Servicing
Records relating to the Pledged Receivables as such firm deems necessary as a
basis for the report contemplated by this Section 7.6(f) and has issued its
report therefor and that such examination (1) was made in accordance with
generally accepted auditing standards, and accordingly included such tests of
the accounting records and such other audit procedures as such firm considered
necessary in the circumstances; (2) included an examination of the delinquency
and loss statistics relating to the Servicer's portfolio of Pledged Receivables;
and (3) except as described in the report, disclosed no exceptions or errors in
the records relating to Pledged Receivables serviced for others that, in the
firm's opinion, requires such firm to report. The accountant's report shall
further state that (1) the Servicer has completed with the minimum servicing
standards in the Uniform Single Attestation Program for Mortgage Bankers
("USAP") published by the Mortgage Bankers Association of America; (2) except as
disclosed in the report, no exceptions or errors were found; (3) except as
disclosed in the report, the delinquency and loss information relating to the
Pledged Receivables contained in the Monthly Reports was found to be accurate;
(4) except for (i) such exceptions as such firm shall believe to be immaterial,
and (ii) such other exceptions as shall be set forth in such statement, such
firm has examined the financial statements for the preceding year of the
Servicer and, on the basis of such examination, the Servicer has complied during
such year with such covenants; (5) except for (i) such exceptions as such firm
shall believe to be immaterial, and (ii) such other exceptions as shall be set
forth in such statement, such firm has examined the Monthly Reports delivered
during the previous calendar year (including the calculation of the Aggregate
Pledged Receivable Value set forth therein) and such Records relating to the
Pledged Receivables as such firm deems necessary as a basis for its report; and
(6) the Lender, the Deal Agent and the Collateral Agent may rely on such report;
not later than each Report Date, such detailed portfolio information as the Deal
Agent shall reasonably request in order for it to track and monitor the Pledged
Receivables, Collections and insurance;
(g)......promptly, copies of all public filings with any
Governmental Authority after the sending or filing thereof, the annual report of
the Servicer after the sending or filing thereof, and from time to time, such
other information, documents, records or reports respecting the Pledged
Receivables or the condition or operations, financial or otherwise, of the
Borrower, any Transferring Affiliate or any of their respective Subsidiaries, as
the Deal Agent or the Collateral Agent may, from time to time, reasonably
request, no such request to impose a commercially unreasonable burden on the
operations of Servicer.
SECTION 7.7.......Limited Partnership Existence.
The Servicer shall maintain its existence as a limited
partnership and shall at all times continue to be duly organized under the laws
of the State of Delaware and duly qualified and duly authorized to conduct its
business, and shall conduct its business in accordance with the terms of its
limited partnership agreement.
SECTION 7.8.......No Recourse.
The Servicer agrees that its recourse for the repayment of any
obligations of the Borrower owing hereunder or in respect hereof shall in all
events be limited to monies on deposit in the Collection Account or otherwise as
collected under the Pledged Receivables and any proceeds thereof and such
obligations shall only be payable by the Borrower to the extent that funds are
available therefor in accordance with this Agreement.
SECTION 7.9.......Cooperation With Requests for Information or
Documents.
The Servicer will provide all commercially reasonable
cooperation with all reasonable requests of the Borrower, the Deal Agent and the
Collateral Agent regarding the provision of any information or documents
necessary or desirable to allow each of the Borrower, the Deal Agent and the
Collateral Agent to carry out its responsibilities under the Basic Documents,
including the provision of such information or documents in electronic or
machine-readable format.
SECTION 7.10......Successor Servicer.
The terms and provisions of Exhibit I with respect to a
Successor Servicer are hereby incorporated by reference.
SECTION 7.11......Transfer of Servicing.
Notwithstanding any other provision of this Agreement to the
contrary, the Borrower may, upon written notice to the Collateral Agent,
transfer the servicing duties and obligations of the Servicer to U.S. Bank
National Association ("U.S. Bank"). U.S. Bank must agree in writing to perform
all of the duties and obligations of the Servicer under this Agreement. The
Borrower and U.S. Bank shall execute and deliver a Transfer Agreement mutually
agreed upon in advance and effective on the Transfer Date, whereby U.S. Bank
will agree to perform all of the duties and obligations of the Servicer under
this Agreement. U.S. Bank shall be entitled to payment of a pro rated portion
(based on actual days of service and a year of 365 days) of the Servicing Fee
during its term of service. Each Transfer Agreement shall include any additional
terms and provisions the parties reasonably determine are necessary or
appropriate and which additional terms and provisions are approved by the
parties to the Transfer Agreement, which approvals shall not be unreasonably
withheld. The Transfer Agreement shall contain a provision stating that the
former Servicer is relieved from all liability under this Agreement for acts or
omissions occurring after the Transfer Date. Within five (5) business days after
the Transfer Date, the Borrower may transfer servicing and appoint the former
Servicer as the Servicer. The transfer of servicing shall be contingent upon the
receipt by the Collateral Agent of written notice from the Borrower and written
consent from the former Servicer of its acceptance of its appointment. In the
event that the Borrower elects to transfer servicing and appoint the former
Servicer as the Servicer, U.S. Bank shall be relieved from all liability under
this Agreement for acts or omissions occurring after the later of the date of
the written notice from the Borrower or the written consent from the former
Servicer of its acceptance of its appointment. On the sixth Business Day after
the Transfer Date and thereafter, servicing may only be transferred in
accordance with the procedures set forth in Exhibit I hereto.
ARTICLE VIII
GRANT OF SECURITY INTERESTS
SECTION 8.1.......Borrower's Grant of Security Interest.
As security for the prompt payment or performance in full when
due, whether at stated maturity, by acceleration or otherwise, of all Borrower
Secured Obligations, the Borrower hereby assigns and pledges to the Collateral
Agent and grants to the Collateral Agent a security interest in and lien upon,
all of the Borrower's right, title and interest in and to the following, in each
case whether now or hereafter existing or in which Borrower now has or hereafter
acquires an interest and wherever the same may be located (collectively, the
"Collateral"):
(a)......all Pledged Receivables, Collections, Obligor
Documents and Records related thereto;
(b)......all Lockbox Agreements, Franchise Receivable
Assignments and Obligor Documents now or hereafter in effect (collectively, the
"Borrower Assigned Agreements"), including (i) all rights of the Borrower to
receive moneys due and to become due under or pursuant to the Borrower Assigned
Agreements, (ii) all rights of the Borrower to receive proceeds of any
insurance, indemnity, warranty or guaranty with respect to the Borrower Assigned
Agreements, (iii) the Borrower's right of foreclosure as lienholder of the real
or personal property underlying the Pledged Receivables; (iv) claims of the
Borrower for damages arising out of or for breach of or default under the
Borrower Assigned Agreements, and (v) the right of the Borrower to amend, waive
or terminate the Borrower Assigned Agreements, to perform under the Borrower
Assigned Agreements and to compel performance and otherwise exercise all
remedies and rights under the Borrower Assigned Agreements;
(c)......all of the following (the "Borrower Account
Collateral"): (i) each Lockbox Account, the Lockboxes and all funds held in each
Lockbox Account and the Lockboxes and all certificates and instruments, if any,
from time to time representing or evidencing each Lockbox Account, the Lockboxes
or such funds, (ii) the Collection Account, all funds held in such account, and
all certificates and instruments, if any, from time to time representing or
evidencing the Collection Account or such funds, (iii) all Investments from time
to time of amounts in each Lockbox Account and the Collection Account, and all
certificates and instruments, if any, from time to time representing or
evidencing such Investments, (iv) all notes, certificates of deposit and other
instruments from time to time delivered to or otherwise possessed by the Lender
or any assignee or agent on behalf of the Lender in substitution for or in
addition to any of the then existing Borrower Account Collateral, and (v) all
interest, dividends, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any and all of the then existing Borrower Account Collateral; (d)......all
Hedging Instruments with respect to the Pledged Receivables;
(e)......all Real Property in which the Borrower has acquired
an interest (whether an ownership interest or a Lien) relating to any Pledged
Receivable (including any such Real Property in which the Borrower has retained
an interest following the termination of such Pledged Receivable);
(f)......all additional property that may from time to time
hereafter be granted and pledged by the Borrower or by anyone on its behalf
under this Agreement, including the deposit with the Lender, the Deal Agent or
the Collateral Agent of additional moneys by the Borrower; and
(g)......all Proceeds, accessions, substitutions, rents and
profits of any and all of the foregoing Collateral (including Proceeds that
constitute property of the types described in Sections 8.1 (a) through (f)
above) and, to the extent not otherwise included, all payments under insurance
(whether or not the Lender or any Hedge Counterparty or any assignee or agent on
behalf of the Lender or any Hedge Counterparty is the loss payee thereof) or any
indemnity, warranty or guaranty payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Collateral.
SECTION 8.2.......Delivery of Collateral.
All Obligor Documents relating to the Collateral shall be
delivered to and held by or on behalf of the Collateral Agent pursuant to this
Agreement and the Custodial Agreement, and shall be in suitable form for
transfer by delivery or shall be accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to the
Collateral Agent. From and after the Termination Date, the Collateral Agent
shall have the right, at any time in its discretion and without notice to the
Borrower or the Lender, to transfer to or to register in the name of the
Collateral Agent or any of its nominees any or all of the Collateral.
SECTION 8.3.......Borrower Remains Liable.
Notwithstanding anything to the contrary in this Agreement,
(a) each of the Borrower and the Transferring Affiliates shall remain liable
under the Pledged Receivables, Borrower Assigned Agreements and other agreements
included in the Collateral to perform all of its duties and obligations
thereunder to the same extent as if this Agreement had not been executed, (b)
except to the extent otherwise expressly provided in this Agreement, the
exercise by the Deal Agent as agent of the Lender and each Hedge Counterparty or
the Collateral Agent as agent of the Lender and the Hedge Counterparties of any
of its rights under this Agreement shall not release the Borrower or the
Servicer from any of their respective duties or obligations under the Pledged
Receivables, Borrower Assigned Agreements or other agreements included in the
Collateral, (c) the Deal Agent as agent of the Lender and each Hedge
Counterparty and the Collateral Agent shall not have any obligation or liability
under the Pledged Receivables, Borrower Assigned Agreements or other agreements
included in the Collateral by reason of this Agreement, and (d) neither the
Collateral Agent nor the Lender nor any Hedge Counterparty shall be obligated to
perform any of the obligations or duties of the Borrower or the Servicer under
the Pledged Receivables, Borrower Assigned Agreements or other agreements
included in the Collateral or to take any action to collect or enforce any claim
for payment assigned under this Agreement.
SECTION 8.4.......Covenants of the Borrower and Servicer Regarding the
Collateral.
(a)......Offices and Records. The Borrower shall keep its
chief place of business and chief executive offices and the office where it
keeps its Records at the location specified in Schedule 7 or, upon thirty (30)
days' prior written notice to the Collateral Agent, at such other location in a
jurisdiction where all action required by Section 8.4(e) shall have been taken
with respect to the Collateral. The Borrower and the Servicer shall, until the
period ending one year after the repayment in full or maturity of each Pledged
Receivable or for such longer period as may be required by law, from the date on
which such Pledged Receivable arose, maintain the Records with respect to such
Pledged Receivable, including records of all payments received. The Borrower and
the Servicer will permit representatives of the Deal Agent and the Collateral
Agent at any time and from time to time (but no more often than quarterly)
during normal business hours of the Borrower and the Servicer and upon
reasonable advance notice (i) to inspect and make copies (at the sole cost and
expense of the Deal Agent or the Collateral Agent, as the case may be) of and
abstracts from such records, and (ii) to visit the properties of the Borrower or
the Servicer utilized in connection with the collection, processing or servicing
of the Pledged Receivables for the purpose of examining such Records, and to
discuss matters relating to the Pledged Receivables or the Borrower's or
Servicer's performance under this Agreement with any officer or employee of the
Borrower or Servicer having knowledge of such matters. In connection therewith,
the Deal Agent may institute procedures to permit it at its expense to confirm
the Obligor balances in respect of any Pledged Receivables. If a Termination
Event shall have occurred and be continuing, promptly upon request therefor, the
Borrower or the Servicer shall deliver to the Collateral Agent records
reflecting activity through the close of business on the Business Day
immediately preceding such Termination Event.
(b)......Maintain Records of Pledged Receivables. The Servicer
shall, at its own cost and expense, maintain satisfactory and complete records
of the Collateral, including a record of all payments received with respect to
the Collateral and all other dealings with the Collateral.
(c)......Performance of Borrower Assigned Agreements. The
Borrower shall (i) perform and observe all the terms and provisions of the
Borrower Assigned Agreements to be performed or observed by it, maintain the
Borrower Assigned Agreements in full force and effect, enforce the Borrower
Assigned Agreements in accordance with their terms and, upon the occurrence and
during the continuation of a Termination Event, take all such action to such end
as may be from time to time requested by the Collateral Agent, and (ii) upon
request of the Deal Agent or the Collateral Agent, make to any other party to
the Borrower Assigned Agreements such demands and requests as may be reasonable
for information and reports or for action as the Borrower is entitled to make
under the Borrower Assigned Agreements.
(d)......Notice of Adverse Claim. Each of the Borrower and the
Servicer shall advise the Deal Agent and the Collateral Agent promptly, in
reasonable detail, (i) of any Adverse Claim known to it made or asserted against
any of the Collateral which would have a material adverse effect on the value of
the Collateral, and (ii) of the occurrence of any event which would have a
material adverse effect on the aggregate value of the Collateral or on the
assignments and security interests granted by the Borrower in this Agreement.
(e)......Further Assurances; Financing Statements; Mortgages.
(i) Each of the Borrower and the Servicer severally agrees
that at any time and from time to time, at its expense, it shall
promptly execute, endorse and deliver all further instruments and
documents, and take all further action, that may be necessary or
reasonably desirable or that the Deal Agent or the Collateral Agent may
reasonably request to perfect and protect the assignments and security
interests granted or purported to be granted by this Article VIII or to
enable the Lender, the Hedge Counterparties, the Deal Agent or the
Collateral Agent to exercise and enforce its rights and remedies under
this Agreement with respect to any Collateral. Without limiting the
generality of the foregoing, the Borrower shall execute and file such
financing or continuation statements, or amendments thereto, such
Mortgages and Mortgage Assignments and such other instruments or
notices as may be necessary or reasonably desirable or that the Deal
Agent or the Collateral Agent may reasonably request to protect and
preserve the assignments and security interests granted by this
Agreement.
(ii) The Borrower, the Lender and the Hedge Counterparties
hereby severally authorize the Collateral Agent to file one or more
financing or continuation statements, and amendments thereto, relating
to all or any part of the Collateral without the signature of the
Borrower, the Lender or any Hedge Counterparty where permitted by law.
A photographic or other reproduction of this Agreement or any financing
statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law. The
Collateral Agent will promptly send to the Borrower any financing
statements or continuation statements thereto which it files without
the signature of the Borrower and will promptly send to the Lender and
the Hedge Counterparties any financing statements or continuation
statements thereto which it files without the signature of the Lender
except in the case of filings of copies of this Agreement as financing
statements, the Collateral Agent will promptly send the Borrower, the
Lender or the Hedge Counterparties, as the case may be, the filing or
recordation information with respect thereto.
(iii) Each of the Borrower and the Servicer shall furnish to
the Collateral Agent from time to time such statements and schedules
further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Collateral Agent may
reasonably request, all in reasonable detail.
(f)......Defaulted Receivables. Upon receipt of notice from
the Borrower, the Deal Agent or any other Person, or if the Servicer otherwise
learns, that the Obligor under any Franchise Receivable is in material default
thereunder, the Servicer will take such action as is appropriate, consistent
with the Servicer's administration of leases and loans serviced for its
Affiliates and consistent with the customary practices of servicers in the same
segment of the industry, including such action as may be necessary to cause, or
attempt to cause, the Obligor thereunder to cure such default (if the same may
be cured) or to terminate or attempt to terminate such Franchise Receivable and
to recover, or attempt to recover, all damages resulting from such default to
the extent permitted under such Franchise Receivable and under applicable law.
(g)......Liquidation of Real Property. Upon the expiration or
termination of any Franchise Lease (whether such expiration or termination
arises following the occurrence of a default under such Franchise Lease or for
any other reason), the Servicer will use its best efforts to promptly sell all
of the Real Property which was the subject of such Franchise Lease, such sale to
be made in a manner consistent with that utilized by the Servicer with respect
to Real Property serviced by it for its Affiliates and otherwise in a manner
consistent with industry practices, so as to realize, to the extent possible
under then prevailing market conditions, the fair market value of such Real
Property; provided that, prior to the last day of the Revolving Period, the
Servicer shall have the right, instead of selling such Real Property, to
promptly lease such property to an Eligible Obligor pursuant to a Franchise
Lease so long as (i) such Franchise Lease is an Eligible Receivable and (ii)
such Franchise Lease shall have been added to the Collateral pursuant to Section
2.2(g), or to substitute a new Franchise Lease for such Franchise Lease pursuant
to Section 8.8; further provided, that the Servicer may, instead of selling such
Real Property, substitute a new Franchise Lease for such Franchise Lease
pursuant to Section 8.8 at any time if such expiration or termination arises
following the occurrence of a default under such Franchise Lease. In no event
shall the Servicer or any Affiliate of the Servicer purchase any such Real
Property from the Borrower unless (i) the Deal Agent shall have approved the
documents evidencing such sale and (ii) the purchase price paid to the Borrower
with respect thereto at least equal to the greater of the fair market value of
such Real Property and the Rent Cost Basis for such Real Property. In the event
the Servicer is required to sell any item of Real Property pursuant to the
provisions of this Section 8.4(g) at a time when the Servicer is trying to lease
or sell other similar items of Real Property, the Servicer will not disfavor the
Real Property included in the Collateral in its selling efforts.
(h)......Insurance. If the Borrower fails to maintain (or
caused to be maintained) any of the insurance required by Section 5.1(m), the
Deal Agent or the Collateral Agent may (but shall not be obligated to) procure
such insurance and charge the cost thereof to the Borrower as part of the
Borrower Secured Obligations payable on demand.
SECTION 8.5.......Limited Recourse. Anything in this Agreement or any
of the other Basic Documents to the contrary notwithstanding, no recourse for
the repayment of the Borrower Secured Obligations shall be had against the
Borrower except to the extent of the Collateral; provided that nothing in this
Section 8.5 shall impair the validity of the obligations of the Borrower arising
under this Agreement and the other Basic Documents, prevent the taking of any
action permitted by law against the Borrower to the extent of the Collateral or
the proceeds thereof, or in any way affect or impair the right of the Collateral
Agent or any Secured Party to take any action permitted by law to realize upon
any of the Collateral; and provided further that, notwithstanding anything
herein to the contrary, each Secured Party shall have full recourse to the
Borrower and to any property or assets of the Borrower to satisfy any claim of
such Secured Party pursuant to Section 11.1 or Section 12.3 of this Agreement
arising out of or relating to (i) any fraud, gross negligence or willful
misconduct on the part of the Borrower or the Servicer, (ii) any environmental
liability arising out of or in connection with any Real Property securing any
Franchise Loan or which is the subject of any Franchise Lease, (iii) any failure
by the Borrower or the Servicer to apply funds as required pursuant to Section
6.4(A)(iv)(e), or (iv) any failure on the part of the Borrower to perform any of
its obligations under Section 8.7.
SECTION 8.6.......Release of Collateral.
(a)......Generally. The Borrower may obtain releases of the
security interest of the Collateral Agent in all or any part of the Collateral
to the extent that either (i) such release is necessary in order to consummate
the sale of the Real Property which is the subject of a Franchise Lease to the
related Obligor or any Affiliate thereof pursuant to a right or obligation of
such Obligor or such Affiliate satisfying the requirements set forth in clause
(o) of the definition of "Eligible Receivable", or (ii) (A) both before and
after giving effect to such release no Borrowing Excess exists and no event or
circumstance has occurred which constitutes a Termination Event or which, with
the giving of notice or the passage of time, or both, would constitute a
Termination Event, (B) prior to such release, any termination or partial
termination of any Hedging Instrument that is required under the terms of such
Hedging Instrument (including the terms of any agreement or document governing
such Hedging Instrument) has been effected in accordance with the terms thereof
and (C) after giving effect to such release, the Aggregate Eligible Receivables
value is not less than $25,000,000. Each request for a partial release of
Collateral (a "Release Request") shall be addressed to the Collateral Agent,
certifying as to compliance with the immediately preceding sentence and, if
applicable, acknowledging that the receipt of proceeds from such sale or
transfer to an Obligor or any other third party shall be deposited into the
Collection Account in accordance with Section 6.2. Such proceeds shall
thereafter be disbursed when the next disbursement is made from the Collection
Account in accordance with Section 6.4.
(b)......Releases. With respect to any release of Collateral
permitted by Section 8.6(a), the Collateral Agent shall, upon the request and at
the expense of the Borrower, (i) execute such releases as may be reasonably
requested by the Borrower to give effect to such release and (ii) deliver, or
instruct the Custodian to deliver, any Obligor Documents relating solely to the
Collateral so released.
(c)......Continuation of Lien. With respect to any Collateral
which is to be released in connection with the sale or transfer of such
Collateral to an Obligor or third party, the security interest in favor of the
Collateral Agent in such Collateral shall continue in effect until such time as
the proceeds from such sale or transfer have been deposited into the Collection
Account in accordance with this Agreement. Such funds shall thereafter be
disbursed when the next disbursement is made from the Collection Account in
accordance with Section 6.4.
(d)......Application of Proceeds; No Duty. Neither the Deal
Agent nor any other Secured Party shall be under any duty at any time (i) to
credit the Borrower for any amount due from any third party in respect of any
sale of any Collateral to such third party, until the Deal Agent has actually
received such amount in immediately available funds for deposit to the
Collection Account or (ii) to collect any amounts or otherwise enforce any
obligations due from any third party in respect of any such sale.
(e)......Representation in Connection with Releases. Each
Release Request delivered by the Borrower hereunder with respect to a release
described in Section 8.6(a)(ii) shall be deemed to constitute a representation
and warranty to the Deal Agent and the other Secured Parties to the effect that
immediately before and after giving effect to such release (i) no Borrowing
Excess exists and (ii) no event or circumstance has occurred which constitutes a
Termination Event or which, with the giving of notice or the passage of time, or
both, would constitute a Termination Event.
SECTION 8.7.......Substitution. (a) In the event the Borrower, the
Servicer or the Deal Agent determines (in the case of the Deal Agent, on a
reasonable basis) that any Franchise Receivable included, or purported to be
included, in the Collateral is not an Eligible Receivable (any such Franchise
Receivable, an "Ineligible Receivable"), then the Borrower shall, within 90 days
of such determination, substitute one or more Eligible Receivables for such
Ineligible Receivable in accordance with this Section 8.7; provided that the
Eligible Receivables added to the Collateral in connection with such
substitution shall have an aggregate Receivable Basis (the "Required Balance")
equal to or greater than the Receivable Basis of the Ineligible Receivable to be
removed from the Collateral in connection with such substitution. Any such
substitution shall be made on notice from the Borrower to the Deal Agent
specifying (i) the effective date of such substitution, which shall be a
Business Day, (ii) the Ineligible Receivable which is to be removed from the
Collateral in connection with such substitution and the Receivable Basis thereof
and (iii) the Eligible Receivables which are to be added to the Collateral in
connection with such substitution and the aggregate Receivable Basis thereof.
Any such addition of an Eligible Receivable shall be made in accordance with
Section 2.2(g). Upon the Collateral Agent's confirmation that Eligible
Receivables having the Required Balance have been so added to the Collateral,
the Ineligible Receivable which is the subject of such substitution shall be
deemed to have been released from the Collateral. With respect to any Ineligible
Receivable so released from the Collateral, the Collateral Agent shall, upon the
request and at the expense of the Borrower, (i) execute such releases as may be
reasonably requested by the Borrower to give effect to such release and (ii)
deliver, or instruct the Custodian to deliver, any Obligor Documents relating
solely to the Ineligible Receivables so released.
(b)......The Borrower may remove an Eligible Receivable from
the Collateral and substitute one or more Eligible Receivables in its place;
provided that (i) any such removal shall be made in accordance with, and subject
to the terms and conditions set forth in, Section 8.6 and (ii) any such
substitution shall be effected by adding the new Eligible Receivables to the
Collateral in accordance with Section 2.2(g).
ARTICLE IX
TERMINATION EVENTS
SECTION 9.1.......Termination Events.
If any of the following events (each, a "Termination Event")
shall occur and be continuing:
(a)......the Borrower shall fail to make any payment or
deposit required to be made by it under the terms of this Agreement or any other
Basic Document and such failure continues unremedied for a period of five (5)
Business Days
(b)......a Borrowing Excess shall exist for more than five (5)
Business Days; or
(c)......the Borrower shall fail to perform or observe in any
material respect any other covenant or other agreement of the Borrower set forth
in this Agreement or any other Basic Document, or (ii) any Transferring
Affiliate shall fail to perform or observe in any material respect any term,
covenant or agreement of such Transferring Affiliate set forth in any Franchise
Receivable Assignment or any other Basic Document, in each case when such
failure continues unremedied for more than fifteen (15) days after written
notice thereof shall have been given by the Deal Agent or the Collateral Agent
to such Person; or
(d)......any representation or warranty made by the Borrower
or any Transferring Affiliate pursuant to this Agreement or any other Basic
Document shall prove to be incorrect in any material respect as of the time when
the same shall have been made; or
(e)......any Event of Bankruptcy shall occur with respect to
the Borrower or any Transferring Affiliate; or
(f)......a Servicer Event of Default has occurred; or
(g)......The Borrower or any Transferring Affiliate shall fail
to pay any principal of or premium or interest on any Debt having an aggregate
outstanding principal amount of $10,000,000 or more ("Material Debt"), when the
same becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) and such failure shall continue
after the applicable grace period, if any, specified in the agreement or
instrument relating to such Material Debt; or any other default under any
agreement or instrument relating to any Material Debt or any other event, shall
occur and shall continue after the applicable grace period, if any, specified in
such agreement or instrument if the effect of such default or event is to
accelerate, or to permit the acceleration of, the maturity of such Material
Debt; or any such Material Debt shall be declared to be due and payable or
required to be prepaid (other than by a regularly scheduled required prepayment)
prior to the stated maturity thereof, and such acceleration shall have a
Material Adverse Effect on such entity;
(h)......the Collateral Agent shall cease for any reason,
other than because of its own failure to file a continuation statement or take
other appropriate action within its control, to have a valid and perfected first
priority security interest in all of the Collateral and the proceeds thereof; or
(i)......(x) a final judgment for the payment of money in
excess of $3,000,000 shall have been rendered against the Borrower or any
Transferring Affiliate by a court of competent jurisdiction and the Borrower or
such Transferring Affiliate, as applicable, shall not, within thirty (30) days,
have either, (1) discharged or provided for the discharge of such judgment in
accordance with its terms, or (2) perfected a timely appeal of such judgment and
caused the execution thereof to be stayed during the pendency of such appeal or
(y) the Borrower or any Transferring Affiliate shall have made payments of
amounts in excess of $3,000,000, in settlement of any litigation; or
(j)......(i) the long-term debt rating of any Hedge
Counterparty under a Hedging Instrument is downgraded to below A- by S&P or DCR
or A3 by Moody's or the short-term debt rating of any such counterparty is
downgraded to below A-1 by S&P or D-1 by DCR or P-1 by Moody's and (ii) a
successor to such Hedging Counterparty acceptable to the Deal Agent is not in
place or collateral acceptable to the Deal Agent has not been posted, in each
case, within ten (10) Business Days; or
(k)......the Delinquency Ratio including only those Eligible
Receivables greater than 60 days past due shall exceed 5.0% at any time or the
cumulative aggregate Receivable Basis of all Defaulted Receivables shall exceed
$10,000,000 over any thirteen month period during the term of this Agreement; or
(l)......the Borrower shall become an "investment company"
within the meaning of the Investment Company Act of 1940, as amended (the "40
Act") or the arrangements contemplated by this Agreement shall require
registration as an "investment company" within the meaning of the 40 Act;
then, and in any such event, the Deal Agent or the Lender may by notice to the
Borrower declare the Termination Date to have occurred, without demand, protest
or further notice of any kind, all of which are hereby expressly waived by the
Borrower, and all Advances and all other amounts owing by the Borrower under
this Agreement shall be accelerated and become immediately due and payable,
provided, that if any Event of Bankruptcy shall occur with respect to the
Borrower, the Termination Date shall automatically occur, without demand,
protest or any notice of any kind, all of which are hereby expressly waived by
the Borrower.
SECTION 9.2.......Servicer Event of Default.
Upon the occurrence of any of the following events (each, a
"Servicer Event of Default"), the Lender may terminate the rights of the
Servicer and cause a successor Servicer to be appointed to service the Pledged
Receivables:
(a)......any failure by the Servicer to deposit or transfer
into the Collection Account any proceeds or payment, required to be so deposited
or transferred under the terms of this Agreement that shall continue unremedied
for a period of five (5) Business Days; or
(b)......any failure on the part of the Servicer to perform or
to observe in any material respect any other covenants or agreements of the
Servicer set forth in this Agreement, which failure shall continue unremedied
for more than fifteen (15) days after the date on which written notice of such
failure or breach, requiring the same to be remedied, shall have been given to
the Servicer by the Borrower, the Deal Agent or the Collateral Agent; or
(c)......any representation or warranty made by the Servicer
pursuant to this Agreement or any other Basic Document shall prove to be
incorrect in any material respect as of the time when the same shall have been
made; or
(d)......any Event of Bankruptcy shall occur with respect to
the Servicer; or (e)......a Termination Event has occurred.
If a Servicer Event of Default shall occur, then, and in any such event, the
Deal Agent or the Lender may, by delivery of a Servicer Termination Notice to
the Borrower and the Servicer, terminate the servicing responsibilities of the
Servicer hereunder, without demand, protest or further notice of any kind, all
of which are hereby waived by the Servicer. Upon any such declaration and the
appointment and acceptance of a Successor Servicer, all authority and power of
the Servicer under this Agreement and the Custodial Agreement shall pass to and
be vested in the Successor Servicer appointed pursuant to Section 7.11.
In addition, if any such event shall occur and be continuing,
(i) the Deal Agent may direct that payment of all amounts payable under any
Pledged Receivable be made directly to the Collateral Agent or its designee,
(ii) the Borrower shall (at the Deal Agent's request) give notice of the Deal
Agent's interest in the Pledged Receivables to each Obligor and each guarantor
and direct that payments be made directly to the Deal Agent or its designee,
(iii) the Borrower shall (at the Deal Agent's request) transfer all Pledged
Receivable files to the Deal Agent or its designee; and (iv) the Borrower shall
authorize the Deal Agent to take any and all steps in the Borrower's name and on
behalf of the Borrower necessary (in the determination of the Deal Agent) to
collect all amounts due under the Pledged Receivables.
All related costs of replacing the Servicer and transferring
the servicing of the Pledged Receivables to a Successor Servicer, including but
not limited to all third party costs and reimbursable expenses of the Servicer,
shall be borne by the Servicer.
SECTION 9.3.......Control of Lockbox Account. Rabobank agrees for the
benefit of the Borrower and the Servicer that it will not exercise its right to
obtain exclusive ownership of and access to any Lockbox Account unless and until
a Termination Event has occurred.
ARTICLE X
REMEDIES
SECTION 10.1......Actions Upon Termination Event.
Upon the occurrence and during the continuation of a
Termination Event, the Servicer shall (i) deliver and turn over to the
Collateral Agent or to its representatives, or at the option of the Collateral
Agent, provide the Collateral Agent or its representatives with access to, at
any time, all of the Servicer's facilities, personnel, books and records
pertaining to the Collateral, including all Records, (ii) allow the Collateral
Agent to occupy the premises of the Servicer where such books, records and
Records are maintained, and (iii) assist the Collateral Agent in using such
premises, the equipment thereon and any personnel of the Servicer that the
Collateral Agent may lawfully employ to administer, service and collect the
Pledged Receivables.
If any Termination Event shall have occurred and be continuing
and the Deal Agent shall have declared the Termination Date to have occurred or
the Termination Date shall have been deemed to have occurred pursuant to Section
9.1, then the Collateral Agent may exercise in respect of the Collateral, in
addition to any and all other rights and remedies otherwise available to it, all
of the rights and remedies of a secured party upon default under the UCC (such
rights and remedies to be cumulative and nonexclusive), and, in addition, may
take the following remedial actions:
(a)......The Collateral Agent may, without notice to the
Borrower except as required by law and at any time or from time to time, charge,
set-off and otherwise apply all or any part of the Borrower Secured Obligations
against amounts payable to the Borrower from the Lockbox Account, the Lockboxes,
the Collection Account or any part of such accounts in accordance with the
priorities required by Section 10.2.
(b)......Consistent with the rights and remedies of a secured
party under the UCC (and except as otherwise required by the UCC), the
Collateral Agent may, without notice except as specified below, solicit and
accept bids for and sell the Collateral or any part of the Collateral in one or
more parcels at public or private sale, at any exchange, broker's board or at
any of the Lender's, Deal Agent's or Collateral Agent's offices or elsewhere,
for cash, on credit or for future delivery, and upon such other terms as the
Collateral Agent may deem commercially reasonable. The Borrower agrees that, to
the extent notice of sale shall be required by law, ten (10) or more Business
Days' notice to the Borrower of the time and place of any public sale or the
time after which any private sale is to be made shall constitute reasonable
notification. The Collateral Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The Collateral Agent
may adjourn any public or private sale from time to time by announcement at the
time and place fixed for such sale, and such sale may, without further notice,
be made at the time and place to which it was so adjourned. Every such sale
shall operate to divest all right, title, interest, claim and demand whatsoever
of the Borrower in and to the Collateral so sold, and shall be a perpetual bar,
both at law and in equity, against the Borrower, any Transferring Affiliate, any
Person claiming the Collateral sold through the Borrower, any Transferring
Affiliate and their respective successors or assigns.
(c)......Upon the completion of any sale under Section
10.1(b), the Borrower or the Servicer will deliver or cause to be delivered all
of the Collateral sold to the purchaser or purchasers at such sale on the date
of sale, or within a reasonable time thereafter if it shall be impractical to
make immediate delivery, but in any event full title and right of possession to
such property shall pass to such purchaser or purchasers forthwith upon the
completion of such sale. Nevertheless, if so requested by the Collateral Agent
or by any purchaser, the Borrower shall confirm any such sale or transfer by
executing and delivering to such purchaser all proper instruments of conveyance
and transfer and releases as may be designated in any such request.
(d)......At any sale under Section 10.1(b), the Lender, the
Collateral Agent or any secured party may bid for and purchase the property
offered for sale and, upon compliance with the terms of sale, may hold, retain
and dispose of such property without further accountability therefor. Any holder
of the Note purchasing property at a sale under Section 10.1(b) may set off the
purchase price of such property against amounts outstanding under the Note in
full payment of such purchase price.
(e)......The Collateral Agent may exercise at the Borrower's
expense any and all rights and remedies of the Borrower under or in connection
with the Borrower Assigned Agreements or the other Collateral, including any and
all rights of the Borrower to demand or otherwise require payment of any amount
under, or performance of any provisions of, the Borrower Assigned Agreements.
SECTION 10.2......Application of Proceeds.
Any cash held by or on behalf of the Collateral Agent as
Collateral, whether from Pledged Receivables or otherwise, and all cash proceeds
received by the Collateral Agent in respect of any sale of, collection from or
other realization upon all or any part of the Collateral, shall be applied as
set forth in Section 6.4. Any surplus of such cash or cash proceeds held by or
on behalf of the Collateral Agent shall be disposed of in accordance with
Section 6.7.
SECTION 10.3......Exercise of Remedies.
No failure or delay on the part of the Collateral Agent to
exercise any right, power or privilege under this Agreement and no course of
dealing between the Borrower, the Servicer, the Lender or the Deal Agent, on the
one hand, and the Collateral Agent, on the other hand, shall operate as a waiver
of such right, power or privilege, nor shall any single or partial exercise of
any right, power or privilege under this Agreement preclude any other or further
exercise of such right, power or privilege or the exercise of any other right,
power or privilege. The rights and remedies expressly provided in this Agreement
and the other Basic Documents are cumulative and not exclusive of any rights or
remedies which the Collateral Agent, the Lender or the Hedge Counterparties
would otherwise have pursuant to law or equity. No notice to or demand on any
party in any case shall entitle such party to any other or further notice or
demand in similar or other circumstances, or constitute a waiver of the right of
the other party to any other or further action in any circumstances without
notice or demand.
SECTION 10.4......Waiver of Certain Laws.
Each of the Borrower and the Servicer agrees, to the full
extent that it may lawfully so agree, that neither it nor anyone claiming
through or under it will set up, claim or seek to take advantage of any
appraisement, valuation, stay, extension or redemption law now or hereafter in
force in any locality where any Collateral may be situated in order to prevent
hinder or delay the enforcement of this Agreement or the foreclosure of any
Collateral, or the absolute sale of any of the Collateral or any part thereof,
or the final and absolute putting into possession thereof, immediately after
such sale, of the purchasers thereof, and each of the Borrower and the Servicer,
for itself and all who may at any time claim through or under it, hereby waives,
to the full extent that it may be lawful so to do, the benefit of all such laws,
and any and all right to have any of the properties or assets constituting the
Collateral marshalled upon any such sale, and agrees that the Collateral Agent
or any court having jurisdiction to foreclose the security interests granted in
this Agreement may sell the Collateral as an entirety or in such parcels as the
Collateral Agent or such court may determine.
SECTION 10.5......Power of Attorney.
Each of the Borrower and the Servicer hereby irrevocably
appoints the Collateral Agent its true and lawful attorney (with full power of
substitution) in its name, place and stead and at its expense, in connection
with the enforcement of the rights and remedies provided for in this Article X,
including with the following powers: (a) to give any necessary receipts or
acquittance for amounts collected or received hereunder, (b) to make all
necessary transfers of the Collateral in connection with any sale or other
disposition made pursuant hereto, (c) to execute and deliver for value all
necessary or appropriate bills of sale, assignments and other instruments in
connection with any such sale or other disposition, the Borrower and the
Servicer hereby ratifying and confirming all that such attorney (or any
substitute) shall lawfully do hereunder and pursuant hereto, and (d) to sign any
agreements, orders or other documents in connection with or pursuant to any
Basic Document or Hedging Instrument. Nevertheless, if so requested by the
Collateral Agent or a purchaser of Collateral, the Borrower shall ratify and
confirm any such sale or other disposition by executing and delivering to the
Collateral Agent or such purchaser all proper bills of sale, assignments,
releases and other instruments as may be designated in any such request.
ARTICLE XI
INDEMNIFICATION
SECTION 11.1......Indemnities by the Borrower.
(a)......Without limiting any other rights that the Collateral
Agent, the Lender, the Hedge Counterparties, the Deal Agent or any director,
officer, employee or agent or incorporator of such party (each an "Indemnified
Party") may have hereunder or under applicable law, the Borrower hereby agrees
to indemnify each Indemnified Party from and against any and all claims, losses,
liabilities, obligations, damages, penalties, actions, judgments, suits, and
related costs and expenses of any nature whatsoever, including reasonable
attorneys' fees and disbursements (all of the foregoing being collectively
referred to as "Indemnified Amounts"), which may be imposed on, incurred by or
asserted against an Indemnified Party in any way arising out of or relating to
(i) any breach of the Borrower's obligations under any Basic Document or (ii)
the financing or the pledge of or foreclosure on the Collateral, excluding,
however, Indemnified Amounts to the extent resulting solely from gross
negligence or willful misconduct on the part of such Indemnified Party. Without
limiting or being limited by the foregoing, the Borrower shall pay on demand to
each Indemnified Party any and all amounts necessary to indemnify such
Indemnified Party from and against any and all Indemnified Amounts relating to
or resulting from:
(A) the failure of any representation or warranty made or
deemed made by the Borrower, any Transferring Affiliate or the Servicer
(or any of their respective officers) under or in connection with any
Basic Document or any report or other information delivered by the
Borrower, any Transferring Affiliate or the Servicer pursuant thereto
to have been true and correct in all respects when made or deemed made
or delivered;
(B) the failure by the Borrower, any Transferring Affiliate
or the Servicer to comply with any term, provision or covenant
contained in any Basic Document or any agreement executed by it in
connection with any Basic Document or with any applicable law, rule or
regulation with respect to Collateral, or the nonconformity of any
Collateral with any such applicable law, rule or regulation;
(C) the failure to vest and maintain vested in the Borrower
legal and equitable title to and ownership of all Franchise Receivables
that are, or are purported to be, Pledged Receivables, together with
all Collections in respect thereof, free and clear of any Adverse Claim
or Restrictions on Transferability, whether existing at the time of the
purchase of such Franchise Receivable or at any time thereafter, and to
vest and maintain vested in the Collateral Agent a first priority
perfected security interest in the Collateral;
(D) with respect to any Real Property that is the subject of
a Franchise Lease, the failure to vest and maintain vested in the
Borrower legal and equitable title to and ownership of such Real
Property, free and clear of any Adverse Claim or Restrictions on
Transferability, whether existing at the time of purchase of such Real
Property or at any time thereafter, and to maintain vested in the
Collateral Agent a first priority perfected lien on and security
interest in such Real Property;
(E) the use, possession, ownership or operation of any Real
Property securing any Franchise Loan or which is the subject of any
Franchise Lease or any environmental liability allegedly arising out of
or in connection with any such Real Property;
(F) any negligent action or willful misconduct taken by, or
negligent omission of, the Borrower, the Servicer or any Transferring
Affiliate with respect to any Franchise Receivable;
(G) the failure of any Franchise Receivable which is treated
as or represented to be a Pledged Receivables to be an Eligible
Receivable;
(H) the failure by the Borrower, any Transferring Affiliate or
any of their respective Affiliates to pay when due any Taxes;
(I) any products liability claim or personal injury or
property damage suit or other similar or related claim or action of
whatever sort arising out of or in connection with any Obligor
Documents, Franchise Receivables or Real Property included in the
Collateral; or
(J) any dispute, claim, offset or defense (other than
discharge in bankruptcy of the Obligor) of the Obligor on any Franchise
Receivable to the payment thereof (including, without limitation, a
defense based on such Franchise Receivable not being a legal, valid and
binding obligation of such Obligor, enforceable against such Obligor in
accordance with its terms);
(K) any failure of the Borrower or the Servicer or any of
their respective agents or representatives to remit to the Collection
Account any Collections;
(L) the commingling of Collections with any other funds; or
(M) any investigation, litigation or proceeding related to
this Agreement, any other Basic Document or the use of proceeds of the
Advances.
(b)......Any Indemnified Amounts subject to the
indemnification provisions of this Section 11.1 shall be paid in accordance with
Article VI, to the extent that funds are available therefor in accordance with
the provisions of Article VI.
SECTION 11.2......Indemnities by the Servicer.
(a)......Without limiting any other rights that an Indemnified
Party may have hereunder or under applicable law, the Servicer hereby agrees to
indemnify each Indemnified Party from and against any and all Indemnified
Amounts that may be imposed on, incurred by or asserted against an Indemnified
Party in any way arising out of or relating to any breach of the Servicer's
obligations under this Agreement excluding, however, Indemnified Amounts to the
extent resulting from gross negligence or willful misconduct on the part of such
Indemnified Party. Without limiting or being limited by the foregoing, the
Servicer shall pay on demand to each Indemnified Party any and all amounts
necessary to indemnify such Indemnified Party from and against any and all
Indemnified Amounts relating to or resulting from:
(i) the failure of any representation or warranty made or
deemed made by the Servicer (or any of its officers) under or in
connection with any Basic Document or any report or other information
delivered by the Servicer pursuant hereto to be true and correct in all
respects when made or deemed made or delivered;
(ii) the failure by the Servicer to comply with any term,
provision or covenant applicable to the Servicer and contained in any
Basic Document or any agreement executed by it in connection with any
Basic Document or with any applicable law, rule or regulation with
respect to any Pledged Receivable;
(iii) the failure to vest and maintain vested in the Borrower
legal and equitable title to and ownership of all Receivables that are,
or are purported to be, Pledged Receivables, together with all
Collections in respect thereof, free and clear of any Adverse Claim or
Restrictions on Transferability whether existing at the time of the
funding of such Pledged Receivable or at any time thereafter, and to
vest and maintain vested in the Collateral Agent a first priority
perfected security interest in the Collateral;
(iv) with respect to any Real Property that is the subject of
a Franchise Lease, the failure to vest and maintain vested in the
Borrower legal and equitable title to and ownership of such Real
Property, free and clear of any Adverse Claim or Restrictions on
Transferability (except for Permitted Liens), whether existing at the
time of purchase of such Real Property or at any time thereafter, and
to maintain vested in the Collateral Agent a first priority perfected
lien on and security interest in such Real Property;
(v) any negligent action or willful misconduct taken by, or
negligent omission of, the Servicer with respect to any Franchise
Receivable;
(vi) any failure of the Servicer or any of its agents or
representatives to remit to the Collection Account any Collections;
(vii) the commingling of Collections with any other funds; or
(viii) the failure of any Franchise Receivables which is
treated as or represented to be a Pledged Receivable to be an Eligible
Receivable.
(b)......Any Indemnified Amounts subject to the
indemnification provisions of this Section 11.2 shall be paid to the Indemnified
Party within five (5) Business Days following demand therefor.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1......Notices, etc.
All notices and other communications provided for hereunder
shall, unless otherwise stated herein, be in writing (including communication by
facsimile copy) and mailed, transmitted or delivered, as to each party hereto,
at its address set forth on Schedule 7 hereto or at such other address as shall
be designated by such party in a written notice to the other parties hereto. In
the case of any notice or communication sent by a party to the Borrower, such
party shall send a copy to the Servicer. All such notices and communications
shall be effective upon receipt, or in the case of notice by facsimile copy,
when verbal communication of receipt is obtained, provided, however, that no
notice or communication sent pursuant to Article II shall be effective until
received.
SECTION 12.2......Binding Effect; Assignability; Termination.
This Agreement shall be binding upon and inure to the benefit
of the Borrower, the Servicer, the Lender, the Hedge Counterparties, the Deal
Agent and their respective permitted successors and assigns. Neither the
Borrower nor the Servicer may assign any of their rights and obligations
hereunder or any interest herein (i) without the prior written consent of the
Collateral Agent and the Deal Agent, except that the Servicer may delegate the
performance of its duties hereunder to an Affiliate of the Servicer with the
prior, written consent of the Deal Agent (which will not unreasonably be
withheld), provided that, notwithstanding any such delegation, the Servicer
shall remain primarily liable for the performance of its obligations hereunder,
and (ii) if such assignment may result in a withdrawal or reduction of the then
current rating by each Rating Agency of Neptune's commercial paper notes,
without the confirmation in writing from each Rating Agency that such assignment
will not result in any such withdrawal or reduction of the then current rating.
The Lender, the Hedge Counterparties, the Collateral Agent and the Deal Agent
may, at any time, assign any of their respective rights and obligations
hereunder or interest herein to an Eligible Assignee. Any such Eligible Assignee
may at any time further assign its rights and obligations hereunder or interests
herein to an Eligible Assignee. This Agreement shall create and constitute the
continuing obligations of the parties hereto in accordance with its terms, and
shall remain in full force and effect until its termination; provided, that the
rights and remedies with respect to any breach of any representation and
warranty made by the Borrower or the Servicer pursuant to Article IV and the
indemnification and payment provisions of Article XI shall be continuing and
shall survive any termination of this Agreement.
SECTION 12.3......Costs, Expenses and Taxes.
(a)......In addition to the rights of Indemnification under
Article XI hereof, the Borrower agrees to pay upon demand all reasonable costs
and expenses incurred by the Lender, the Deal Agent or the Collateral Agent
("Other Costs") in connection with the administration (including periodic
auditing, Rating Agency fees, modification and amendment) of the Basic Documents
and the other documents to be delivered hereunder, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Lender, the Deal Agent and the Collateral Agent with respect thereto. The
Borrower further agrees to pay within ten (10) Business Days after demand all
reasonable costs, counsel fees and expenses in connection with the enforcement
by the Deal Agent against the Borrower or the Servicer (whether through
negotiation, legal proceedings or otherwise) of the Basic Documents and the
other agreements and documents to be delivered hereunder, including, without
limitation, reasonable counsel fees and expenses in connection with the
enforcement of rights under this Section 12.3 in accordance with the provisions
of Article VI to the extent that funds are available therefor in accordance
therewith.
(b)......In addition, the Borrower shall pay on demand
(subject to Section 5.1(j)) any present or future stamp, sales, excise, or
documentary taxes or fees or any other property taxes, charges or similar levies
that arise from any payment made hereunder or from the execution, delivery or
registration of, performing under, or otherwise with respect to, this Agreement,
or which are payable in connection with the execution, delivery, filing or
recording of the Basic Documents or the other agreements to be delivered
hereunder. The Borrower agrees to indemnify and save each Indemnified Party from
and against any and all liabilities with respect to or resulting from any delay
in paying or omission to pay such fees.
(c)......If the Borrower or the Servicer fails to perform any
agreement or obligation contained herein, the Lender, any Hedge Counterparty,
the Collateral Agent or the Deal Agent may (but shall not be required to) itself
perform, or cause performance of, such agreement or obligation, and the expenses
of such party incurred in connection therewith shall be payable by the party
which has failed to so perform upon such party's demand therefor.
SECTION 12.4......The Deal Agent.
The terms and provisions of Exhibit J with respect to the Deal
Agent are hereby incorporated by reference.
SECTION 12.5......Confidentiality.
(a)......Each of the parties to this Agreement shall maintain
and shall cause each of its employees, managers, members and officers to
maintain the confidentiality of this Agreement (and all drafts hereof and
documents ancillary thereto) and the other confidential proprietary information
with respect to the other parties hereto and their respective businesses
obtained by it or them in connection with the structuring, negotiating and
execution of the transactions contemplated herein and agree not to disclose,
deliver or otherwise make available to any third party (other than to their
employees, managers, members or officers, each of whom shall be informed of the
confidential nature of any such information) the original or any copy of all or
any part of this Agreement (or any draft hereof and documents ancillary
thereto), except that each such party and its employees, managers, members and
officers may disclose such information (i) to its external accountants and
attorneys, or as required by applicable law, any order of any judicial or
administrative proceeding, or as required to be filed with the Securities and
Exchange Commission, (ii) to any third party which the Borrower, the Servicer or
any Transferring Affiliate reasonably believes may become an Obligor, or (iii)
in cases where the provider of such information shall otherwise consent in
writing.
(b)......Anything herein to the contrary notwithstanding, the
Borrower and the Servicer hereby consent to the disclosure of any nonpublic
information with respect to them (i) by the Deal Agent or the Lender to any
prospective or actual Eligible Assignee of either of them or (ii) by the Deal
Agent or the Lender to any Rating Agency, commercial paper dealer or provider of
a credit or liquidity enhancement and to any employees, managers, members,
officers, outside accountants and attorneys of any of the foregoing, provided
each such Person is informed of the confidential nature of such information and
agrees to be bound hereby.
SECTION 12.6......No Proceedings.
Each of the Borrower, the Deal Agent, the Servicer, the Lender
and the Hedge Counterparties hereby agrees that it will not institute against,
join or cooperate with any other Person in instituting against, or encourage or
solicit any other Person to institute against, Neptune any proceedings of the
type referred to in the definition of "Event of Bankruptcy" hereunder until one
year and one day shall have elapsed since the last day on which any of Neptune's
commercial paper notes remained outstanding .
SECTION 12.7......Amendments; Waivers; Consents.
No modification, amendment or waiver of or with respect to any
provision of the Basic Documents (other than Pledged Receivables), nor consent
to any departure by the Borrower or the Servicer from any of the terms or
conditions thereof, shall be effective unless it shall be in writing and signed
by the Deal Agent, as agent for the Lender. Any waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
consent to or demand on the Borrower, any Transferring Affiliate or the Servicer
in any case shall, in itself, entitle it to any other consent or further notice
or demand in similar or other circumstances. The Basic Documents and the
documents referred to therein embody the entire agreement among the Borrower,
the Lender, the Deal Agent, the Collateral Agent and the Servicer and supersede
all prior agreements and understandings relating to the subject hereof.
Notwithstanding the foregoing provisions of this Section 12.7, no amendment,
waiver or other modification of any provision of this Agreement that otherwise
meets the requirements of this Section 12.7 shall be effective without the
written consent of a Hedge Counterparty if the effect of that amendment, waiver
or modification would be to diminish or impair the rights, interests or benefits
provided to it as a Hedge Counterparty under the Basic Documents or to increase
its obligations as a Hedge Counterparty under the Basic Documents.
SECTION 12.8......GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF
JURY TRIAL.
(a)......THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE
CONFLICT OF LAW PROVISIONS THEREOF).
(b)......EACH OF THE PARTIES TO THIS AGREEMENT HEREBY SUBMITS
TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE
UNITED STATES DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK
CITY, AND EACH WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND
CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL, AND
SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE DAYS AFTER THE SAME SHALL
HAVE BEEN DEPOSITED IN THE U.S. MAILS, POSTAGE PREPAID. EACH OF THE PARTIES TO
THIS AGREEMENT HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS AND ANY
OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER, AND CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE
COURT. NOTHING IN THIS SECTION 12.9(b) SHALL AFFECT THE RIGHT OF ANY PARTY TO
THIS AGREEMENT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
AFFECT ANY PARTY'S RIGHT TO BRING ANY ACTION OR PROCEEDING IN THE COURTS OF ANY
OTHER JURISDICTION.
(c)......TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF
THE PARTIES TO THIS AGREEMENT HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE
IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE
ARISING OUT OF, CONNECTED WITH, RELATED TO OR IN CONNECTION WITH THIS AGREEMENT.
INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT
A JURY.
SECTION 12.9......Execution in Counterparts; Severability.
This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
agreement. In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation shall not in any way be affected or impaired thereby in
such jurisdiction and the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation shall not be
impaired thereby in any other jurisdiction.
SECTION 12.10.....Descriptive Headings.
The descriptive headings of the various sections of this
Agreement are inserted for convenience of reference only and shall not be deemed
to affect the meaning or construction of any of the provisions hereof.
SECTION 12.11.....Recourse Against Certain Parties.
No recourse under or with respect to any obligation, covenant
or agreement (including, without limitation, the payment of any fees or any
other obligations) of the Lender or Hedge Counterparty, as contained in this
Agreement or any other agreement, instrument or document entered into by it
pursuant hereto or in connection herewith shall be had against any administrator
of such Lender or Hedge Counterparty or any incorporator, affiliate,
stockholder, officer, employee or director of such Lender or Hedge Counterparty
or of any such administrator, as such, by the enforcement of any assessment or
by any legal or equitable proceeding, by virtue of any statute or otherwise; it
being expressly agreed and understood that the agreements of such Lender or
Hedge Counterparty contained in this Agreement and all of the other agreements,
instruments and documents entered into by it pursuant hereto or in connection
herewith are, in each case, solely the corporate obligations of such Lender or
Hedge Counterparty, provided that, in the case of the Lender, such liabilities
shall be paid only after the repayment in full of all of the Lender's commercial
paper notes and all other liabilities contemplated in the program documents with
respect to the Lender, and that no personal liability whatsoever shall attach to
or be incurred by any administrator of such Lender or Hedge Counterparty or any
incorporator, stockholder, affiliate, officer, employee or director of such
Lender or Hedge Counterparty or of any such administrator, as such, or any of
them, under or by reason of any of the obligations, covenants or agreements of
such Lender or Hedge Counterparty contained in this Agreement or in any other
such instruments, documents or agreements, or which are implied therefrom, and
that any and all personal liability of every such administrator of such Lender
or Hedge Counterparty and each incorporator, stockholder, affiliate, officer,
employee or director of such Lender or Hedge Counterparty or of any such
administrator, or any of them, for breaches by such Lender or Hedge Counterparty
of any such obligations, covenants or agreements, which liability may arise
either at common law or at equity, by statute or constitution, or otherwise, is
hereby expressly waived as a condition of, and in consideration for, the
execution of this Agreement. The provisions of this Section 12.11 shall survive
the termination of this Agreement.
[THE REMAINDER OF THIS PAGE WAS LEFT BLANK INTENTIONALLY]
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Franchise Receivable
Funding and Servicing Agreement to be executed by their respective officers
thereunto duly authorized, as of the date first above written.
SERVICER: CNL FINANCIAL SERVICES, LP, as Servicer
<TABLE>
<CAPTION>
<S> <C>
By: CNL FINANCIAL SERVICES GP CORP,
its general partner
By: _________________________________________________________
Name:
Title:
BORROWER:_________CNL APF PARTNERS, LP, as Borrower
By: CNL APF GP CORP., its general partner
By:__________________________________________________________
Name:
Title:
LENDER: NEPTUNE FUNDING CORPORATION,
as Lender
By: COOPERATIEVE CENTRALE
RAIFFEISEN - BOERENLEENBANK,
B.A., "RABOBANK INTERNATIONAL,"
NEW YORK BRANCH, as attorney-in-fact
By:__________________________________________________________
Name:
Title:
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
DEAL AGENT: COOPERATIEVE CENTRALE RAIFFEISEN -
BOERENLEENBANK, B.A., "RABOBANK INTERNATIONAL", NEW YORK
BRANCH, as Deal Agent and Collateral Agent
By:__________________________________________________________
Name:
Title:
By:__________________________________________________________
Name:
Title:
</TABLE>
<PAGE>
[Schedule 1 to the Agreement]
LIST OF PLEDGED RECEIVABLES
[Attached]
<PAGE>
[Schedule 2 to the Agreement]
CONCENTRATION LIMITS AND TIERING
(A) Concentration Limits with respect to types of Franchise Loans (without
duplication) shall be as follows:
(i) the aggregate Receivable Basis of all Enterprise Loans
included in the Collateral shall be no greater than 35% of the
Maximum Funded Collateral Amount; and
(ii) the aggregate Receivable Basis of all Ground Lease Loans
included in the Collateral shall be no greater than 50% of the
Maximum Funded Collateral Amount, and when combined with the
aggregate Outstanding Balance of all Enterprise Loans included
Collateral shall be no greater than 70% of the Maximum Funded
Collateral Amount.
(B) Concentration Limits by Tier (without duplication) shall be as follows:
(i) with respect to each Obligor of an Eligible Receivable arising
in connection with a Tier I Approved Concept, the aggregate
Receivable Basis of all Eligible Receivables with respect to
such Obligor or any consolidated Affiliate of such Obligor
included in the Collateral shall be no greater than 15% of the
Maximum Funded Collateral Amount;
(ii) with respect to each Obligor of an Eligible Receivable arising
in connection with a Tier II Approved Concept, the aggregate
Receivable Basis of all Eligible Receivables with respect to
such Obligor or any consolidated Affiliate of such Obligor
included in the Collateral shall be no greater than (A) in the
case of IHOP Properties, Inc., 15% of the Maximum Funded
Collateral Amount, (B) in the case of Foodmaker, Inc., 20% of
the Maximum Funded Collateral Amount and (C) in the case of
any other Obligor, 10% of the Maximum Funded Collateral
Amount;
(iii) with respect to each Obligor of an Eligible Receivable arising
in connection with a Tier III Approved Concept, the aggregate
Receivable Basis of all Eligible Receivables with respect to
such Obligor or any consolidated Affiliate of such Obligor
included in the Collateral shall be no greater than 10% of the
Maximum Funded Collateral Amount;
(iv) with respect to each Obligor of an Eligible Receivable arising
in connection with a Tier IV Approved Concept, the aggregate
Receivable Basis of all Eligible Receivables with respect to
such Obligor or any consolidated Affiliate of such Obligor
included in the Collateral shall be no greater than 7.5% of
the Maximum Funded Collateral Amount;
(v) the aggregate Receivable Basis of the Eligible Receivables
included in the Collateral arising in connection with Approved
Concepts included in a single Tier shall be no greater than
(A) 100% of the Maximum Funded Collateral Amount in the case
of Tier I, (B) 50% of the Maximum Funded Collateral Amount in
the case of Tier II, (C) 30% of the Maximum Funded Collateral
Amount in the case of Tier III and (D) 20% of the Maximum
Funded Collateral Amount in the case of Tier IV; and
(vi) with respect to any Approved Concept, the aggregate Receivable
Basis of all Eligible Receivables arising in connection with
such Approved Concept and included in the Collateral shall be
no greater than (A) in the case of an Approved Concept
included in Tier I, 40% of the Maximum Funded Collateral
Amount, (B) in the case of an Approved Concept included in
Tier II, 25% of the Maximum Funded Collateral Amount, (C) in
the case of an Approved included in Tier III, 15% of the
Maximum Funded Collateral Amount and (D) in the case of an
Approved Concept included in Tier IV, 15% of the Maximum
Funded Collateral Amount.
To the extent the aggregate Receivable Basis of the Eligible
Receivables which are the subject of any Concentration Limit exceed
such Concentration Limit, the amount of such excess shall constitute an
"Excess Concentration Amount" for purposes of the Agreement.
<PAGE>
[Schedule 3 to the Agreement]
APPROVED CONCEPTS
[Attached]
<PAGE>
[Schedule 4 to the Agreement]
LIST OF LOCKBOX ACCOUNT BANKS, LOCKBOXES AND LOCKBOX ACCOUNTS
Lockbox Account Bank: First Union National Bank
Lockbox: P.O. Box Number 930191 in Atlanta, Georgia, zip code 31193
Lockbox Account: Checking Account #2000007802872
<PAGE>
[Schedule 5 to the Agreement]
LICENSES AND PERMITS OF BORROWER AND SERVICER APPLIED FOR
BUT NOT YET OBTAINED
NONE.
<PAGE>
[Schedule 6 to the Agreement]
TRADE NAMES AND FORMER NAMES
NONE.
<PAGE>
[Schedule 7 to the Agreement]
ADDRESSES FOR NOTICES/UCC LOCATIONS
CNL APF PARTNERS, LP
450 E. South Street
Orlando, FL 32801-2878
Attention: Treasurer
Facsimile No.: (407) 425-9876
Telephone No.: (407) 650-1067
CNL FINANCIAL SERVICES, LP
450 E. South Street
Orlando, FL 32801-2878
Attention: Chief Financial Officer
Facsimile No.: (407) 425-9876
Telephone No.: (407) 650-1067
NEPTUNE FUNDING CORPORATION c/o Global Securitization Services, LLC 25 West 43rd
Street, Suite 704
New York, New York 10036
Attention: Andrew L. Stidd
Facsimile No.: (212) 302-8767
Confirmation No.: (212) 302-8330
with a copy to:
NEPTUNE FUNDING CORPORATION
c/o Rabobank International, New York Branch
as Administrator
245 Park Avenue
New York, New York 10167
Attention: Chris Kortlandt
Facsimile No.: (212) 922-0969
Confirmation No.: (212) 916-7810
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK, B.A., "RABOBANK
INTERNATIONAL", NEW YORK BRANCH
245 Park Avenue
New York, New York 10167
Attention: Tom Dawe
Facsimile No.: (212) 922-0969
Confirmation No.: (212) 916-7810
<PAGE>
[Exhibit A to the Agreement]
FORM OF BORROWER NOTICE - Funding Request
[Insert Date]
Neptune Funding Corporation
Attention:
Cooperatieve Centrale Raiffeisen-Boerenleenbank, B.A.,
"Rabobank International", New York Branch ("Rabobank"),
as Deal Agent
Attention:
Re:......Franchise Receivable Funding and Servicing Agreement,
dated as of October 14, 1999
Ladies and Gentlemen:
This notice is given pursuant to Section 2.2(a) of the
Franchise Receivable Funding and Servicing Agreement, dated as of October 14,
1999, (the "Agreement"), among CNL APF Partners, LP (the "Borrower"), Neptune
Funding Corporation (the "Lender"), CNL Financial Services, LP (the "Servicer"),
and Rabobank (the "Deal Agent"). Capitalized terms used but not defined in this
notice have the meanings ascribed to such terms in the Agreement.
The Borrower hereby requests that the Lender make an Advance
to the Borrower on _______________, 199__ pursuant to Section 2.2(b) of the
Agreement in the amount of $_______________ to be disbursed to the Borrower in
accordance with Section 2.2(b) of the Agreement. The Borrower hereby confirms
that the conditions set forth in Section 3.2 of the Agreement for the making of
such Advance have been met.
Attached to this notice pursuant to Section 2.2(e) of the
Agreement is a report prepared by the Servicer containing the information
prescribed in such Section 2.2(e).
Very truly yours,
CNL APF PARTNERS, LP
By: CNL APF GP CORP., its general partner
By: __________________________________
Name:
Title:
<PAGE>
FORM OF BORROWER NOTICE - Repayment of Advance
[Insert Date]
Neptune Funding Corporation
Attention:
Cooperatieve Centrale Raiffeisen-Boerenleenbank, B.A.,
"Rabobank International", New York Branch ("Rabobank"),
as Deal Agent
Attention:
Re:......Franchise Receivable Funding and Servicing Agreement,
dated as of October 14, 1999
Ladies and Gentlemen:
This notice is given pursuant to Section 2.2(a) of the
Franchise Receivable Funding and Servicing Agreement, dated as of October 14,
1999 (the "Agreement"), among CNL APF Partners, LP (the "Borrower"), Neptune
Funding Corporation (the "Lender"), CNL Financial Services, LP (the "Servicer")
and Rabobank (the "Deal Agent"). Capitalized terms used but not defined in this
notice have the meanings ascribed to such terms in the Agreement.
The Borrower hereby notifies the Lender and the Deal Agent
that on ___________________, 19__ (which is a Business Day) the Borrower intends
to repay $_______________ of Advances currently outstanding to the Borrower
pursuant to Section 2.6 of the Agreement, including (i) all Note Interest
accrued on the principal amount of Advances being repaid through the date of
repayment, and (ii) any and all Breakage Costs payable under Section 2.11 of the
Agreement.
Very truly yours,
CNL APF PARTNERS, LP
By: CNL APF GP CORP., its general partner
By: __________________________________
Name:
Title:
<PAGE>
FORM OF BORROWER NOTICE - Reduction of Program Amount
[Insert Date]
Neptune Funding Corporation
Attention:
Cooperatieve Centrale Raiffeisen-Boerenleenbank, B.A.,
"Rabobank International", New York Branch ("Rabobank"),
as Deal Agent
Attention:
Re:......Franchise Receivable Funding and Servicing Agreement,
dated as of October 14, 1999
Ladies and Gentlemen:
This notice is given pursuant to Section 2.2(a) of the
Franchise Receivable Funding and Servicing Agreement, dated as of October 14,
1999 (the "Agreement"), among CNL AFP Partners, LP (the "Borrower"), Neptune
Funding Corporation (the "Lender"), CNL Financial Services, LP (the "Servicer")
and Rabobank (the "Deal Agent"). Capitalized terms used but not defined in this
notice have the meanings ascribed to such terms in the Agreement.
The Borrower hereby irrevocably notifies the Lender and the
Deal Agent pursuant to Section 2.3 of the Agreement that on __________________,
199_ (which is a Business Day at least thirty (30) days after the date this
notice is given) the Program Amount shall be reduced to $______________. After
such reduction, the Program Amount will not be less than the aggregate
outstanding principal balance of the Advances after giving effect to, and
conditioned upon, the repayment of Advances set forth in the attached notice.
Very truly yours,
CNL APF PARTNERS, LP
By: CNL APF GP CORP., its general partner
By: __________________________________
Name:
Title:
<PAGE>
FORM OF BORROWER NOTICE - Termination of Program Amount
[Insert Date]
Neptune Funding Corporation
Attention:
Cooperatieve Centrale Raiffeisen-Boerenleenbank, B.A.,
"Rabobank International", New York Branch ("Rabobank"),
as Deal Agent
Attention:
Re:......Franchise Receivable Funding and Servicing Agreement,
dated as of October 14, 1999
Ladies and Gentlemen:
This notice is given pursuant to Section 2.2(a) of the
Franchise Receivable Funding and Servicing Agreement, dated as of October 14,
1999 (the "Agreement"), among CNL APF Partners, LP (the "Borrower"), Neptune
Funding Corporation (the "Lender"), CNL Financial Services, LP (the "Servicer")
and Rabobank (the "Deal Agent"). Capitalized terms used but not defined in this
notice have the meanings ascribed to such terms in the Agreement.
The Borrower hereby irrevocably notifies the Lender and the
Deal Agent pursuant to Section 2.3 of the Agreement that on _________________,
199_ (which is a Business Day at least five (5) days after the date this notice
is given) the Program Amount shall be reduced to zero and the Commitment
terminated.
Very truly yours,
CNL APF PARTNERS, LP
By: CNL APF GP CORP., its general partner
By: __________________________________
Name:
Title:
<PAGE>
Exhibit A-1
Form of FINAL Transaction Summary
[Attached]
<PAGE>
Exhibit B to Agreement
SETTLEMENT AGENT'S LETTER
[Attached]
<PAGE>
[Exhibit C to Agreement]
FORM OF NOTE
$147,000,000.00 [Insert Date]
FOR VALUE RECEIVED, CNL APF Partners, LP, a Delaware limited
partnership (the "Borrower"), promises to pay to Neptune Funding Corporation
(the "Lender"), or registered assigns, the principal sum of ONE HUNDRED
FORTY-SEVEN MILLION DOLLARS ($147,000,000.00) or, if less, the unpaid principal
amount of the aggregate loans ("Advances") made by the Lender to the Borrower
pursuant to the Agreement (as defined below), as set forth on the attached
Schedule, on the dates specified in Section 2.6 of the Agreement, and to pay the
Note Interest (as defined in the Agreement) on the unpaid principal amount of
this Note on each day that such unpaid principal amount is outstanding on the
dates specified in Section 2.7 of the Agreement.
This Note is issued pursuant to Section 2.5 of the Franchise
Receivable Funding and Servicing Agreement, dated as of October 14, 1999 (as
amended, restated, supplemented or otherwise modified from time to time, the
"Agreement"), among the Borrower, CNL Financial Services, LP, as Servicer,
Neptune Funding Corporation, and Cooperatieve Centrale
Raiffeisen-Boerenleenbank, B.A. "Rabobank International", New York Branch.
Capitalized terms used but not defined in this Note are used with the meanings
ascribed to them in the Agreement.
Notwithstanding any other provisions contained in this Note,
if at any time the Note Interest payable by the Borrower under this Note, when
combined with any and all other charges provided for in this Note, in the
Agreement or in any other document (to the extent such other charges would
constitute interest for the purpose of any applicable law limiting interest that
may be charged on this Note), exceeds the highest rate of interest permissible
under applicable law (the "Maximum Lawful Rate"), then so long as the Maximum
Lawful Rate would be exceeded the rate of interest under this Note shall be
equal to the Maximum Lawful Rate. If at any time thereafter the rate of interest
payable under this Note is less than the Maximum Lawful Rate, the Borrower shall
continue to pay interest under this Note at the Maximum Lawful Rate until such
time as the total interest paid by the Borrower is equal to the total interest
that would have been paid had applicable law not limited the interest rate
payable under this Note. In no event shall the total interest received by the
Lender under this Note exceed the amount which the Lender could lawfully have
received had the interest due under this Note been calculated since the date of
this Note at the Maximum Lawful Rate.
Payments of the principal of, premium, if any, and Note
Interest on this Note shall be made by the Borrower to the holder hereof by wire
transfer of immediately available funds by 11:00 a.m. (New York City time), in
the manner and at the address specified for such purpose as provided in Section
2.9 of the Agreement, or in such manner or at such other address as the holder
of this Note shall have specified in writing by the Borrower for such purpose,
without the presentation or surrender of this Note or the making of any notation
on this Note.
If any payment under this Note falls due on a day which is not
a Business Day, then such due date shall be extended to the next succeeding
Business Day and Note Interest shall be payable on any principal so extended.
The Borrower expressly waives presentment, demand, diligence,
protest and all notices of any kind whatsoever with respect to this Note.
This Note is secured by the security interests granted to the
Collateral Agent pursuant to the Agreement, the holder of this Note is entitled
to the benefits of the Agreement and may enforce the agreements of the Borrower
contained in the Agreement and exercise the remedies provided for by, or
otherwise available in respect of, the Agreement, all in accordance with the
terms of the Agreement. If a Termination Event shall occur and be continuing,
the unpaid balance of the principal of this Note, together with accrued Note
Interest, may be declared and become due and payable in the manner and with the
effect provided in the Agreement.
The liability of the Borrower under this Note is limited as
set forth in Section 8.5 of the Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS (WITHOUT APPLICATION OF ITS CONFLICT OF LAWS PROVISIONS)
OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the Borrower has caused this Note to be
signed and delivered by its duly authorized officer as of the date set forth
above.
CNL APF PARTNERS, LP
By: CNL APF GP Corp., its general partner
By: _____________________________________
Name:
Title:
<PAGE>
Schedule to Note
<TABLE>
<CAPTION>
<S> <C>
- ------------------------------- ---------------------------- ---------------------------- ============================
Date of Principal Principal Outstanding Principal
Advance or Amount of Amount of Amount
Repayment Advance** Repayment
- ------------------------------- ---------------------------- ---------------------------- ============================
</TABLE>
<PAGE>
[Exhibit D to Agreement]
LIST OF LITIGATION MATTERS
Marvin A. Leffingwell, d/b/a Leffingwell Electric vs. CNL APF Partners, L.P.
Iowa District Court, Webster County, Case No. LA CV 306796
<PAGE>
[Exhibit E to Agreement]
FORM OF OFFICER'S CERTIFICATE AS TO INSOLVENCY
I........After reasonable investigation, and consultation with
all necessary parties, a review of the relevant Basic Documents, to which the
Company is a party, and additional relevant documents and records, the
undersigned hereby certifies, warrants and represents that:
II.......The undersigned is the ________ of CNL APF GP Corp.,
the general partner of CNL APF Partners, LP (the "Company"). The undersigned is
authorized to make the hereinafter stated representations, warranties, and
certifications on behalf of the Company.
III......The Company will borrow sums under the Agreement (as
defined below) and, to secure repayment of such sums and the other Borrower
Secured Obligations, the Company will grant a Security interest to the
Collateral Agent in that Collateral.
IV.......In connection with its borrowings under the Agreement
the Company will enter into certain Hedging Instruments.
V........The Company has the legal power and authority to act
under the Basic Documents.
VI.......The Company has the requisite power and authority to
own and operate its property, to enter into the Basic Documents and Hedging
Instruments, and to carry out the transactions contemplated thereby.
VII......The execution, delivery, and performance of the Basic
Documents and Hedging Instruments, payment of the Loan and amounts due under the
Hedging Instruments, and the granting of the security interests provided for in
the Basic Documents have been duly authorized by all necessary action on the
part of the Company.
VIII.....The execution, delivery, and performance of the Basic
Documents and the Hedging Instruments, the granting of the security interests
provided for in the Basic Documents and the Hedging Instruments, and the
consummation of the transactions contemplated by the Agreement, the other Basic
Documents and the Hedging Instruments do not violate any provision of the
certificate of limited partnership or partnership agreement of the Company, or
any order, judgment or decree of any Governmental Authority binding on the
Company.
IX.......The Basic Documents and the Hedging Instruments
constitute valid and legally binding obligations of the Company and are
enforceable in accordance with their terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
X........The Company is not currently in bankruptcy, and has
no present intent to file a voluntary petition (or consent to the filing of an
involuntary petition) under the Bankruptcy Code or commence any other proceeding
under any applicable bankruptcy, insolvency or other similar law.
XI.......The Company is in sound financial condition, has
adequate capital to conduct its business, is paying its debts as they come due,
and does not anticipate any difficulty in continuing to pay its debts.
XII......The Company is not insolvent, and will not be
rendered insolvent as a result of any contemplated transaction. The Company was
not engaged in, is not engaged in, nor is it about to enter into, a business or
transaction for which the property remaining in its hands after the transaction
is or will be unreasonably small in relation to its business or transactions.
XIII.....The Company did not and does not intend to incur
debts beyond its ability to pay such debts as they mature, and has not entered
into any transaction with the actual intent to hinder, delay or defraud either
present or future creditors or any other Person.
XIV......The Company has made no assignment of accounts which
does not alone or in conjunction with other assignments to the same assignee
transfer a significant part of the outstanding accounts of the Company, and the
Company has made no assignment for the benefit of all the creditors of the
Company.
XV.......There are no judgment liens, executions, tax liens or
levies, ERISA liens, other nonconsensual liens in the Company's assets, or
security interests against the Collateral, other than those granted pursuant to
the Agreement.
Capitalized terms used but not defined in this Certificate
have the meanings ascribed to such terms in the Franchise Receivable Funding and
Servicing Agreement, dated as of October 14, 1999, among the Company, Neptune
Funding Corporation, CNL Financial Services, LP and Cooperatieve Centrale
Raiffeisen-Boerenleenbank, B.A., "Rabobank International", New York Branch.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this
Certificate as of _______, 1999.
CNL APF PARTNERS, LP
By: CNL APF GP CORP., its general partner
By: _____________________________________
Name:
Title:
<PAGE>
[Exhibit F to Agreement]
FORM OF MONTHLY REPORT
[Attached]
<PAGE>
[Exhibit G to Agreement]
COPY OF SERVICER'S CREDIT AND COLLECTION POLICIES
[On File with Sidley & Austin]
<PAGE>
[Exhibit H to Agreement]
FORM OF ESTOPPEL LETTER
TENANT'S ESTOPPEL CERTIFICATE
THIS TENANT'S ESTOPPEL CERTIFICATE ("Certificate") is given
this _____ day of ________________________, 1999 by [TENANT] ("Tenant") in favor
of CNL APF Partners, LP, a Delaware limited partnership, with a principal office
and place of business at 400 East South Street, Orlando, Florida 32801-2878
Attention: Steven D. Shackelford, Chief Financial Officer ("Landlord").
R E C I T A L S:
A........Pursuant to the terms and conditions of that certain
Lease Agreement ("Lease") dated [LEASE DATE], Landlord leased to Tenant certain
real property in [COUNTY] County, [STATE] ("Leased Premises"), which Leased
Premises are more particularly described in the Lease, and are also identified
as [CONCEPT] [UNIT #], [CITY], [STATE], having a street address of [STREET
ADDRESS], and more particularly described on Exhibit "A" attached hereto.
B........Subject and pursuant to the terms and conditions of
the Lease, the Landlord intends to mortgage the Leased Premises to Cooperatieve
Centrale Raffeisen-Boerenleenbank, B.A. ("Rabobank") and to assign all of its
right, title and interest in the Lease and the rents received thereby to
Rabobank as security for said mortgage.
C........As a condition precedent to accepting a mortgage to
the Leased Premises and accepting an assignment of the Lease, Rabobank has
requested that the Tenant execute and deliver this Certificate with respect to
the Lease.
NOW, THEREFORE, in consideration of the above premises, the
Tenant hereby makes the following statements for the benefit of Rabobank:
1........The Lease is in full force and effect as of the date
hereof.
2........The Lease has not been modified or amended (except as
shown on Exhibit "B" attached hereto, if applicable).
3........All rents and other charges due the Landlord have
been paid up to and including the date of __________________, 1999.
4........The Tenant has no knowledge of any default by the
Landlord, nor does the Tenant have any claim against the Landlord (except as
shown on Exhibit "C" attached hereto, if applicable).
5._______The Tenant understands and acknowledges that Rabobank is
relying upon the representations set forth in this Certificate, and may rely
thereon in connection with the transactions described herein.
IN TESTIMONY WHEREOF, witness the signature of the Tenant as
of the day and year first set forth above.
SECTION 12.12.....Signed, sealed and delivered in the
presence of the following witnesses: [TENANT]
By:
Name:
Title:
STATE OF _________
COUNTY OF ________
The foregoing instrument was acknowledged before me this ____day of
_______, 1999 by ____________________, as __________________ of
____________________, a __________________________, on behalf of the
_______________. He/she is personally known to me or has produced ____________
as identification and did not take an oath.
Printed Name:
Notary Public, State of
Commission #:
My commission expires:
(NOTARY SEAL)
<PAGE>
EXHIBIT "A"
[Legal Description of Leased Premises]
<PAGE>
EXHIBIT "B"
[Modifications/Amendments to Lease Agreement]
<PAGE>
EXHIBIT "C"
[Defaults under Lease Agreement]
<PAGE>
[Exhibit I to Agreement]
SUCCESSOR SERVICER
1........The Servicer shall not resign from the obligations
and duties hereby imposed on it except upon a determination by it that (a) the
performance of its duties hereunder has become impermissible under applicable
law, and (b) there is no reasonable action which the Servicer could take to make
the performance of its duties hereunder permissible under applicable law. Any
such determination permitting the resignation of the Servicer shall be evidenced
as to clause (a) above by an opinion of counsel to such effect delivered to the
Deal Agent. No such resignation shall become effective until a successor
servicer shall have assumed the responsibilities and obligations of the Servicer
in accordance with subsection (b) of this Exhibit I.
2........In connection with the termination of the Servicer's
responsibilities under this Agreement pursuant to Section 9.2 or subsection (a)
of this Exhibit I, the Deal Agent shall appoint a successor Servicer to the
Servicer which shall succeed to all rights and assume all of the
responsibilities, duties and liabilities of the Servicer under this Agreement
(such successor Servicer being referred to as the "Successor Servicer");
provided, that the Successor Servicer shall have no responsibility for any
actions of the Servicer prior to the date of its appointment as Successor
Servicer. In selecting a Successor Servicer, the Deal Agent may obtain bids from
any potential Successor Servicer and may agree to any bid it deems appropriate
in its commercially reasonable judgment. The Successor Servicer shall accept its
appointment by executing, acknowledging and delivering to the Deal Agent an
instrument in form and substance acceptable to the Deal Agent.
3........At any time following the appointment of a Successor
Servicer:
(A) The Servicer agrees that it will terminate its
activities as Servicer hereunder in a manner acceptable to the
Deal Agent so as to facilitate the transfer of servicing to
the Successor Servicer including, without limitation, timely
delivery (x) to the Collateral Agent of any funds that were
required to be remitted to the Collateral Agent for deposit in
the Collection Account, and (y) to the Successor Servicer, at
a place selected by the Successor Servicer, of all Servicing
Records and other information with respect to the Pledged
Receivables. The Servicer shall account for all funds and
shall execute and deliver such instruments and do such other
things as may reasonably be required to more fully and
definitely vest and confirm in the Successor Servicer all
rights, powers, duties, responsibilities, obligations and
liabilities of the Servicer.
(B) The Servicer shall terminate each Sub-Servicing
Agreement that may have been entered into and the Successor
Servicer shall not be deemed to have assumed any of the
Servicer's interest therein or to have replaced the Servicer
as a party to any such Sub-Servicing Agreement.
4........Any termination or resignation of the Servicer under
this Agreement shall not affect any claims that the Borrower, the Collateral
Agent, the Lender, any Hedge Counterparty or the Deal Agent may have against the
Servicer for events or actions taken or not taken by the Servicer arising prior
to any such termination or resignation.
<PAGE>
[Exhibit J to Agreement]
THE DEAL AGENT
1........The Lender hereby designates and appoints Rabobank as
Deal Agent hereunder, and authorizes the Deal Agent to take such actions as
agent on its behalf and to exercise such powers as are delegated to the Deal
Agent by the terms of this Agreement together with such powers as are reasonably
incidental thereto. The Deal Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with the Lender or any Hedge Counterparty, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities on
the part of the Deal Agent shall be read into this Agreement or otherwise exist
for the Deal Agent. In performing its functions and duties hereunder, the Deal
Agent shall act solely as agent for the Lender and the Hedge Counterparties and
does not assume nor shall be deemed to have assumed any obligation or
relationship of trust or agency with or for the Borrower or any of its
successors or assigns. The Deal Agent shall not be required to take any action
that exposes the Deal Agent to personal liability or that is contrary to this
Agreement or applicable law. The appointment and authority of the Deal Agent
hereunder shall terminate at the indefeasible payment in full of the Aggregate
Unpaids.
2........The Deal Agent may execute any of its duties under
this Agreement by or through agents or attorneys-in-fact and shall be entitled
to advice of counsel concerning all matters pertaining to such duties. The Deal
Agent shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
3........Neither the Deal Agent nor any of its directors,
officers, agents or employees shall be (i) liable for any action lawfully taken
or omitted to be taken by it or them under or in connection with this Agreement
(except for its, their or such Person's own gross negligence or willful
misconduct), or (ii) responsible in any manner to any of the Lender or Hedge
Counterparties for any recitals, statements, representations or warranties made
by the Borrower contained in this Agreement or in any certificate, report,
statement or other document referred to or provided for in, or received under or
in connection with, this Agreement or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other
document furnished in connection herewith, or for any failure of the Borrower to
perform its obligations hereunder, or for the satisfaction of any condition
specified in Article III. The Deal Agent shall not be under any obligation to
the Lender or Hedge Counterparty to ascertain or to inquire as to the observance
or performance of any of the agreements or covenants contained in, or conditions
of, this Agreement, or to inspect the properties, books or records of the
Borrower. The Deal Agent shall not be deemed to have knowledge of any
Termination Event unless the Deal Agent has received notice from the Borrower or
the Lender.
4........The Deal Agent shall in all cases be entitled to
rely, and shall be fully protected in relying, upon any document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrower), independent
accountants and other experts selected by the Deal Agent. The Deal Agent shall
in all cases be fully justified in failing or refusing to take any action under
this Agreement or any other document furnished in connection herewith unless it
shall first receive such advice or concurrence of Neptune or all of the Hedge
Counterparties, as applicable, as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lender, provided that unless and until
the Deal Agent shall have received such advice, the Deal Agent may take or
refrain from taking any action, as the Deal Agent shall deem advisable and in
the best interests of the Lender and the Hedge Counterparties. The Deal Agent
shall in all cases be fully protected in acting, or in refraining from acting,
in accordance with a request of Neptune or all of the Hedge Counterparties, as
applicable, and such request and any action taken or failure to act pursuant
thereto shall be binding upon the Lender.
5........The Lender and each Hedge Counterparty expressly
acknowledges that none of the Deal Agent, or any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates has made any representations
or warranties to it and that no act by the Deal Agent hereafter taken,
including, without limitation, any review of the affairs of the Borrower, shall
be deemed to constitute any representation or warranty by the Deal Agent. The
Lender and each Hedge Counterparty represents and warrants to the Deal Agent
that it has and will, independently and without reliance upon the Deal Agent or
the Hedge Counterparties and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, prospects, financial and other conditions and
creditworthiness of the Borrower and made its own decision to enter into this
Agreement.
6........The Deal Agent and its Affiliates may make loans to,
accept deposits from and generally engage in any kind of business with the
Borrower or any Affiliate of the Borrower as though the Deal Agent was not the
Deal Agent hereunder. With respect to the making of Advances pursuant to this
Agreement, the Deal Agent and its Affiliates shall have the same rights and
powers under this Agreement as the Lender and may exercise the same as though it
were not the Deal Agent, and the terms "Lender", "Lender's" and "Hedge
Counterparties" shall include the Deal Agent in its individual capacity.
7........The Deal Agent may, upon five (5) days' notice to the
Borrower, the Lender, the Hedge Counterparties, and the Deal Agent will, upon
the direction of the Lender (other than the Deal Agent, in its individual
capacity) and the Hedge Counterparties resign as Deal Agent. If the Deal Agent
shall resign, then the Lender during such 5-day period shall appoint a successor
agent. If for any reason no successor Deal Agent is appointed during such 5-day
period, then effective upon the termination of such five day period, the Lender
shall perform all of the duties of the Deal Agent hereunder and the Borrower
shall make all payments thereafter due and payable in respect of the Aggregate
Unpaids or under the Fee Letter directly to the Lender and for all purposes
shall deal directly with the Lender. After any retiring Deal Agent's resignation
hereunder as Deal Agent, the provisions of Articles VII and VIII shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Deal Agent under this Agreement.
[THE REMAINDER OF THIS PAGE WAS LEFT BLANK INTENTIONALLY]
<PAGE>
[Exhibit L to Agreement]
REQUIRED LEASE PROVISIONS
(References to "Borrower" below shall include the Transferring
Affiliate as applicable.)
1........Term: The initial term of the lease shall not be less
than 15 years.
2........Payment of Taxes: The tenant must be responsible for
the payment of ad valorem real estate taxes and assessments which may be levied
upon or assessed against the real property and the improvements situated
thereon, or arising from the use, occupancy or possession thereof.
3........Alterations: In the case where a tenant is to
construct a new restaurant facility or repair an existing facility and Borrower
is to provide funds for such construction or repair, the lease must provide that
(i) tenant's construction will comply with all applicable laws, rules and
regulations, and (ii) tenant shall be responsible for the payment and discharge
of all mechanic's and materialmen's liens which are filed against the property.
4........Maintenance. The tenant must be responsible to
maintain the real property and improvements subject to the lease. The lease must
provide that Borrower, as landlord, has no duty to repair the restaurant and
tenant may not offset rent due under the lease for maintenance and repair costs.
5........Permitted Use: Tenant must be required to operate the
restaurant at all times in compliance with the terms of the lease and all
applicable laws.
6........Operating Expenses: Borrower, as landlord, must have
no obligation to pay operating expenses of the restaurant, and must not guaranty
the payment of such expenses to franchisor or any other third party. Landlord
must not be liable for any interruption of services as a result of tenant's
failure to pay such costs, and tenant must be prohibited from offsetting rent
under the lease as a result of any such interruption in services or its
business.
7........Casualty/Destruction: The lease must provide that
tenant is responsible to rebuild the restaurant and improvements in the event of
a casualty, except if the casualty occurs during a period near the conclusion of
the initial term of the lease (as set forth in the lease) or at such other time
after the initial term as is set forth in the lease. The lease must provide that
if tenant is obligated to restore a damaged or destroyed restaurant, tenant
shall promptly restore the restaurant in a manner and with materials of
comparable quality to the original construction (unless applicable law requires
otherwise) from insurance proceeds, and if insurance proceeds are insufficient
to cover restoration costs, tenant must be obligated to pay the difference.
8........Insurance: The tenant must be responsible to insure
the Real Property and improvements thereon which are the property of Borrower,
at its expense, with hazard insurance and public liability insurance in amounts
determined by Borrower, and with deductibles and other coverages as determined
by Borrower. Borrower may approve self-insurance for any coverages.
9........Condemnation: In the event of a partial condemnation
which does not cause a termination of the lease, net awards may be paid to
tenant to the extent necessary to repair/restore its restaurant, or as otherwise
provided in the lease. In the event of a partial taking which does not terminate
the lease, the rent payable by tenant for the balance of the lease term may be
adjusted accordingly. Borrower must be entitled to receive any excess net award
without further obligation under the lease to account for such proceeds after
payment of restoration costs.
10.......Encumbrances: The lease may provide that tenant may
encumber tenant's leasehold interest with a leasehold mortgage only if such
leasehold mortgage is subordinate to Borrower's interest as landlord.
11.......Events of Default: The lease shall contain default
provisions stating that the following events are events of default: (i)
non-payment, (ii) breach of representations, covenants or agreements set forth
in the lease, and (iii) tenant's voluntary or involuntary bankruptcy, and
curative periods may be included for any events of default.
12.......Remedies: The lease must grant the Borrower the
following remedies for events of default: (i) the right to terminate the lease,
(ii) the right to reenter and repossess the restaurant facility, (iii) the right
to re-let the restaurant facility, and (iv) the right to collect Borrower's
costs of enforcing its remedies.
13.......Landlord Representations/Liability: Borrower, as
landlord, must make no representation in the lease as to the condition of the
property or, if applicable, compliance of any existing restaurant facility with
applicable laws and franchisor standards. Borrower, as landlord, must not be
liable for any damages suffered by the tenant's negligence or willful
misconduct.
14.......Indemnification: The lease shall contain
indemnification provisions regarding the tenant's indemnification of Borrower,
as landlord, against all claims related to: (i) the construction of the
restaurant facility (if applicable), (ii) operation of the restaurant facility,
(iii) violations of environmental and hazardous waste laws resulting from
tenant's operations at the property, and (iv) third party claims of personal
injury or property damage relating to the tenant's operations at the property.
15.......Tenant's Option to Purchase: In the event the tenant
is given an option to purchase the Real Property and improvements which are
subject to a lease, the purchase price will be the greater of the fair market
value thereof, or not less than 115% of the lease Rent Cost Basis, except that
with respect to Franchise Leases representing not more than 20% of the Aggregate
Eligible Loan Value and approved by the Deal Agent, such requirement shall not
apply.
16.......Termination of the Lease: Other than as a result of
destruction of the improvements during the periods described in paragraph 7
above, or as a result of condemnation, the tenant must not be permitted to
terminate the lease.
<PAGE>
[Exhibit M to Agreement]
APPROVED ENVIRONMENTAL ASSESSMENT FIRMS
1. AGRA Earth & Environmental, Inc.
2. Allender Butzke Engineers Inc.
3. American Environmental Corporation
4. Ardaman & Associates, Inc.
5. ASTEC, Environmental Services Division
6. ATC Associates, Inc.
7. Atlanta Testing & Engineering
8. BHE Environmental, Inc.
9. California Environmental
10. CTE Environmental
11. EE&G
12. Empire Environmental
13. Environmental Consultants and
14. Earth Sciences Consultants, Inc.
15. Environmental System Design, Inc.
16. Environmental Management Group, Inc.
17. ESA (Environmental Site Assessments, Inc.)
18. Faggert Consulting
19. FGS, Inc.
20. Geotechnical and Environmental
21. Geotechnical Services, Inc.
22. Gallet & Associates
23. GeoSystems Engineering, Inc.
24. Giles Engineering Associates, Inc.
25. GME Consulting Services, Inc.
26. Gulf of Maine Research Center, Inc.
27. GZA GeoEnvironmental, Inc.
28. KU Resources, Inc.
29. LAW Engineering & Environmental, Inc.
30. Lutz Environmental Company, Inc.
31. Kleinfelder, Inc.
32. MAK Environmental, Inc.
33. Melick-Tully & Associates, P.C.
34. Ninyo & Moore
35. Nova Consulting Group, Inc.
36. Nutting Environmental of Florida, Inc.
37. Petroleum Environmental Services, Inc.
38. Polyengineering, Inc.
39. Quality Environmental Solutions, Inc.
40. Ragan-Smith-Associates, Inc.
41. Redmond & Associates
42. RMA - Rindt-McDuff Associates, Inc.
43. Russell Environmental Services
44. Soil and Environmental
45. Speedie & Associates
46. Streamline Environmental
47. Superior Environmental Corp.
48. Terracon
49. TVG Environmental Inc.
50. Underground Environmental
51. Universal Engineering Sciences
52. Wagner-Huster Engineers, Inc.
<PAGE>
[Exhibit N to Agreement]
[Reserved]
<PAGE>
[Exhibit O to Agreement]
[FORM OF LOCAL COUNSEL OPINION]
---------, ----
Rabobank International, as Collateral Agent
245 Park Avenue - Floor 38
New York, NY 10167-0062
Re: CNL APF Partners, LP -- Franchise Receivables Funding Facility
Ladies and Gentlemen:
We have acted as special counsel to the Borrower (as
hereinafter defined) in the State of __________ (the "State") in connection with
the making of certain loans (collectively, the "Loan") pursuant to that certain
Franchise Receivable Funding and Servicing Agreement dated as of October 14,
1999 (the "Loan Agreement"), by and among CNL APF Partners, LP, a Delaware
limited partnership (the "Borrower"), Neptune Funding Corporation, as lender
(the "Lender"), CNL Financial Services, LP, as Servicer, and Rabobank
International, as Deal Agent.
In connection with this opinion, we have examined drafts of
the loan documents ("Loan Documents") we deemed necessary to examine in order to
render this opinion, namely the following:
(a)......Loan Agreement;
(b)......each Mortgage, Security Agreement and Assignment of
Rents (the "Mortgage"), covering the premises in the State referred to on
Exhibit A attached hereto (the "Premises"); and
(c)......Promissory Note ("Note") from the Borrower to Lender
in the amount of $_________.
Terms used herein which are defined in the Loan Agreement
shall have the respective meanings set forth in the Loan Agreement, unless
otherwise defined herein.
This opinion is being delivered in connection with Section
3.1(l) of the Loan Agreement.
Based upon the foregoing, we are of the opinion that:
1........(a) Borrower is duly qualified to do business,
including the business of leasing the Premises and owning and operating the
Premises described in each Mortgage, and is in good standing as a foreign
corporation under the laws of the State.
(b)......CNL APF GP Corp. is duly qualified to act as the
general partner of the Borrower, and if required by the laws of the State, is in
good standing as a foreign corporation under the laws of the State.
2........The Mortgage is the legal, valid and binding
obligation of Borrower, enforceable against Borrower in accordance with its
terms, subject to the qualifications set forth below.
3........The Mortgage is in proper form:
(a)......to create a lien against the collateral described in
the Mortgage (the "Mortgage Collateral"); and
(b)......for recording in the real property records of the
Clerk's Office in the respective counties where the Premises described in the
Mortgage are located in the State (the "Recording Offices"), and the Recording
Offices are the proper offices in the State for recording such instruments to
perfect a lien against real property.
4........The Mortgage contains the terms and provisions
necessary to enable the Lender, following a default under any of the Loan
Documents, to exercise the remedies which are customarily available to a real
estate lienholder under the laws of the State.
5........No recording, filing, privilege or other tax must be
paid in the State in connection with the making of the Loan or the execution,
delivery, recordation or enforcement of the Mortgage, other than [describe
taxes, if any].
6........[The priority of the lien of the Mortgage related to
all advances made by the Lender under the Loan Agreement on or before the date
on which the Mortgage is recorded in the Recording Office, will be determined by
the date of such recording.] The priority of the lien of the Mortgage related to
each advance made by the Lender under the Loan Agreement after the date the
Mortgage is so recorded will be determined by **[the date the Mortgage is
recorded] [or] [the date such advance is made]**.
7........The duly conducted foreclosure of the Mortgage will
not in any manner restrict, affect or impair the Borrower's liability with
respect to the indebtedness secured thereby or the Lender's rights or remedies
with respect to the foreclosure or enforcement of any other security interests
or liens securing such indebtedness, to the extent any deficiency remains unpaid
after application of the proceeds of the foreclosure of the Mortgage.
8........The law (statutory or otherwise) of the State does
not require a lienholder to make an election of remedies where such lienholder
holds security interests and liens on both the real and the personal property of
a debtor or to take recourse first or solely against its collateral. A Lender
may be compelled by principles of equity, such as the doctrine of marshaling, to
proceed against certain collateral before resort may be had to other collateral.
9........The Loan Documents provide that in any action to
enforce the lien of the Mortgage, the law of the State will govern the
enforceability of the lien. If the law of the State were to apply, the interest
and other obligations secured by the Mortgage would not be usurious under the
laws of the State, provided that the rate of interest reserved or collected does
not exceed ____%.
10.......The Borrower **[does] [does not]** have a right of
redemption under the laws of the State.
13.......The Lender is not required, solely because of its
role as Lender under the Loan Agreement (including, without limitation, the
making of the Loan) and as a secured party under the Mortgage, or because of
taking such actions as enforcement of the Loan Agreement, maintaining or
defending any action relating to the Loan, or taking mere title to the property
by judicial foreclosure or deed in lieu of foreclosure, to (a) qualify to
transact business in the State; (b) obtain a license, certificate or other form
of permission or consent from any State agency; (c) file a designation for
service of process or any other similar type of filing in the State; or (d) pay
any state or local tax (whether income, franchise or other) in the State, other
than taxes paid in the nature of documentary, mortgage and intangible taxes.
Very truly yours,
<PAGE>
EXHIBIT A
THE PREMISES
<PAGE>
[Exhibit P-1 to Agreement]
Form of Franchise Receivable Assignment - Loan
PREPARED BY AND RETURN TO:
Dale A. Burket, Esquire
Lowndes, Drosdick, Doster,
Kantor & Reed, P.A.
215 North Eola Drive
P. O. Box 2804
Orlando, Florida 32802
<TABLE>
<CAPTION>
<S> <C>
SPACE ABOVE THIS LINE FOR RECORDER'S USE
- ---------------------------------------------------- ---------------------------------------------------------------
</TABLE>
ARTICLE XIIIWARRANTY DEED
THIS WARRANTY DEED, made and executed as of the _____ day of
__________,1999, by CNL AMERICAN PROPERTIES FUND, INC., a Maryland corporation,
whose address is 400 East South Street, Suite 500, Orlando, Florida 32801
(hereinafter referred to as the "Grantor") to CNL APF PARTNERS, LP, a Delaware
limited partnership, whose address is 400 East South Street, Suite 500, Orlando,
Florida 32801 (hereinafter referred to as the "Grantee");
Grantor, for and in consideration of the sum of TEN DOLLARS ($10.00) to
Grantor in hand paid by Grantee, the receipt of which is acknowledged, has
granted, bargained, and sold to Grantee, and Grantee's heirs and assigns forever
that certain piece, parcel or tract of land situated in _______________ County,
Florida more particularly described on Exhibit "A" (the "Property") together
with all of Grantor's right, title and interest as landlord or lessor in and to
any leases or rental agreements pertaining to the Property, and all of the
rights, benefits and privileges of the landlord or lessor thereunder, including
without limitation all of Grantor's right, title and interest in and to all
security deposits and rentals thereunder. And Grantor does fully warrant the
title to the land conveyed, and will defend the same against the lawful claims
of all persons whomever.
[Signatures on Next Page]
<PAGE>
IN WITNESS OF THE ABOVE, Grantor has executed this deed on the date
first written above.
Signed, sealed and delivered in the presence of:
CNL AMERICAN PROPERTIES FUND, INC., a Maryland
corporation
By: _____________________________
[insert name ], [insert title]
Name:
------------------------------------------------
Name:
-----------------------------------------------
STATE OF FLORIDA
COUNTY OF ORANGE
The foregoing instrument was acknowledged before me on the _______ day
of ______________, 1999, by [insert name], as [title] of CNL AMERICAN PROPERTIES
FUND, INC., a Maryland corporation, on behalf of the corporation. He is
personally known to me and did not take an oath.
Notary Signature
Printed Name
Notary Public, State of Florida
Commission Number:
My Commission Expires:
<PAGE>
[Exhibit P-2 to Agreement]
Form of Franchise Receivable Assignment - Lease
PREPARED BY AND RETURN TO:
Dale A. Burket, Esquire
Lowndes, Drosdick, Doster,
Kantor & Reed, P.A.
215 North Eola Drive
P. O. Box 2804
Orlando, Florida 32802
<TABLE>
<CAPTION>
<S> <C>
SPACE ABOVE THIS LINE FOR RECORDER'S USE
- ---------------------------------------------------- ---------------------------------------------------------------
ARTICLE XIVWARRANTY DEED
THIS WARRANTY DEED, made and executed as of the _____ day of
__________,1999, by CNL AMERICAN PROPERTIES FUND, INC., a Maryland corporation,
whose address is 400 East South Street, Suite 500, Orlando, Florida 32801
(hereinafter referred to as the "Grantor") to CNL APF PARTNERS, LP, a Delaware
limited partnership, whose address is 400 East South Street, Suite 500, Orlando,
Florida 32801 (hereinafter referred to as the "Grantee");
Grantor, for and in consideration of the sum of TEN DOLLARS ($10.00) to
Grantor in hand paid by Grantee, the receipt of which is acknowledged, has
granted, bargained, and sold to Grantee, and Grantee's heirs and assigns forever
that certain piece, parcel or tract of land situated in _______________ County,
Florida more particularly described on Exhibit "A" (the "Property") together
with all of Grantor's right, title and interest as landlord or lessor in and to
any leases or rental agreements pertaining to the Property, and all of the
rights, benefits and privileges of the landlord or lessor thereunder, including
without limitation all of Grantor's right, title and interest in and to all
security deposits and rentals thereunder. And Grantor does fully warrant the
title to the land conveyed, and will defend the same against the lawful claims
of all persons whomever.
</TABLE>
[Signatures on Next Page]
<PAGE>
IN WITNESS OF THE ABOVE, Grantor has executed this deed on the date
first written above.
Signed, sealed and delivered in the presence of:
<TABLE>
<CAPTION>
<S> <C>
CNL AMERICAN PROPERTIES FUND, INC., a Maryland
corporation
By: ___________________________________
Name: [insert name ], [insert title]
------------------------------------------------
Name:
------------------------------------------------
STATE OF FLORIDA
COUNTY OF ORANGE
The foregoing instrument was acknowledged before me on the _______ day
of ______________, 1999, by [insert name], as [title] of CNL AMERICAN PROPERTIES
FUND, INC., a Maryland corporation, on behalf of the corporation. He is
personally known to me and did not take an oath.
Notary Signature
Printed Name
Notary Public, State of Florida
Commission Number:
My Commission Expires:
</TABLE>
<PAGE>
135210v1
[Exhibit Q to Agreement]
FORM OF PLEDGED RECEIVABLE SUPPLEMENT
[Insert Date]
Neptune Funding Corporation
Attention:
Cooperatieve Centrale Raiffeisen-Boerenleenbank, B.A.,
"Rabobank International", New York Branch ("Rabobank"),
as Deal Agent
Attention:
Re:......Franchise Receivable Funding and Servicing Agreement,
dated as of October 14, 1999
Ladies and Gentlemen:
Reference is made to the Franchise Receivable Funding and
Servicing Agreement, dated as of October 14, 1999 (as amended or otherwise
modified from time to time, the "Agreement"), among CNL APF Partners, LP (the
"Borrower"), Neptune Funding Corporation (the "Lender"), CNL Financial Services,
LP (the "Servicer") and Rabobank (the "Deal Agent"). Capitalized terms used but
not defined in this notice have the meanings ascribed to such terms in the
Agreement.
Pursuant to Section 2.2(g) of the Agreement, the Borrower
hereby adds the Franchise Receivables identified on Schedule 1 (each a "New
Pledged Receivable") to the Pledged Receivables. As security for the prompt
payment or performance in full when due, whether at stated maturity, by
acceleration or otherwise, of all Borrower Secured Obligations, the Borrower
hereby assigns and pledges to the Collateral Agent and grants to the Collateral
Agent a security interest in and lien upon, all of the Borrower's right, title
and interest in and to the New Pledged Receivables and all related Collateral,
in each case whether now or hereafter existing or in which Borrower now has or
hereafter acquires an interest and wherever the same may be located.
Very truly yours,
CNL APF PARTNERS, LP
By: CNL APF GP CORP., its general partner
By: __________________________________
Name:
Title:
** The aggregate principal amount of all Advances may not exceed the Program
Amount.
AMENDMENT
AMENDMENT, dated as of August 30, 1999 (this "Amendment"), among CNL
FINANCIAL V, LP, a Delaware limited partnership (the "Borrower"), CNL APF
PARTNERS, LP, a Delaware limited partnership ("APF"), [CNL AMERICAN PROPERTIES
FUND, INC., a Maryland corporation (the "Parent")], CNL FINANCIAL SERVICES, LP,
a Delaware limited partnership ("CFS"; together with APF, the Parent and the
Borrower, the "Credit Parties"), CNL FINANCIAL SERVICES, INC., a Delaware
corporation ("Old CFS"), CNL FINANCIAL CORPORATION, a Delaware corporation
("CFC") and CNL GROUP, INC. ("Group"; together with CFC and Old CFS, the
"Original Credit Parties") and PRUDENTIAL SECURITIES CREDIT CORPORATION (the
"Lender"), to the Interim Wholesale Mortgage Warehouse and Security Agreement,
dated as of September 18, 1998 (as amended, supplemented or otherwise modified
prior to the date hereof, the "Existing Loan Agreement" as modified hereby, the
"Loan Agreement"), among the Borrower, CEC, CFS, Group and the Lender.
RECITALS
The Borrower has requested the Lender to agree to amend certain
provisions of the Existing Loan Agreement as set forth in this Amendment as of
the date of the merger of CNL Financial Corporation with a subsidiary of the
parent of APF. The Lender is willing to agree to such amendments, but only on
the terms and subject to the conditions set forth in this amendment.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, including, without limitation, the assumption by the
Credit Parties of the Original Credit Parties' agreement that Prudential
Securities Incorporated shall be the lead underwriter or lead placement agent in
the next securitization of Franchise Loans by the Credit Parties, the receipt
and sufficiency of which is hereby acknowledged, the Borrower, the Credit
Parties and the Original Credit Parties and the Lender hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein, terms
defined in the Loan Agreement are used herein as therein defined.
2. Amendments.
(a) The Heading of the Existing Loan Agreement is hereby
amended by deleting clause (ii) thereof and substituting in lieu
thereof a new clause (ii) to read in its entirety as follows:
"(ii) solely for the purposes of Section 7.22 and
Section 11 (excluding Sections 11.03 and 11.15) hereof, CNL
APE Partners, LP, a Delaware limited partnership ("APF"), [CNL
American Properties Fund, Inc., a Maryland corporation (the
"Parent")] and CNL FINANCIAL SERVICES, LP, a Delaware limited
partnership and successor by merger to CNL Financial Services,
Inc. ("CFS"); and"
(b) Section 1.01 of the Existing Loan Agreement is hereby
amended by deleting the name "CFS" wherever it appears in the
definition of "Administrative Agreement" thereof and substituting in
lieu thereof the name "CNL Financial Services, Inc."
(c) Section 1.01 of the Existing Loan Agreement is hereby
amended by deleting the last sentence of the definition of "Affiliate"
thereof and substituting in lieu thereof a new sentence to read in its
entirety as follows:
"Affiliates of the Borrower shall include, without
limitation, APF and CFS."
(d) Section 1.01 of the Existing Loan Agreement is hereby
amended by deleting the definition of "Credit Party" thereof and
substituting in lieu thereof a new definition to read in its entirety
as follows:
"'Credit Party' shall mean any of the (i) Borrower,
(ii) APF, [(iii) the Parent,] (iv) CFS, [(v) each Subsidiary
of the foregoing], (vi) any Affiliate of any of the foregoing
which services or originates Franchise Loans, and (vii)
successors and assigns of each of the foregoing."
(e) Section 1.01 of the Existing Loan Agreement is hereby
amended by deleting clause (ii) of the definition of "Franchise Loan
Transfer Documents" thereof and substituting in lieu thereof a new
clause (ii) to read in its entirety as follows:
"(ii) require that such Originator, CFS and APF make
certain representations and warranties relating to such
Franchise Loans substantially comparable to those
representations and warranties made by the Borrower to the
Lender under Schedule 1 of this Agreement,"
(f) Section 1.01 of the Existing Loan Agreement is hereby
amended by deleting the definition of "Originator" thereof and
substituting in lieu thereof a new definition to read in its entirety
as follows:
"'Originator' shall mean APF and each other Credit
Party that has been approved by the Lender in writing, which
originates Franchise Loans."
(g) Section 1.01 of the Existing Loan Agreement is hereby
amended by deleting the definition of "Space Lease Franchise Loan"
thereof and substituting in lieu thereof a new definition to read in
its entirety as follows:
"'Space Lease Franchise Loan' shall mean a Franchise
Loan which is any of (a) secured by a Mortgage on or a
collateral assignment of a space lease interest in real
property relating to the operation of one or more Franchise
Units; provided that (i) the related Mortgage has been or will
be duly filed to be recorded with all appropriate governmental
authorities in all jurisdictions in which such Mortgage is
required to be filed and recorded to create a valid, binding
and enforceable collateral assignment or mortgage of the
Obligor's interest in the related Property, (ii) the owner of
the related Property has consented to such collateral
assignment or mortgage and has executed a landlord's estoppel
and consent in connection with such assignment and (iii) all
necessary subordination, attornment and non-disturbance
agreements have been obtained with respect to such property;
provided, that, in accordance with paragraph (iv) of the
definition of "Borrowing Base", certain Space Lease Franchise
Loans may fail to satisfy items (ii) and (iii) above; (b) a
Franchise Loan for which the related Franchise Units are
Burger King units subject to Burger King Corporation's
standard Intercreditor Agreement; or (c) a Franchise Loan for
which the related Franchise Units are either Taco Bell or KFC
units subject to Tricon Global Restaurants standard tn-party
agreement."
(h) Section 1.01 of the Existing Loan Agreement is hereby
amended by deleting the definition of "Termination Date" thereof and
substituting in lieu thereof a new definition to read in its entirety
as follows:
"'Termination Date' shall mean September 19, 2000 or
such earlier date on which this Loan Agreement shall terminate
in accordance with the provisions hereof or by operation of
law, as same may be extended in accordance with Section 2.11
hereof."
(i) Section 2.06 of the Existing Loan Agreement is hereby
amended by adding the following clause at the end of Section (a)
thereof:
"; provided, that no such prepayment or pledge of
additional Eligible Franchise Loans shall be required pursuant
to this Section 2.06(a) unless the Borrowing Base Deficiency
is greater than or equal to $250,000."
(j) Section 6.01 of the Existing Loan Agreement is hereby
amended by deleting Section (a) thereof and substituting in lieu
thereof the following new Section (a) to read in its entirety as
follows:
"(a) (i) The audited consolidated and consolidating
balance sheet of CNL Financial Services, Inc. and its
consolidated Subsidiaries as at June 30, 1999,
reported thereon by Arthur Anderson, LLP and the
audited consolidated and consolidating balance sheet
of the Parent and its consolidated Subsidiaries as at
June 30, 1999, reported thereon by
PricewaterhouseCoopers, LLP, a copy of which has
heretofore been furnished to or reviewed by the
Lender, is complete and correct and presents fairly
the consolidated financial condition of CNL Financial
Services, Inc., the Parent and their consolidated
Subsidiaries as at such dates and the consolidated
results of their operations and their consolidated
cash flows for the fiscal year then ended.
(ii) The unaudited pro forma consolidated
and consolidating balance sheet of the Parent and its
consolidated Subsidiaries as at the August __, 1999,
a copy of which has heretofore been furnished to or
reviewed by the Lender, is complete and correct and
presents fairly the consolidated financial condition
of the Parent and its consolidated Subsidiaries as of
August __, 1999 after giving effect to the
acquisition by APF of assets, liabilities and
entities relating to CNL Group, Inc. and the
corporate restructuring to be performed in connection
therewith."
(k) Section 6.01 of the Existing Loan Agreement is hereby
amended by deleting from Section (c) thereof the parenthetical that
reads "(other than CNL)".
(1) Section 6.02 of the Existing Loan Agreement is hereby
amended by deleting the date "June 30, 1997" and substituting in lieu
thereof the date "June 30, 1999".
(m) Section 7.01 of the Existing Loan Agreement is hereby
amended by deleting such Section in its entirety and substituting in
lieu thereof the following new Section 7.01 to read in its entirety as
follows:
"7.01 Financial Statements. The Credit Parties shall
deliver to the Lender:
(a) as soon as available and in any event within
forty-five (45) days after the end of each of the first three
quarterly fiscal periods of each fiscal year of the Credit
Parties, the consolidated and consolidating balance sheets of
the Credit Parties and their consolidated Subsidiaries as at
the end of such period and the related unaudited consolidated
and consolidating statements of income and of cash flows for
the Credit Parties and their consolidated Subsidiaries for
such period and the portion of the fiscal year through the end
of such period, setting forth in each case in comparative form
the figures for the previous year, accompanied by a
certificate of a Responsible Officer of such Credit Parties,
which certificate shall state that said consolidated financial
statements fairly present the consolidated and consolidating
financial condition and results of operations of the Credit
Parties and their Subsidiaries in accordance with GAAP,
consistently applied, as at the end of, and for, such period
(subject to normal year-end audit adjustments);
(b) as soon as available and in any event within
ninety (90) days after the end of each fiscal year of each
Credit Party, the audited consolidated and consolidating
balance sheets of the Credit Parties and their consolidated
Subsidiaries as at the end of such fiscal year and the related
consolidated and consolidating statements of income and
retained earnings and of cash flows for the Credit Parties and
their consolidated Subsidiaries for such year, setting forth
in each case in comparative form the figures for the previous
year, accompanied by an opinion thereon of independent
certified public accountants of recognized national standing,
which opinion shall not be qualified as to scope of audit or
going concern and shall state that said consolidated and
consolidating financial statements fairly present the
consolidated and consolidating financial condition and results
of operations of the Credit Parties and their consolidated
Subsidiaries as at the end of, and for, such fiscal year in
accordance with GAAP; and
(c) from time to time such other information
regarding the financial condition, operations, or business of
the Credit Parties and their Subsidiaries as the Lender may
reasonably request."
(n) Section 7.03 of the Existing Loan Agreement is hereby
amended by deleting the reference to "CFC" in the third line thereof
and substituting in lieu thereof "APF".
(o) Section 8 of the Existing Loan Agreement is hereby amended
by deleting Section (in) thereof and substituting in lieu thereof the
following new Section (in) to read in its entirety as follows:
"(m) Changing of Control. APF and CNL Financial GP
Holding Corp., a Delaware corporation and an Affiliate of APF,
shall cease to own collectively, directly or indirectly 100%
of the issued and outstanding partnership interests of the
Borrower without the written consent of the Lender (determined
in good faith); or"
(p) Section 11.16 of the Existing Loan Agreement is hereby
amended by deleting the last sentence thereof.
(q) Schedule 1 of the Existing Loan Agreement is hereby
amended by adding the following sentence at the end of Section (xi)
thereof:
"Notwithstanding anything to the contrary contained
herein, in the event that environmental reports were not
delivered in connection with any Franchise Loan, the
Originator shall have received a lender's environmental
indemnity insurance policy from an environmental insurer
acceptable to the Lender in respect of the related Franchise
Units."
(r) Schedule 1 of the Existing Loan Agreement is hereby
amended by adding the following sentence at the end of Section (xv)
thereof:
"Notwithstanding anything to the contrary contained
herein, any Franchise Loan for which the related Obligor is an
Obligor approved by the Lender shall be permitted to exclude
from the collateral for such Franchise Loan any equipment at
the related Franchise Units, so long as such equipment was
excluded from the valuation of such Franchise Units in the
underwriting of such Franchise Loan."
(s) Schedule 1 of the Existing Loan Agreement is hereby
amended by adding the following sentence at the end of Section (xxvii)
thereof:
"Notwithstanding anything to the contrary contained
herein, no actual survey shall be required so long as (A) the
related real property is being refinanced and is not being
newly acquired and (B) the related title insurance policy
deletes the standard survey exception."
(t) Schedule 1 of the Existing Loan Agreement is hereby
amended by adding the following new Section at the end thereof:
"(liii) In the case of any Space Lease Franchise Loan
made pursuant to clause (b) of the definition thereof, each of
the related Franchise Units shall be subject to a Burger King
Corporation standard Intercreditor Agreement which shall be in
full force and effect."
(u) Schedule 4 of the Existing Loan Agreement is hereby
deleted and the new Schedule 4 attached hereto is substituted in lieu
therof.
3. Release of Certain Original Credit Parties: Assumption by
APF. From and after the Amendment Effective Date (as hereinafter defined), CNL
Group, Inc. and CNL Financial Corporation shall be released of all rights,
duties and obligations under the Loan Agreement and the other Loan Documents and
APF shall succeed to and assume all such rights, duties and obligations. CNL
Financial Corporation shall be dissolved substantially concurrently with the
Amendment Effective Date.
4. Effectiveness. This Amendment shall become effective on the
date upon which the following conditions precedent have been satisfied (the
"Amendment Effective Date"):
(a) the receipt by the Lender of this Amendment, duly executed
and delivered by the Credit Parties and the Lender;
(b) the receipt by the Lender of an amended and restated
Franchise Loan Purchase Agreement, giving effect to the change in
Credit Parties contemplated hereby and otherwise in form and substance
acceptable to the Lender;
(c) the receipt by the Lender of an amended and restated
Interim Servicing Agreement, giving effect to the change in Credit
Parties contemplated hereby and otherwise in form and substance
acceptable to the Lender;
(d) the merger of CNL Financial Corporation with a subsidiary
of APF and the merger of Old CFS into CFS shall have been consummated
in accordance with the descriptions of such mergers delivered to the
Lender; and
(e) any other conditions precedent reasonably requested by the
Lender.
5. Representations and Warranties. To induce the Lender to
enter into this Amendment, the Borrower hereby represents and warrants to the
Lender and the Lenders that after giving effect to the amendments provided for
herein, the representations and warranties contained in the Loan Agreement and
the other Loan Documents will be true and correct in all material respects as if
made on and as of the date hereof and that no Default or Event of Default will
have occurred and be continuing.
6. No Other Amendments. Except as expressly amended hereby,
the Loan Agreement, the Note and the other Loan Documents shall remain in full
force and effect in accordance with their respective terms, without any waiver,
amendment or modification of any provision thereof.
7. Counterparts. This Amendment may be executed by one or more
of the parties hereto on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
8. Expenses. The Credit Parties jointly and severally agree to
pay and reimburse the Lender for all of the reasonable out-of-pocket costs and
expenses incurred by the Lender in connection with the preparation, execution
and delivery of this Amendment, including, without limitation, the reasonable
fees and disbursements of Cadwalader, Wickersham & Taft, counsel to the Lender.
9. Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
[SIGNATURE PAGES FOLLOW]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered as of the day and year first above
written.
CNL FINANCIAL V, LP,
By: CNL FINANCIAL V. INC.
its general partner
By:___________________
Name: Brian H. Fluck
Title: Executive Vice President
CNL APF PARTNERS, LP
By: CNL APF GP CORP.
its general partner
By:___________________
Name: Steven D. Shackelford
Title: Chief Financial Officer
CNL AMERICAN PROPERTIES FUND, INC.,
By:___________________
Name: Steven D. Shackelford
Title: Chief Financial Officer
CNL FINANCIAL SERVICES, LP
By: CFS GP CORP.
its general partner
By:__________________________
Name: Brian H. Fluck
Title: Executive Vice President
<PAGE>
CNL FINANCIAL SERVICES, INC.
By:__________________________
Name: Brian H. Fluck
Title: Executive Vice President
CNL FINANCIAL CORPORATION
By:__________________________
Name: Brian H. Fluck
Title: Executive Vice President
CNL GROUP, INC.
By:_________________________
Name: Curtis B. McWilliams
Title: Executive Vice President
<PAGE>
The Amendment, dated as of August 30, 1999, among CNL FINANCIAL V, LP, a
Delaware limited partnership. CNL APF PARTNERS, LP, a Delaware limited
partnership. CNL AMERICAN PROPERTIES FUND. INC., a Maryland corporation, CNL
FINANCIAL SERVICES, LP, a Delaware 1imited partnership, CNL FINANCIAL SERVICES,
INC., a Delaware corporation, CNL FINANCIAL CORPORATION, a Delaware corporation,
and CNL GROUP, INC. and PRUDENTIAL SECURITIES CREDIT CORPORATION to the Interim
Wholesale Mortgage Warehouse and Security Agreement, dared as of September 18,
1998 is hereby acknowledged and consented to:
PRUDENTIAL GLOBAL FUNDING, INC.
By:_____________________________
Name: Peter Nelson
Title: Vice President
<PAGE>
INTERIM WHOLESALE MORTGAGE WAREHOUSE
AND SECURITY AGREEMENT
DATED AS OF SEPTEMBER 18, 1998
by and among
CNL FINANCIAL V, LP
as Borrower,
CNL FINANCIAL CORPORATION,
CNL FINANCIAL SERVICES, INC., and
CNL GROUP, INC.
as Credit Parties,
and
PRUDENTIAL SECURITIES CREDIT CORPORATION
as Lender
TABLE OF CONTENTS
1. Interim Wholesale Mortgage Warehouse and Security Agreement
2. Note
3. Custodial Agreement
4. Blocked Account Agreement
5. Servicing Agreement
6. Franchise Loan Purchase Agreement
7. Administration Agreement
8. UCC-l Financing Statement
9. Closing Certificate of CNL Financial V, LP
10. Closing Certificate of CNL Financial LP Holding Corp.
<PAGE>
11. Closing Certificate of CNL Financial Services, Inc.
12. Closing Certificate of CNL Financial Corporation
13. Closing Certificate of CNL Group, Inc.
14. Corporate Legal Opinion of Lowndes, Drosdick, Doster, Kantor & Reed,
P.A.
15. True Sa1e/Non-Consolidation Legal Opinion of Lowndes, Drosdick, Doster,
Kantor & Reed, P.A.
16. Insurance Certificates
17. Certificates of Out-of-State Delivery
<PAGE>
INTERIM WHOLESALE MORTGAGE WAREHOUSE AND SECURITY AGREEMENT
Dated as of September 18, 1998
CNL FINANCIAL V, LP
as Borrower
and
CNL FINANCIAL CORPORATION
CNL FINANCIAL SERVICES, INC.
CNL GROUP, INC.
as Credit Parties
and
PRUDENTIAL SECURITIES CREDIT CORPORATION
as Lender
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
RECITALS 1
SECTION 1 Definitions and Accounting Matters 1
1.01 Certain Defined Terms 1
1.02 Accounting Terms and Determinations 14
SECTION 2 Advances, Note and Prepayments 14
2.01 Advances 14
2.02 Note 14
2.03 Procedure for Borrowing 15
2.04 Repayment of Advances; Interest 16
2.05 Limitation on Advances; Illegality 16
2.06 Determination of Borrowing Base; Mandatory Prepayments or Pledge 17
2.07 Optional Prepayments 17
2.08 Requirements of Law 18
2.09 Purpose of Advances 19
2.10 Taxes 19
2.11 Extension of Termination Date 20
2.12 Commitment Fee 20
SECTION 3 Payments; Computations; Etc 20
3.01 Payments 20
3.02 Computations 20
3.03 Blocked Account 21
SECTION 4 Collateral Security 21
4.01 Collateral; Security Interest 21
4.02 Further Documentation 22
4.03 Changes in Locations, Name, etc 23
4.04 Lender's Appointment as Attorney-in-Fact 23
4.05 Performance by Lender of Borrower's Obligations 24
4.06 Proceeds 24
4.07 Remedies 25
4.08 Limitation on Duties Regarding Presentation of Collateral 25
4.09 Powers Coupled with an Interest 26
4.10 Release of Security Interest 26
SECTION 5 Conditions Precedent 26
5.01 Initial Advance 26
5.02 Initial and Subsequent Advances 28
SECTION 6 Representations and Warranties 30
6.01 Financial Condition 30
6.02 No Change 30
6.03 Existence; Compliance with Law 30
6.04 Corporate Power; Authorization Enforceable Obligations 31
6.05 No Legal Bar 31
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
6.06 No Material Litigation 31
6.07 No Default 31
6.08 Collateral; Collateral Security 31
6.09 Chief Executive Office 32
6.10 Location of Books and Records 32
6.11 No Burdensome Restrictions 32
6.12 Taxes 32
6.13 Margin Regulations 32
6.14 Investment Company Act; Other Regulations 32
6.15 Subsidiaries 33
6.16 Origination and Acquisition of Franchise Loans 33
6.17 No Adverse Selection 33
6.18 Borrower Solvent; Fraudulent Conveyance 33
6.19 ERISA 33
6.20 True and Complete Disclosure 33
6.21 Licenses 34
6.22 True Sales 34
6.23 Lines of Business 35
6.24 Year 2000 35
SECTION 7 Covenants of the Borrower 35
7.01 Financial Statements 35
7.02 Existence, Etc 36
7.03 Maintenance of Property; Insurance 36
7.04 Notices 36
7.05 Other Information 37
7.06 Further Identification of Collateral 37
7.07 Franchise Loan Determined to be Defective 37
7.08 Reports 38
7.09 Borrowing Base Deficiency 38
7.10 Prohibition of Fundamental Changes 38
7.11 Limitation on Liens on Collateral 38
7.12 Limitation on Sale or Other Disposition of Collateral 38
7.13 Limitation on Transactions with Affiliates 38
7.14 Underwriting Guidelines 39
7.15 Limitations on Modifications, Waivers and Extensions of Franchise Loans 39
7.16 Servicing
7.17 Limitation on Distributions 39
7.18 Use of Proceeds 39
7.19 Selection of Collateral 39
7.20 Interest Rate Protection Agreements 40
7.21 Lines of Business 40
7.22 Securitization of Franchise Loans 40
7.23 Year 2000 Procedures 41
SECTION 8 Events of Default 41
SECTION 9 Remedies Upon Default 44
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SECTION 10 No Duty of Lender 44
SECTION 11 Miscellaneous
11.01 Waiver 45
11.02 Notices 45
11.03 Indemnification and Expenses 45
11.04 Amendments 46
11.05 Successors and Assigns 46
11.06 Survival 46
11.07 Captions 46
11.08 Counterparts 46
11.09 Governing Law; etc 46
11.10 Submission to Jurisdiction; Waivers 47
11.11 Waiver of Jury Trial 47
11.12 Acknowledgments 48
11.13 Hypothecation and Pledge of Collateral 48
11.14 Assignments Participations 48
11.15 Servicing 48
11.16 Periodic Due Diligence Review 49
11.17 Set-Off 50
11.18 Confidentiality 50
11.19 No Proceedings 50
</TABLE>
SCHEDULES
SCHEDULE 1 Representations and Warranties re: Franchise Loans
SCHEDULE 2 Filing Jurisdictions and Offices
SCHEDULE 3 Subsidiaries
SCHEDULE 4 Franchise Concepts
EXHIBITS
EXHIBIT A Form of Note
EXHIBIT B Form of Custodial Agreement
EXHIBIT C Form of Opinion of Counsel to Borrower
EXHIBIT D Form of Notice of Borrowing and Pledge
EXHIBIT E Underwriting Guidelines
EXHIBIT F Form of Blocked Account Agreement
EXHIBIT G Eligibility Violation Notice
EXHIBIT H Form of Confidentiality Agreement
<PAGE>
INTERIM WHOLESALE MORTGAGE WAREHOUSE AND SECURITY
AGREEMENT
INTERIM WHOLESALE MORTGAGE WAREHOUSE AND SECURITY AGREEMENT, dated as
of September 18, 1998, among
(i) CNL FINANCIAL V, LP, a Delaware limited partnership (the
"Borrower"); and
(ii) solely for purposes of Section 7.22 and Section 11
(excluding Sections 11.03 and 11.15) hereof, CNL Financial Corporation
("CFC"), CNL Financial Services, Inc. ("CFS") and CNL Group, Inc.
("CNL"), each a Florida corporation; and
(iii) PRUDENTIAL SECURITIES CREDIT CORPORATION, a Delaware
corporation (the "Lender").
RECITALS
The Borrower wishes to obtain financing from time to time to
provide interim funding for the origination and acquisition of certain Franchise
Loans some of which Franchise Loans are to be sold or contributed by the
Borrower to one or more trusts or other entities to be sponsored by the Borrower
or an Affiliate (as defined herein) thereof, or to third-parties with the
consent of the Lender, and which Franchise Loans shall secure Advances (as
defined herein) to be made by the Lender hereunder.
The Lender has agreed, subject to the terms and conditions of
this Loan Agreement (as defined herein), in consideration of an agreement by the
Borrower to make PSI (as defined herein) the underwriter or placement agent in
connection with certain securitizations, to provide such financing to the
Borrower, with a portion of the proceeds of the sale of all asset-backed
securities issued by any such trust or other entity, together with a portion of
the proceeds of any permitted whole loan sales, together with other funds and
Franchise Loans of the Borrower, if necessary, being used to repay any Advances
made hereunder and any Interest Rate Protection Agreements as more particularly
described herein.
Accordingly, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:
SECTION 1 Definitions and Accounting Matters.
1.01 Certain Defined Terms. As used herein, the following
terms shall have the following meanings (all terms defined in this Section 1.01
or in other provisions of this Loan Agreement in the singular to have the same
meanings when used in the plural and vice versa):
"Accepted Servicing Practices" shall have the meaning assigned
thereto in Section 11.15(a) hereof.
"Acquisition Loan" shall mean a Franchise Loan, the proceeds
of which are used to acquire additional Franchise Units.
<PAGE>
"Administration Agreement" shall mean the Administration
Agreement as dated as of September 18, 1998, between the Borrower and CFS
providing for certain services to be performed by CFS for the Borrower, as it
may be amended, supplemented or otherwise modified from time to time with the
prior written consent of the Lender.
"Advance" shall have the meaning assigned to such term in
Section 2.01 hereof.
"Affiliate" means, with respect to any Person, any other
Person which, directly or indirectly, controls, is controlled by, or is under
common control with, such Person. For purposes of this definition, "control"
(together with the correlative meanings of "controlled by" and "undercommon
control with") means possession, directly or indirectly, of the power (a) to
vote 10% or more of the securities (on a fully diluted basis) having ordinary
voting power for the directors or managing general partners (or their
equivalent) of such Person, or (b) to direct or cause the direction of the
management or policies of such Person, whether through the ownership of voting
securities, by contract, or otherwise. Affiliates of the Borrower shall include,
without limitation, CFC, CFS and CNL.
"Applicable Collateral Percentage" shall mean:
(a) for each Franchise Loan, from time to time, the following:
<TABLE>
<CAPTION>
<S> <C>
----------------------------------------------- ---------------------------------------------
Principal Amount of Advances Outstanding Applicable Collateral
Percentage
----------------------------------------------- ---------------------------------------------
----------------------------------------------- ---------------------------------------------
$0 to $50 million 90%
----------------------------------------------- ---------------------------------------------
----------------------------------------------- ---------------------------------------------
Greater than $50 million, but less than $100
million 95%
----------------------------------------------- ---------------------------------------------
----------------------------------------------- ---------------------------------------------
Greater than $100 million, but less than $200
million 96%
----------------------------------------------- ---------------------------------------------
----------------------------------------------- ---------------------------------------------
Greater than $200 million 97%
----------------------------------------------- ---------------------------------------------
</TABLE>
(b) for each Franchise Loan which is a Delinquent Franchise
Loan, from time to time, the following:
<TABLE>
<CAPTION>
<S> <C>
----------------------------------------------- ---------------------------------------------
Applicable Collateral
Days Delinquent Percentage
----------------------------------------------- ---------------------------------------------
----------------------------------------------- ---------------------------------------------
61 to 90 days 85%
----------------------------------------------- ---------------------------------------------
----------------------------------------------- ---------------------------------------------
91 to 120 days 75%
----------------------------------------------- ---------------------------------------------
----------------------------------------------- ---------------------------------------------
121 to 150 days 65%
----------------------------------------------- ---------------------------------------------
----------------------------------------------- ---------------------------------------------
151 to 180 days 50%
----------------------------------------------- ---------------------------------------------
</TABLE>
<PAGE>
"Applicable Margin" shall mean, for each Advance, .95%.
"Appraised Value" shall mean the value set forth in a
valuation performed by a valuation consultant in connection with the origination
of the related Franchise Loan as the value of the related Franchise Units
(determined on a going concern basis), such valuation shall be in form and
substance satisfactory to the Lender and performed by a valuation consultant
satisfactory to the Lender.
"Approved Hedge Counterparty" shall mean (i) Prudential Global
Funding and (ii) any other Hedge Counterparty mutually agreeable to the Lender
and the Borrower (to be negotiated in good faith).
"Asset-Backed Securities" or "ABS" shall mean securities
issued pursuant to a securitization of Franchise Loans.
"Bankruptcy Code" shall mean the United States Bankruptcy Code
of 1978, as amended from time to time.
"Basic Documents" shall mean, collectively, the Loan
Documents, the Administration Agreement, the Franchise Loan Purchase Agreement
and the Servicing Agreement.
"Blocked Account" shall mean any bank account subject to a
Blocked Account Agreement.
"Blocked Account Agreement" shall mean the agreement between
the Servicer and the Lender substantially in the form of Exhibit F, attached
hereto.
"Borrower" shall have the meaning provided in the heading
hereof.
"Borrowing Base" shall mean the aggregate Collateral Value of
all Eligible Franchise Loans, provided that:
(i) no more than $45,000,000 of the aggregate Collateral Value
included in the Borrowing Base may consist of Franchise Loans relating to a
single Obligor;
(ii) no more than $100,000,000 of the aggregate Collateral
Value included in the Borrowing Base may consist of Franchise Loans relating to
any four Obligors;
(iii) the aggregate Collateral Value of Ground Lease Franchise
Loans included in the Borrowing Base may not exceed 80% of the Maximum Committed
Credit;
(iv) the aggregate Collateral Value of Space Lease Franchise
Loans included in the Borrowing Base may not exceed 60% of the Maximum Committed
Credit; provided, that the aggregate Collateral Value of Space Lease Franchise
Loans included in the Borrowing Base which are missing an executed landlord
estoppel or executed subordination, non-disturbance and attornment agreement may
not exceed 10% of such Space Lease Franchise Loans;
(v) the aggregate Collateral Value of Equipment Franchise
Loans included in the Borrowing Base may not exceed 25% of the Maximum Committed
Credit;
(vi) the aggregate Collateral Value of Construction Franchise
Loans included in the Borrowing Base may not exceed 15% of the Maximum Committed
Credit;
(vii) the aggregate Collateral Value of Tier II Franchise
Loans included in the Borrowing Base may not exceed 55% of the Maximum Committed
Credit;
(viii) the aggregate Collateral Value of Tier III Franchise
Loans included in the Borrowing Base may not exceed 40% of the Maximum Committed
Credit;
(ix) the aggregate Collateral Value of Tier IV Franchise Loans
included in the Borrowing Base may not exceed 30% of the Maximum Committed
Credit;
(x) the aggregate Collateral Value of Franchise Loans included
in the Borrowing Base which relate to Franchise Units located in any one state
may not exceed 25% of the Maximum Committed Credit;
(xi) the aggregate Collateral Value of Acquisition Loans
included in the Borrowing Base may not exceed 65% of the Maximum Committed
Credit;
(xii) the aggregate Collateral Value of Franchise Loans
included in the Borrowing Base which relate to Franchise Units located outside
of the United States may not exceed 15% of the Maximum Committed Credit;
provided, that only Franchise Loans relating to Franchise Units located in
Canada may be permitted to be included in the Borrowing Base unless otherwise
consented to by the Lender, in its sole discretion; provided, further, that any
such Franchise Loan shall have Franchise Loan Documents which are acceptable to
the Lender and shall adequately hedge currency rate exposure to the satisfaction
of the Lender; and
(xiii) the Collateral Value shall be zero for each Eligible
Franchise Loan:
(A) in respect of which each of the Critical
Eligibility Criteria has not been met;
(B) which is a Delinquent Franchise Loan in respect
of which there is a delinquency in the payment of principal
and/or interest which continues for a period in excess of 180
days (without regard to any applicable grace periods);
(C) which has been released from the possession of
the Custodian under the Custodial Agreement to any Person
other than the Lender or its bailee for a period in excess of
ten (10) days; or
(D) for which the Custodian has not received the
Final Documentation within five (5) Business Days following
the related Funding Date (or such longer period as consented
to by the Lender).
"Borrowing Base Deficiency" shall have the meaning provided in
Section 2.06 hereof.
"Business Day" shall mean any day other than (i) a Saturday or
Sunday or (ii) a day on which the New York Stock Exchange, the Federal Reserve
Bank of New York or the Custodian is authorized or obligated by law or executive
order to be closed.
"Casual Dining Franchise" shall mean any Franchise designated
as a casual dining franchise on Schedule 4 hereto.
"Code" shall mean the Internal Revenue Code of 1986. as
amended from time to time.
"Collateral" shall have the meaning provided in Section
4.01(b) hereof.
"Collateral Value" shall mean, with respect to each Eligible
Franchise Loan, the Applicable Collateral Percentage times the Market Value of
such Franchise Loan; provided, that in the case of a Franchise Loan for which
the Borrower has received Payoff Proceeds, until such time that the related
Advance is prepaid, the Collateral Value of such Franchise Loan shall be the
amount of Payoff Proceeds being held in the Blocked Account.
"Collection Account" shall mean one or more accounts
established by the Servicer subject to a security interest in favor of the
Lender and to the Blocked Account Agreement, into which all Collections shall be
deposited by the Servicer.
"Collections" shall mean, collectively, all collections,
payments and recoveries on or in respect of the Franchise Loans, the Interest
Rate Protection Agreements, the Franchise Loan Transfer Documents and the other
Collateral (without limitation insurance proceeds. proceeds of the disposition
of assets securing or otherwise subject to the Franchise Loans), and recoveries
against the Credit Parties in respect of claims under the Franchise Loan
Transfer Documents, and all proceeds of the foregoing.
"Commonly Controlled Entity" shall mean an entity, whether or
not incorporated, which is under common control with the Borrower within the
meaning of Section 4001 of ERISA or is part of a group which includes the
Borrower and which is treated as a single employer under Section 414 of the
Code.
"Confidentiality Agreement" shall mean a confidentiality
agreement, substantially in the form of Exhibit H hereto.
"Construction Franchise Loan" shall mean a Franchise Loan
secured by an interest in property relating to one or more Franchise Units which
is being constructed or developed with the proceeds of the Franchise Loan.
"Contractual Obligation" shall mean as to any Person, any
provision of any agreement, instrument or other undertaking to which such Person
is a party or by which it or any of its property is bound or any provision of
any security issued by such Person.
"Credit Party" shall mean any of the (i) Borrower, (ii) CFC,
(iii) CFS, (iv) each Subsidiary of the foregoing, (v) CNL, (vi) any Affiliate of
any of the foregoing which services or originates Franchise Loans, and (vii)
successors and assigns of each of the foregoing.
"Critical Eligibility Criteria" shall mean the eligibility
criteria set forth in any of paragraphs (xiii), (xv), (xvii), (xix), (xxi),
(xxii), (xxvii), (xxviii), (xxxi), (xxxv), (xxxvi), (xli), (xlii), (xliii),
(xliv)(A), (xliv)(B), (xliv)(E), (xlv), (xlvi) or (xlvii) of Schedule 1 hereto.
"Custodial Agreement" shall mean the Custodial Agreement,
dated as of the date hereof, among the Borrower, the Custodian and the Lender,
substantially in the form of Exhibit B hereto, as the same shall be modified and
supplemented and in effect from time to time.
"Custodian" shall mean Norwest Bank Minnesota, National
Association, as custodian under the Custodial Agreement. and its successors and
permitted assigns thereunder.
"Default" shall mean an Event of Default or an event that with
notice or lapse of time or both would become an Event of Default.
"Delinquent Franchise Loan" shall mean a Franchise Loan for
which the related Obligor is delinquent in the regularly scheduled payments of
principal and/or interest (without giving effect to any applicable grace
periods).
"Dollars" and "$" shall mean lawful money of the United States
of America.
"Due Diligence Review" shall mean the performance by the
Lender of any or all of the reviews permitted under Section 11.16 hereof with
respect to any or all of the Franchise Loans, as desired by the Lender from time
to time.
"Effective Date" shall mean the date upon which the conditions
precedent set forth in Section 5.01 shall have been satisfied.
"Eligibility Violation Notice" shall mean a written report
detailing any violations of the eligibility criteria listed on Schedule 1
hereto, substantially in the form of Exhibit G hereto.
"Eligible Franchise Loan" shall mean a Franchise Loan which
satisfies the eligibility characteristics set forth on Schedule 1 hereto on and
as of the applicable Funding Date, and continues to satisfy the Critical
Eligibility Criteria at all times thereafter while such Franchise Loan is
included in the Borrowing Base.
"Equipment Franchise Loan" shall mean a Franchise Loan secured
exclusively by an interest in equipment relating to the operation of one or more
Franchise Units.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"ERISA Affiliate" shall mean any corporation or trade or
business that is a member of any group of organizations (i) described in Section
4 14(b) or (c) of the Code of which the Borrower is a member and (ii) solely for
purposes of potential liability under Section 302(c)(11) of ERISA and Section
412(c)(11) of the Code and the lien created under Section 302(1) of ERISA and
Section 4 12(n) of the Code, described in Section 4 14(m) or (o) of the Code of
which the Borrower is a member.
"Event of Default" shall have the meaning provided in Section
8 hereof.
"Facility Delinquency Rate" shall mean, at any time, the
aggregate principal amount of Delinquent Franchise Loans which are greater than
thirty (30) days delinquent included in the Borrowing Base as a percentage of
the Maximum Committed Credit.
"Fee Franchise Loan" shall mean a Franchise Loan secured by a
Mortgage on a fee interest in real property relating to the operation of one or
more Franchise Units.
"Final Documentation" shall have the meaning assigned thereto
in the Custodial Agreement.
"Franchise" shall mean each Tier I Franchise, Tier II
Franchise, Tier Ill Franchise and Tier IV Franchise.
"Franchise Loan" shall mean a performing restaurant franchise
loan relating to one or more Franchise Units which are originated by an
Affiliate of the Borrower and purchased by the Borrower with the intention to
securitize them in an asset-backed securities offering, and which Franchise Loan
includes, without limitation (i) a Promissory Note and related Mortgage and/or
Franchise Loan Security Agreement and (ii) all right, title and interest of the
Borrower in and to the Secured Property covered by such Mortgage and/or
Franchise Loan Security Agreement. The Obligor of such Franchise Loan may be the
Franchisor.
"Franchise Loan Documents" shall mean, with respect to any
Franchise Loan, (i) the documents comprising the Franchise Loan File for such
Franchise Loan (regardless of whether such document has been delivered to the
Custodian under the Custodial Agreement), (ii) all Servicing Records, servicing
agreements (including without limitation the Servicing Agreement), servicing
rights, pledge agreements (including without limitation the Servicing
Agreement), and any other collateral pledged or otherwise relating to such
Franchise Loan, and (iii) all files, documents, instruments, surveys,
certificates, correspondence, appraisals, computer programs, computer storage
media, accounting records and other books and records relating thereto.
"Franchise Loan File" shall have the meaning assigned thereto
in the Custodial Agreement, it being understood that for purposes of determining
whether the portion of the Franchise Loan File held by the Custodian and
relating to any Franchise Loan is complete, the Final Documentation related to
such Franchise Loan shall not be required to be delivered to the Custodian until
five Business Days after the related Funding Date for such Franchise Loan, or
such longer or shorter period as agreed to by the Borrower and the Lender from
time to time.
"Franchise Loan Interest Rate" shall mean the annual rate of
interest borne on a Promissory Note, which shall be adjusted from time to time
with respect to adjustable rate Franchise Loans.
"Franchise Loan Purchase Agreement" shall mean the Franchise
Loan Purchase Agreement, dated as of September 18. 1998, between the Originators
and the Borrower, pursuant to which the Originators transfer the Franchise Loans
to the Borrower from time to time, as amended, supplemented or otherwise
modified from time to time with the prior written consent of the Lender.
"Franchise Loan Schedule" shall have the meaning assigned
thereto in the Custodial Agreement.
"Franchise Loan Schedule and Exception Report" shall mean the
Franchise Loan Schedule and Exception Report prepared by the Custodian pursuant
to the Custodial Agreement.
"Franchise Loan Security Agreement" shall mean the security
agreement or similar document evidencing the security interest of the Borrower
in the assets of the Obligor pursuant to a Franchise Loan, which security
agreement may be contained within a Mortgage.
"Franchise Loan Tape" shall mean a computer-readable magnetic
tape ,containing the information with respect to each Franchise Loan, to be
delivered by the Borrower to the Lender pursuant to the Franchise Loan Schedule.
"Franchise Loan Transfer Documents" shall mean the Franchise
Loan Purchase Agreement and any other agreements by which an Originator shall
sell or contribute Franchise Loans to the Borrower; provided, that such
agreements shall be in form and substance satisfactory to the Lender. Such
agreements shall (i) contain provisions reasonably intended to effect a "true
sale" or "true contribution" of such Franchise Loans to the Borrower, (ii)
require that such Originator, CFS, CFC and CNL make certain representations and
warranties relating to such Franchise Loans substantially comparable to those
representations and warranties made by the Borrower to the Lender under Schedule
1 of this Agreement, and (iii) be accompanied by such supporting documentation
with respect to such sale or contribution (including without limitation opinions
of counsel, evidence of lien filings and lien searches) as the Lender shall
reasonably require.
"Franchise Unit" shall mean the individual business location
on which a business relating to a Franchise is operated.
"Funding Date" shall mean the date on which an Advance is made
hereunder.
"Funding Date Documentation" shall have the meaning assigned
to such term in the Custodial Agreement.
"GAAP" shall mean generally accepted accounting principles as
in effect from time to time in the United States of America.
"Governmental Authority" shall mean any nation or governments
any state or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and any court or arbitrator having jurisdiction over
the Borrower, any of its Subsidiaries or any of its properties.
"Ground Lease Franchise Loan" shall mean a Franchise Loan
secured by a Mortgage on a ground lease interest in real property relating to
the operation of one or more Franchise Units.
"Guarantee Obligation" shall mean, as to any Person, any
obligation of such Person directly or indirectly guaranteeing any Indebtedness
of any other Person or in any manner providing for the payment of any
Indebtedness of any other Person or otherwise protecting the holder of such
Indebtedness against loss (whether by virtue of partnership arrangements, by
agreement to keep-well, U) purchase Franchise Loan, goods, securities or
services, or to take-or-pay or otherwise). The amount of any Guarantee of a
Person shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Guarantee is made or,
if not stated or determinable, the maximum reasonably anticipated liability in
respect thereof as determined by such Person in good faith. The terms
"Guarantee" and "Guaranteed" used as verbs shall have correlative meanings.
"Hedge Counterparty" shall mean the counterparty under any
Interest Rate Protection Agreement.
"Hedge Payment" shall mean any amount payable to a Hedge
Counterparty pursuant to an Interest Rate Protection Agreement.
"Indebtedness" shall mean, of any Person at any date, without
duplication, (a) all indebtedness of such Person for borrowed money (whether by
loan or the issuance and sale of debt securities) or for the deferred purchase
price of property or services (other than current trade liabilities incurred in
the ordinary course of business and payable in accordance with customary
practices), (b) any other indebtedness of such Person which is evidenced by a
note, bond, debenture or similar instrument, (c) all obligations of such Person
under financing leases, (d) all obligations of such Person in respect of letters
of credit, acceptances or similar instruments issued or created for the account
of such Person and (e) all liabilities secured by any Lien on any property owned
by such Person even though such Person has not assumed or otherwise become
liable for the payment thereof.
"Indemnified Party" shall have the meaning provided in Section
11.03 hereof.
"Interest Rate Protection Agreement" shall mean, with respect
to any or all of the Franchise Loans, any interest rate swap, cap or collar
agreement or similar arrangements providing for protection against fluctuations
in interest rates or the exchange of nominal interest obligations, either
generally or under specific contingencies, entered into by the Borrower and
reasonably acceptable to the Lender.
"Investment Company Act" shall mean the Investment Company Act
of 1940, as amended.
"Lender" shall have the meaning provided in the heading
hereof.
"LIBO Rate" shall mean, with respect to any Advance, the rate
per annum equal to the rate appearing at page 3750 of the Telerate Screen as
one-month LIBOR on the each Business Day, of is such day is not a Business Day,
the immediately preceding Business Day, and if such rate shall not be so quoted,
the rate per annum at which the Lender is offered Dollar deposits at or about
11:00 a.m., New York City time, on such date by prime banks in the interbank
eurodollar market where the eurodollar and foreign currency exchange operations
in respect of its Advances are then being conducted for delivery on such day for
a period of one month, and in an amount comparable to the amount of the Advances
to be outstanding on such day.
"Lien" shall mean any mortgage, lien, pledge, charge, security
interest or similar encumbrance.
"Loan Agreement" shall mean this Interim Wholesale Mortgage
Warehouse and Security Agreement, as the same may be amended, supplemented or
otherwise modified from time to time.
"Loan Documents" shall mean, collectively, this Loan
Agreement, the Note, the Blocked Account Agreement and the Custodial Agreement.
"Market Value" shall mean, with respect to any Franchise Loan,
the market value of such Franchise Loan (not to exceed the Par Amount of such
Franchise Loan), as determined by the Lender in its sole discretion (exercised
in good faith), which Market Value may be determined to be zero, reflecting,
among other things, without limitation (a) the effect of changes in interest
rates on the value of the Franchise Loan, (b) changes in financial operating
performance for each underlying Franchise Unit, (c) information contained in
quarterly financial statements relating to the Obligors and the Franchise Units,
(d) delinquencies and defaults on such Franchise Loan, (e) seasoning of such
Franchise Loan and (f) the value of any Interest Rate Protection Agreement
relating to such Franchise Loan, (g) developments in the general franchise
industry or with respect to any Franchise and (h) rating agency requirements for
securitization.
"Material Adverse Effect" shall mean, with respect to each
Credit Party, a material adverse effect on (a) the business, Franchise Loans,
property, business, condition (financial or otherwise) or prospects of any
Credit Party, (b) the ability of any Credit Party to perform its obligations
under any of the Loan Documents to which it is a party, (c) the validity or
enforceability of any of the Loan Documents, (d) the rights and remedies of the
Lender under any of the Loan Documents, (e) the timely payment of the principal
of or interest on the Advances or other amounts payable in connection therewith
or (f) the Collateral.
"Maximum Committed Credit" shall mean $300,000,000.
"Monthly Payment" means the scheduled monthly payment of
principal and interest on a Franchise Loan as adjusted in accordance with
changes in the Franchise Loan Interest Rate pursuant to the provisions of the
Promissory Note for an adjustable rate Franchise Loan.
"Mortgage" shall mean the mortgage, deed of trust or other
instrument securing a Promissory Note, which creates a first lien on the fee or
leasehold interest in real property securing the Promissory Note.
"Multiemployer Plan" shall mean a Plan which is a
multiemployer plan as defined in Section 400 1(a)(3) of ERISA.
"Non-Excluded Taxes" shall have the meaning provided in
Section 2.10 hereof.
"Note" shall have the meaning assigned to such term in Section
2.02 hereof.
"Notice of Borrowing and Pledge" shall have the meaning
provided in Section 2.03(a) hereof.
"Obligor" shall mean the obligor under a Promissory Note.
"Originator" shall mean CFS and each other Credit Party that
has been approved by the Lender in writing, which originates Franchise Loans.
"Par Amount" shall mean, in respect of a Franchise Loan at any
time, the outstanding principal balance of such Franchise Loan at such time.
"Payment Date" shall have the meaning set forth in Section
2.06(c) hereof.
"Payoff" shall mean, with respect to any Franchise Loan
repayment by the applicable Obligor of all outstanding principal thereunder
together with all interest accrued thereon to the date of such repayment and any
penalty or premium thereon.
"Payoff Proceeds" shall mean, with respect to any Franchise
Loan, all funds received from the applicable Obligor in connection with a
Payoff.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any entity succeeding to any or all of its functions under ERISA.
"Person" shall mean any individual., corporation, company,
voluntary association, partnership, joint venture, limited liability company,
trust, unincorporated association, government (or any agency, instrumentality or
political subdivision thereof) or any other entity of whatever nature.
"Plan" shall mean at a particular time, any employee benefit
plan which is covered by ERISA and in respect of which the Borrower or a
Commonly Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Post-Default Rate" shall mean, in respect of any principal of
any Advance or any other amount under this Loan Agreement, the Note or any other
Loan Document that is not paid when due to the Lender (whether at stated
maturity, by acceleration, by optional or mandatory prepayment or otherwise), a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to the LIBO Rate
plus 5.00% per annum.
"Promissory Note" shall mean the original executed promissory
note or other evidence of the indebtedness of a Obligor/borrower with respect to
a Franchise Loan.
"Property" shall mean any right or interest in or to property
of any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"PSI" shall mean Prudential Securities Incorporated, a
Delaware corporation.
"Quick Service Franchise" shall mean any Franchise designated
as a quick service franchise on Schedule 4 hereto.
"Regulations T. U and X" shall mean Regulations T, U and X of
the Board of Governors of the Federal Reserve System (or any successor), as the
same may be modified and supplemented and in effect from time to time.
"Reportable Event": any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the notice period is
waived under Sections .21, .22, .23, .26, .27 or .28 of PBGC Reg. ss. 4043.
"Responsible Officer" shall mean, as to any Person, the chief
executive officer or, with respect to financial matters, the chief financial
officer of such Person; provided, that in the event any such officer is
unavailable at any time he or she is required to take any action hereunder or if
a document is required in connection with a funding request pursuant to Section
2.03 hereof, Responsible Officer shall mean any officer authorized to act on
such officer's behalf as demonstrated to the Lender to its reasonable
satisfaction.
"Requirement of Law" shall mean as to any Person, the
certificate of incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Secured Obligations" shall mean the unpaid principal amount
of, and interest on the Advances, and all other obligations and liabilities of
the Borrower to the Lender, whether direct or indirect, absolute or contingent,
due or to become due, or now existing or hereafter incurred, which may arise
under, out of or in connection with this Loan Agreement, the Note, any other
Loan Document and any other document made, delivered or given in connection
herewith or therewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses (including, without limitation,
all fees and disbursements of counsel to the Lender that are required to be paid
by the Borrower pursuant to the terms hereof or thereof) or otherwise. For
purposes hereof, "interest" shall include, without limitation, interest accruing
after the maturity of the Advances and interest accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to the Borrower, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding.
"Secured Property" shall mean the real property (including all
improvements, buildings, fixtures, building equipment and personal property
thereon and all additions, alterations and replacements made at any time with
respect to the foregoing) and all other collateral securing repayment of the
debt evidenced by a Promissory Note.
"Servicer" shall mean CFS, its successors and assigns, or such
other servicer designated by the Borrower and acceptable to the Lender.
"Servicing Agreement" shall mean a servicing agreement between
the Borrower and the Servicer for the servicing of Franchise Loans.
"Servicing Records" shall have the meaning provided in Section
11.15(b) hereof.
"Single Employer Plan" shall mean any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan.
"Space Lease Franchise Loan" shall mean a Franchise Loan
secured by a Mortgage on or a collateral assignment of a space lease interest in
real property relating to the operation of one or more Franchise Units; provided
that (i) the related Mortgage has been or will be duly filed to be recorded with
all appropriate governmental authorities in all jurisdictions in which such
Mortgage is required to be filed and recorded to create a valid, binding and
enforceable collateral assignment or mortgage of the Obligors interest in the
related Property, (ii) the owner of the related Property has consented to such
collateral assignment or mortgage and has executed a landlord's estoppel and
consent in connection with such assignment and (iii) all necessary
subordination, attornment and nondisturbance agreements have been obtained with
respect to such property; provided, that, in accordance with paragraph (iv) of
the definition of "Borrowing Base", certain Space Lease Franchise Loans may tail
to satisfy items (ii) and (iii) above.
"Subsidiary" shall mean, with respect to any Person, any other
Person of which at least a majority of the securities or other ownership
interests having by the terms thereof ordinary voting power to elect a majority
of the board of directors or other persons performing similar functions of such
corporation partnership or other entity (irrespective of whether or not at the
time securities or other ownership interests of any other class or classes of
such corporation, partnership or other entity shall have or might have voting
power by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by such Person or one or more Subsidiaries of
such Person or by such Person and one or more Subsidiaries of such Person.
"Termination Date" shall mean September 18. 1999 or such
earlier date on which this Loan Agreement shall terminate in accordance with the
provisions hereof or by operation of law, as same may be extended in accordance
with Section 2.11 hereof.
"Tier I Franchise" shall mean a Franchise listed as a Tier I
Franchise on Schedule 4, Part A.
"Tier II Franchise" shall mean a Franchise listed as a Tier U
Franchise on Schedule 4, Part B.
"Tier III Franchise" shall mean a Franchise listed as a Tier
Ill Franchise on Schedule 4, Part C.
"Tier IV Franchise" shall mean a Franchise listed as a Tier IV
Franchise on Schedule 4, Part D.
"Tier I Franchise Loan" shall mean a Franchise Loan relating
to a Tier I Franchise.
"Tier II Franchise Loan" shall mean a Franchise Loan relating
to a Tier II Franchise.
"Tier Ill Franchise Loan" shall mean a Franchise Loan relating
to a Tier III Franchise.
"Tier IV Franchise Loan" shall mean a Franchise Loan relating
to a Tier IV Franchise.
"Underwriting Guidelines" shall mean the underwriting
guidelines of the Borrower for Franchise Loans a copy of each of which has been
delivered to the Lender.
"Underwriting Package" shall mean, with respect to each
Franchise Loan, a file which includes, without limitation, the following
information pertaining to such Franchise Loan (i) detailed loan characteristics,
(ii) use of proceeds and (iii) detailed financial and credit reports of the
related Obligor.
"Uniform Commercial Code" shall mean the Uniform Commercial
Code as in effect on the date hereof in the State of New York; provided that if
by reason of mandatory provisions of law, the perfection or the effect of
perfection or non-perfection of the security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than New York, "Uniform Commercial Code" shall mean the Uniform Commercial Code
as in effect in such other jurisdiction for purposes of the provisions hereof
relating to such perfection or effect of perfection or non-perfection.
"Year 2000 Problem" shall have the meaning assigned to such
term in Section 6.24 hereof.
1.02 Accounting Terms and Determinations. Except as otherwise
expressly provided herein, all accounting terms used herein shall be interpreted
and all financial statements and certificates and reports as to financial
matters required to be delivered to the Lender hereunder shall be prepared, in
accordance with GAAP.
SECTION 2 Advances. Note and Prepayments.
2.01 Advances.
(a) Subject to the terms and conditions of this Loan
Agreements the Lender agrees to make loans (individually, an "Advance"
collectively, the "Advances") to the Borrower, from time to time on any Business
Day from and including the Effective Date to but excluding the Termination Date,
in an aggregate principal amount at any one time outstanding up to but not
exceeding the lesser of (i) the Maximum Committed Credit, and (ii) the Borrowing
Base at such time.
(b) Subject to the terms and conditions of this Loan
Agreements during such period the Borrower may borrow, repay and reborrow
hereunder.
(c) In no event shall an Advance be made when any Default or
Event of Default has occurred and is continuing.
(d) The Lender shall have no obligation to make Advances at
any time in which the Facility Delinquency Rate exceeds 6%.
(e) All Advances relating to Construction Franchise Loans must
be requested in accordance with a construction schedule satisfactory to the
Lender. The full amount of Advances relating to any Construction Franchise Loan
must be made no later than one hundred and eighty (180) days following the first
Funding Date relating to such Construction Franchise Loan.
(f) Notwithstanding anything to the contrary herein, the
Borrower does not need to make a pledge of Franchise Loans in connection with an
Advance, so long as the then existing Borrowing Base will not be exceeded after
giving effect to such Advance.
(g) The Lender shall have no obligation to make new Advances
at any time in which the Final Documentation relating to Franchise Loans pledged
in connection with any Advance have not been delivered to the Custodian within
five (5) Business Days (or such longer time period as consented to by the
Lender) following the related Funding Date for such Advance until such time as
the Final Documentation, complete and free of exceptions, is delivered to the
Custodian.
2.02 Note
(a) The Advances made by the Lender shall be evidenced by a
single promissory note of the Borrower substantially in the form of ~h1bILA
hereto (the "NI~")~ dated the date hereof, payable to the Lender in a principal
amount equal to the amount of the Maximum Committed Credit and otherwise duly
completed. The Lender shall have the right to have its Note subdivided, by
exchange for promissory notes of lesser denominations or otherwise.
(b) The date, amount and interest rate of each Advance made by
the Lender to the Borrower, and each payment made on account of the principal
and interest thereof, shall be recorded by the Lender on its books and, prior to
any transfer of the Note, endorsed by the Lender on the schedule attached to the
Note or any continuation thereof; provided that the failure of the Lender to
make any such recordation or endorsement shall not affect the obligations of the
Borrower to make a payment when due of any amount owing hereunder or under the
Note in respect of the Advances.
2.03 Procedure for Borrowing.
(a) The Borrower may request an Advance hereunder, on any
Business Day during the period from and including the Effective Date to but
excluding the Termination Date) by delivering to the Lender, with a copy to the
Custodian, an irrevocable written Notice of Borrowing and Pledge substantially
in the form of Exhibit D hereto (a "Notice of Borrowing and Pledge"),
appropriately completed which Notice of Borrowing and Pledge must be received by
the Lender, with a copy to the Custodian, prior to 5 p.m., New York City time,
two (2) Business Days prior to the requested Funding Date of such Advance;
provided, that if the requested Funding Date is during the last seven (7) days
of March, June, September or December, such Notice of Borrowing and Pledge must
be received by the Lender, with a copy to the Custodian, prior to 5 p.m., New
York City time, four (4) Business Days prior to the requested Funding Date of
such Advance. The Borrower shall have the right to cancel a Notice of Borrowing
and Pledge by giving notice to the Lender of such cancellation prior to 11 a.m.,
New York City time, one (1) Business Day prior to the requested Funding Date.
Such Notice of Borrowing and Pledge shall (i) attach a schedule identifying the
Eligible Franchise Loan that the Borrower proposes to pledge to the Lender and
to be included in the Borrowing Base in connection with such Advance, (ii)
contain the amount of the requested Advance, which shall in all events be at
least equal to $500,000 (or in the case of an Advance relating to a Construction
Franchise Loan, $100,000) to be made on such Funding Date, (iii) specify the
requested Funding Date, (iv) attach an officer's certificate signed by a
Responsible Officer of the Borrower, and (v) contain (by attachment) such other
information reasonably requested by the Lender from time to time.
(b) The Borrower shall deliver (or cause to be delivered) to
the Lender no later than 5 p.m., New York City time, seven (7) Business Days
prior to the requested Funding Date, a complete Underwriting Package relating to
each Eligible Franchise Loan to be pledged to the Lender and included in the
Borrowing Base on such requested Funding Date. Within seven (7) Business Days
following the receipt by the Lender of the complete Underwriting Package
relating to each Eligible Franchise Loan, the Lender shall deliver to the
Borrower notice of whether or not such Franchise Loan is rejected and deemed
ineligible to be pledged or is acceptable to be pledged; provided, that the
failure to give notice within the allotted time period shall be deemed to be
notice by the Lender of its rejection of such Franchise Loan; provided, further,
that notice that such Franchise Loan is not rejected shall not be construed to
be a waiver of the requirement to satisfy all conditions precedent prior to
making Advances hereunder.
(c) The Borrower shall deliver (or cause to be delivered) and
release to the Custodian no later than 12:00 noon, New York City time, two (2)
Business Days prior to the requested Funding Date (in the case of Franchise
Loans involving less than twenty (20) Franchise Units) or three (3) Business
Days prior to the requested Funding Date (in the case of Franchise Loans
involving twenty (20) or more Franchise Units), the Funding Date Documentation
pertaining to each Eligible Franchise Loan to be pledged to the Lender and
included in the Borrowing Base on such requested Funding Date, in accordance
with the terms and conditions of the Custodial Agreement.
(d) Pursuant to the Custodial Agreement, the Custodian shall
deliver to the Lender and the Borrower,. no later than 12:00 noon, New York City
time, one Business Day prior to the Funding Date, a Funding Date Certification
in respect of the Funding Date Documentation relating to all Franchise Loans
pledged to the Lender on such Funding Date and an Franchise Loan Schedule and
Exception Report in respect of all Franchise Loan so pledged to the Lender.
(e) The Borrower shall deliver or cause to be delivered to'
the Custodian the Final Documentation relating to any Advance no later than five
(5) Business Days following the Funding Date for such Advance, or such longer
period as reasonably requested by Borrower and consented to by the Lender, such
consent not to be unreasonably withheld.
2.04 Repayment of Advances: Interest.
(a) The Borrower hereby promises to repay in full on the
Termination Date the then aggregate outstanding principal amount of the
Advances.
(b) The Borrower hereby promises to pay to the Lender interest
on the unpaid principal amount of each Advance for the period from and including
the Funding Date of such Advance to but excluding the date such Advance shall be
paid in full, at a rate per annum equal to the LIBO Rate plus the Applicable
Margin; calculated such that interest shall accrue each day on the outstanding
principal amount of all Advances as of 11:00 a.m., New York City time, on such
day. Notwithstanding the foregoing, the Borrower hereby promises to pay to the
Lender interest at the applicable Post-Default Rate on any principal of any
Advance and on any other amount payable by the Borrower hereunder or under the
Note that shall not be paid in full when due (whether at stated maturity, by
acceleration or by mandatory prepayment or otherwise) for the period from and
including the due date thereof to but excluding the date the same is paid in
full. Accrued interest on each Advance shall be payable monthly on each Payment
Date and on the Termination Date. Notwithstanding the foregoing, interest
accruing at the Post-Default Rate shall be payable to the Lender on demand.
2.05 Limitation on Advances: Illegality. Anything herein to
the contrary notwithstanding, if, on or prior to the determination of any LIBO
Rate:
(a) the Lender determines, which determination shall be
conclusive, that quotations of interest rates for the relevant deposits referred
to in the definition of "LIBO Rate" in Section 1.01 hereof are not being
provided in the relevant amounts or for the relevant maturities for purposes of
determining rates of interest for Advances as provided herein; or
(b) the Lender determines, which determination shall be conclusive, that the
relevant rate of interest referred to in the definition of "LIBO Rate" in
Section 1.01 hereof upon the basis of which the rate of interest for Advances is
to be determined is not likely adequately to cover the cost to the Lender of
making or maintaining Advances; or
(c) it becomes unlawful for the Lender to honor its obligation to make or
maintain Advances hereunder using the LIBO Rate; then the Lender shall give the
Borrower prompt notice thereof and, so long as such condition remains in effect,
the Lender shall be under no obligation to make additional Advances, and the
Borrower shall, a~ its option, either prepay all such Advances as may be
outstanding or such Advances shall accrue interest based on an alternative
comparable methodology, determined by the Lender it is sole discretion
(exercised in good faith).
2.06 Determination of Borrowing Base: Mandatory Prepayments or
Pledge.
(a) If at any time the aggregate outstanding principal amount
of Advances exceeds the Borrowing Base (a "Borrowing Base Deficiency"), as
determined by the Lender and notified to the Borrower on or before 11:00 a.m. on
any Business Day, the Borrower shall no later than three (3) Business Days after
receipt of such notice, at the option of the Borrower, either prepay the
Advances in part or in whole or pledge additional Eligible Franchise Loans to
the Lender (which shall be in all respects acceptable to the Lender), such that
after giving effect to such prepayment or pledge the aggregate outstanding
principal amount of the Advances does not exceed the Borrowing Base.
(b) All proceeds of a securitization relating to the Franchise
Loans pledged hereunder shall be used to prepay the outstanding principal amount
of Advances relating to such Franchise Loans in such securitization, and to
prepay an amount equal to any Borrowing Base Deficiency that results from a
change m the Applicable Collateral Percentage that occurs as a result of
repayment of Advances in connection with such securitization.
(c) On the fifteenth (15th) day of each month (each a "Payment
Date"), the Borrower shall be required to prepay the Advances in an amount equal
to the amount of Collections received since the preceding Payment Date and
allocable to principal on the Franchise Loans in accordance with the terms of
such Franchise Loans.
2.07 Optional Prepayments.
(a) The Borrower may prepay, in whole or in part, Advances at
any time without premium or penalty, except as contained in paragraph (b) of
this Section 2.07. Any amounts prepaid shall be applied to repay the outstanding
principal amount of any Advances (together with interest thereon) until paid in
full. Amounts repaid may be reborrowed in accordance with the terms of this Loan
Agreement. If the Borrower intends to prepay an Advance in whole or in part from
any source, the Borrower shall give two (2) Business Days' prior written notice
thereof to the Lender, specifying the date and amount of prepayment. If such
notice is given, the amount specified in such notice shall be due and payable on
the date specified therein, together with accrued interest to such date on the
amount prepaid. Partial prepayments shall be in an aggregate principal amount of
at least $100,000.
(b) The Borrower shall indemnify the Lender and hold the
Lender harmless from any actual loss or expense which the Lender may sustain or
incur arising from a prepayment of any Advance (other than prepayments
associated with (i) a securitization or (ii) any Collateral withdrawn from the
Borrowing Base with sixty (60) days prior written notice to the Lender), which
actual loss or expense shall be equal to an amount equal to the excess, as
reasonably determined by the Lender, of (x) its cost of obtaining funds for such
Advances for the period from the date of such payment over (y) the amount of
interest likely to be realized by such Lender in redeploying the funds not
utilized by reason of such payment for such period. For the purposes of
calculating any actual loss or expense, the cost of obtaining funds shall be
limited to costs incurred for a maximum period of sixty (60) days. This Section
2.07 shall survive termination of this Loan Agreement and payment of the Note.
2.08 Requirements of Law.
(a) If any Requirement of Law (other than with respect to any
amendment made to the Lender's certificate of incorporation and by-laws or other
organizational or governing documents) or any change in die interpretation or
application thereof or compliance by the Lender with any request or directive
(whether or not having the force of law) from any central bank or other
Governmental Authority made subsequent to the date hereof:
(i) shall subject the Lender to any tax of any kind whatsoever
with respect to this Loan Agreement, the Note or any Advance made by it
(excluding net income taxes) or change the basis of taxation of payments to the
Lender in respect thereof:
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory Advance or similar requirement against Franchise
Loan held by, deposits or other liabilities in or for the account of, advances,
Advances or other extensions of credit by, or any other acquisition of funds by,
any office of the Lender which is not otherwise included in the determination of
the LIBO Rate hereunder;
(iii) shall impose on the Lender any other condition; and the
result of any of the foregoing is to increase the cost to the Lender, by an
amount which the Lender deems to be material, of making or maintaining any
Advance or to reduce any amount receivable hereunder in respect thereof, then,
in any such case, the Borrower shall promptly pay the Lender such additional
amount or amounts as will compensate the Lender for such increased cost or
reduced amount receivable.
(b) If the Lender shall have determined that the adoption of
or any change in any Requirement of Law (other than with respect to any
amendment made to the Lender's certificate of incorporation and by-laws or other
organizational or governing documents) regarding capital adequacy or in the
interpretation or application thereof or compliance by the Lender or any
corporation controlling the Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on the Lender's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which the Lender
or such corporation (taking into consideration the Lender's or such
corporation's policies with respect to capital adequacy) by an amount deemed by
the Lender to be material, then from time to time, the Borrower shall promptly
pay to the Lender such additional amount or amounts as will compensate the
Lender for such reduction.
(c) If the Lender becomes entitled to claim any additional
amounts pursuant to this subsection, it shall promptly notify the
Borrower of the event by reason of which it has become so entitled. A
certificate as to any additional amounts payable pursuant to this
subsection submitted by the Lender to the Borrower shall be conclusive
in the absence of manifest error.
2.09 Purpose of Advances. Each Advance shall be used to
finance the origination or acquisition of Eligible Franchise Loans
identified to the Lender in writing on each Franchise Loan Schedule, as
such Franchise Loan Schedule may be amended from time to time.
2.10 Taxes.
(a) All payments made by the Borrower under this Loan
Agreement and the Note shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding net income taxes and franchise taxes (imposed
in lieu of net income taxes) imposed on the Lender as a result of a present or
former connection between the Lender and the jurisdiction of the Governmental
Authority imposing such tax or any political subdivision or taxing authority
thereof or therein (other than any such connection arising solely from the
Lender having executed, delivered or performed its obligations or received a
payment under, or enforced, this Loan Agreement or any Note). If any such
non-excluded taxes, levies. imposts, duties, charges, fees deductions or
withholdings ("Non-Excluded Taxes") are required to be withheld from any amounts
payable to the Lender hereunder or under the Note, the amounts so payable to the
Lender shall be increased to the extent necessary to yield to the Lender (after
payment of all Non-Excluded Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Loan Agreement;
provided, however, that the Borrower shall not be required to increase any such
amounts payable to the Lender that is not organized under the laws of the United
States of America or a state thereof if the Lender fails to comply with the
requirements of clause (b) of this Section. Whenever any Non-Excluded Taxes are
payable by the Borrower, as promptly as possible thereafter the Borrower shall
send to the Lender, as the case may be, a certified copy of an original official
receipt received by the Borrower showing payment thereof. If the Borrower fails
to pay any Non-Excluded Taxes when due to the appropriate taxing authority or
fails to remit to the Lender the required receipts or other required documentary
evidence, the Borrower shall indemnify the Lender for any incremental taxes,
interest or penalties that may become payable by the Lender as a result of any
such failure. The agreements in this Section shall survive the termination of
this Loan Agreement and the payment of the Advances and all other amounts
payable hereunder.
(b) If the Lender hereunder (or an assignee or participant
that acquires an interest hereunder in accordance with Section 11.14 hereof)
that is not incorporated under the laws of the United States of America or a
state thereof shall:
(i) deliver to the Borrower (A) two duly completed copies of
United States Internal Revenue Service Form 1001 or 4224, or successor
applicable form, as the case may be, and (B) an Internal Revenue
Service Form W-8 or W-9, or successor applicable form, as the case
maybe;
(ii) deliver to the Borrower two further copies of any such
form or certification on or before the date that any such form or
certification expires or becomes obsolete and after the occurrence of
any event requiring a change in the most recent form previously
delivered by it to the Borrower; and
(iii) obtain such extensions of time for filing and complete
such forms or certifications as may reasonably be requested by the
Borrower; unless in any such case an event (including, without
limitation, any change in treaty, law or regulation) has occurred prior
to the date on which any such delivery would otherwise be required
which renders all such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form with respect
to it and such Lender so advises the Borrower. Such Lender shall
certify (i) in the case of a Form 1001 or 4224, that it is entitled to
receive payments under this Loan Agreement without deduction or
withholding of any United States federal income taxes and (ii) in the
case of a Form W-8 or W-9, that it is entitled to an exemption from
United States backup withholding tax. Each Person that shall become a
Lender or a participant pursuant to Section 11.14 hereof shall, upon
the effectiveness of the related transfer, be required to provide all
of the forms and statements required pursuant to this Section, provided
that in the case of a participant, such participant shall furnish all
such required forms and statements to the Lender from which the related
participation shall have been purchased.
2.11 Extension of Termination Date. Upon the written request
of the Borrower, at least ninety (90) days prior to then current Termination
Date, the Lender may in its sole discretion extend the Termination Date for a
period of 364 days, by giving written notice of such extension to the Borrower
no later than thirty (30) days following receipt of such request from the
Borrower.
2.12 Commitment Fees. On or prior to the Effective Date, the
Borrower shall pay to the Lender a facility commitment fee in an amount equal to
.25% of the Maximum Committed Credit. Upon each extension of the Termination
Date pursuant to Section 2.11 hereof, the Borrower shall pay to the Lender a
renewal fee in an amount equal to .10% of the Maximum Committed Credit.
SECTION 3 Payments: Computations: Etc.
3.01 Payments.
(a) Except to the extent otherwise provided herein, a"
payments of principal, interest and other amounts to be made by the Borrower
under this Loan Agreement and the Note, shall be made in Dollars, in immediately
available funds, without deduction, set-off or counterclaim, to the Lender at
the following account maintained by the Lender with the Bank of New York:
Account No. "GLAl11569PPC" For the A/C of Prudential Securities Credit
Corporation, ABA# "021000018" not later than 1:00 p.m., New York City time, on
the date on which such payment shall become due (and each such payment made
after such time on such due date shall be deemed to have been made on the next
succeeding Business Day). The Borrower acknowledges that it has no rights of
withdrawal from the foregoing account.
(b) Except to the extent otherwise expressly provided herein,
if the due date of any payment under this Loan Agreement or the Note would
otherwise fall on a day that is not a Business Day, such date shall be extended
to the next succeeding Business Day, and interest shall be payable for any
principal so extended for the period of such extension.
3.02 Computations. Interest on the Advances shall be computed
on the basis of a 360-day year for the actual days elapsed (including the first
day but excluding the last day) occurring in the period for which payable.
3.03 Blocked Account.
(a) The Borrower shall (or shall cause the Servicer to)
instruct all Obligors to remit payments in respect of the Franchise Loans to the
Collection Account. The Borrower shall (and shall cause the Servicer to) use all
reasonable efforts to prevent the deposit of any funds other than proceeds of
Collateral into the Collection Account. If the Borrower or the Servicer receives
any Collections, the Borrower shall (or cause the Servicer to) deposit such
Collections into the Collection Account no later than the Business Day following
such receipt. Pending such deposit, such funds shall be held in trust for the
benefit of the Lender.
(b) Funds deposited in the Collection Account during any month
shall be held therein, in trust for the Lender, until the next Payment Date. On
each Payment Date, funds shall be withdrawn from the Collection Account and
applied as follows:
(i) first, ratably to Hedge Counterparties for the payment of
Hedge Payments,
(ii) second, to the Lender for the payment of interest on the
Advances then accrued;
(iii) third, to the payment of other Secured Obligations
(other than the payments in respect of principal on the Advances) then
due;
(i':) fourth, to the payment of any principal of the Advances
then due (whether pursuant to Section 2.06, by acceleration or
otherwise);
(v) fifth, to the payment of servicing fees and the
reimbursement of expenses under the Servicing Agreement; and
(vi) sixth, to the payment of amounts payable under the
Administration Agreement. Any funds remaining in the Collection Account
following the application set forth above shall be remitted to the
Borrower; provided, that such funds shall not be remitted to the
Borrower or to the Borrower's Affiliates pursuant to subsections (v) or
(vi) above or otherwise if a Default or Event of Default is continuing
and shall instead be held in the Collection Account as security for the
Secured Obligations.
SECTION 4 Collateral Security.
4.01 Collateral: Security Interest.
(a) Pursuant to the Custodial Agreement, the Custodian shall
hold the Franchise Loan Documents as exclusive bailee and agent for the Lender
pursuant to terms of the Custodial Agreement and shall deliver certifications to
the Lender each to the effect that it has reviewed such Franchise Loan Documents
in the manner and to the extent required by the Custodial Agreement and
identifying any exceptions in such Franchise Loan Documents as so reviewed in
the Franchise Loan Schedule and Exception Reports.
(b) Each of the following items of property is hereinafter
referred to as the "Collateral":
(i) all Franchise Loans identified on a Notice of
Borrowing and Pledge delivered by the Borrower to the
Lender and the Custodian from time to time;
(ii) all Franchise Loan Documents, including without
limitation all promissory notes, and all Servicing
Records, Servicing Agreements, servicing rights,
pledge agreements, Purchase and Sale Agreements and
any other collateral pledged or otherwise relating to
the Franchise Loan, together with all files,
documents, instruments, surveys, certificates,
correspondence, appraisals, computer programs,
computer storage media, accounting records and other
books and records relating thereto;
(iii) all mortgage guaranties and insurance relating to
such Franchise Loans (issued by governmental agencies
or otherwise) and any mortgage insurance certificate
or other document evidencing such mortgage guaranties
or insurance relating to such Franchise Loans and all
claims and payments thereunder;
(iv) all other insurance policies and insurance proceeds
relating to any Franchise Loan or the related Secured
Property;
(v) all purchase or take-out commitments relating to or
constituting any or all of the foregoing;
(vi) all Interest Rate Protection Agreements relating to
any Franchise Loan;
(vii) all Blocked Accounts and the balance from time to
time standing to the credit of Blocked Accounts and
all rights with respect thereto;
(viii) all collateral, however defined, under any other
agreement between the Borrower or any of its
Affiliates on the one hand and the Lender or any of
its Affiliates on the other hand;
(ix) all "accounts", "chattel paper", "instruments" and
"general intangibles" as defined in the Uniform
Commercial Code relating to or constituting any and
all of the foregoing; and
(x) any and all replacements, substitutions,
distributions on or proceeds of any and all of the
foregoing.
(c) The Borrower hereby pledges to the Lender, and grants a
security interest in favor of the Lender in, all of the Borrowers right, title
and interest in, to and under the Collateral, whether now owned or hereafter
acquired, now existing or hereafter created and wherever located, to secure the
Secured Obligations. The Borrower agrees to mark its computer records and tapes
to evidence the interests granted to the Lender hereunder.
4.02 Further Documentation. At any time and from time to time,
upon the written request of the Lender, and at the sole expense of the Borrower,
the Borrower will promptly and duly execute and deliver, or will promptly cause
to be executed and delivered, such further instruments and documents and take
such further action as the Lender may reasonably request for the purpose of
obtaining or preserving the full benefits of this Loan Agreement and of the
rights and powers herein granted, including, without limitation, the filing of
any financing or continuation statements under the Uniform Commercial Code in
effect in any jurisdiction with respect to the Liens created hereby or the
taking of any other action necessary to preserve the status of the Lender's
Liens on the Collateral as first priority perfected liens. The Borrower also
hereby authorizes the Lender to file any such financing or continuation
statement without the signature of the Borrower to the extent permitted by
applicable law. A photographic or other reproduction of this Loan Agreement
shall be sufficient as a financing statement for filing in any jurisdiction.
4.03 Changes in Locations. Name. etc. The Borrower shall not
(i) change the location of its chief executive office/chief place of business
from that specified in Section 6 hereof or (ii) change its name, identity or
corporate structure (or the equivalent) or change the location where it
maintains its records with respect to the Collateral unless it shall have given
the Lender at least 30 days prior written notice thereof and shall have
delivered to the Lender all Uniform Commercial Code financing statements and
amendments thereto as the Lender shall request and taken all other actions
deemed necessary by the Lender to continue its perfected status in the
Collateral with the same or better priority.
4.04 Lender's Appointment as Attorney-in-Fact.
(a) The Borrower hereby irrevocably constitutes and appoints
the Lender and any officer or agent thereof, with full power of substitution, as
its true and lawful attorney-in-fact with full irrevocable power and authority
in the place and stead of the Borrower and in the name of the Borrower or in its
own name, from time to time in the Lender's discretion, for the purpose of
carrying out the terms of this Loan Agreement, to take any and all appropriate
action and to execute any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this Loan Agreement, and,
without limiting the generality of the foregoing, the Borrower hereby gives the
Lender the power and right, on behalf of the Borrower, without assent by, but
with notice to, the Borrower, if an Event of Default shall have occurred and be
continuing, to do the following:
(i) in the name of the Borrower or its own name, or otherwise,
to take possession of and endorse and collect any checks, drafts,
notes, acceptances or other instruments for the payment of moneys due
under any mortgage insurance or with respect to any other Collateral
and to file any claim or to take any other action or proceeding in any
court of law or equity or otherwise deemed appropriate by the Lender
for the purpose of collecting any and all such moneys due under any
such mortgage insurance or with respect to any other Collateral
whenever payable;
(ii) to pay or discharge taxes and Liens levied or placed on
or threatened against the Collateral; and
(iii) (A) to direct any party liable for any payment under any
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Lender or as the Lender shall direct; (B) to
ask or demand for, collect, receive payment of and receipt for, any and
all moneys, claims and other amounts due or to become due at any time
in respect of or arising out of any Collateral; (C) to sign and endorse
any invoices, assignments, verifications, notices and other documents
in connection with any of the Collateral; (D) to commence and prosecute
any suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any thereof and to
enforce any other right in respect of any Collateral; (E) to defend any
suit, action or proceeding brought against the Borrower with respect to
any Collateral; (F) to settle, compromise or adjust any suit, action or
proceeding described in clause (E) above and, in connection therewith,
to give such discharges or releases as the Lender may deem appropriate;
and (G) generally, to sell, transfer, pledge and make any agreement
with respect to or otherwise deal with any of the Collateral as fully
and completely as though the Lender were the absolute owner thereof for
all purposes, and to do, at the Lender's option and the Borrower's
expense, at any time, and from time to time, all acts and things which
the Lender deems necessary to protect, preserve or realize upon the
Collateral and the Lender's Liens thereon and to effect the intent of
this Loan Agreement, all as fully and effectively as the Borrower might
do.
The Borrower hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.
(b) The Borrower also authorizes the Lender, at any time and
from time to time, to execute, in connection with any sale provided for in
Section 4.07 hereof, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral.
(c) The powers conferred on the Lender are solely to protect
the Lender's interests in the Collateral and shall not impose any duty upon the
Lender to exercise any such powers. The Lender shall be accountable only for
amounts that it actually receives as a result of the exercise of such powers,
and neither the Lender nor any of its officers, directors, or employees shall be
.responsible to the Borrower for any act or failure to act hereunder, except for
its own gross negligence or willful misconduct.
4.05 Performance by Lender of Borrower's Obligations. If the
Borrower fails to perform or comply with any of its agreements contained in the
Loan Documents and the Lender may itself perform or comply, or otherwise cause
performance or compliance, with such agreement, the expenses of the Lender
incurred in connection with such performance or compliance, together with
interest thereon at a rate per annum equal to the Post-Default Rate, shall be
payable by the Borrower to the Lender on demand and shall constitute Secured
Obligations.
4.06 Proceeds. If an Event of Default shall occur and be
continuing, (a) all proceeds of Collateral received by the Borrower consisting
of cash, checks and other near-cash items shall be held by the Borrower in trust
for the Lender, segregated from other funds of the Borrower, and shall forthwith
upon receipt by the Borrower be turned over to the Lender in the exact form
received by the Borrower (duly endorsed by the Borrower to the Lender, if
required) and (b) any and all such proceeds received by the Lender (whether from
the Borrower or otherwise) may, in the sole discretion of the Lender, be held by
the Lender as collateral security for, and/or then, at any time thereafter and
subject to the priorities of payments outlined in Section 3.03(b), shall be
applied by the Lender against the Secured Obligations (whether matured or
unmatured) and the Hedge Payments. Any balance of such proceeds remaining after
the Secured Obligations and the Hedge Payments shall have been paid in full and
this Loan Agreement shall have been terminated shall be paid over to the
Borrower or to whomsoever may be lawfully entitled to receive the same. For
purposes hereof, proceeds shall include, but not be limited to, all principal
and interest payments, all prepayments and payoffs, insurance claims,
condemnation awards, sale proceeds, real estate owned rents and any other income
and all other amounts received with respect to the Collateral.
4.07 Remedies. If an Event of Default shall occur and be
continuing, the Lender may exercise, in addition to all other rights and
remedies granted to it in this Loan Agreement and in any other instrument or
agreement securing, evidencing or relating to the Secured Obligations, all
rights and remedies of a secured party under the Uniform Commercial Code.
Without limiting the generality of the foregoing, the Lender without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon the
Borrower or any other Person (each and all of which demands, presentments,
protests, advertisements and notices are hereby waived), may in such
circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell (on a servicing
released basis, at the Lender's option), lease, assign, give option or options
to purchase, or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more parcels or as
an entirety at public or private sale or sales, at any exchange, broker's board
or office of the Lender or elsewhere upon such terms and conditions as it may
deem advisable and at such prices as it may deem best, for cash or on credit or
for future delivery without assumption of any credit risk. The Lender shall have
the right upon any such public sale or sales, and, to the extent permitted by
law, upon any such private sale or sales, to purchase the whole or any part of
the Collateral so sold, free of any right or equity of redemption in the
Borrower, which right or equity is hereby waived or released. The Borrower
further agrees, at the Lender's request, to assemble the Collateral and make it
available to the Lender at places which the Lender shall reasonably select,
whether at the Borrower's premises or elsewhere. The Lender shall apply the net
proceeds of any such collection, recovery, receipt, appropriation, realization
or sale, after deducting all reasonable costs and expenses of every kind
incurred therein or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of the Lender
hereunder, including without limitation reasonable attorneys' fees and
disbursements, to the payment in whole or in part of the Secured Obligations, in
such order as the Lender may elect, and only after such application and after
the payment by the Lender of any other amount required or permitted by any
provision of law, including without limitation Section 9-504(1)(c) of the
Uniform Commercial Code, need the Lender account for the surplus, if any, to the
Borrower. To the extent permitted by applicable law, the Borrower waives all
claims, damages and demands it may acquire against the Lender arising out of the
exercise by the Lender of any of its rights hereunder, other than those claims,
damages and demands arising from the gross negligence or willful misconduct of
the Lender. If any notice of a proposed sale or other disposition of Collateral
shall be required by law, such notice shall be deemed reasonable and proper if
given at least 10 days before such sale or other disposition. The Borrower shall
remain liable for any deficiency (plus accrued interest thereon as contemplated
pursuant to Section 2.04(b) hereof) if the proceeds of any sale or other
disposition of the Collateral are insufficient to pay the Secured Obligations
and the fees and disbursements of any attorneys employed by the Lender to
collect such deficiency.
4.08 Limitation on Duties Regarding Presentation of
Collateral. The Lender's duty with respect to the custody, safekeeping and
physical preservation of the Collateral in its possession, under Section 9-207
of the Uniform Commercial Code or otherwise, shall be to deal with it in the
same manner as the Lender deals with similar property for its own account.
Neither the Lender nor any of its directors, officers or employees shall be
liable for failure to demand, collect or realize upon all or any part of the
Collateral or for any delay in doing so or shall be under any obligation to sell
or otherwise dispose of any Collateral upon the request of the Borrower or
otherwise.
4.09 Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.
4.10 Release of Security Interest. Upon termination of this
Loan Agreement and repayment to the Lender of all Secured Obligations and the
performance of all obligations under the Loan Documents the Lender shall release
its security interest in any remaining Collateral; provided that if any payment,
or any part thereof, of any of the Secured Obligations is rescinded or must
otherwise be restored or returned by the Lender upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower, or upon or as a
result of the appointment of a receiver, intervenor or conservator of, or a
trustee or similar officer for, the Borrower or any substantial part of its
Property, or otherwise, this Loan Agreement, all rights hereunder and the Liens
created hereby shall continue to be effective, or be reinstated, as though such
payments had not been made.
SECTION 5 Conditions Precedent.
5.01 Initial Advance. The agreement of the Lender to make the
initial Advance requested to be made by it hereunder is subject to the
satisfaction, immediately prior to or concurrently with the making of such
Advance, of the following conditions precedent:
(a) Loan Agreement. The Lender shall have received this Loan
Agreement, executed and delivered by a duly authorized officer of the Borrower.
(b) Note. The Lender shall have received the Note, conforming
to the requirements hereof and executed by a duly authorized officer of the
Borrower.
(c) Custodial Agreement. The Lender shall have received the
Custodial Agreement, conforming to the requirements hereof and executed by a
duly authorized officer of the Borrower and the Custodian.
(d) Blocked Account. The Lender shall have received evidence
satisfactory to the Lender of the existence of the Blocked Account.
(e) Blocked Account Agreement. The Lender shall have received
the Blocked Account Agreement, in form and substance satisfactory to the Lender
and executed by a duly authorized officer of the Borrower and any other party
thereto.
(t) Servicing Agreement(s). The Lender shall have received any
Servicing Agreement(s), each certified as a true, correct and complete copy of
the original.
(g) Franchise Loan Purchase Agreement. The Lender shall have
received a Franchise Loan Purchase Agreement, in form and substance satisfactory
to the Lender and executed by a duly authorized officer of each Originator.
(h) Administration Agreement. The Lender shall have received
the Administration Agreement, in form and substance acceptable to the Lender,
and executed by a duly authorized officer of each of the parties thereto.
(i) Filings. Registrations. Recordings. Any documents
(including, without limitation, financing statements) required to be filed,
registered or recorded in order to create, in favor of the Lender, a perfected,
first-priority security interest in the Collateral, subject to no Liens other
than those created hereunder, shall have been properly prepared and executed for
filing (including the applicable county(ies) if the Lender determines such
filings are necessary in its sole discretion), registration or recording in each
office in each jurisdiction in which such filings, registrations and
recordations are required to perfect such first-priority security interest.
(j) Closing Certificates. The Lender shall have received a
certificate of the Secretary or Assistant Secretary of the Borrower, dated as of
the date hereof, and certifying (A) that attached thereto is a true, complete
and correct copy of (i) the certificate of formation of limited partnership of
the Borrower, (ii) the limited partnership agreement of the Borrower containing
appropriate restrictions making the Borrower a bankruptcy remote special purpose
entity, in form and substance acceptable to the Lender, and (iii) resolutions
duly adopted by the general partner of the Borrower authorizing the execution,
delivery and performance of this Loan Agreement, the Note and the other Loan
Documents to which it is a party, and the borrowings contemplated hereunder, and
that such resolutions have not been amended, modified, revoked or rescinded, and
(B) as to the incumbency and specimen signature of each officer executing any
Loan Documents on behalf of the Borrower and authorized to execute any Notice of
Borrowing, and such certificate and the resolutions attached thereto shall be in
form and substance satisfactory to the Lender.
(k) Good Standing Certificates. The Lender shall have received
copies of certificates evidencing the good standing of the Borrower, dated as of
a recent date, from the Secretary of State (or other appropriate authority) of
the jurisdiction under which the Borrower is organized and of each other
jurisdiction where the ownership, lease or operation of property, or the conduct
of business, requires the Borrower to qualify as a foreign corporation, except
where the failure to qualify would not have a Material Adverse Effect.
(l) Legal Opinions. The Lender shall have received the
executed legal opinions of Lowndes, Drosdick, Doster, Kantor & Reed, P.A., legal
counsel of the Borrower, addressing the matters set forth in the form attached
hereto as Exhibit C, dated the initial Funding Date and otherwise in form and
substance acceptable to the Lender and covering such other matters incident to
the transactions contemplated by this Loan Agreement as the Lender shall
reasonably request.
(m) Fees and Expenses. The Lender shall have received all fees
and expenses required to be paid by the Borrower on or prior to the initial
Funding Date pursuant to Sections 2.12 and 11.03.
(n) Financial Statements. The Lender shall have received the
financial statements referenced in Section 6.01(a).
(o) Underwriting Guidelines. The Lender and the Credit Parties
shall have agreed upon the underwriting guidelines for Franchise Loans (the
"Underwriting Guidelines") and the Lender shall have received a certified copy
thereof.
(p) Consents. Licenses. Approvals. etc. The Lender shall have
received copies certified by the Borrower of all consents, licenses and
approvals, if any, required in connection with the execution, delivery and
performance by the Borrower of, and the validity and enforceability of, the Loan
Documents, which consents, licenses and approvals shall be in full force and
effect.
(q) Insurance. The Lender shall have received evidence in form
and substance satisfactory to the Lender showing compliance by the Borrower as
of such initial Funding Date with Section 7.03 hereof.
(r) Termination Letter. The Lender shall have received a
letter from the Borrower and the Servicer consenting to the termination of the
Servicer as servicer of the Franchise Loans in the event that an Event of
Default shall have occurred and be continuing (this provision may be contained
in the Servicing Agreement itself).
(s) Credit Party Due Diligence Review. The Lender shall have
completed its standard and customary due diligence review of each Credit Party
and be satisfied that as to each Credit Party, the operations, financial
condition and standard loan documents of such Credit Party are acceptable to the
Lender, in its sole discretion, and that each Credit Party is qualified as a
lender and securitization issuer with the relevant rating agencies as necessary
to consummate the transactions contemplated hereby. Such due diligence review
shall have been approved by the Credit and Legal Departments of the Lender and
PSI, as well as the Lender's Business Review
(t) Other Documents. The Lender shall have received such other
documents as the Lender or its counsel may reasonably request.
5.02 Initial and Subsequent Advances. The making of each
Advance to the Borrower (including the initial Advance) on any Business Day is
subject to the satisfaction of the following further conditions precedent, both
immediately prior to the making of such Advance and also after giving effect
thereto and to the intended use thereof:
(a) No Default. No Default or Event of Default shall have
occurred and be continuing.
(b) Representations and Warranties. Each representation and
warranty made by the Borrower in Section 6 hereof and elsewhere in each of the
Loan Documents, shall be true and correct on and as of the date of the making of
such Advance (in the case of the representations and warranties in Schedule 1,
solely with respect to the pledged Franchise Loan included in the Borrowing Base
on such date) with the same force and effect as if made on and as of such date
(or, if any such representation or warranty is expressly stated to have been
made as of a specific date, as of such specific date). The Borrower shall also
be in compliance with all governmental licenses and authorizations and qualified
to do business and in good standing in all required jurisdictions where the
failure to be so qualified should reasonably be expected to have a Material
Adverse Effect.
(c) Borrowing Base. The aggregate outstanding principal amount
of the Advances shall not exceed the Borrowing Base.
(d) Notice of Borrowing and Pledge. The Lender shall have
received a Notice of Borrowing and Pledge, Franchise Loan Schedule and
Underwriting Package in accordance with Section 2.03 hereof, appropriately
completed.
(e) Certifications: Franchise Loan Schedule and Exception
Report.The Custodian shall have received all Franchise Loan Files (subject only
to the absence of the Final Documentation) relating to the pledged Franchise
Loan, and the Lender shall have received from the Custodian a Funding Date
Certification in respect of all Franchise Loans to be pledged hereunder on such
Business Day and a corresponding Franchise Loan Schedule and Exception Report,
with exceptions in respect of such Franchise Loan acceptable to the Lender in
its sole discretion, in each case dated such Business Day and duly completed.
(f) Reports. The Lender shall have received any reports
required to be delivered to the Lender under Section 7.08.
(g) Additional Documents. The Lender shall have received with
regard to all Franchise Loans, such title insurance or marked up title
commitments, surveys, appraisals and other information, documents, agreement or
instruments as the Lender deems advisable with respect to Franchise Loans to be
pledged hereunder on such Business Day, each in form and substance satisfactory
to the Lender.
(h) Additional Matters. All corporate and other proceedings,
and all documents, instruments and other legal matters in connection with the
transactions contemplated by this Loan Agreement and the other Loan Documents
shall be reasonably satisfactory in form and substance to the Lender, and the
Lender shall have received such other documents and legal opinions in respect of
any aspect or consequence of the transactions contemplated hereby or thereby as
it shall reasonably request.
(i) No Material Adverse Effect. There shall not have occurred
one or more events that, in the reasonable judgment of the Lender, constitutes
or should reasonably be expected to constitute a Material Adverse Effect.
(j) Franchise Loan Due Diligence Review. Subject to the
Lender's right to perform one or more Due Diligence Reviews pursuant to Section
11.16 hereof, the Lender shall have completed its due diligence review of the
Franchise Loan Documents for each Advance and such other documents, records,
agreements, instruments, mortgaged properties or information relating to such
Advances as the Lender in its sole discretion deems appropriate to review and
such review shall be satisfactory to the Lender in its sole discretion.
(k) True Sale Opinion. With respect to any Franchise Loan that
was originated by an Affiliate of the Borrower (and which is not covered by a
true sale opinion previously delivered to the Lender), the Lender may, in its
sole discretion, require the Borrower to provide evidence sufficient to satis1~r
the Lender that such Franchise Loan was acquired in a legal sale, including
without limitation, an opinion, in form and substance and from an attorney, in
both cases, acceptable to the Lender in its sole discretion, that such Franchise
Loan was acquired in a legal sale and the Borrower shall not be consolidated
with the originator of the Franchise Loans for bankruptcy purposes.
(l) Other Conditions.The Borrower shall have satisfied all
other conditions that the Lender may reasonably request.
SECTION 6 Representations and Warranties. As of the Effective
Date and each Funding Date, the Borrower represents and warrants to the Lender
that:
6.01 Financial Condition.
(a) The audited consolidated balance sheet of CFS and its
consolidated Subsidiaries as at June 30, 1997, reported thereon by McDirmit,
Davis, Lauteria, Puckett, Vogel & Company, P.A. and the audited consolidated
balance sheet of CFC and its consolidated Subsidiaries as at June 30, 1997,
reported thereon by Arthur Anderson, LLP, a copy of which has heretofore been
furnished to or reviewed by the Lender, is complete and correct and presents
fairly the consolidated financial condition of the Credit Parties (other than
CNL) and their consolidated Subsidiaries as at such dates and the consolidated
results of their operations and their consolidated cash flows for the fiscal
year then ended.
(b) Such financial statement, including the related schedules
and notes thereto, has been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by such
accountants or Responsible Officer, as the case may be, and as disclosed
therein).
(c) Neither the Credit Parties (other than CNL) nor any of
their consolidated Subsidiaries had, at the date of the financial statement
referred to above, any material Guarantee Obligation, contingent liability or
liability for taxes, or any long-term lease or unusual forward or long term
commitment, including, without limitation, any interest rate or foreign currency
swap or exchange transaction, or other financial derivative, which is not
reflected in the foregoing statements or in the notes thereto.
6.02 No Change. Since June 30, 1997, there has been no
development or event nor any prospective development or event which has had or
should reasonably be expected to have a Material Adverse Effect.
6.03 Existence: Compliance with Law. The Borrower (a) is a
limited partnership duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization, (b) has the power and authority,
and has all governmental licenses, authorizations, consents and approvals
necessary, to own and operate its property, to lease the property it operates as
lessee and to carry on its business as now being or as proposed to be conducted,
(c) is duly qualified to do business and is in good standing under the laws of
each jurisdiction in which the nature of the business conducted by it makes such
qualification necessary and where failure so to qualify should be reasonably
expected (either individually or in the aggregate) to have a Material Adverse
Effect, and (d) is in compliance in all material respects with all Requirements
of Law.
6.04 Power: Authorization: Enforceable Obligations.
(a) The Borrower has the power and authority, and the legal
right, to make, deliver and perform this Loan Agreement, the Note, and each
other Loan Document to which it is a party, and to borrow and to grant Liens
hereunder, and has taken all necessary corporate action to authorize the
borrowings and the granting of Liens on the terms and conditions of this Loan
Agreement, the Note, and each other Loan Document to which it is a party, and
the execution, delivery and performance of this Loan Agreement, the Note, and
each other Loan Document to which it is a party.
(b) No consent or authorization of, approval by, notice to,
filing with or other act by or in respect of, any Governmental Authority or any
other Person is required or necessary in connection with the borrowings
hereunder or with the execution, delivery, performance, validity or
enforceability of this Loan Agreement or the Note or any other Loan Document,
except (i) for filings and recordings in respect of the Liens created pursuant
to this Loan Agreement, and (ii) as previously obtained and currently in full
force and effect.
(c) Each Loan Document has been duly and validly executed and
delivered by the Borrower and constitutes, a legal, valid and binding obligation
of the Borrower, enforceable against the Borrower in accordance with their
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
6.05 No Legal Bar. The execution, delivery and performance of
this Loan Agreement and the Note, the borrowings hereunder and the use of the
proceeds thereof will not violate any Requirement of Law or Contractual
Obligation of the Borrower or of any of its Subsidiaries and will not result in,
or require, the creation or imposition of any Lien (other than the Liens created
hereunder) on any of its or their respective properties or revenues pursuant to
any such Requirement of Law or Contractual Obligation.
6.06 No Material Litigation. There are no actions, suits,
arbitrations, investigations or proceedings of or before any arbitrator or
Governmental Authority pending or, to the knowledge of the Borrower, threatened
against the Borrower or any of its Subsidiaries or against any of its or their
respective properties or revenues of which should reasonably be expected to have
a Material Adverse Effect.
6.07 No Default. None of the Borrower nor any of its
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect which should reasonably be expected to have a
Material Adverse Effect. No Default or Event of Default has occurred and is
continuing.
6.08 Collateral: Collateral Security.
(a) The Borrower has not assigned, pledged, or otherwise
conveyed or encumbered any of the Collateral to any Person other than the
Lender, and immediately prior to the pledge of such Collateral, the Borrower was
the sole owner of the Collateral and had good and marketable title thereto, free
and clear of all Liens, in each case except for Liens that have been released or
are to be released simultaneously with the Liens granted in favor of the Lender
hereunder.
(b) The provisions of this Loan Agreement are effective to
create in favor of the Lender a valid security interest in all right, title and
interest of the Borrower in, to and under the Collateral.
(c) Upon (i) receipt by the Custodian of each Promissory Note,
(ii) the filing (to the extent such interest can be perfected by filing under
the Uniform Commercial Code) of financing statements on Form UCC-l naming the
Lender as "Secured Party" and the Borrower as "Debtor", and describing the
Collateral, in the jurisdictions and recording offices listed on Schedule 2
attached hereto, (iii) the taking of such other actions with respect to the
Franchise Loans as the Borrower shall have notified the Lender, the security
interests and Liens granted hereunder will constitute fully perfected
first-priority security interests under the Uniform Commercial Code or
applicable state real property law, as the case may be, in all right, title and
interest of the Borrower in, to and under such Collateral.
6.09 Chief Executive Office. The Borrower's chief executive
office on the Effective Date is located at 103 Foulk Road, Suite #202,
Wilmington, Delaware 19803.
6.10 Location of Books and Records. The location where the
Borrower keeps its books and records, including all computer tapes and records
relating to the Collateral is its chief executive office.
6.11 No Burdensome Restrictions. No Requirement of Law or
Contractual Obligation of the Borrower or any of its Subsidiaries has a Material
Adverse Effect.
6.12 Taxes. Each of the Borrower and its Subsidiaries has
filed all Federal and state income tax returns and all other material tax
returns that are required to be filed by them and has paid all taxes due
pursuant to such returns or pursuant to any assessment received by any of them,
except for any such taxes or assessments, if any, that are being appropriately
contested in good faith by appropriate proceedings diligently conducted and with
respect to which adequate reserves in conformity with GAAP have been provided.
No tax Lien has been filed, and, to the knowledge of
6.13 Margin Regulations. No part of the proceeds of any
Advances will be used for "purchasing" or "carrying" any "margin stock"
within the respective meanings of each of the quoted terms under, or
for any other purpose which violates or would be inconsistent with the
provisions of, Regulation T, U or X.
6.14 Investment Company Act: Other Regulations. The Borrower
is not an investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
The Borrower is not subject to regulation under any Federal or state statute or
regulation which limits its ability to incur Indebtedness.
6.15 Subsidiaries. All of the Subsidiaries of the Borrower at
the date hereof are listed on Schedule 3 to this Loan Agreement.
6.16 Origination and Acquisition of Franchise Loans. The
Franchise Loans to be pledged as collateral were originated by a Credit Party
and acquired by the Borrower, and the origination and collection practices used
by the Credit Parties or such other originator with respect to the Franchise
Loans have been, in all respects legal, proper, prudent and customary in the
commercial Franchise Loan servicing business, and in accordance with the
criteria 1i~ed on Schedule 1. The closing or escrow agent for each such
Franchise Loan is a nationally recognized title insurance company or an agent
thereof approved by the Lender.
6.17 No Adverse Selection. The Credit Parties have not
systematically selected Franchise Loans to be pledged to the Lender through a
process that is adverse to the Lender or which results in the Lender receiving
pledged Franchise Loans that are of lesser quality, determined in the sole
discretion of the Lender (exercised in good faith), than those Franchise Loans
pledged to other lenders pursuant to any other facility to which the Credit
Parties may be a party.
6.18 Borrower Solvent:Fraudulent Conveyance. As of the date
hereof and immediately after giving effect to each Advance, the fair value of
the Franchise Loans of the Borrower is greater than the fair value of the
liabilities (including, without limitation, contingent liabilities if and to the
extent required to be recorded as a liability on the financial statements of the
Borrower in accordance with GAAP) of the Borrower and the Borrower is and will
be solvent, is and will be able to pay its debts as they mature and does not and
will not have an unreasonably small capital to engage in the business in which
it is engaged and proposes to engage. Borrower does not intend to incur, or
believe that it has incurred, debts beyond its ability to pay such debts as they
mature. Borrower is not contemplating the commencement of insolvency,
bankruptcy, liquidation or consolidation proceedings or the appointment of a
receiver, liquidator, conservator, trustee or similar official in respect of
Borrower or any of its Franchise Loan. Borrower is not transferring any
Franchise Loan with any intent to hinder, delay or defraud any of its creditors.
6.19 ERISA. Each Plan to which the Borrower or its
Subsidiaries make direct contributions, and, to the knowledge of the Borrower,
each other Plan and each Multiemployer Plan, is in compliance in all material
respects with, and has been administered in all material respects in compliance
with, the applicable provisions of ERISA, the Code and any other Federal or
state law.
6.20 True and Complete Disclosure. The information, reports,
financial statements, exhibits and schedules furnished in writing by or on
behalf of the Borrower to the Lender in connection with the negotiation,
preparation or delivery of this Loan Agreement and the other Loan Documents or
included herein or therein or delivered pursuant hereto or thereto, do not
contain any untrue statement of material fact or omit to state any material fact
necessary to make the statements herein or therein not misleading. All written
information furnished after the date hereof by or on behalf of the Borrower to
the Lender in connection with this Loan Agreement and the other Loan Documents
and the transactions contemplated hereby and thereby will be true, correct and
accurate in every material respect, or (in the case of projections) based on
reasonable estimates, on the date as of which such information is stated or
certified. There is no fact known to a Responsible Officer of the Borrower that,
after due inquiry, should reasonably be expected to have a Material Adverse
Effect that has not been disclosed herein, in the other Loan Documents or in a
report, financial statement, exhibit, schedule, disclosure letter or other
writing furnished to the Lender for use in connection with the transactions
contemplated hereby or thereby.
6.21 Licenses. The Lender will not be required as a result of
financing or taking a pledge of the Franchise Loan to be licensed, registered or
approved or to obtain permits or otherwise qualify (i) to do business in any
state in which it currently so required or (ii) under any state consumer
lending, fair debt collection or other applicable state statute or regulation.
6.22 True Sales. Any Franchise Loan originated by an
Originator other than the Borrower has been conveyed to the Borrower pursuant to
a legal sale. The Borrower is operated in such a manner that it would not be
substantively consolidated in the trust estate of the Originator (that is, such
that the separate corporate existence of the Borrower and the Originator would
be disregarded), in the event of a bankruptcy or insolvency of the Originator
and in such regard:
(i) the Borrower is a special purpose limited
partnership whose activities are restricted in its certificate of partnership
and partnership agreement;
(ii) neither the Originator nor any Affiliate of the
Originator is involved in the day-to-day management of the Borrower;
(iii) other than the purchase of Franchise Loans and
other transactions contemplated by
the Franchise Loan Purchase Agreement, transactions contemplated by other
securitizations and the underlying facilities thereto, the payment of dividends
and the return of capital, any lease or sublease of office space or equipment,
and the payment of Servicing Fees to the Servicer under this Facility, the
Borrower engages in no intercorporate transactions with the Originator or any
Affiliate of the Originator;
(iv) the Borrower maintains separate records and
books of account from the Originator, holds regular meetings, and otherwise
observes limited partnership formalities and has a separate business office from
the Originator;
(v) the financial statements and books and records of
the Borrower and Originator prepared after the Closing Date reflect the separate
existence of the Borrower;
(vi) the Borrower maintains its assets separately
from the assets of the Originator and any other Affiliate of the Originator
(including through the maintenance of separate bank accounts), the Borrower's
funds and assets, and records relating thereto, have not been and are not
commingled with those of the Originator or any other Affiliate of the Originator
and the separate creditors of the Borrower will be entitled to be satisfied out
of the Borrower's assets prior to any value in the Borrower becoming available
to the Borrower's equity holders;
(vii) neither the Originator nor any Affiliate of the
Originator (A) pays the Borrower's expenses; or (b) advances funds to the
Borrower for the payment of expenses or otherwise;
(viii) all business correspondence of the Borrower
and other communications are conducted in the Borrower's own name, on its own
stationery and through a separately-listed telephone number.
6.23 Lines of Business. The Borrower engages in no other
business activities other than the acquisition of Franchise Loans from its
Affiliates, pledging such Franchise Loans hereunder and transferring such
Franchise Loans in connection with a securitization, and entering into Interest
Rate Protection Agreements, as required hereunder.
6.24 Year 2000. The Borrower has reviewed the areas within its
business and operations which could be adversely affected by, and have developed
or are developing a program to address on a timely basis the risk that computer
applications used by the Borrower may be unable to recognize and perform
properly date-sensitive functions involving certain dates prior to and any date
on or after December 31, 1999 (the "Year 2000 Problem"), and has made related
appropriate inquiry of material suppliers and vendors. Based on such review,
program and inquiry, the Borrower believes that the Year 2000 Problem will not
have a Material Adverse Effect.
SECTION 7 Covenants of the Borrower.The Borrower covenants and
agrees with the Lender that, so long as any Advance is outstanding and until the
later to occur of the payment in full of all Secured Obligations and the
termination of this Loan Agreement:
7.01 Financial Statements. The Credit Parties shall deliver to
the Lender:
(a) as soon as available and in any event within forty-five
(45) days after the end of each of the first three quarterly fiscal periods of
each fiscal year of the Credit Parties (other than CNL), the consolidated and
consolidating balance sheets of the Credit Parties (other than CNL) and their
consolidated Subsidiaries as at the end of such period and the related unaudited
consolidated and consolidating statements of income and of cash flows for the
Credit Parties (other than CNL) and their consolidated Subsidiaries for such
period and the portion of the fiscal year through the end of such period,
setting forth in each case in comparative form the figures for the previous
year, accompanied by a certificate of a Responsible Officer of such Credit
Parties, which certificate shall state that said consolidated financial
statements fairly present the consolidated and consolidating financial condition
and results of operations of the Credit Parties (other than CNL) and their
Subsidiaries in accordance with GAAP, consistently applied, as at the end of,
and for, such period (subject to normal year-end audit adjustments);
(b) as soon as available and in any event within ninety (90)
days after the end of each fiscal year of each Credit Party, the audited
consolidated and consolidating balance sheets of the Credit Parties (other than
CNL) and their consolidated Subsidiaries as at the end of such fiscal year and
the related consolidated and consolidating statements of income and retained
earnings and of cash flows for the Credit Parties (other than CNL) and their
consolidated Subsidiaries for such year, setting forth in each case in
comparative form the figures for the previous year, accompanied by an opinion
thereon of independent certified public accountants of recognized national
standing, which opinion shall not be qualified as to scope of audit or going
concern and shall state that said consolidated and consolidating financial
statements fairly present the consolidated and consolidating financial condition
and results of operations of the Credit Parties (other than CNL) and their
consolidated Subsidiaries as at the end of, and for, such fiscal year in
accordance with GAAP;
(c) from time to Lime such other information regarding the
financial condition, operations, or business of the Credit Parties and their
Subsidiaries as the Lender may reasonably request; and
(d) (i) at the same time as information is delivered to the
Lender in accordance with Sections 7.01(a) and (b) hereof, a statement of the
tangible net worth of CNL, certified as true and correct by a Responsible
Officer of CNL and (ii) at the same time as information is delivered to the
Lender in accordance with Sections 7.01(b) hereof a copy of an auditor's letter
with respect to the most recent audit of CNL which states that CNL is a going
concern and that such auditor has delivered an unqualified opinion with respect
to CNL.
7.02 Existence. Etc. The Borrower will:
(a) preserve and maintain its legal existence as a
limited partnership;
(b) preserve and maintain all of its material rights,
privileges, licenses and franchises;
(c) comply with the requirements of all applicable
Requirements of Law (including, without limitation, the Truth in
Lending Act, the Real Estate Settlement Procedures Act and all
environmental laws) if failure to comply with such requirements should
reasonably be expected (either individually or in the aggregate) to
have a Material Adverse Effect;
(d) keep adequate records and books of account, in which
complete entries will be made in accordance with GAAP consistently
applied; and
(e) not amend, supplement or otherwise modify its operating
agreement or other organizational documents without the prior written
consent of the Lender.
7.03 Maintenance of Property: Insurance. The Borrower shall
keep all property useful and necessary in its business in good working order and
condition. The Borrower shall maintain, on behalf of itself, CFC and CFS, errors
and omissions insurance and director and officer insurance in an aggregate
amount of at least $10,000,000, in substance satisfactory to the Lender. The
above described coverages shall not be reduced without the written consent of
the Lender. The Borrower shall also maintain such other insurance with
financially sound and reputable insurance companies, and with respect to
property and risks of a character usually maintained by entities engaged in the
same or similar business similarly situated, against loss, damage and liability
of the kinds and in the amounts customarily maintained by such entities. All
insurance companies issuing insurance pursuant to this section shall be
acceptable to the Lender in its sole discretion and shall have no less than an
"A2" rating by Moody's Investors Service, Inc. and "A" by Standard & Poor's
Rating Group.
7.04 Notices.
(a) The Borrower shall give notice to the Lender promptly:
(i) upon the Borrower becoming aware of, and in any
event within one (1) Business Day after, the occurrence of any Default
or Event of Default (unless such Default or Event of Default has been
waived in writing by the Lender) or any event of default or default
which with the lapse of time or notice or both would become an event of
default under any other material agreement of the Borrower;
(ii) upon, and in any event within five (5) Business
Days after, service of process on the Borrower or any of its
Subsidiaries, or any agent thereof for service of process, in respect
of any legal or arbitrable proceedings affecting the Borrower or any of
its Subsidiaries (a) that questions or challenges the validity or
enforceability of any of the Loan Documents or (b) in which the amount
in controversy exceeds S 100,000;
(iii) upon the Borrower becoming aware of any
material default related to any Franchise Loan, any Material Adverse
Effect and any event or change in circumstances which should reasonably
be expected to have a Material Adverse Effect;
(iv) upon the Borrower becoming aware that the
Secured Property in respect of any Franchise Loan has been damaged by
waste, fire, earthquake or earth movement, windstorm, flood, tornado or
other casualty, or otherwise damaged so as to materially and adversely
affect the Collateral Value of such Franchise Loan;
(v) upon the Borrower's receipt of any Payoff
Proceeds of any Franchise Loan, and in any event within one (1)
Business Day after receipt thereof;
(vi) of entry of a judgment or decree against any
Credit Party in an amount in excess of $100,000.
Each notice pursuant to this Section 7.04(a) (other than 7.04(a)(v)) shall be
accompanied by a statement of a Responsible Officer of the Borrower setting
forth details of the occurrence referred to therein and stating what action the
Borrower has taken or proposes to take with respect thereto.
7.05 Other Information. The Borrower shall furnish to the
Lender, as soon as available, copies of any and all proxy statements, financial
statements and reports which the Borrower sends to its stockholders, and copies
of all regular, periodic and special reports, and all registration statements
filed with the Securities and Exchange Commission or any Governmental Authority
which supervises the issuance of securities by the Borrower and any press
releases concerning the Borrower.
7.06 Further Identification of Collateral. The Borrower will
furnish to the Lender from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as the Lender or any Lender may reasonably request, all in
reasonable detail.
7.07 Franchise Loan Determined to be Defective. Upon discovery
by the Borrower or the Lender of any breach of any representation or warranty
listed on Schedule I hereto applicable to any Franchise Loan, the party
discovering such breach shall promptly give written notice of such discovery to
the other, together with a completed Eligibility Violation Notice.
7.08 Reports.
(a) The Borrower shall deliver or cause to be delivered to the
Lender, (i) by 12:00 noon, New York City time on Monday of each week, (ii) two
Business Days prior to each Funding Date, and (iii) at any time upon the request
of the Lender, a servicing report and Franchise Loan Tape in a computer-readable
format reasonably acceptable to the Lender, listing and setting forth such
information in respect of, all Franchise Loans as the Lender may reasonably
request, including, without limitation, the outstanding principal balance, any
prepayments and delinquency status of each Franchise Loan. The Borrower shall
deliver to the Lender a hard copy of any such report upon request of the Lender.
(b) The Borrower shall notify the Lender within forty-eight
(48) hours of the Borrower gaining knowledge of any event or circumstance which
could reasonably ~e expected to become a default under any Franchise Loan
Document or any actual default under any Franchise Loan Document, which report
shall be in the form of an Eligibility Violation Notice. The Borrower shall
deliver to the Lender a hard copy of any such report.
(c) The Borrower shall deliver to the Lender and/or permit the
Lender to inspect any property, books, valuations, records, audits or other
information as the Lender may reasonably request.
7.09 Borrowing Base Deficiency.If at any time there exists a
Borrowing Base Deficiency the Borrower shall cure same in accordance with
Section 2.06 hereof.
7.10 Prohibition of Fundamental Changes. Neither the Borrower
nor any of its Subsidiaries shall enter into any transaction of merger or
consolidation or amalgamation (other than among Affiliates), or liquidate, wind
up or dissolve itself (or suffer any liquidation, winding up or dissolution) or
sell all or substantially all of its assets (other than to Affiliates), without
the prior written consent of the Lender (determined in good faith).
7.11 Limitation on Liens on Collateral. The Borrower will
defend the Collateral against, and will take such other action as is necessary
to remove, any Lien, security interest or claim on or to the Collateral, other
than the security interests created or permitted under this Loan Agreement, and
the Borrower will defend the right, title and interest of the Lender in and to
any of the Collateral against the claims and demands of all persons whomsoever.
7.12 Limitation on Sale or Other Disposition of Collateral.
The Borrower will not lease, transfer, assign, sell or otherwise dispose of any
Collateral (other than in the ordinary course of business) without the prior
written consent of the Lender, unless the proceeds of such sale are applied to
repay the Advances, and after giving effect to such transaction, any Advances
then outstanding do not exceed the Borrowing Base.
7.13 Limitation on Transactions with Affiliates. Neither the
Borrower nor any of its Subsidiaries shall enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of property
or the rendering of any service, with any Affiliate unless such transaction is
(a) not otherwise prohibited under this Loan Agreement, (b) in the ordinary
course of the Borrower's business and (c) upon fair and reasonable terms no less
favorable to the Borrower, as the case may be, than it would obtain in a
comparable arm's length transaction with a Person which is not an Affiliate.
7.14 Underwriting Guidelines. Without prior written consent of
the Lender, the Borrower shall not permit another Credit Party to amend or
otherwise modify its Underwriting Guidelines.
7.15 Limitations on Modifications, Waivers and Extensions of
Franchise Loan Documents. The Borrower will not, nor will it permit or allow
others to, amend, modify, terminate or waive any provision of any Franchise Loan
Document or Franchise Loan Transfer Document to which the Borrower is a party in
any manner which should reasonably be expected to materially and adversely
affect the value of such Franchise Loan as Collateral. The Borrower shall take
such actions as the Lender shall request to enforce the Borrower's rights under
the Franchise Loan Documents and Franchise Loan Transfer Documents, and shall
take such actions as are necessary to enable the Lender to exercise such rights
in the Lender's own name.
7.16 Servicing. The Borrower shall not permit any Person other
than the Servicer to service Franchise Loans without the prior written consent
of the Lender.
7.17 Limitation on Distributions.
(a) The Borrower shall not declare, pay or make any
distribution (in cash, property or obligations) on any beneficial interest (now
or hereafter outstanding) of the Borrower on any warrants, options or other
rights with respect to any beneficial interest (now or hereafter outstanding) of
the Borrower or apply any of its funds, property or assets to the purchase,
redemption, sinking fund or other retirement of any beneficial interest (now or
hereafter outstanding) of the Borrower, or warrants, options or other rights
with respect to any beneficial interest (now or hereafter outstanding) of the
Borrower; and
(b) the Borrower shall not make any deposit for any of the
foregoing purposes; except that the Borrower may declare, pay or make
distributions (in cash or property) on any beneficial interest or on warrants,
options or other rights with respect to any beneficial interest or make loans to
any holder of a beneficial interest if immediately prior and after giving effect
to any proposed action described above, (i) no Default or Event of Default shall
have occurred and be continuing, and (ii) after giving effect to such
distribution, the Borrower shall have a positive net worth calculated in
accordance with GAAP.
7.18 Use of Proceeds. The Borrower will use the proceeds of
the Advances solely for the purposes set forth in Section 2.09 hereof.
7.19 Selection of Collateral. The Borrower shall not
systematically select Franchise Loans to be pledged to the Lender through a
process that is adverse to the Lender or which results in the Lender receiving
pledged Franchise Loans that are of lesser quality, determined in the sole
discretion of the Lender (exercised in good faith), than those Franchise Loans
pledged to other lenders pursuant to any other facility to which the Borrower
may be a party.
7.20 Interest Rate Protection Agreements. The Borrower shall
purchase Interest Rate Protection Agreements from Approved Hedge Counterparties,
in form and substance acceptable to the Lender, for each Franchise Loan pledged
under this Loan Agreement which bears interest at a fixed rate. The Borrower
shall maintain such Interest Rate Protection Agreements so long as the related
Franchise Loan is included in the Borrowing Base.
7.21 Lines of Business. The Borrower shall not engage in any
other business activities other than the acquisition of Franchise Loans from its
Affiliates, pledging such Franchise Loans hereunder and transferring such
Franchise Loans in connection with a securitization.
7.22 Securitization of Franchise Loans.
(a) Each securitization of Franchise Loans by the Credit
Parties or their Affiliates after the Effective Date shall include Franchise
Loans pledged to the Lender under this Loan Agreement in an aggregate principal
amount of not less than the product of (a) the aggregate principal amount of all
Advances outstanding under this Loan Agreement divided by the aggregate
principal amount of all loans outstanding under all warehouse financing
arrangements of the Credit Parties and/or their Affiliates and (b) the aggregate
principal amount of all Franchise Loans, Collateralizing such securitization
(the "Minimum Amount"). If the Lender determines that the Minimum Amount is not
appropriate for securitizations due to prevailing market conditions, the
Borrower and the Lender shall jointly arrive at an optimum amount of Franchise
Loans to be securitized from this Loan Agreement.
(b) The Credit Parties agree that PSI shall have the right of
first refusal to be either the lead underwriter or lead placement agent or
co-underwriter or co-placement agent for all securitizations of Franchise Loans
by a Credit Party while this Loan Agreement remains outstanding. The Borrower
further agrees that PSI shall have the right of first refusal to act as the lead
underwriter or lead placement agent for at least one of the next two
securitizations relating to Franchise Loans consummated after the Effective Date
and while this Loan Agreement remains outstanding. The underwriting/placement
fee of PSI shall be based on the current market conditions at the time of the
related securitization.
(c) Notwithstanding anything to the contrary contained herein,
nothing set forth in this Section 7.22 is intended to be and does not constitute
a commitment or obligation by PSI or any of its Affiliates to act as an
underwriter or placement agent in connection with any offering or sale of
securities or arrange any financing by the Borrower, any other Credit Party or
their Affiliates; and no liability or obligation on the part of PSI or any of
its Affiliates to proceed with or participate in an offering of securities or
arrangement of financing by the Borrower, any other Credit Party or their
Affiliates shall be created or exist unless or until PSI or such Affiliate, as
the case may be, has executed and delivered a purchase agreement, placement
agency or similar agreement containing PSI's or such Affiliate's customary
provisions (including provisions with respect to indemnification and
contribution) and then only in accordance with the terms and conditions set
forth therein.
7.23 Year 2000 Procedures. The Borrower shall (i) review the
areas within its business and operations which could be adversely affected by,
and will develop and implement a program to address on a timely basis the Year
2000 Problem, and will make related appropriate inquiry of material suppliers
and vendors and (ii) notify the Lender if any auditor, regulator or third party
consultant has issued a management letter or other communication regarding the
Year 2000 Problem, program or progress of the Borrower.
SECTION 8 Events of Default. Each of the following events
shall constitute an event of default (an "Event of Default") hereunder:
(a) Borrower Default in the Payment of any Advance. The
Borrower shall default in the payment of any principal of or interest on any
Advance when due (whether at stated maturity, upon acceleration or at mandatory
or optional prepayment); or
(b) Borrower Default in the Payment of Other Amount. The
Borrower shall default in the payment of any other amount payable by it
hereunder or under any other Loan Document and such default shall continue for a
period of five (5) Business Days following written demand from the Lender for
payment of such amounts; or
(c) Failure of Representation or Warranty. Any representation,
warranty or certification (excluding representations, warranties or
certifications contained in Schedule 1 or otherwise relating to a Franchise Loan
pledged hereunder for which the remedy for such breach is the removal of such
Franchise Loan from the Borrowing Base or an appropriate adjustment in the
Collateral Value of such Franchise Loan) made or deemed made by the Borrower
herein or by the Borrower in any other Loan Document or any certificate
furnished to the Lender pursuant to the provisions thereof, shall prove to have
been false or misleading in any material respect as of the time made or
furnished; or
(d) Default of Covenant. Any Credit Party shall:
(i) in the case of the Borrower, fail to comply with
the requirements of Section 7 hereof (other than Sections 7.01,
7.02(b), 7.02(d), 7.03, or 7.08),
(ii) in the case of the Borrower, fail to comply with
the requirements of Sections 7.01, 7.02(b), 7.02(d), 7.03, or 7.08
and such default shall continue unremedied for a period of five (5)
Business Days,
(iii) in the case of any Credit Party, fail to
observe or perform any other covenant, condition or agreement
contained in this Loan Agreement or any other Basic Document to
which it is a party and such failure to observe or perform shall
continue unremedied for a period of fifteen (15) Business Days; or
(e) Cross Default. Any Credit Party shall:
(i) in the case of the Borrower, default in any
payment of principal of or interest on any Indebtedness (other than
the Advances) or in the payment of any Guarantee Obligation, beyond
the period of grace (not to exceed 30 days), if any, provided in
the instrument or agreement under which such Indebtedness or
Guarantee Obligation was created; or
(ii) in the case of any other Credit Party, default
in any payment of principal of or interest on any Indebtedness
(other than the Advances) or in the payment of any Guarantee
Obligation, beyond the period of grace (not to exceed 30 days), if
any, provided in the instrument or agreement under which such
Indebtedness or Guarantee Obligation was created, if the aggregate
amount of the Indebtedness and/or Guarantee Obligations in respect
of which such default or defaults shall have occurred is $500,000
or more; or
(iii) in the case of the Borrower, default in the
observance or performance of any other agreement or condition
relating to any Indebtedness (other than the Advances) or Guarantee
Obligation or contained in any instrument or agreement evidencing,
securing or relating thereto, in each case beyond the period of
grace (not to exceed 30 days), if any, provided in the instrument
or agreement under which such Indebtedness or Guarantee Obligation
was created; or
(iv) in the case of any other Credit Party, default
in the observance or performance of any other agreement or
condition relating to any Indebtedness (other than the Advances) or
Guarantee Obligation or contained in any instrument or agreement
evidencing, securing or relating thereto, in each case beyond the
period of grace (not to exceed 30 days), if any, provided in the
instrument or agreement under which such Indebtedness or Guarantee
Obligation was created, if the aggregate amount of the Indebtedness
and/or Guarantee Obligations in respect of which such default or
defaults shall have occurred is $500,000 or more; or
(v) a default of any other agreement between a Credit
Party, on the one hand, and Lender or any of its Affiliates on the
other hand, which has not been waived by the Lender, the effect of
which default or other event or condition is to cause, or give the
holder or holders of such Indebtedness or the beneficiary or
beneficiaries of such Guarantee Obligation (or a trustee or agent
on behalf of such holder or holders or beneficiary or
beneficiaries) the immediate right to cause, with the giving of
notice if required, such Indebtedness to become due prior to its
stated maturity or such Guarantee Obligation to become payable; or
(f) Unsatisfied Judgment. One or more judgments or decrees
shall be entered against. the Borrower or any of its Subsidiaries or any Credit
Party involving in the aggregate a liability (not paid or fully covered by
insurance) of $250,000 or more, and all such judgments or decrees shall not have
been vacated, discharged, stayed or bonded pending appeal within 60 days from
the entry thereof; or
(g) Inability to Pay Debts. The Borrower or any Credit Party
shall admit in writing its inability to pay its debts as such debts become due;
or
(h) Voluntary Bankruptcy Event. Any Credit Party or any of
their Subsidiaries shall (i) apply for or consent to the appointment of, or the
taking of possession by, a receiver, custodian, trustee, examiner or liquidator
of itself or of all or a substantial part of its property, (ii) make a general
assignment for the benefit of its creditors, (iii) commence a voluntary case
under the Bankruptcy Code, (iv) file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, reorganization, liquidation,
dissolution, arrangement or winding-up, or composition or readjustment of debts,
(v) fail to controvert in a timely and appropriate manner, or acquiesce in
writing to, any petition filed against it in an involuntary case under the
Bankruptcy Code or (vi) take any corporate or other action for the purpose of
effecting any of the foregoing; or
(i) Involuntary Bankruptcy Event. A proceeding or case shall
be commenced, without the application or consent of a Credit Party or any of
their Subsidiaries, in any court of competent jurisdiction, seeking (i) its
reorganization, liquidation, dissolution, arrangement or winding-up, or the
composition or readjustment of its debts, (ii) the appointment of a receiver,
custodian, trustee, examiner, liquidator or the like of the Borrower or any such
Subsidiary or of all or any substantial part of its property, or (iii) similar
relief in respect of the Borrower or any such Subsidiary under any law relating
to bankruptcy, insolvency, reorganization, winding-up, or composition or
adjustment of debts, and such proceeding or case shall continue undismissed, or
an order, judgment or decree approving or ordering any of the foregoing shall be
entered and continue unstayed and in effect, for a period of 60 or more days; or
an order for relief against the Borrower or any such Subsidiary shall be entered
in an involuntary case under the Bankruptcy Code; or
(j) Termination of Loan Documents. The Custodial Agreement, or
any other Loan Document or Basic Document, shall for whatever reason be
terminated or cease to be in full force and effect, or the enforceability
thereof shall be contested by any party thereto; or
(k) ERISA Default. (i) any Person shall engage in any
"prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of
the Code) involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA). whether or nor waived, shall exist with
respect to any Plan or any Lien in favor of the PBGC or a Plan shall arise on,
the Franchise Loan of the Borrower or any Commonly Controlled Entity, (iii) a
Reportable Event shall occur with respect to, or proceedings shall commence to
have a trustee appointed, or a trustee shall be appointed, to administer or to
terminate, any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of the
Lender, likely to result in the termination of such Plan for purposes of Title
IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title
IV of ERISA, (v) the Borrower or any Commonly Controlled Entity shall, or in the
reasonable opinion of the Lender is likely to, incur any liability in connection
with a withdrawal from, or the insolvency or reorganization of, a Multiemployer
Plan or (vi) any other event or condition shall occur or exist with respect to a
Plan; and in each case in clauses (i) through (vi) above, such event or
condition, together with all other such events or conditions, if any, could
reasonably be expected to have a Material Adverse Effect; or
(1) Material Adverse Effect. Any other event shall occur
which, in the sole good faith discretion of the Lender, may have a Material
Adverse Effect; or
(m) Change of Control. CFC or an Affiliate shall cease to own
a majority of the issued and outstanding shares of voting capital stock of the
general partner of the Borrower without the written consent of the Lender
(determined in good faith); or
(n) Pre-Existing Condition. The discovery by the Lender during
its continuing due diligence of the Borrower of a condition or event which
existed at or prior to the execution hereof which was not previously disclosed
to the Lender and which the Lender, in its sole reasonable discretion,
determines materially and adversely affects: (i) the condition (financial or
otherwise) of the Borrower, its Subsidiaries or Affiliates; or (ii) the ability
of either the Borrower or the Lender to fulfill its respective obligations under
this Agreement; or
(o) Other Liens. The Borrower shall grant, or suffer to exist,
any Lien on any Collateral except the Liens contemplated hereby; or the Liens
contemplated hereby shall cease to be first priority perfected Liens on the
Collateral in favor of the Lender or shall be Liens in favor of any Person other
than the Lender; or
(p) Failure to Answer. The Lender shall reasonably request,
specifying the reasons for such request, information, and/or written responses
to such requests, regarding the financial well-being of the Borrower and such
information and/or responses shall not have been provided within three Business
Days of such request.
(q) Perfection of Collateral. The Lender shall cease to have a
valid, fully perfected and enforceable first priority security interest in the
Collateral.
SECTION 9 Remedies Upon Default.
(a) Upon the occurrence of one or more Events of Default other
than those referred to in Sections 8(h) or (i), and in addition to the remedies
provided in Section 4.07 hereof and otherwise provided in this Loan Agreement,
the Lender may immediately declare the principal amount of the Advances then
outstanding under the Note to be immediately due and payable, together with all
interest thereon and fees and expenses accruing under this Loan Agreement. Upon
the occurrence of an Event of Default referred to in Sections 8(h) or (i), and
in addition to the remedies provided in Section 4.07 hereof and otherwise
provided in this Loan Agreement, such amounts shall immediately and
automatically become due and payable without any further action by any Person.
Upon such declaration or such automatic acceleration, the balance then
outstanding on the Note shall become immediately due and payable, without
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by the Borrower.
(b) Upon the occurrence of one or more Events of Default, and
in addition to the remedies provided in Section 4.07 hereof and otherwise
provided in this Loan Agreement, the Lender shall have the right to obtain
physical possession of the Servicing Records and all other files of the Borrower
relating to the Collateral and all documents relating to the Collateral which
are then or may thereafter come in to the possession of the Borrower or any
third party acting for the Borrower and the Borrower shall deliver to the Lender
such assignments as the Lender shall request. The Borrower shall be responsible
for paying any fees of any Servicer resulting from the termination of a Servicer
due to an Event of Default. The Lender shall have the right to demand transfer
of all servicing rights and obligations to a new servicer acceptable to the
Lender (such new servicer shall receive a servicing fee or any other amounts
necessary to assure the ability of the Lender to find an appropriate successor
servicer). The Lender shall be entitled to specific performance of all
agreements of the Borrower contained in this Loan Agreement.
SECTION 10 No Duty of Lender. The powers conferred on the
Lender hereunder are solely to protect the Lender's interests in the Collateral
and shall not impose any duty upon it to exercise any such powers. The Lender
shall be accountable only for amounts that it actually receives as a result of
the exercise of such powers, and neither it nor any of its officers, directors,
employees or agents shall be responsible to the Borrower for any act or failure
to act hereunder, except for its or their own gross negligence or willful
misconduct.
SECTION 11 Miscellaneous.
11.01 Waiver. No failure on the part of the Lender to exercise
and no delay in exercising, and no course of dealing with respect to, any right,
power or privilege under any Loan Document shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or privilege under
any Loan Document preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
11.02 Notices. Except as otherwise expressly permitted by this
Loan Agreement, all notices, requests and other communications provided for
herein and under the Custodial Agreement (including without limitation any
modifications of, or waivers, requests or consents under, this Loan Agreement)
shall be given or made in writing (including without limitation by telex or
telecopy) delivered to the intended recipient at the "Address for Notices"
specified below its name on the signature pages hereof or thereof); or, as to
any party, at such other address as shall be designated by such party in a
written notice to each other party. Except as otherwise provided in this Loan
Agreement and except for notices given under Section 2 (which shall be effective
only on receipt), all such communications shall be deemed to have been duly
given when transmitted by telex or telecopy or personally delivered or, in the
case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.
11.03. Indemnification and Expenses.
(a) The Borrower agrees to hold the Lender and each of its officers,
directors, agents and employees (each, an "Indemnified Party") harmless from and
indemnify each Indemnified Party against all liabilities, losses, damages,
judgments, costs and expenses of any kind which may be imposed on, incurred by
or asserted against such Indemnified Party in any suit, action, claim or
proceeding relating to or arising out of this Loan Agreement, the Note, any
other Loan Document or any transaction contemplated hereby or thereby, or any
amendment, supplement or modification of, or any waiver or consent under or in
respect of, this Loan Agreement, the Note, any other Loan Document or any
transaction contemplated hereby or thereby, except, in each case, to the extent
arising from such Indemnified Party's gross negligence or willful misconduct. In
any suit, proceeding or action brought by the Lender in connection with any
Franchise Loan for any sum owing thereunder, or to enforce any provisions of any
such Franchise Loan, the Borrower will save, indemnify and hold the Lender
harmless from and against all expense, loss or damage suffered by reason of any
defense, set-off, counterclaim, recoupment or reduction or liability whatsoever
of the account debtor or obligor thereunder, arising out of a breach by the
Borrower of any obligation thereunder or arising out of any other agreement,
indebtedness or liability at any time owing to or in favor of such account
debtor or obligor or its successors from the Borrower. The Borrower also agrees
to reimburse the Lender as and when billed by the Lender for all the Lender's
costs and expenses incurred in connection with the good faith enforcement or the
preservation of the Lender's rights under this Loan Agreement, the Note, any
other Loan Document or any transaction contemplated hereby or thereby, including
without limitation the fees and disbursements of its counsel (including all fees
and disbursements incurred in any action or proceeding between the Borrower and
an Indemnified Party or between an Indemnified Party and any third party
relating hereto). The Borrower hereby acknowledges that, notwithstanding the
fact that the Note is secured by the Collateral, the obligation of the Borrower
under the Note is a recourse obligation of the Borrower.
(b) The Borrower agrees to pay as and when billed by the
Lender all of the reasonable out-of-pocket costs and expenses incurred by the
Lender in connection with the development, preparation and execution of, and any
amendment, supplement or modification to, this Loan Agreement, the Note, any
other Loan Document or any other documents prepared in connection herewith or
therewith, and the consummation and administration of the transactions
contemplated hereby and thereby, including without limitation (i) all the
reasonable fees, disbursements and expenses of counsel to the Lender; provided,
that in no event shall the Borrower be liable for the fees of the Lender's
counsel in excess of $75,000 and (ii) all the due diligence, inspection, testing
and review costs and expenses incurred by the Lender with respect to Collateral
under this Loan Agreement; provided that in no event shall the Borrower be
liable for fees and expenses of a third-party underwriter who is hired to review
the Franchise Loans in excess of $50,000 over the term of this Loan Agreement.
11.04 Amendments Except as otherwise expressly provided in
this Loan Agreement, any provision of this Loan Agreement may be modified or
supplemented only by an instrument in writing signed by the Borrower and the
Lender and any provision of this Loan Agreement may be waived by the Lender;
pr~yi4~4, that the Lender and the Borrower shall not amend the provisions of
Section 3.03(b) or Section 4.06 hereof without the prior written consent of any
Hedge Counterparty adversely affected thereby.
11.05 Successors and Assigns. This Loan Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
11.06 Survival. The obligations of the Borrower under Section
11.03 hereof shall survive the repayment of the Advances and the termination of
this Loan Agreement. In addition, each representation and warranty made or
deemed to be made by a request for a borrowing herein or pursuant hereto shall
survive the making of such representation and warranty, and the Lender shall not
be deemed to have waived, by reason of making any Advance, any Default that may
arise because any such representation or warranty shall have proved to be false
or misleading, notwithstanding that the Lender may have had notice or knowledge
or reason to believe that such representation or warranty was false or
misleading at the time such Advance was made.
11.07 Captions. The table of contents and captions and section
headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this Loan
Agreement.
11.08 Counterparts. This Loan Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute this Loan Agreement
by signing any such counterpart.
11.09 GOVERNING LAW: ETC. THIS LOAN AGREEMENT SHALL BE
GOVERNED BY THE LAW OF THE STATE OF NEW YORK WITHOUT REFERENCE TO CHOICE OF LAW
DOCTRINE (BUT WITH REFERENCE TO SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW, WHICH BY ITS TERMS APPLIES TO THIS LOAN AGREEMENT), AND SHALL
CONSTITUTE A SECURITY AGREEMENT WITHIN THE MEANING OF THE UNIFORM COMMERCIAL
CODE.
11.10 SUBMISSION TO JURISDICTION: WAIVERS. THE BORROWER HEREBY
IRREVOCABLY AND UNCONDITIONALLY:
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS LOAN AGREEMENT, THE NOTE AND THE OTHER LOAN
DOCUMENTS, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT
THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF
NEW YORK, THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;
(B) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT
IN SUCH COURTS AND, TO THE EXTENT PERMITI~ED BY LAW, WAIVES ANY OBJECTION THAT
IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN
ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT
COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
CW&T/JADOCS\NCLIB1\PWERTZ\0041891 .14 -45-
(C) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED
MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS
ADDRESS SET FORTH UNDER lTS SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF WHICH
THE LENDER SHALL HAVE BEEN NOTIFIED; AND
(D) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO
EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT
THE RIGHT TO SUE IN ANY OTHER JURISDICTION.
11.11 WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE
LENDER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS LOAN AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
11.12 Acknowledgments. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Loan Agreement, the Note and the other
Loan Documents;
(b) the Lender has no fiduciary relationship to the Borrower,
and the relationship between the Borrower and the Lender is solely that
of debtor and creditor; and
(c) no joint venture exists between the Lender and the
Borrower.
11.13 Hypothecation and Pledge of Collateral. The Lender shall
have free and unrestricted use of all Collateral and nothing in this Loan
Agreement shall preclude the Lender from engaging in repurchase transactions
with the Collateral or evidence of the Lender's interest in the Collateral
relating thereto or otherwise pledging, repledging, transferring, hypothecating,
or rehypothecating the Collateral. Nothing contained in this Loan Agreement
shall obligate the Lender to segregate any Collateral delivered to the Lender by
the Borrower. Nothing contained in this section shall impair or affect any
rights of the Borrower under the Loan Documents, including the right to have any
Franchise Loan released from any lien of the Lender upon payment to the Lender
of the principal balance of the Advance relating to such Franchise Loan.
11.14 Assignments: Participations.
(a) The Borrower may not assign any of its rights or
obligations hereunder or under the Note without the prior written consent of the
Lender. The Lender may assign or transfer to any Affiliate of the Lender or
(following an Event of Default) any other Person all or any of its rights or
obligations under this Loan Agreement and the other Loan Documents.
Notwithstanding the foregoing, the Lender shall have the right, without the
consent of the Borrower, to pledge, assign or otherwise transfer its interest in
the Note (without assigning its obligations under the Loan Agreement or any
other Loan Documents) to any other Person.
(b) The Lender may, without the prior written consent of the
Borrower, at any time sell to any other Person participating interests in any
Advance owing to the Lender hereunder, any commitment of the Lender to make
Advances hereunder, its interest in the Collateral, or any other interest of the
Lender hereunder or under any other Loan Document.
(c) The Borrower agrees to cooperate with the Lender in
connection with any such assignment or transfer, to execute and deliver such
replacement notes, and to enter into such restatements of, and amendments,
supplements and other modifications to, this Loan Agreement and the other Loan
Documents in order to give effect to such assignment or transfer.
11.15 Servicing.
(a) The Borrower covenants to maintain or cause the servicing
of the Franchise Loans to be maintained in conformity with accepted customary
and prudent servicing practices in the industry for the same type of Franchise
Loans as the Franchise Loans and in a manner at least equal in quality to the
servicing the Borrower provides for Franchise Loans which it owns ("Accepted
Servicing Practices"). In the event that the preceding language is interpreted
as constituting one or more servicing contracts, each such servicing contract
shall terminate automatically upon the earlier of (i) an Event of Default, or
(ii) the Termination Date.
(b) The Borrower agrees that the Lender is the collateral
assignee of all servicing records, including but not limited to any and all
servicing agreements, files, documents, records, data bases, computer tapes,
copies of computer tapes, proof of insurance coverage, insurance policies,
appraisals, other closing documentation, payment history records, and any other
records relating to or evidencing the servicing of Franchise Loans (the
"Servicing Records"), and (ii) the Borrower grants the Lender a security
interest in all of the Borrower's rights relating to the Franchise Loans and all
Servicing Records to secure the obligation of the Borrower or its designee to
service in conformity with this Section and any other obligation of the Borrower
to the Lender. The Borrower covenants to safeguard such Servicing Records and to
deliver them promptly to the Lender or its designee (including the Custodian) at
the Lender's request.
(c) After the Funding Date, until the pledge of any Franchise
Loan is relinquished by the Custodian, the Borrower will have no right to modify
or alter the terms of such Franchise Loan Documents except with the prior
written consent of the Lender, and the Borrower will have no obligation or right
to repossess such Franchise Loan or substitute another Franchise Loan, except as
provided in the Custodial Agreement; provided, that the Borrower may enter into
forbearance agreements or plans with Obligors consistent with its collection
activities as servicer of the Franchise Loans and in conformity with Accepted
Servicing Practices.
(d) The Borrower shall permit the Lender to inspect the
Borrower's or its Affiliate's servicing facilities, as the case may be, for the
purpose of satisfying the Lender that the Borrower or its Affiliate, as the case
may be, has the ability to service the Franchise Loans as provided in this Loan
Agreement.
11.16 Periodic Due Diligence Review. The Borrower acknowledges
that the Lender has the right to perform continuing due diligence reviews with
respect to the Franchise Loans, for purposes of verifying compliance with the
representations, warranties and specifications made hereunder, or otherwise, and
the Borrower agrees that upon reasonable (but no less than two (2) Business
Day's) prior notice to the Borrower (which prior notice shall not be required
after the occurrence and during the continuation of a Default), the Lender or
its authorized representatives will be permitted during normal business hours to
examine, inspect, and make copies and extracts of, the Franchise Loan Files and
any and all documents, records, agreements, instruments or information relating
to such Franchise Loans in the possession or under the control of the Borrower
and/or the Custodian. The Borrower also shall make available to the Lender a
knowledgeable credit, financial or accounting officer for the purpose of
answering questions respecting the Franchise Loan Files and the Franchise Loans.
Without limiting the generality of the foregoing, the Borrower acknowledges that
the Lender may make Advances to the Borrower based solely upon the information
provided by the Borrower to the Lender and the representations, warranties and
covenants contained herein, and that the Lender, at its option, has the right at
any time to conduct a partial or complete due diligence review on some or all of
the Franchise Loans securing such Advance, including without limitation ordering
new credit reports and new appraisals on the related Mortgaged Properties and
otherwise re-generating the information used to originate such Franchise Loans.
The Lender may underwrite such Franchise Loans itself or engage a mutually
agreed upon third party underwriter to perform such underwriting. The Borrower
agrees to cooperate with the Lender and any third party underwriter in
connection with such underwriting, including, but not limited to, providing the
Lender and any third party underwriter with access to any and all documents,
records, agreements, instruments or information relating to such Franchise Loans
in the possession, or under the control, of the Borrower. The Borrower further
agrees that the Borrower shall reimburse the Lender for all reasonable
out-of-pocket costs and expenses incurred by the Lender in connection with the
Lender's activities pursuant to this Section 11.16; provided, that the
obligation of the Borrower to pay such costs and expenses shall be limited to no
more than two such diligence reviews during each year. Notwithstanding anything
to the contrary in this Section 11.16, this section shall not be implied to
authorize the Lender to perform due diligence with respect to CNL, other than as
permitted in Section 7.01(d).
11.17 Set-Off. In addition to any rights and remedies of the
Lender provided by this Loan Agreement and by law, the Lender shall have the
right, without prior notice to the Borrower, any such notice being expressly
waived by the Borrower to the extent permitted by applicable law, upon any
amount becoming due and payable by the Borrower hereunder (whether at the stated
maturity, by acceleration or otherwise) to set-off and appropriate and apply
against such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by the Lender or any
Affiliate thereof to or for the credit or the account of the Borrower. The
Lender agrees promptly to notify the Borrower after any such set-off and
application made by the Lender; provided that the failure to give such notice
shall not affect the validity of such set-off and application.
11.18 Confidentiality. The Lender and the Credit Parties agree
to keep the terms of this Loan Agreement and the other Loan Documents
confidential; provided, that the Lender and the Credit Parties shall have the
right to disseminate such information (i) to the Custodian, the Servicer, any
outside accounting firm performing analyses in connection with this Loan
Agreement or the transactions contemplated hereunder which agrees to comply with
the provisions of this Section 11.18 (ii) to any proposed assignee of the Lender
which agrees to comply with the provisions of this Section 11.18, (iii) to their
respective employees, directors, agents, attorneys, accountants and other
professional advisors (other than competitors of the Lender) who agree to comply
with the provisions of this Section 11.18, (iv) upon the request or demand of
any examiner or other Governmental Authority having jurisdiction over the such
party, (v) in response to any order of any court or other Governmental
Authority, (vi) as may otherwise be required pursuant to any Requirement of Law,
(vii) in connection with the exercise of any remedy hereunder, and (viii) to any
other Person which agrees to comply with the provisions of this Section 11.18 if
such dissemination is necessary in connection with this Loan Agreement or the
transactions contemplated hereunder, in the good faith determination of the
Lender. Under no circumstances shall any Credit Party make any statement which
directly or indirectly indicates or implies to any Obligor that the Lender is
involved in a joint venture with the Borrower or that the Lender has any
obligation or responsibility, direct or indirect, with respect to such Obligor.
The Borrower may disseminate copies of this Loan Agreement (which shall have
information redacted as deemed appropriate by the Lender in its sole discretion
(exercised in good faith)) to Approved Hedge Counterparties; provided, that each
such Approved Hedge Counterparty execute and deliver to the Lender a
Confidentiality Agreement.
11.19 No Proceedings. Each of the Lender, PSI and each of the
Credit Parties, and heir respective assignees and successors hereby agrees that
it will not institute against, or join any their Person in instituting against,
the Borrower, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceeding under any federal or state
bankruptcy or similar law, for one year and one day after payment in full of all
Advances under this Loan Agreement.
11.20 Credit Parties. Notwithstanding the references to the
Credit Parties set forth in this Loan Agreement and the obligations of the
Borrower under provisions referencing or relating to the Credit Parties, the
liabilities and obligations of each of the Credit Parties under this Loan
Agreement to the Lender or any other party (including the Borrower) are limited
solely to the covenants applicable to such Credit Party under sub-section 7.22
of this Loan Agreement, and the "Miscellaneous" terms and conditions of this
Section 11 (other than sub-sections 11.03 and 11.15) as they relate to each such
Credit Party.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
LENDER
PRUDENTIAL SECURITIES CREDIT
CORPORATION
By:_________________________________
Name:
Title:
Address for Notices:
One Seaport Plaza
27th Floor
Credit Department
New York, New York 10292
Attention: James Maitland
Telecopier No.: (212) 214-7678
Telephone No.: (212) 214-7231
with a copy to:
One New York Plaza
14th Floor
New York, New York 10292
Attention: Russell J. Burns
Telecopier No.: (212) 778-7401
Telephone No.: (212) 778-4531
with a copy to:
One Seaport Plaza
27th Floor
Credit Department
New York, New York 10292
Attention: Robert Troiano
Telecopier No.: (212) 214-7535
Telephone No.: (212) 214-7640
</TABLE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Loan
Agreement to be duly executed and delivered as of the day and year first above
written.
BORROWER
<TABLE>
<CAPTION>
<S> <C>
CNL FINANCIAL V, LP, a Delaware limited partnership
By: CNL FINANCIAL V, INC., a Delaware corporation,
its general partner
By: ___________________________
Name:
Title:
Address for Notices:
103 Foulk Road
Suite #202
Wilmington, Delaware 19803.
Attention: Brian Fluck
Telecopier No.: (407) 425-9876
Telephone No.: (407) 650-1057
with a copy to:
CNL Financial Services, Inc.
400 East South Street
Suite 500
Orlando, Florida 32801-2878
Attention: Brian Fluck
Telecopier No.: (407) 425-9876
Telephone No.: (407) 650-1057
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
CREDIT PARTIES (solely for purposes of
Section 7.22 and Section 11
(excluding 11.03 and 11.15)
hereof)
CNL FINANCIAL CORPORATION
By:______________________________
Name:
Tide:
CNL FINANCIAL SERVICES, INC.
By:_______________________________
Name:
Title:
CNL GROUP, INC.
By:_______________________________
Name:
Title:
Address for Notices:
400 East South Street
Suite 500
Orlando, Florida 32801-2878
Attention: Brian Fluck
Telecopier No.: (407) 425-9876
Telephone No.; (407) 650-1057
Schedule 1
</TABLE>
<PAGE>
Schedule 1
ELIGIBILITY CRITERIA RE: FRANCHISE LOANS
Part 1. Eligible Franchise Loans
To be an Eligible Franchise Loan, a Franchise Loan (and the
related Franchise Loan Documents and related Secured Property) must satisfy the
following eligibility characteristics as of the applicable Funding Date and
maintain at all times the Critical Eligibility Criteria, subject to any
exceptions thereto approved in writing by the Lender in its sole discretion
(terms not otherwise defined herein shall have the meaning assigned to such
terms on Part II of this Schedule 1:
(i) As of the date of origination, such Franchise Loan relates to a
Franchise concept that is listed on Schedule 4 hereto, as well as
concepts that are added from time to time to CFS's approved franchise
list with the consent of the Lender, such consent not to be
unreasonably withheld; provided, that the Lender shall have the right
to remove any concept previously listed on Schedule 4 hereto or
otherwise previously approved, if the Lender determines in its sole
discretion (exercised in good faith) that such concept should no longer
be considered an approved concept hereunder.
(ii) The proceeds of such Franchise Loan were used for the purpose of
(A) refinancing existing indebtedness relating to the Franchise Units,
(B) remodeling existing Franchise Units, (C) acquisition of new
Franchise Units, (D) purchase of leased equipment to be used in
connection with the operation of the Franchise Units or (E)
construction of new Franchise Units.
(iii) Such Franchise Loan is a fully amortizing term loan with terms
not greater than (A) 20 years, in the case of Fee Franchise Loans and
Ground Lease Franchise Loans (B) 15 years, in the case of Space Lease
Franchise Loans, (C) 10 years, in the case of Equipment Franchise
Loans.
(iv) The Obligor, or its management, under such Franchise Loan is a
seasoned operator of Franchise Units. Such Obligor, or its management,
must have a minimum of three years of operating experience with
Franchise Units and such Obligor or its Affiliates must operate a
minimum of five Franchise Units.
(v) Such Franchise Loan contains provisions, acceptable to the Lender
in its sole discretion, which provide that such Franchise Loan may be
prepaid in full only upon payment of yield maintenance or similar
prepayment fee which is designed to compensate the Lender for the
present value of interest that would have accrued over the term of such
Franchise Loan had it not been prepaid; provided, that if such
Franchise Loan bears interest at a variable interest rate, the
prepayment fee shall be mutually acceptable to the Lender and the
Borrower.
(vi) Such Franchise Loan shall be with full recourse to the Obligor
under such Franchise Loan.
(vii) The FCCR of the Obligor and its consolidated Subsidiaries under
such Franchise Loan shall not be less than 1.10 to 1.00. The FCCR of
each Franchise Unit relating to such Franchise Loan shall not be less
than 1.20 to 1.00; provided, that in the case of any Franchise Unit
that are pledged as additional collateral for such Franchise Loan and
were not deemed necessary for the credit approval of such Franchise
Loan (such that the Franchise Loan would have been approved for the
same principal amount in the absence of such Franchise Unit), the
foregoing restriction shall not apply.
(viii) As of the date of origination, the LTV of such Franchise Loan
shall not be greater than (A) 70%, in the case of Fee Franchise Loans,
(B) 60%, in the case of Ground Lease Franchise Loans and Space Lease
Franchise Loans, and (C) 60% in the case of Equipment Franchise Loans.
(ix) If such Franchise Loan is a Construction Franchise Loan, the
principal amount of such Construction Franchise Loan shall not exceed
100% of the actual construction costs, including the costs of land,
buildings, franchise fees and construction period interest, paid as
incurred. Such Construction Franchise Loan must be eligible for
securitization one year (or such earlier time as determined by the
Lender in its sole discretion based upon prevailing market conditions)
after such Construction Franchise Loan converts to an ordinary
Franchise Loan.
(x) The Franchise Units and Secured Property relating to such Franchise
Loan shall have been valued by Deloitte and Touche or another qualified
industry expert acceptable to the Lender in its sole discretion.
(xi) The originator of such Franchise Loan shall have received
environmental reports relating to the related Franchise Units which
shall comply with CFS's environmental review process, such process to
comply with the secured creditor lender exemption provision of the
Asset Conservation, Lender Liability, and Deposit Insurance Protection
Act of 1996.
(xii) Such Franchise Loan, the Borrower and all other parties involved
in the origination and servicing of the Franchise Loan complied in all
material respects, as of the date of origination and as of the Closing
Date, with all applicable federal, state and local laws, rules and
regulations, including, without limitation, those relating to usury,
truth-in-lending, real estate settlement procedure, land sales, the
offer and sale of securities, consumer credit protection and equal
credit opportunity or disclosure.
(xiii) Each related Mortgage has been or will be duly filed to be
recorded with all appropriate governmental authorities in all
jurisdictions in which such Mortgage is required to be filed and
recorded to create a valid, binding and enforceable lien on the related
Secured Property, and such Mortgage creates a valid, binding and
enforceable first priority lien on the related Secured Property (except
as such enforceability may be limited by the insolvency laws or other
laws of general application relating to or affecting the enforcement of
creditors' rights generally or by general principles of equity,
regardless of whether such enforceability is considered in a proceeding
in equity or at law), which interest is free and clear of all other
encumbrances and liens, except for (a) liens for real estate taxes and
special assessments not yet due and payable, (b) covenants, conditions
and restrictions, rights of way, easements and other matters that (i)
are of public record as of the date of recording of such Mortgage
and/or (ii) are referred to in the related lender's title insurance
policy, such exceptions being acceptable to mortgage lending
institutions generally, (c) mechanics or materialmen's liens and other
matters to which like properties are commonly subject, provided, that
such liens and other matters (i) do not, individually or in the
aggregate, materially interfere with the benefits of the security
intended to be provided by such Mortgage and (ii) do not constitute
liens securing debt for borrowed money or other obligations incurred
outside of the ordinary course of the Obligor's business and (d) liens
on equipment which relate to indebtedness not in excess of (i) $50,000
in the case of a fee Franchise Unit or (ii) $35,000 in the case of a
ground lease Franchise Unit or space lease Franchise Unit. The Mortgage
Assignments being executed in connection herewith are in form and
substance acceptable for recording in the jurisdiction where the
related Secured Property is located and in a form sufficient to assign
the Mortgage purported to be assigned thereby.
(xiv) With respect to each Mortgage that is a deed of trust, a trustee,
duly qualified under applicable law to serve as such, has either been
properly designated and currently so serves or may be substituted in
accordance with applicable law. Except in connection with a trustee's
sale after default by the Borrower, no fees or expenses are payable by
the Lender to such trustee.
(xv) The Franchise Loan Security Agreement related to and delivered in
connection with such Franchise Loan, together with any related Uniform
Commercial Code financing statements, establishes and creates a valid
and enforceable lien and security interest on the personal property
described therein, to the extent such lien or security interest may be
perfected by the filing of a Uniform Commercial Code financing
statement, except as enforceability may be limited by bankruptcy or
other laws affecting creditor's rights generally or by the application
of the rules of equity. All furniture, fixtures and equipment and all
other personal property covered by the Franchise Loan Security
Agreement related to or delivered in connection with the Franchise Loan
is subject to a Uniform Commercial Code financing statement filed
and/or recorded in all places necessary to perfect a valid lien
thereon, to the extent such lien may be perfected by the filing of a
Uniform Commercial Code financing statement.
(xvi) The Borrower owns full legal and equitable title to such
Franchise Loan, free and clear of any lien or participation or
ownership interest in favor of any other Person, and had full right and
authority to pledge, assign and transfer such Franchise Loan; and the
form of this Agreement and the related instruments of transfer are in
form sufficient to transfer all right, title and interest in, to and
under the Secured Property to the Lender. The Borrower has given or
caused to be given or will give or cause to be given all notices
legally necessary to be given by the Borrower to effect the pledge of
the Secured Property pursuant hereto.
(xvii) Each Promissory Note and related Franchise Loan Security
Agreement, Mortgage, if any, and guarantee, if any, is genuine, has not
been impaired, amended, satisfied, canceled, altered or modified in any
respect (other than pursuant to written instruments included on the
related Franchise Loan Documents) and is the legal, valid and binding
obligation of the maker, Borrower, guarantor or other party executing
such document or agreement, enforceable in accordance with its terms
(except as such enforceability may be limited by the insolvency laws or
other laws of general application relating to or affecting the
enforcement of creditors' rights generally or by general principles of
equity, regardless of whether such enforceability shall be considered
in a proceeding in equity or at law), and is not subject to any
dispute, counterclaim, right to rescission, right of setoff,
counterclaim or defense of any kind. The endorsement of each Promissory
Note constitutes the legal, valid and binding assignment of such
Promissory Note and, together with this Loan Agreement and the delivery
hereof and thereof, legally and validly conveys all right, title and
interest in, to and under the related Franchise Loan to the Issuer.
Such Promissory Note is an instrument under Article 9 of the New York
Uniform Commercial Code.
(xviii) All parties to each Promissory Note and related Franchise Loan
Security Agreement, Mortgage, if any, and guarantee, if any, had the
legal capacity to enter into such Franchise Loan Documents and to
execute and deliver such Franchise Loan Documents, and such Franchise
Loan Documents have been duly and properly executed by such parties.
(xix) Each Mortgage, Franchise Loan Security Agreement and guarantee,
if any, contains customary and enforceable provisions so as to render
the rights and remedies of the holder thereof adequate for the
practical realization of the benefits of the security interests
intended to be provided thereby, including by judicial foreclosure,
subject to the limitations described in the next succeeding sentence.
There is no exemption under existing law available to the related
Borrower which would interfere with the mortgagee's or secured party's
right to foreclose or to realize upon such related Mortgage, Franchise
Loan Security Agreement or guarantee, if any, as applicable, other than
which may be available under the ins3lvency laws, other laws of general
application relating to or affecting the enforcement of creditors'
rights generally, applicable debt relief or homestead statutes or
general principles of equity.
(xx) The Obligor under such Franchise Loan was at the time of
origination in possession of all material licenses, permits, approvals
and other authorizations necessary and required by applicable law for
the conduct of its business; all such licenses, permits and
authorizations are valid and in full force and effect; and all material
conditions on the Obligor's part to be fulfilled under the terms of any
lease of the Secured Property have been satisfied.
(xxi) The Secured Property is in compliance with and lawfully used and
occupied under any applicable zoning, and environmental laws or
regulations, and all laws, rules, regulations, judgments, orders,
permits, licenses, authorizations and other requirements of and
agreements with all governments, department agencies, courts and
officials, which relate to or are made or issued with respect to the
Secured Property. The Obligor has not received notification from any
governmental authority that the Secured Property is in material
non-compliance with such laws or regulations, is being used, operated
or occupied unlawfully or has failed to have or obtain such inspection,
licenses or certificates, as the case may be. The Obligor has not
received notice of any violation or failure to conform with any such
law, ordinance, regulations, standard, license or certificate.
(xxii) Other than payment delinquencies and violations of FCCR
maintenance covenants, there is no material default, breach, violation
or event of acceleration existing under the related Franchise Loan
Documents and no event (other than payments due but not yet delinquent)
that, with the passage of time or with notice and the expiration of any
grace or cure period, would constitute such a material default, breach,
violation or event of acceleration thereunder; such materiality to be
determined by the Lender in its sole discretion (exercised in good
faith). To the best of the Borrower's knowledge, the Obligor is not
otherwise in default in complying with the terms of its Franchise Loan
Documents. The Borrower has not waived any default, breach, violation
or event of acceleration of any of the foregoing, and, pursuant to the
terms of the Franchise Loan, the related Franchise Loan Documents, no
person other than the holder of such Promissory Note may declare an
event of default or accelerate the related indebtedness under any such
Franchise Loan, Mortgage or Promissory Note. To the best of the
Borrower's knowledge, the Obligor is not in default on any other debt
obligation owed or owing to the Borrower or any Affiliate of the
Borrower. The related Franchise Loan Documents permit acceleration of
such Franchise Loan if any Obligor thereunder is in default of its
other debt or lease obligations owing to the Borrower or any Affiliate
of the Borrower.
(xxiii) The Borrower has inspected or has caused to be inspected each
related Secured Property in connection with the origination thereof.
(xxiv) The related Obligor owns or has a leasehold interest in the
related Secured Property, including good and marketable title to any
Secured Property (subject to exceptions contained in the title
insurance policy, if any, relating to such Secured Property).
(xxv) At the time such Franchise Loan was made, the related Secured
Property pledged by the Borrower under the Franchise Loan was free and
clear of any mechanics' and materialmen's liens or liens in the nature
thereof, and no rights are outstanding that under law could give rise
to any such liens which are or may be prior to, or equal with, the lien
of the Mortgage, except those which are insured against by the title
insurance policy.
(xxvi) None of the improvements which were included for the purpose of
determining the value of the related Secured Property at the time of
the origination of the Franchise Loan lies outside of the boundaries
and building restriction lines of such Secured Property, and no
improvements on adjoining properties materially encroach upon such
Secured Property such that it would have a material adverse effect on
the operation or value of the restaurant or the Secured Property. No
improvement located on or forming part of the related Secured Property
is in material violation of any applicable zoning and building laws or
ordinances.
(xxvii) With respect to such Franchise Loan (other than Equipment
Franchise Loans), the lien of the related Mortgage is insured by a
title insurance policy or marked up commitment for title insurance,
insuring (subject to the exceptions referred to in subparagraph (xiii)
above) for the benefit of the Borrower, its successors and assigns that
the related Mortgage is a valid first lien on the fee or leasehold
estate, as applicable, of the related Obligor in the Secured Property.
Such title insurance policy is in full force and effect, is freely
assignable and will inure to the benefit of the owner of the Franchise
Loan without payment of additional premium. Such title insurance policy
is an ALTA lender's policy or other generally accepted form of policy,
and each such policy is issued by a title insurer acceptable to the
Lender and qualified to do business in the jurisdiction where the
Secured Property is located. Where required by state law or regulation,
the Obligor has been give the opportunity to choose the carrier of the
required title insurance. Except in the case of Space Lease Franchise
Loans, the title insurance policy does not contain any special
exceptions (other than the standard exclusions) for zoning and uses and
has been marked to delete the standard survey exception or to replace
the standard survey exception with a specific survey reading; provided,
that if the jurisdiction does not permit the removal of such
exceptions, the Borrower shall have obtained a certification from a
surveyor or a letter from the relevant municipality regarding the
zoning of the Secured Property. To the best of the Borrower's
knowledge, no Person has done, by act or omission, anything, or has
knowledge of any fact, that would materially impair the coverage of any
such title insurance policy.
(xxviii) The related Secured Property is insured by a fire and extended
perils Insurance Policy, and to the extent required as of the date of
origination by the Borrower consistent with its normal franchise
lending practices, against risks insured against by persons operating
like properties, in an amount not less than the value of the Secured
Property relating to such Franchise Loan. All such insurance policies
contain a standard "New York" mortgagee clause (or similar clause)
naming the Borrower, its successors and assigns (including, without
limitation, subsequent owners of the Franchise Loan), as mortgagee, and
may not be reduced, terminated or canceled without thirty (30) days'
prior written notice to the mortgagee. No such notice has been received
by the insured. The Obligor is also required to maintain business
interruption and rental continuation coverage sufficient to protect
against loss for a period of up to 12 months. If any portion of the
real property securing a Mortgage is in an area identified by any
federal governmental department, agency or authority as having special
flood hazards, and flood insurance is available, a flood insurance
policy meeting the current guidelines of the Federal Insurance
Administration is in effect with a generally acceptable insurance
carrier, in an amount representing the lesser of the maximum coverage
available and the full insurable value of the Secured Property. All
premiums on such insurance policies are no more than fourteen (14) days
past due. The related Mortgage obligates the related Obligor to
maintain such insurance and, at such Obligor's failure to do so,
authorizes the mortgagee to maintain such insurance at the Obligor's
cost and expense and to seek reimbursement therefor from such Obligor.
To the best of the Borrower's knowledge, there have been no acts or
omissions that would impair the coverage of any such insurance policy
or the benefits of the mortgage endorsement. All insurance contemplated
in this section shall be maintained with insurance companies which are
"A3" rated by Moody's Investors Service, Inc. and "A-" rated byStandard
and Poor's Rating Group.
(xxix) All applicable intangible taxes and documentary stamp taxes were
paid as to such Franchise Loan, Promissory Note and each related
Mortgage and Franchise Loan Security Agreement.
(xxx) Except as contemplated by the Franchise Loan Documents therefor
and subject to Permitted Encumbrances with respect thereto, each
Mortgage (subject to the terms of the applicable lease in the case of a
leasehold Mortgage) and Franchise Loan Security Agreement gives the
mortgagee or the secured party, subject to applicable law, the right to
receive and direct the application of insurance proceeds and
condemnation proceeds received in respect of the related Franchise
Loan, subject to the terms of the underlying lease if the loan is a
Ground Lease Franchise Loan or a Space Lease Franchise Loan.
Notwithstanding this provision, proceeds may be paid directly to the
Obligors if such proceeds do not exceed $25,000 per loss.
(xxxi) To the Borrower's knowledge, there are no delinquent taxes,
ground rents, water charges, sewer rents, levies, fees, claims,
assessments or other charges by a governmental authority outstanding
with respect to any of the Secured Property for such Franchise Loan
other than those that are Permitted Encumbrances for a period in excess
of fourteen (14) days. Notwithstanding this representation, in the case
of a Space Lease Franchise Loan, the Obligor shall be deemed to be in
compliance with its lease and the Borrower shall have satisfied this
representation if the Obligor has paid its tax obligations as required
by the lease.
(xxxii) At the time such Franchise Loan was made, the collateral for
such Franchise Loan was in good repair and free and clear of material
damage, defective condition or waste and there is no proceeding pending
or, to the best knowledge of the Borrower, threatened for the total or
partial condemnation or taking of any of the collateral by eminent
domain.
(xxxiii) Such Franchise Loan that was originated by a Credit Party was
originated in accordance with the Underwriting Guidelines, and the
Promissory Note, Franchise Loan Security Agreement, Mortgage and
guarantee, if any, for each Franchise Loan are in substantially the
form of the Standard Form Documents with the exceptions, if any, listed
on the Notice of Borrowing and Pledge. Each Franchise Loan that was
originated by a third party was originated in a manner consistent, in
all material respects, with the Underwriting Guidelines.
(xxxiv) No Obligor or any officer, director, employee, shareholder,
member, partner or Affiliate thereof is an officer, director, employee,
shareholder, member, partner or Affiliate of any Credit Party.
(xxxv) No instrument of release or waiver has been executed in
connection with such Franchise Loan (other than in connection with the
waiver of a payment delinquency or failure to meet an FCCR maintenance
covenant; provided that such waiver shall not forgive the obligations
of the Obligor to pay any amounts due under the Franchise Loan
Documents), and no Obligor has been released in whole or in part.
(xxxvi) The related Mortgage has not been waived, modified, altered,
satisfied or canceled in any respect or rescinded, and the related
Secured Property has not been released, in whole or in part, from the
lien or other encumbrance of, nor has the Obligor been released from
its obligations under, the Mortgage, in whole or in any part, nor has
any instrument been executed that would effect any such cancellation,
subordination, rescission or release.
(xxxvii) The Borrower has not advanced funds, or induced, solicited or
knowingly received any advance of funds by a party other than an
Obligor, directly or indirectly, for the payment of any amount required
by such Obligor's Franchise Loan.
(xxxviii) The related Franchise Loan File for such Franchise Loan
contains the documents and instruments specified to be included therein
in the form specified in the definition of "Franchise Loan File."
(xxxix) Unless the Franchise Loan is a Construction Franchise Loan, the
proceeds of such Franchise Loan have been fully disbursed, there is no
obligation or requirement for future advances thereunder, and all
costs, fees and expenses incurred in making, closing or recording such
Franchise Loan have been paid. The originator of such Franchise Loan
has duly fulfilled in all material respects all obligations on its part
to be fulfilled under or in connection with the related Franchise Loan
Documents and has done nothing to impair the rights of the Borrower or
the Lender in such Franchise Loan, Franchise Loan Documents or payments
with respect thereto.
(xl) There exist no deficiencies with respect to escrow deposits and
payments, if such are required, for which customary arrangements for
repayment thereof have not been made, and no escrow deposits or
payments of other charges or payments due the Borrower have been
capitalized under any Promissory Note (except if such Franchise Loan is
a Construction Franchise Loan). All such escrow deposits and payments
have been deposited in a segregated trust account pursuant to
arrangements satisfactory to the Lender, and are not commingled with
other funds of the Credit Parties.
(xli) The Borrower has caused to be performed any and all acts required
to be performed to preserve the rights and remedies of the secured
party in any insurance policies in respect of such Franchise Loan.
(xlii) The Franchise Loan is not subject to a bankruptcy plan. The
Borrower has no knowledge nor has it received any notice that any
Obligor is a debtor in any state or federal bankruptcy or insolvency
proceeding.
(xliii) To the Borrower's knowledge, there exists no material violation
of federal or state environmental law or regulation with respect to
such Secured Property; provided, however, that notwithstanding the
foregoing, the term hazardous substances shall not include materials
normally used in the operation and maintenance of properties such as
the Secured Property and properties subject to Mortgages (e.g.,
cleaning agents and used motor oil).
(xliv) If such Franchise Loan is a Ground Lease Franchise Loan:
(A) The ground lease or memorandum thereof has been recorded
(when necessary for issuance of a mortgagee title insurance
policy), and either (1) such ground lease does not prohibit the
leasehold estate to be mortgaged or (2) the ground lessor's
consent to allow the mortgage of the leasehold estate has been
obtained and does not restrict the use of the related Secured
Property by the Obligor, its successors or assigns in a manner
that would materially adversely affect the security provided by
the related Mortgage; the lessee's interest in the ground lease
may be assigned at foreclosure or by the mortgagee subsequent to
foreclosure (subject in certain cases to the ground lessor's
reasonable consent or other requirements that would not be viewed
as commercially unreasonably by an institutional franchise loan
lender); and there has been no material change in the terms of
such ground lease since its recordation, except by written
instruments all of which have been reviewed and copies of which
are a part of the Franchise Loan File;
(B) The lessor under such ground lease has agreed in such
ground lease or in another writing contained in the Franchise
Loan File, or the related Mortgage provides for Obligor's
agreement, that such ground lease may not be amended, modified,
surrendered, canceled or terminated in any manner that would be
materially adverse to the mortgagee without the prior written
consent of the mortgagee;
(C) Such Franchise Loan's related lease has a remaining term,
or option to extend, beyond the scheduled maturity date of the
Franchise Loan;
(D) The Borrower is permitted a reasonable opportunity to cure
any default under such ground lease which is curable after the
receipt of notice of any such default before the lessor thereunder
may terminate such ground lease; and in the case of any such
lessee under default which is not curable by the mortgagee, or in
the event of bankruptcy or insolvency of the lessee under such
ground lease, the Borrower has the right, following termination of
the existing ground lease or rejection thereof by a bankruptcy
trustee or similar party, to enter into a new ground lease with
the lessor on identical financial terms and substantially
identical other terms;
(E) Such ground lease is in full force and effect and, to the
Borrower's knowledge, no default has occurred under such ground
lease, nor is there any existing condition which, but for the
passage of time or the giving of notice, would result in a default
under the terms of such ground lease.
(xlv) The Obligor has entered into a legal, valid, and binding
franchise agreement (or in the case of a Construction Franchise Loan, a
pre-franchise/site approval agreement). The Obligor has represented in
the Franchise Loan Documents that, as of the date of origination of the
Franchise Loan, there were no defaults under the franchise agreement.
To the best of the Borrower's knowledge, there are no defaults by any
party under the franchise agreement and the franchise agreement is in
full force and effect.
(xlvi) The information set forth in each Franchise Loan Schedule and
Franchise Loan Tape with respect to such Franchise Loan is complete,
true and correct in all material respects.
(xlvii) To the best of the Borrower's knowledge, there are no material
proceedings or investigations pending or, to the Borrower's knowledge,
threatened, before any court, regulatory body, administrative agency,
or other tribunal or governmental instrumentality (a) asserting the
invalidity of the related Franchise Loan Documents, (b) seeking to
prevent payment and performance of such Franchise Loan Documents, or
(c) seeking any determination or ruling that might materially and
adversely affect the validity, enforceability or collectability of such
Franchise Loan or the related Franchise Loan Documents.
(xlviii) The Borrower's computer records have been marked to indicate
that such Franchise Loan has been pledged to the Lender pursuant to
this Loan Agreement.
(xlix) The Borrower has no knowledge of any circumstance or condition
with respect to such Franchise Loan, the Secured Property, or the
related Obligor's credit standing that could reasonably be expected to
cause the Lender to regard such Franchise Loan as unacceptable
security, cause such Franchise Loan to become delinquent or adversely
affect the value or marketability of such Franchise Loan.
(1) The term of the franchise agreement under which the related
Franchise Units operate (assuming that the franchisee exercises all
available options set forth therein to extend the term thereof) exceeds
the full term of such Franchise Loan.
(Ii) [Reserved]
(lii) As of the Funding Date, such Franchise Loan is not a
Delinquent Franchise Loan.
For purposes of the representations made herein, the phrase
"to the best knowledge of the Borrower" or "to the Borrower's knowledge" means
to the actual knowledge of the Borrower without inquiry.
<PAGE>
Part II: Definitions
"Closing Date" shall mean, with respect to any Franchise Loan,
the date on which such Franchise Loan was advanced.
"FCCR" shall mean the fixed charge coverage ratio of an
Obligor or Franchise Unit with respect to a Franchise Loan, as such term (or
equivalent term) is defined in the relevant Franchise Loan Documents, or as
otherwise agreed upon by the Lender and the Borrower.
"Loan-to-Value Ratio" or "LTV" shall mean with respect to any
Franchise Loan, the ratio of the Par Amount of the Franchise Loan as of the date
of origination (unless otherwise indicated) to the Appraised Value of the
Secured Property.
"Mortgage Assignment" shall mean an instrument evidencing the
assignment of a Mortgage, in form and substance satisfactory to the Lender.
"Permitted Encumbrances" shall with respect to any Franchise
Loan, have the meaning assigned to such term in the Franchise Loan Documents
relating thereto.
<PAGE>
Schedule 2
FILING JURISDICTIONS AND OFFICES
Florida, Secretary of State
Delaware, Secretary of State
Minnesota, Secretary of State
<PAGE>
Schedule 3
SUBSIDIARIES
None
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Schedule 4
FRANCHISE CONCEPTS
PART A: TIER I FRANCHISES
Tier I Chain Segment Type Parent Company
---------------- ----------------------------- ----------------------- ------------ ----------------------------------
1 McDonald's Sandwich QSR McDonald's Corp.
2 Burger king Sandwich QSR Diageo PLC
3 Pizza Hut Pizza QSR Tricon Global Restaurants
4 Taco Bell Sandwich QSR Tricon Global Restaurant's
5 Wendy's Sandwich QSR Wendy's Int'l Inc.
6 KFC Chicken QSR Tricon Global Restaurants
7 Applebee's Restaurant Dinner House CD** Applebee's Int'l
8 T.G.I. Friday's Dinner House CD Carlson Hospitality
---------------- ----------------------------- ----------------------- ------------ ----------------------------------
Part B: TIER II FRANCHISES
Tier II Chain Segment Type Parent Company
---------------- ----------------------------- ----------------------- ------------ ----------------------------------
9 Arby's Sandwich QSR TriArc Corp.
10 Jack in the Box Sandwich QSR Foodmaker, Inc.
11 Papa John's Pizza Pizza QSR Papa John's Int'l
12 Ruby Tuesday Dinner house CD Ruby Tuesday, Inc.
13 IHOP Family CD IHOP Corp.
---------------- ----------------------------- ----------------------- ------------ ----------------------------------
PART C: TIER III FRANCHISES
Tier III Chain Segment Type Parent Company
---------------- ----------------------------- ----------------------- ------------ ----------------------------------
14 Bennigan's/S&A Restaurants
Dinner House
15 Steak and Ale/S&A Dinner House
16 Restaurants Grill/Buffet
17 Golden Corral Chicken
18 Popeye's Sandwich
19 Del Taco Sandwich
Morton's of Chicago Fine Dining
---------------- ----------------------------- ----------------------- ------------ ----------------------------------
PART D: TIER IV FRANCHISES
Tier IV Chain Segment Type Parent Company
---------------- ----------------------------- ----------------------- ------------- ---------------------------------
20 Denny's Family CD Flagstar Cos. Inc.
21 Captain D's Seafood QSR Shoney's Inc.
Tony Roma's Famous for Ribs
22 Dinner House CD NPC International, Inc.
23 Shoney's Family CD Shoney's, Inc.
24 Sonny's Real Pit BBQ Family CD Sonny's Franchise Co.
25 Chevy's
26 Fazoli's Sandwich QSR Seed Restaurant Group
50 Houlihan's Dinner House CD The Glazer Group
---------------- ----------------------------- ----------------------- ------------- ---------------------------------
</TABLE>
<PAGE>
*"QSR: Quick Service Restaurant.
**"CD" Casual Dining
<PAGE>
EXHIBIT A
[FORM OF NOTE]
$300,000,000 September 18, 1998
New York, New York
FOR VALUE RECEIVED, CNL FINANCIAL V, LP, a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of PRUDENTIAL
SECURITIES CREDIT CORPORATION a Delaware corporation (the "Lender"), at the
principal office of the Lender at ______________________________________ in
lawful money of the United States, and in immediately available funds, the
principal sum of THREE HUNDRED MILLION AND 00/100 DOLLARS ($300,000,000.00) (or
such lesser amount as shall equal the aggregate unpaid principal amount of the
Advances made by the Lender to the Borrower under the Loan Agreement as defined
below), on the dates and in the principal amounts provided in the Loan
Agreement, and to pay interest on the unpaid principal amount of each such
Advance, at such office, in like money and funds, 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 Loan Agreement.
The date, amount and interest rate of each Advance made by the
Lender to the Borrower, and each payment made on account of the principal and
interest thereof, shall be recorded by the Lender on its books and, prior to any
transfer of this Note, endorsed by the Lender on the schedule attached hereto or
any continuation thereof; provided, that the failure of the Lender to make any
such recordation or endorsement shall not affect the obligations of the Borrower
to make a payment when due of any amount owing under the Loan Agreement or
hereunder in respect of the Advances made by the Lender.
This Note is the Note referred to in the Interim Wholesale
Mortgage Warehouse and Security Agreement dated as of September 18, 1998 (as
amended, supplemented or otherwise modified and in effect from time to time, the
"Loan Agreement") between the Borrower and the Lender, and evidences Advances
made by the Lender thereunder. Terms used but not defined in this Note have the
respective meanings assigned to them in the Loan Agreement.
The Borrower agrees to pay all the Lender's costs of
collection and enforcement (including attorneys' fees and disbursements of
Lender's counsel) in respect of this Note when incurred, including, without
limitation, attorneys' fees through appellate proceedings.
Notwithstanding the pledge of the Collateral, the Borrower
hereby acknowledges, admits and agrees that the Borrower's obligations under
this Note are recourse obligations of the Borrower to which the Borrower pledges
its full faith and credit.
The Borrower, and any endorsers hereof, (a) severally waive
diligence, presentment, protest and demand and also notice of protest, demand,
dishonor and nonpayments of this Note, (b) expressly agree that this Note, or
any payment hereunder, may be extended from time to time, and consent to the
acceptance of further Collateral, the release of any Collateral for this Note,
the release of any party primarily or secondarily liable hereon, and (c)
expressly agree that it will not be necessary for the Lender, in order to
enforce payment of this Note, to first institute or exhaust the Lender's
remedies against the Borrower or any other party liable hereon or against any
Collateral for this Note. No extension of time for the payment of this Note, or
any installment hereof, made by agreement by the Lender with any person now or
hereafter liable for the payment of this Note, shall affect the liability under
this Note of the Borrower, even if the Borrower is not a party to such
agreement; provided, however, that the Lender and the Borrower, by written
agreement between them, may affect the liability of the Borrower.
Any reference herein to the Lender shall be deemed to include
and apply to every subsequent holder of this Note. Reference is made to the Loan
Agreement for provisions concerning optional and mandatory prepayments,
Collateral, acceleration and other material affecting this Note.
Any enforcement action relating to this Note may be brought by
motion for summary judgment in lieu of a complaint pursuant to Section 3213 of
the New York Civil Practice Law and Rules. The Borrower hereby submits to New
York jurisdiction with respect to any action brought with respect to this Note
and waives any right with respect to the doctrine of forum non conveniens with
respect to such transactions.
This Note shall be governed by and construed under the laws of
the State of New York (without reference to choice of law doctrine but with
reference to Section 5-1401 of the New York General Obligations Law, which by
its terms applies to this Note) whose laws the Borrower expressly elects to
apply to this Note. The Borrower agrees that any action or proceeding brought to
enforce or arising out of this Note may be commenced in the Supreme Court of the
State of New York, Borough of Manhattan, or in the District Court of the United
States for the Southern District of New York.
CNL FINANCIAL V, LP
By:___________________
Name:
Title:
<PAGE>
SCHEDULE OF ADVANCES
This Note evidences Advances made under the within-described
Loan Agreement to the Borrower, on the dates, in the principal amounts and
bearing interest at the rates set forth below, and subject to the payments and
prepayments of principal set forth below:
<TABLE>
<CAPTION>
<S> <C>
Principal Amount Unpaid Pricipal
of Advance Amount paid or Amount Notation Made by
Date Made Interest Rate Prepaid
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</TABLE>
<PAGE>
(FORM OF CUSTODIAL AGREEMENT]
[distributed separately]
<PAGE>
EXHIBIT C
[FORM OF OPINION OF COUNSEL TO BORROWER]
[to be provided]
<PAGE>
EXHIBIT D
FORM OF NOTICE OF BORROWING AND PLEDGE
[insert date]
Prudential Securities Credit Corporation Prudential Securities Incorporated
One Seaport Plaza, 27th Floor One New York Plaza, 14th Floor
Credit Department New York, New York 10292
New York, New York 10292 Attention: Mr. Glenn Roder
Attn: Mr. James Maitland Phone Number: (212) 778-1823
Phone Number: (212) 778-7231 Fax Number: (212) 778-7401
Fax Number: (212) 778-7698
Prudential Securities Credit Corporation
One New York Plaza, 12th Floor
Operations Department
New York, New York 10292
Attention: Mr. Kenneth M. Leavy
Phone Number: (212) 778-6141
Fax Number: (212) 778-7533
Notice of Borrowing and Pledge No.:____________________
Ladies/Gentlemen:
Reference is made to the Interim Wholesale Mortgage Warehouse
and Security Agreement, dated as of September 18, 1998 (the "Loan Agreement";
capitalized terms used but not otherwise defined herein shall have the meaning
given them in the Loan Agreement), between (the "Borrower") and Prudential
Securities Credit Corporation (the "Lender").
In accordance with Section 2.03(a) of the Loan Agreement, the
undersigned Borrower hereby requests that you, the Lender, make Advances to us
based on the following criteria:
1) Requested Advance Amount: $____________________
2) Requested Funding Date: ________________,199_
3) Franchise Tier: _________________________.
4) In connection with this Advance we shall pledge to you as Collateral
the Franchise Loan set forth on the Franchise Loan Schedule attached hereto.
The Borrower hereby certifies, as of such Funding Date, that:
(a) no Default or Event of Default has occurred and is continuing on
the date hereof nor will occur after giving effect to such Advance as a result
of such Advance;
(b) each of the representations and warranties made by the Borrower in or
pursuant to the Loan Documents is true and correct in all material respects on
and as of such date (in the case of the representations and warranties in
respect of Franchise Loans, solely with respect to Franchise Loans being
included the Borrowing Base on the Funding Date) as if made on and as of the
date hereof (or, if any such representation or warranty is expressly stated to
have been made as of a specific date, as of such specific date); and
(c) the Borrower is in compliance with all governmental licenses and
authorizations and is qualified to do business and is in good standing in all
required jurisdictions.
Very truly yours,
CNL FINANCIAL V, LP
By:__________________
Name:
Title:
<PAGE>
Schedule I
to Notice of Borrowing and Pledge
Franchise Loan PROPOSED TO BE PLEDGED
TO LENDER ON FUNDING DATE
[attach Franchise Loan Schedule]
<PAGE>
EXHIBIT E
UNDERWRITING GUIDELINES
<PAGE>
EXHIBIT F
FORM OF BLOCKED ACCOUNT AGREEMENT
September 18, 1998
FIRST UNION NATIONAL BANK
Re: CNL Financial V. LP
Ladies and Gentlemen:
CNL Financial V, LP (the "Borrower") hereby notifies you that it has
transferred exclusive ownership, dominion and control of deposit account [No.
_____________] maintained with you (the "Deposit Account") to Prudential
Securities Credit Corporation (the "Lender"), located at One New York Plaza, New
York, New York 10292, under the terms of an Interim Wholesale Mortgage Warehouse
and Security Agreement, dated as of September 18, 1998, among the Borrower and
the Lender (as the same may be amended, supplemented or otherwise modified from
time to time, the "Loan Agreement"). The Borrower has granted to the Lender a
security interest in the Deposit Account, and all cash, checks, drafts and other
similar writings for the payment of money from time to time held in or credited
to the Deposit Account.
The Borrower hereby irrevocably instructs you to make all payments to
be made by you out of or in connection with the Deposit Account in accordance
with the instructions of the Lender. In this regard, the Borrower wishes to note
that the Lender in the accompanying Acknowledgment and Instructions has
authorized you to continue to accept instructions from the Borrower until
receipt by you of contrary and/or terminating instructions in writing from the
Lender.
The Borrower also hereby notifies you that the Lender, subject to the
immediately preceding paragraph, shall be irrevocably entitled to exercise any
and all rights in respect of or in connection with the Deposit Account,
including, without limitation, the right to specify when payments are to be made
out of or in connection with the Deposit Account.
By executing this letter agreement you acknowledge that you have not
heretofore received a notice, writ, order or any form of legal process from any
other person asserting, claiming or exercising, any right of set-off, banker's
lien or other purported form of claim with respect to the items collected from
the Deposit Account or any funds from time to time therein or in transit
thereto, and agree to inform the Lender in writing of any such action in the
future.
All funds deposited into the Deposit Account will not be subject to
deduction, set-off, banker's lien or any other right in favor of any other
person other than the Lender, except (i) that you may set off against the
Deposit Account the face amount of any check deposited in and credited to the
Deposit Account which is subsequently returned for any reason and (ii) for your
statutory security interest in items and their proceeds to the extent of deposit
credits posted therefore. Your compensation for providing the services
contemplated herein shall be as mutually agreed between the Borrower and you
from time to time and the Borrower will continue to pay such compensation. The
Lender shall have no liability to you or the Borrower for any compensation to
you for providing the services contemplated herein.
You agree not to terminate the Deposit Account without giving the
Lender at least 30 days' prior written notice. Upon the termination of this
letter agreement, you will close the Deposit Account and, subject to your rights
to charge the Deposit Account as set forth herein, transfer any monies remaining
therein at the direction of the Lender. You agree that you shall forward all
incoming mail addressed to the Deposit Account and all wire transfers and
deposits to the Deposit Account that you receive after such termination in the
form received at the direction of the Lender, promptly after you discover that
you have received any such mail or transfers.
By signing this letter below, you agree that this letter and the
accompanying Acknowledgment and Instructions constitute notice in writing of the
security interest of the Lender in the Deposit Account and all cash, checks,
drafts and similar writings for the payment of money from time to time therein,
and you hereby consent to such notice. This Agreement may not be changed except
pursuant to a writing signed by us and the Lender.
All notices and other communications provided for hereunder shall,
unless otherwise stated herein, be in writing (including facsimile
communication) and shall be personally delivered or sent by certified mail,
postage prepaid, by facsimile or by overnight courier, to the intended person at
the address or facsimile number of such person set forth under its name on the
signature pages hereof or at such other address or facsimile number as shall be
designated by such person in a written notice to the other parties hereto given
in accordance with the requirements of this paragraph.
All notices and communications provided for hereunder shall be
effective when received or if transmitted by facsimile, when receipt is
confirmed by telephone.
This letter agreement shall be binding upon you and your successors and
assigns and shall inure to the benefit of the Borrower and the Lender and their
respective successors, transferees and, assigns; provided, however, that you may
not assign your rights and duties under this letter agreement without thirty
(30) days prior written notice of such assignment to the Lender.
This letter agreement shall be governed by and construed in accordance
with the laws of the State of New York, not including the choice of law rules
thereof.
You shall be entitled to rely conclusively upon any notice or
instruction that you receive from the Lender and shall have no obligation to
investigate or verify the authenticity or correctness of any such notice or
instruction. You shall have no liability for the honoring of any instructions or
directions regarding the Deposit Account which you receive from the Lender
during the term of the Loan Agreement, and you shall be fully discharged from
liability with respect to any funds on deposit in the Deposit Account to the
extent that you honor such instructions and transfer the same to or at the
direction of the Lender.
The Borrower hereby agrees to indemnify you and hold you harmless
against any loss, damage or expense, including but not limited to unpaid
charges, fees and returned items for which the Lender and/or the Borrower
originally received the benefit (including reasonable attorney's fees, court
costs and other litigation expenses) which you may suffer as a direct result of
entering into this letter agreement, honoring any instructions or directions you
receive from the Lender with respect to the Deposit Account during the term of
this letter agreement or, to the extent required by this letter agreement, not
honoring any instructions you receive from the Borrower with respect to the
Deposit Account during the term of this letter agreement, except in the event of
your gross negligence or willful misconduct. In no event shall you be liable for
special, indirect, exemplary, consequential or punitive damages.
<PAGE>
Please agree to the terms of, and acknowledge receipt of, this letter
by signing in the space provided below on four of the enclosed copies.
Very truly yours,
CNL FINANCIAL V, LP
By: _____________________
Name:
Title:
Address for Notice:
CNL Financial V, LP
400 East South Street
Suite 500
Orlando, Florida 32801-2878
Attention: Brian Fluck
Telephone: (407) 650-1057
Telecopy: (407) 425-9876
Acknowledged and agreed to as of this ___ day of September, 1998 by:
FIRST UNION NATIONAL BANK
By: _____________________
Name:
Title:
Address for Notice:
[Deposit Account Bank]
==============================
Attention: ___________________
------------------------------
Phone Number: ________________
Fax Number: __________________
<PAGE>
PRUDENTIAL SECURITIES CREDIT
CORPORATION
By: _____________________
Name:
Title:
Address for Notice:
Prudential Securities Credit Corporation
One Seaport Plaza
27th Floor
Credit Department
New York, New York 10292
Attention: James Maitland
Phone Number: (212) 214-7231
Fax Number: (212) 214-7678
With a copy to:
Prudential Securities Incorporated
One New York Plaza, 14th Floor
New York, New York 10292
Attention: Russell J. Burns
Phone Number: (212) 778-4531
Fax Number: (212) 778-7401
<PAGE>
ACKNOWLEDGMENT AND INSTRUCTIONS
Prudential Securities Credit Corporation (the "Lender") under the terms
of the Interim Wholesale Mortgage Warehouse and Security Agreement (as amended,
supplemented or otherwise modified from time to time, (the "Loan Agreement"),
dated as of September 18, 1998, among the Lender and CNL Financial V, LP (the
"Borrower") hereby acknowledges the transfer to the Lender of exclusive
ownership, dominion and control of the Deposit Account (as defined in, and
pursuant to the terms of, the foregoing letter (the "Letter Agreement") executed
by the Borrower and acknowledged by the Lender and ________________________ (the
"Bank"). Pursuant to the second paragraph of the Letter Agreement, the Bank may
continue to accept instructions from the Borrower in connection with the Deposit
Account until such time as the Bank receives contrary and/or terminating
instructions from the Lender. Any such written notice shall be effective on the
business day received by the Bank if received before 12:00 P.M. (New York time)
and, if not received by such time, on the next succeeding business day. This
Acknowledgment and Instructions may not be changed except pursuant to a writing
signed by us and the Borrower.
PRUDENTIAL SECURITIES CREDIT
CORPORATION, as Lender
By: _____________________________
Name ___________________________
Title ____________________________
<PAGE>
Acknowledged and agreed to as of this ___ day of September, 1998 by:
[Deposit Account Bank]
By: _________________________
Name: _______________________
Title: ________________________
CNL FINANCIAL V, LP
By: _________________________
Name: _______________________
Title: ________________________
<PAGE>
EXHIBIT G
FORM OF ELIGIBILITY VIOLATION NOTICE
<TABLE>
<CAPTION>
<S> <C>
Prudential Securities Credit Corporation Prudential Securities Incorporated
One Seaport Plaza, 27th Floor One New York Plaza, 14th Floor
Credit Department New York, New York 10292
New York, New York 10292 Attention: Mr. Russell Burns
Attn: Mr. James Maitland Phone Number: (212) 778-4531
Phone Number: (212) 778-7231 Fax Number: (212) 778-7401
Fax Number: (212) 778-7698
</TABLE>
Ladies/Gentlemen:
Reference is made to the Interim Wholesale Mortgage Warehouse
and Security Agreement, dated as of September 18, 1998 (the "Loan Agreement";
capitalized terms used but not otherwise defined herein shall have the meaning
given them in the Loan Agreement), between (the "Borrower") and Prudential
Securities Credit Corporation (the "Lender").
In accordance with Section 7.07 of the Loan Agreement, the
undersigned Borrower hereby notifies you that the certain franchise loans listed
below (the "Franchise Loans") no longer satisfy each of the eligibility criteria
listed on Schedule 1 of the Loan Agreement. A description of each such violation
is as follows:
1) Franchise Loan #: _______________________.
2) Date originally pledged to the Lender: ____________________.
3) Original principal amount of such Franchise Loan:
$________________.
4) Outstanding principal amount of such Franchise Loan:
$_____________.
5) Paragraph number(s) of violated eligibility criteria: ____________.
(6) Description of the violation of eligibility criteria:
<PAGE>
Very truly yours,
CNL FINANCIAL V, LP
By:___________________
Name:
Title:
<PAGE>
EXHIBIT H
FORM OF CONFIDENTIALITY AGREEMENT
[Letterhead of Counterparty]
Date:
Prudential Securities Credit Corporation Prudential Securities Incorporated
One Seaport Plaza, 27th Floor One New York Plaza, 14th Floor
Operations Department New York, New York 10292
New York, New York 10292 Attention: Mr. Russell Burns
Attn: Mr. James Maitland Phone Number: (212) 778-4531
Phone Number: (212) 778-7231 Fax Number: (212) 778-7401
Fax Number: (212) 778-7698
Gentlemen:
We understand that CNL Financial V LP (the "CNL") or its Affiliate is
prepared to furnish us with certain information relating to the Interim
Wholesale Mortgage Warehouse and Security Agreement, dated as of September 18,
1998 (the "Warehouse Agreement"), between CNL and Prudential Securities Credit
Corporation (the "Lender") to assist us in making an evaluation of the business
and prospects of CNL in connection with a possible transaction or series of
transactions relating to hedging arrangements involving CNL (a "Transaction").
As a condition to CNL furnishing such information to us, we agree, as set forth
below, to treat confidentiality such information and any other information you
or your agents furnish to us, together with analyses, compilations, studies or
other documents or records prepared by us, our directors, officers, employees,
agents, advisors, subsidiaries or representatives (collectively,
"Representatives"), which contain or otherwise reflect or are generated from
such information (collectively, the "Material").
We agree that the Material will not be used other than in connection
with the purpose described above, and that such information will be kept
confidential by us and our Representatives; provided, however, that (1) any of
such information may be disclosed to our Representatives who need to know such
information in connection with the Transaction (it being understood that such
Representatives shall be informed by us of the confidential nature of such
information and shall agree to be bound by the terms of this agreement) and (2)
any disclosure of such information may be made if required by law or requested
by a regulatory authority or if CNL and the Lender consent to such disclosure.
We agree to make all necessary and appropriate efforts to safeguard the Material
from disclosure to anyone other than as permitted hereby, provided that after
notice to CNL and the Lender, we will be free to correct any false or misleading
information which may become public concerning our relationship to CNL and the
Lender or the Transaction.
Without the prior consent of CNL and the Lender, we will not, and will
direct our Representatives not to, unless advised by counsel that disclosure is
required, disclose to any person the fact that the Material has been made
available to us or that we have inspected any portion of the Material, the fact
that discussions between CNL, the Lender and us are taking place or other facts
with respect to these discussions, including the status thereof.
<PAGE>
The term "Material" does not include information which (i) becomes
generally available to the public other than as a result of disclosure by us or
our Representative in violation of this Agreement, (ii) was available to us on a
non-confidential basis prior to its disclosure to us by CNL or its
Representatives or (iii) becomes available to us on a non-confidential basis
from a source other than CNL or its Representatives, provided that such source
is not actually known by us to be in breach of a confidentiality agreement with
CNL, the Lender or its representatives by making such disclosure.
Upon the termination of our consideration of the Transaction, the
written Material, except for that portion of the Material that may be found in
analyses, compilations, studies or other documents prepared by or for us, will
be returned to CNL or the Lender promptly upon its request. That portion of the
Material that may be found in analyses, compilations, studies or other documents
prepared by or for us, will be held by us and keep subject to the terms of this
agreement or destroyed.
This agreement shall be governed by and construed in accordance with
the laws of the State of New York, without regard to the principles of conflict
of laws.
This agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute the
same agreement.
Very truly yours,
[NAME OF COUNTERPARTY
By:________________________________
Name:
Title:
Agreed to and Accepted:
CNL FINANCIAL V LP
By:________________________________
Name:
Title:
PRUDENTIAL SECURITIES CREDIT CORPORATION
By:________________________________
Name:
Title:
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet of CNL American Properties Fund, Inc. and Subsidiaries at December 31,
1999, and its statement of operations for the year then ended and is qualified
in its entirety by reference to the Form 10-K of CNL American Properties Fund,
Inc. and Subsidiaries for the year ended December 31, 1999.
</LEGEND>
<S> <C>
<PERIOD-TYPE> year
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 46,011,592
<SECURITIES> 75,806,738
<RECEIVABLES> 5,989,626
<ALLOWANCES> 2,660,069
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 695,952,940
<DEPRECIATION> 14,742,596
<TOTAL-ASSETS> 1,138,192,793
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 434,958
<OTHER-SE> 671,779,146
<TOTAL-LIABILITY-AND-EQUITY> 1,138,192,793
<SALES> 0
<TOTAL-REVENUES> 75,500,597
<CGS> 0
<TOTAL-COSTS> 105,557,330
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,205,197
<INCOME-PRETAX> (49,837,334)
<INCOME-TAX> 0
<INCOME-CONTINUING> (49,837,334)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (49,837,334)
<EPS-BASIC> (1.26)
<EPS-DILUTED> (1.26)
<FN>
<F1>Due to the nature of its industry, CNL American Properties Fund, Inc. and
Subsidiaries has an unclassified balance sheet; therefore, no values are shown
above for current assets and current liabilities.
</FN>
</TABLE>
